Regions fight over bond funds

More than a year after state voters approved a $2.85-billion bond issue for affordable housing, a geographical tug of war has developed over the money, with Southern California’s elected officials complaining that their area is getting short shrift.

They say the money from 2006’s Proposition 1C should be apportioned based on population. If it were, Southern California would get 61% of the bond measure proceeds, instead of the 48% it received in the first round of funding.

Northern California officials, including Senate President Pro Tem Don Perata (D-Oakland), who wrote the legislation that put the measure on the ballot, see things differently. With their support, the rules for divvying the money not only reflect a “reasonable geographic distribution of funds” but also require state housing agency officials to consider such factors as the readiness and proximity to commuter rail lines of the projects proposed by developers, cities and counties that are competing for the funds.

So when the first round of money -- about $286 million -- was awarded last year, Southern California ended up receiving less than half of it. Some of the region’s proposed projects simply were not as good as those elsewhere, state housing agency officials said.

And things are not likely to change much in the next two rounds, expected in June. For “infill” housing improvements in older neighborhoods, state officials plan to give 45% each to Northern and Southern California after setting aside 10% for the Central Valley. Money from this $240-million pool is to go for street and property improvements.

Southern California is slated to get at least 45% of another pot of money, $95 million to be allocated for housing projects near mass-transit stations and rail lines.

None of this sits well with Los Angeles Mayor Antonio Villaraigosa, who has promised to increase the city’s scant supply of affordable housing.

“Southern California is being deprived of its fair share of funding under Prop. 1C despite the fact that this region is home to a majority of the state’s population,” Villaraigosa said in a recent interview. “The city of Los Angeles expressed serious concern at the state’s funding guidelines because they seem to favor Northern California projects.”

Protests have poured in from Los Angeles city officials to the state Department of Housing and Community Development, which helped devise the funding formulas and is overseeing distribution of funds.

“We remain steadfast in our assertion that the current allocation . . . is not equitable,” Mercedes Marquez, general manager of the Los Angeles Housing Department, wrote in a Feb. 4 letter. She believes Southern California should get at least 55% of the infill housing money.

Most of the complaints have been rejected by state housing officials, who also are under political pressure from legislative leaders in other parts of the state not to give one region too much of the limited pie.

“Los Angeles needs even more than it got,” said Assembly Speaker-elect Karen Bass (D-Los Angeles). “But it is a challenge to convince colleagues in the Assembly of that.”

When Perata and other legislators drafted the housing bond measure, they did not address how the money would be divided, probably because of concerns that to do so would hamper the measure’s chances with voters.

They left it to state housing agency officials to devise a system for distributing the money. The funding formulas were drawn up after talking with housing advocates and politicians throughout California and are based loosely, but not entirely, on population, said Russ Schmunk, assistant deputy director of the agency. One consideration was to ensure that no single part of the state received significantly less than other areas, he said.

Southern California housing experts side with their elected officials. Los Angeles County is the homeless capital of the country, with 80,000 people lacking permanent housing on any given night, and has the largest gap in the state between wages and housing prices, according to Peter Dreier, professor of politics at Occidental College.

“The need is greater here,” Dreier said.

But advocates for affordable housing in Northern California said their area has its own housing crisis.

“There needs to be more funding in all parts of the state,” said Paul Peninger, policy director of the Non-Profit Housing Assn. of Northern California. He said the state should evaluate the funding formulas after the first rounds of funding to see if any portion of the state was shorted.

There clearly is not enough money to go around. For the $95 million in transit-oriented projects, for example, applications totaled $544 million , including $247 million from Southern California and $297 million from Northern California.

Perata and state housing officials say their guidelines for future awards are flexible enough to meet the needs in Southern California.

And he cautioned that constant battles over the funds could delay the badly needed projects they are meant to build.

“If these bond dollars are going to get caught in formula fights in Sacramento, then they will never be put to work,” Perata said. “We owe it to the voters to get this money out the door and projects completed.”

“Dollars,” he said, “should follow the demand, and priority should be given to projects that are ready to go.”

Perata demonstrated the many ways to determine funding by noting that 41% of the applications for the transit-oriented development came from Southern California but that the state still is planning to allocate it 45% of the funding.

“That appears fair,” he said. “Let’s move on to actually building the necessary affordable housing.”

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patrick.mcgreevy@latimes.com