A Housing Plan That Makes Sense
City housing officials, confronted by a daunting shortage of affordable apartments, want to use federal funds, which were originally earmarked after the riots for economic development, to help developers purchase, renovate and build thousands of units in low-income neighborhoods. The switch would allow developers to take advantage of the decline in the local real-estate market and pick up a few bargains. The additional housing would be a good use of federal dollars that have been just sitting around.
Los Angeles applied for the economic-development money after the riots. Washington responded more than a year ago, during the summer of 1992, with a federal loan fund targeted at the neighborhoods impacted by the civil disturbances. But, sadly, and in spite of deep and depressing needs in those areas, the city has not distributed much of that money.
The City Council and Washington have to approve the shift of those funds to housing. That should be an easy call; other cities, including Kansas City, Rochester and Syracuse, have successfully used the same federal program to create more housing. It’s certainly worth a try here.
Washington requires repayment. In Los Angeles, housing officials want to service that debt with funds generated by the city’s existing low-income housing renovation and homeownership programs. Income from the new projects would also be used to repay the feds. In the meantime, local developers could take advantage of a soft real-estate market.
Housing officials propose lending $40 million to nonprofit and for-profit developers who would buy, then renovate dilapidated buildings for poor tenants in such neighborhoods as Pico-Union where apartments predominate. The developers would also build some new houses for first-time home-buyers in poor neighborhoods south and east of Downtown where homeownership is more common. Each apartment, every new and affordable house, is sorely needed.
Nonprofit developers can expect the largest share of the funds and the best terms. That’s appropriate, because they tend to maximize every dollar and encourage a greater stake in poor neighborhoods. For-profit developers also belong in the mix; since the luxury market is no longer booming, many would put their expertise to good use building small apartment buildings and houses in poor areas.
The new-housing construction and rehabilitation is expected to generated nearly 2,400 jobs next year. Those jobs are another good reason for the council and the feds to say yes.
The Los Angeles City Council is expected to consider the redirection of the federal funds after Thanksgiving. They should quickly approve this local investment of federal funds.
