NEWS ANALYSIS : L.A. Awakening to Low-Cost Housing Crisis

City Councilman Hal Bernson was puzzling one recent day over a proposal to charge big commercial developers a fee that would be used to construct low-income housing.

Bernson could not understand why a program was created to build apartments for the poor, when so many middle-class people faced housing problems too. Disturbed, he promised to “look into the idea” of who should benefit from such a program.

Confusion among elected officials over what appear to them to be odd, newfangled ideas for addressing the city’s housing crisis permeates City Hall these days.

Charging “extraction” fees to developers is actually a proven financing method that, since the early 1980s, has paid for thousands of low-cost rental units in Boston, San Francisco, Washington and other big cities.

But in Los Angeles, elected officials concede, they are just beginning to tinker with these and other strategies for resolving the city’s housing affordability crisis.

Because it lacks a formal housing policy, Los Angeles has only in recent weeks created a “public-private partnership” of housing experts who will draw in public and private funds to build low-cost housing without the constraints of government paper work. Such groups have racked up dramatic successes for many years in New York and elsewhere.

Dade County, Fla., has raised more than $50 million for low-income housing through real estate transfer fees since the mid-1980s, and similar programs exist in New Jersey and Maine. But without an agency assigned to investigate and promote these ideas, Los Angeles officials are only now beginning to discuss similar fees.

This week Mayor Tom Bradley announced a plan that could resolve the persistent lack of direction that has left the city so far behind other urban areas. He proposed the creation of a housing commission and a new Housing Department that would take on increasingly complex duties that the City Council has been unable to perform.

Although the extent of the power to be granted to the new commission has yet to be worked out, most officials say they expect it to act much like the Planning Commission, ironing out the nitty-gritty details of new programs before bringing recommendations to the City Council.

Officials said it is hoped that this will overcome the problem of 11 different departments bringing before the council complex programs that were difficult for elected officials to assess or reshape.

Sydney Irmas, chairman of Bradley’s blue-ribbon committee on affordable housing, which has urged creation of a housing commission since 1988, applauded the mayor’s proposal saying: “This is something we have to do. Right now, the housing effort is a black hole where ideas go in, but not a hell of a lot comes back out.”

Irmas said a “bureaucratic nightmare” has crippled the city’s affordable-housing efforts.

“The city has 11 agencies overseeing housing, and if you graded them they would get from an F to a C plus,” Irmas said. “All of these departments are capable of improving dramatically if they are pushed by this new agency proposed by the mayor.”

But the job of the new agency and the commission will be daunting.

According to city reports, 60% of Los Angeles is made up of renters, one-third of whom live in units that the federal government considers “unaffordable” because rent eats up more than 30% of the family income. City officials say 40,000 families live in garages, 35,000 are homeless, including thousands of children, and the poor generally pay more than 50% of their meager incomes for rent.

Moreover, in the next few years, federal rent restrictions will be lifted on 25,000 apartment units citywide, and officials fear a surge in homelessness as landlords raise rents, driving out the poor.

The proposed department--which must be approved by the council--would absorb the 120 employees and most duties of the Community Development Department’s housing division. City officials expect to add a general manager, plus a small staff for the appointed seven-member commission, but those changes are not expected to strain the city budget, said Michael Bodaken, Bradley’s recently appointed housing coordinator.

In interviews with housing experts and elected officials this week, a consensus emerged that, despite the potential that the move could create a new layer of bureaucracy, the mayor’s plan is long overdue.

“The council doesn’t have time for daily oversight,” said Councilwoman Joan Milke Flores, one of the few council members knowledgeable about affordable housing issues. “When it comes to housing, we have not been very open to listening, and have just told (city housing directors) to go ahead and do it, and don’t mess up.”

“We have money to use, and we have a crisis, and somehow it’s not connecting,” said Councilwoman Gloria Molina, an expert on affordable housing and chairwoman of the council’s Housing Committee. “It all goes back to poor management, and the mayor claims it can be turned around, and I honestly hope it can be.”

One group that she and other housing advocates believe will gain significant new clout under the new system is nonprofit developers. These small, community-based groups have begun building low-income housing in downtrodden Los Angeles neighborhoods.

In Chicago, Cleveland and many other cities, nonprofit developers have long been “an arm of city government” because of their unique ability to build inexpensive housing and maintain low rents indefinitely, said a housing expert.

“Nonprofits are really the key to answering many of these problems, and that hasn’t been recognized by Los Angeles,” said Anita Landecker, of Local Initiatives Support Corp., a Ford Foundation spinoff that finances nonprofit developers nationwide.

Only recently has the city’s Community Development Department, under pressure from Molina and housing advocates, supported the idea of assisting nonprofit developers.

Parker Anderson, director of the CDD, said the agency will soon ask the council to approve $5.5 million in loans to 11 nonprofit developers to pay for architectural design, site preparation and “gap financing” that makes up for shortfalls in loans from traditional lenders.

Anderson said the money, for which nonprofits applied last November, “is just one example of the very aggressive programming we have this year.”

But most city officials and housing experts interviewed this week said the nonprofit program--and the long delay since November in actually getting any loans out--is proof of the city’s inability to move quickly under its current structure.

“It’s a great idea, but it’s six years late, no developers have gotten a penny since it was announced in November, and some of our projects had to be abandoned,” said one nonprofit developer, who asked not to be named. “The CDD responds like a bureaucracy, not a business, and housing doesn’t get built that way.”