Hahn Plans Trust Fund for Affordable Housing

Mayor James K. Hahn is scheduled to release a plan today for creating a $100-million trust fund to build affordable housing in Los Angeles, fulfilling a years-long dream of local housing advocates.

If approved by the City Council, Hahn’s plan would increase the city’s relatively paltry investment in housing to the largest of any city in the nation by fiscal year 2003-04, advocates said.

“It’s a huge commitment,” Hahn said in an interview Wednesday. “You’re going to see this [administration] putting housing much higher on the list of priorities in the city than it’s been in the past.”

The fund will grow within two years to the $100-million level recommended by housing advocates, without imposing new fees or taxes on either developers or residents, the Hahn administration said.

“We’re doing it in a way that I think is very doable and very realistic given the city’s financial picture,” Hahn said.

The proposal has already won the support of many housing advocates, who have pushed the concept of an affordable-housing trust fund over a long and sometimes bumpy road.

“This is victory with a capital V,” said Jan Breidenbach, of Housing LA, the group leading the campaign. “This is what Housing LA has been working for for the last 3 1/2 years.”

Alvivon Hurd, a tenant leader with the Assn. of Community Organizations for Reform Now, or ACORN, called the mayor’s proposal a good start.

“We are glad that the city has begun to take seriously their obligation to address the housing crisis,” Hurd said.

The housing fund would create a permanent source of money to build affordable housing and maintain the current stock of reasonably priced units. According to housing experts, the city needs to build nearly 4,000 units a year to meet increasing demand.

The trust fund is designed to stabilize funding that has fluctuated badly and eliminate the need for advocates to lobby each year for more money.

The mayor’s proposal suggests a graduated approach to reaching $100 million and taps a variety of sources. Currently the fund stands at $10 million. By the 2002-03 budget, the fund is supposed to increase to $52.9 million, and to $100 million the year after that.

Hahn’s office said that it was still finalizing its plan Wednesday and that some of the specifics could change slightly by its release today.

The money would come from many sources, including the hotel tax, Community Redevelopment Agency funds, federal community development block grants and an anticipated increase in collection of city business taxes.

Also augmenting the fund would be an increased share of vehicle license fees.

In the first year, $5 million in federal block grants a year would be redirected to housing from other city departments that do not spend the cash promptly. In future years, the housing trust would receive a guaranteed $5 million from the federal source.

The Hahn plan also incorporates a proposal by Councilman Mark Ridley-Thomas to use money from the sale of city properties to build housing. Currently, money from such sales is spread among City Council offices.

The share of property taxes in redevelopment areas that goes to housing would be increased from 20% to 25%.

The housing trust fund would also benefit beginning in the next fiscal year, when it’s scheduled to receive about $10 million a year from the city’s portion of a $206-billion settlement paid by the tobacco industry to California and 45 other states.

The use of tobacco funds for non-health related issues is justified, “because of the public health impact of lack of affordable housing,” said Deputy Mayor Carmel Sella, who worked on the proposal.

‘Linkage Fees’ Not Included in Plan

Absent from the proposal are sources such as “linkage fees,” which would have increased costs for housing developers. Hahn has long held that linkage fees, levied on commercial developers for any additional housing demands created by construction, would only be considered as a last resort.

“I’ve found another way,” Hahn said. “We don’t need to go there. . . . It’s important to me not to saddle businesses with new fees and new taxes. I want to revive Los Angeles’ economy and keep it moving in the right direction.”

Business interests praised Hahn’s avoidance of such charges.

The mayor “recognizes that the sources of an affordable housing fund have to be ones that encourage growth and not chill it,” said Carol E. Schatz, president of the Central City Assn., a business advocacy group. “The whole idea is to produce more housing.”

Although the City Council still must vote on the proposal, members strongly supported the concept last year and advocates say the support is there.

Ridley-Thomas called the mayor’s proposal “prudent and progressive.”

“I think the council has a receptive disposition to this proposal, and now that we have specifics with which to deal, it just makes it easier,” he said.

Councilman Eric Garcetti also applauded the mayor, but said some members may search for supplementary sources of funding.

Some members “really wanted to make sure we looked under every single rock,” Garcetti said. “Some of them may not be convinced that we have.”

The idea of charging developers fees to expand the housing fund has not been ruled out and may be revisited in the future, Garcetti added.

The first-term councilman said the key now is to “keep a watchful eye on city departments to make sure they can now put up the units that are so badly needed.”

The mayor’s proposal represents a major step forward for housing advocates who pushed the issue to center stage during the mayoral and council races.

The fund’s prospects seemed to dim after the attacks of Sept. 11 and subsequent projections of a city budget deficit of $156 million.

“It was a real concern of ours,” Hahn said. “I was going to be realistic about it. If we could not close that budget gap, initiating a new program like this would have been very difficult.”

But a hiring freeze and other measures have helped close the gap, Hahn said.

Fund Would Mirror Those in Other Cities

With the proposal, the mayor makes good on a campaign promise and has won the support of many housing advocates.

“He said he would have $100 million before the end of his administration and he will have it before the last year of his first term,” Breidenbach said.

The beefed-up fund places Los Angeles in league with other cities that have set up affordable-housing trust funds, said Mary Brooks of the Center for Community Change, a Washington, D.C.-based nonprofit.

“There’s no question that it will be able to produce a significant number of new units and definitely help in terms of improving the condition of existing housing stock,” Brooks said.

There are about 170 city, county and state housing trust funds in cities nationwide, including Sacramento, Palo Alto, Seattle, Chicago and Boston.

Next week, the mayor is expected to meet with U.S. Secretary of Housing and Urban Development Mel Martinez to discuss the city’s housing needs.

The city’s commitment to the trust fund will increase its ability to lobby for what Hahn called its fair share of federal and state housing funds.

“We’ve got our commitment on the table,” Hahn said. “We’ve got our ante in this game.”