California affordable housing projects suffer from loss of funding

Four years after a dilapidated Coachella Valley trailer park known as Duroville became a national symbol of slum housing, Riverside County officials were well into investing millions in a solution: building a new mobile home community for hundreds of the park’s impoverished residents.

But the plan abruptly stalled this spring when cash-hungry state officials yanked back $12.1 million in funds that local officials needed to complete the project.

The action “puts in limbo the health and safety of men, women and children who had planned to leave the squalor of Duroville for a safe, clean home,” complained Riverside County Supervisor John Benoit, who called the state move a “travesty.”

At a time of unprecedented need for affordable housing in California, the Duroville scenario is playing out in various ways across California’s small towns and urban centers. Major sources of state and federal funding are collapsing, jeopardizing thousands of new homes targeted for struggling families, including projects that were ready to break ground.

The biggest loss for local officials has been about $1 billion a year in funding that flowed from more than 400 now-defunct municipal redevelopment agencies, all abolished to help close the state’s budget gap.

Federal funding for affordable housing has also been slashed over the last two years. In the year ending in June, California received $131 million from the HOME Investment Partnerships Program, less than half the amount it got in 2010. Community Development Block Grant funding, which has also been used to build affordable homes, fell 42% in the same period.

On top of that, nearly $5 billion for housing raised through the sale of bonds approved by California voters in 2002 and 2006 is about to run dry.

Developers around the state say they can’t remember a bleaker time for affordable housing construction.

“It’s a disaster,” said Tom Scott, interim executive director of the Southern California Assn. of NonProfit Housing. Construction of homes that working families can afford will “come to a halt,” he said, predicting an uptick in people living in garages and renters having less money for food and other necessities.

At least 177 projects statewide totaling 12,000 homes had been counting on redevelopment money that has been redirected, according to figures compiled by the advocacy groups Housing California and the California Housing Consortium. Without access to those funds, developers say it will be difficult for them to raise additional financing.

So far, only a handful have raised the money to proceed, said Julie Snyder, policy director for Housing California.

Meanwhile, the poor economy is driving up need and record foreclosures are making the situation worse, Snyder said. Those forced from homes by banks are being pushed into an increasingly expensive rental market. Lenders are taking months, even years, to put repossessed homes back on the market and imposing tougher standards to qualify for a mortgage. And many of the cheaper, foreclosed homes put up for sale — in places like the Inland Empire — aren’t where jobs are plentiful, Snyder said.

In Los Angeles County, more than 51,000 people are homeless on any given night, and there are long waits for apartments with below-market rents.

“Any project that we build is filled instantaneously,” said John Molloy, executive director of PATH Ventures, a nonprofit that builds housing for the homeless. His organization has six projects under development in Los Angeles and Orange counties that could be imperiled by the loss of redevelopment funds.

Wendy Brooks spent more than a year in emergency and transitional housing before moving into the Ford, a low-income apartment building developed by SRO Housing Corp., a downtown Los Angeles nonprofit. A retired paralegal and onetime professional dancer, Brooks said she never imagined being in need. But she said the economic collapse wiped out her pension, and the house she was renting was foreclosed upon.

“For the first time in my life, I was homeless,” said Brooks, 62. “I have lived a middle-class life. I am well educated. But it happened to me.”

Redevelopment helped fund more than 80% of the 2,383 units developed by SRO Housing, including Brooks’ studio in a converted skid row hotel once dubbed “Hotel Hell.” The group has another project slated to break ground at the end of the year but won’t consider further ones in the current funding climate, said Executive Director Anita Nelson.

“We were eyeing a property, but when all this happened we just said, ‘Definitely not,’” she said.

The state’s redevelopment agencies were required to set aside a fifth of the revenue they generated from property tax growth to develop affordable housing. Between 1984 and 2010, they helped build or rehabilitate more than 184,000 units, according to the California Redevelopment Assn., a lobby group. However, a 2010 Times investigation found that dozens of cities spent hundreds of millions earmarked for affordable housing without building a single such unit. The Times also found examples of housing for the poor that was razed and never replaced, units built that were not actually affordable and sweetheart deals.

In part citing questionable spending, Gov. Jerry Brown led a successful push last year to abolish redevelopment agencies and redirect their share of property taxes to cities, counties, schools and other agencies. In the last six months, local and state officials reviewed hundreds of projects to determine if they qualified for continued funding.

The state rejected more than half a billion dollars in requests to use property tax money for pending redevelopment projects — including housing — often because they did not have contracts signed by a June 2011 deadline. Projects like the one to rehouse Duroville residents are also being denied millions in bond funds previously available through redevelopment agencies.

“It’s a huge loss,” said Los Angeles City Councilwoman Jan Perry, whose South L.A. district had funding pulled from a proposal to turn an old factory into 85 housing units. “That’s a part of the district that needed a boost,” she said. “It isn’t to say it will never get built, but it certainly got 10 times harder.”

In the farmlands east of Monterey Bay, dozens of families, most earning between $30,000 and $50,000 a year, fear their dreams of homeownership could be slipping out of reach. Felipe and Maria Cabrera raised two children on his gardener’s income but could not save enough for a house. He is now retired; she works as a teacher’s aide. Under a special program offered by the nonprofit South County Housing, they planned to contribute about 40 hours a week of labor in lieu of a down payment for a home in Hollister.

“The dream of our life is to own a house, even a small house,” said Felipe Cabrera, 72.

But the 30-home project had been counting on about $1.5 million in redevelopment funding, and now officials are waiting to hear if they will get the money. A recent decision to allow communities to use loan repayments from existing housing projects and other assets to build more homes could save some developments, said Seth Capron, senior project manager. But he added, “It is not near the funds available in the past.”

State Senate President Pro Tem Darrell Steinberg (D-Sacramento) is proposing a plan to allow communities to form new development agencies that would get a smaller share of property taxes. But questions have been raised about the idea’s workability and constitutionality.

Meanwhile, families wait and worry.

“I feel disillusioned,” said Ofelia Peña, 41, who has lived at the Duroville trailer park with her four children for a decade. “We don’t know what is going to happen to us.”

alexandra.zavis@latimes.com

jessica.garrison@latimes.com