Council Approves Tax-Exempt Bonds for Rental Housing
Despite warnings that it would be subsidizing high-income renters, the Los Angeles City Council on Tuesday approved a plan to issue tax-exempt bonds to help finance construction of four rental housing projects that will cost more than $100 million to build.
The projects--part of a cooperative venture between private developers and the city’s Community Redevelopment Agency--would add 845 apartments in Hollywood, Pacoima and the downtown area with the help of nearly $15 million in low-interest loans.
The largest single project--the Grand Promenade--calls for 372 units to be built at 3rd Street and Grand Avenue in the downtown area at a cost of $57.1 million. An additional 278 apartments are planned at Flower Street and Olympic Boulevard, in the Skyline apartments portion of the South Park community project. Smaller complexes are proposed in the 11000 block of Foothill Boulevard in Pacoima and the 11700 block of Lanewood Avenue in Hollywood.
The projects are designed to attract a “cross section” of low-, moderate- and higher-income residents to revitalize those neighborhoods. But some council members criticized the development plan as overly charitable to developers and to the upper-income tenants who are expected to occupy most of the units.
Despite the criticism, the vote on the bond issue was 13 to 1.
Councilman Ernani Bernardi, who cast the sole negative vote, noted that a two-bedroom unit at the Grand Promenade would rent monthly for $1,700 and that, under provisions of the plan, low-income tenants in the Hollywood complex could be eased out after a 10-year period.
“This is really foisting a fraud on the people of the community.” Bernardi said.
Councilwoman Joan Milke Flores, who later said her vote in favor of the project had been made in error, also criticized the CRA for “asking citizens of Los Angeles to subsidize apartments for upper-middle-class people to occupy them.”
Reduced Rates Cited
But John Maguire, the CRA’s deputy administrator for housing and public affairs, noted that low-income residents would pay reduced rents. For example, he said, the $1,700-a-month two-bedroom apartment at Grand Promenade cited by Bernardi would cost just $625 to those qualifying as low-income residents. He added that any low-income residents who are displaced would be provided relocation assistance.
Under the city’s housing bond program, builders can receive low-interest loans to erect apartments if they set aside a portion of the units for low-and moderate-income families. The downtown projects--located in economically depressed “target” areas--would set aside 15% of their apartments for low-income tenants while others would earmark 20% of the units.
The reduced rental rates under the low-income program would be available to individuals or families whose income is less than 80% of the median income for the city.
The city raises the money to lend through the sale of tax-exempt bonds to the public. The council action, if approved by Mayor Tom Bradley, will lead to the issuing of those bonds.
Praise From Cunningham
Councilman David Cunningham, who chairs the council’s Grants, Housing and Community Development Committee, praised the developers and the CRA and said their plan will result in much-needed housing for Los Angeles, especially in the downtown area.
Councilman Marvin Braude also said the proposal leaves the city “in good shape” after weighing the developments’ public benefits against their public costs.
Developers of the Grand Promenade project include general partners Jona Goldrich, Sol Kest, Warren Breslow and Shappell Housing Inc. Through individual trusts, Goldrich, Kest and Breslow are also partners in the Lanewood development.
The Skyline apartment complex is being built by Forest City Southpark Corp. The general partner in the Pacoima project is Lincoln Properties Co.
In pushing it through the council, supporters of the plan had sought special consideration because the tax-exempt status of such housing bonds may be altered after Dec. 31 by federal tax-code changes now being considered in Congress.
