More Low-Income Housing Is the Easy Way Out

“I stood in line down at the county hall. I heard a man say, ‘We gonna build some new apartments for y’all.’ And everybody wants to know why I sing the blues.”

-- B.B. King

Councilman Mark Ridley-Thomas didn’t like the question.

“Go to hell, Ron.”

Excuse me, I said. Are you talking to me?

“Yeah, I’m talking to you. I said, go to hell! Now, put that in your damn newspaper.”

Ridley-Thomas apparently was upset because I questioned the correctness of his actions. You see, First Interstate Bank, with Ridley-Thomas’ support, is planning to build some low-income housing on a piece of property in South Los Angeles on Vermont Avenue and 81st Street.

Rep. Maxine Waters, who lives a few blocks away, and other residents have voiced objections to the plan. Waters, a longtime supporter of low-income housing, says she’d like to see the area developed into a commercial strip that would create jobs and commerce. I asked Ridley-Thomas if that idea didn’t have some merit.

That’s when the councilman suggested that I go to hell. Ridley-Thomas, despite often being a prickly, thin-skinned politician, is a pretty smart fellow, so I followed his advice and headed to City Hall.

I went there looking for $60 million--the amount in economic development loans that Waters got President Clinton to set aside for Los Angeles after the riots. The money was supposed to be used to develop commercial strips and businesses in the affected areas.

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I’ve asked myself as I’ve dined or shopped in other parts of town, why don’t we have some of this in South Los Angeles? How come Leimert Village couldn’t be a mini-Westwood Village, or Crenshaw Boulevard look more like Ventura Boulevard? Every time there’s talk about development for black folks, it’s low-income housing.

I raised this issue with my economics guru, who knows all the ins and outs of affordable housing and financing. After three hours, my head was spinning, but I did learn this:

Mechanisms have been set in place through a combination of things called tax credits, hard money, residual receipts, soft money and banking consortiums to make the funding of low-income housing more feasible and attractive to large lending institutions.

These institutions didn’t warm to the idea at first, until folks like my friend showed them how they could make “very, very safe money.” First Interstate Bank will probably make about a 20% return on investment on its Vermont project, my guru predicts. But what I really learned is that banks are required by federal law to use a portion of their portfolio for community development. And the way they meet their community development requirements is to build low-income housing. Recently, they’ve started flocking to it. Bank of America has hired four people just to work on this throughout the state.

That’s why we keep getting so much housing in our neighborhoods. The problem when it comes to commercial development, my friend explained, is that while something exists to make housing work, there are no corresponding incentives for commercial investments. I mentioned that $60 million to him. Now that, he said, is another story. “Yeah, with that money, you could do some economic development. They could do it with that money.”

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That’s why I was looking for that $60 million. I went to see Deputy Mayor Rae James, the mayor’s economic development person, but she was out of town. Next, I ran down to the city administrative office to see exactly where that $60 million was at this point.

They sent me to the files. The people over at the Community Redevelopment Agency and the Community Development Department were supposed to put together separate proposals about how to spend the money. But after more than a year they couldn’t figure out what to do with $60 million. I guess there’s something about people of color and economic development that just doesn’t seem to go together.

So the city administrative office went to the City Council with a suggestion. Let’s move half of this money for economic development to another department. The money wasn’t originally designed to go to that department, they explained, but the deadline for submitting a program to the feds was less than a month away and since the city couldn’t up with a real economic development plan before then, “we will lose our allocation and have to apply through normal routes (which may be awkward later since we didn’t use the original $60 million given to us).”

The City Council agreed. So they moved $30 million to . . . housing.