City Awarded $36 Million for Housing

As city officials scramble to preserve housing programs in a tough budget year, Sacramento has sent down a bit of good news: The city of Los Angeles has won more than $36 million in state Proposition 46 housing funds.

The state funds are expected to help build about 807 rental units and some single-family homes designed for low-income home buyers.

Mayor James K. Hahn said the city had made an especially strong effort to win funds “so that Los Angeles can continue to make investments that shelter working families, create jobs and improve neighborhoods, despite a tough budgetary year.”

Matthew O. Franklin, the director of the state’s Department of Housing and Community Development, said competition for the funds had been particularly tough in this cycle.

“Los Angeles continues to develop and submit very strong applications for funding to the state. That’s why they’ve done very well in this announcement,” Franklin said.

The projects address a range of needs: senior housing, housing with service for gay and lesbian seniors, and housing for large families. The projects that received funds in this cycle are located throughout the city.

In 2002, California voters approved Proposition 46, the $2.1-billion housing bond. The recent awards are funded by the bond, and thus are not affected by the state’s budget crisis, officials said.

During each round of funding, developers representing municipalities throughout the state compete for various types of housing-related funding. The Los Angeles region received a total award of $62.6 million, which will go to 24 different cities and is expected to build 1,767 units. The Inland Empire, consisting of San Bernardino and Riverside counties, received $13.9 million, which is expected to build or finance 444 units.

But the news of the state funds comes amid concerns that other housing funding may be in jeopardy.

If President Bush’s proposed budget is passed, the federal Section 8 program, a housing subsidy for low-income residents, will change significantly.

But city housing officials and federal officials view the potential effect in starkly different terms.

In Los Angeles, it would mean a reduction of 5,473 families from the program, which represents about a $50-million loss in funds, said Steve Renahan, director of Section 8 for the Housing Authority of the city of Los Angeles. He based his projection on an analysis conducted by the Center on Budget and Policy Priorities in Washington, D.C.

“This is a significant proposal,” Renahan said. “... The number of families receiving assistance has never been cut. And most years Congress appropriates more money to help additional families.”

Larry Bush, a spokesman for the U.S. Department of Housing and Urban Development, said the president’s proposed budget does not call for families to lose assistance.

“It does call for some reductions in the flexible voucher program, but those reductions are out of administrative costs, rather than support for families receiving assistance,” Bush said.

In addition, the federal government called for a change in the way the city uses some federal dollars that support housing. This year, about 10% less of the city’s Community Development Block Grant money can be used to provide social services that accompany housing.

Because of the shift, the city was forced to make cuts in services for the homeless, including a cut of nearly $300,000 in its contribution to Los Angeles Homeless Services Authority for its Homeless Emergency Shelter and Services.

At the City Council meeting Friday, before those cuts were approved, several speakers, including many who said they were homeless, addressed the damage a loss in services could cause.

Bob Erlenbusch, executive director of the Los Angeles Coalition to End Hunger and Homelessness, argued that the cuts contradicted a local plan to end homelessness in 10 years.

“What kind of message are we sending to the state and feds when we’re trying to leverage funds at the same time?” he said.

The city has already found ways to preserve certain crucial housing-related programs and hopes to do the same with services for the homeless.

“We’re scrambling to find service dollars from other sources than we would traditionally look to,” said Sarah Dusseault, the mayor’s deputy for economic development. “We’re not going to let those beds be lost.”

Budget woes also put the city’s Affordable Housing Trust Fund money in jeopardy.

On Friday, some council members, including Bernard C. Parks and Greig Smith, argued that the city could not afford to commit a total of $9.6 million to the trust fund, given the current fiscal crisis. They argued for reducing the contribution to $4 million.

Several other council members, including Eric Garcetti and Martin Ludlow, made impassioned pleas to preserve money in the fund and to end what Ludlow called a raid of trust fund money.

The council voted 7 to 4 against reducing the contribution. “They have kept faith with their own pledge,” said Jan Breidenbach of the Southern California Assn. of Non-Profit Housing.

Without the contributions from the housing trust fund, local developers would be less competitive in the bid for state funds, Garcetti said. Every trust fund dollar the city grants leverages between $5 and $6 from other sources. “The money is begetting more money,” as evidenced by the Proposition 46 awards, he said.