As many as 500,000 Californians need decent apartments that don't require two paychecks or thievery to pay the rent. The federal government promises little in the way of new low-rent housing, but there is still hope. A blossoming housing partnership between private investors and nonprofit developers holds the promise of 4,000 affordable apartments.
A national, nonprofit housing group--the Local Initiatives Support Corp.--plans to raise at least $125 million in five years to build housing in poor communities including Los Angeles. LISC--with the help of Mayor Tom Bradley--is capitalizing on scarce federal tax credits and a steady track record to attract big investors.
The Federal Home Loan Mortgage Corp. has pledged $10 million this year. Freddie Mac, as it is often referred to, is chartered by Congress to help finance housing primarily by buying residential mortgages. By investing in LISC, the agency can help that segment of the market which is most difficult to help--the very poor.
The investment is a challenge grant. To fully leverage that money, LISC must raise an additional $20 million this year from California firms. Great Western Financial Corp. and Security Pacific National Bank have each committed $2 million a year for each of the next five years. City National Bank has committed $1 million for each target year. Additional million-dollar investors for 1990 include: the Atlantic Richfield Corp., Avery International, Home Savings of America and Kaufman & Broad Home Corp. That honor roll should grow longer.
The investment is not charity. On past projects, the combination of federal and state tax credits has paid off with as high as a 15% return on investment--a rate of return that would please almost any stockholder.
Skeptical business leaders, who have seen other housing projects fail, should be reassured by the group's solid track record. LISC makes sure the housing gets built by funneling dollars and expertise to local groups. The community groups make sure the housing works by screening tenants, imposing rules on residents and providing social services.
LISC isn't stingy with advice. The group helped to assemble the financial package for the Nehemiah West Housing Corp. to build 316 townhouses for moderate- and low-income families. The mayor and the City Council gave that project and homeownership a boost by approving the sale of the city-owned land at a below-market price.
More of these efforts are needed. Only 4,000 apartments are planned, while nearly a half-million poor families need housing.