Nonprofit Housing: A Rich Idea

The term “affordable housing” is becoming an oxymoron in Southern California. For low- and moderate-income families, more nonprofit housing development would help. Mayor Tom Bradley and the City Council support the concept, but a shortage of local investment capital and a glut of paper work bogs down the process of building it.

Financing is a big hurdle. Cities that boast successful affordable-housing programs, such as Boston and San Francisco, rely on public funds generated by a fee on commercial development, private investment attracted by federal tax credits and strong lobbying for their share of scarce federal and state housing subsidies. The L.A. City Council is considering a similar fee linking commercial construction with residential development. The rationale is simple. The employees who work in those new office buildings will have to live somewhere. Such a developer’s fee, if it had been mandated last year at the reasonable rate of $5 per square foot, would have raised more than $60 million for affordable housing by now.

Low-income housing tax credits are one of the few remaining tax shelters, and there are plenty of wealthy people in this region who might find them attractive. Once the financing is in place, land is often the next major expense. But the mayor and council can donate city-owned land to bring down the cost of the housing, or at least help nonprofit developers quickly acquire land and break ground without costly delays. Speeding up the bureaucracy can also shave thousands of dollars off costs.