L.A. Housing Bond in Spirit of an Old Pledge
In July 1949, President Truman signed a landmark bill, the Housing Act, declaring it would provide “decent homes in wholesome surroundings for low-income families now living in the squalor of the slums.”
Ever since, governments at all levels have tried to fulfill that promise with an array of programs -- some successful, some not. The latest iteration of Truman’s pledge came last week when the Los Angeles City Council voted unanimously to put a $1-billion housing bond measure on the Nov. 7 ballot.
The bond measure is believed to be the largest of its kind ever pursued by a municipality. If approved by two-thirds of city voters, its proponents say it would provide enough in grants and loans to developers to build some 20,000 affordable units across Los Angeles and create a home-loan program for workers priced out of the city’s housing market.
In addition to its size, the bond represents a shift in approach. In the past, affordable housing was largely the domain of the federal government and mainly restricted to the poorest residents. But as federal dollars have grown more scarce, the burden has fallen upon cities and counties, which are increasingly aiming to help the middle class as well.
The strategy also has changed. The federal government initially favored big public housing projects that, in effect, isolated the poorest residents from their better-heeled neighbors. Now, more projects consist of smaller complexes sprinkled around the city, closer to people’s jobs and sometimes mixed in with market-rate apartments or condominiums. “I think there are two lessons from the past 50 years,” said council President Eric Garcetti, who has been pushing for a housing bond measure for more than a year. “When government overstates its role with housing, it can cause as many problems as it solves. But when government abdicates its role, it causes things to get much worse than they should be.”
The bond measure, in essence, would be an expansion of the city’s affordable housing trust fund. The bulk of the money would be used to help developers, mostly nonprofit operators, bridge the gap between what it costs to build a project and what rents they can get in the low-income market.
The developers would apply for money from the city and would be required to rent only to people who can prove their incomes are low, based on federal guidelines. The program calls for a variety of projects to be built for people at various income levels; beneficiaries would have to meet strict income criteria to qualify.
The measure also aims to help potential home buyers by providing mortgage assistance to those who meet the low- or middle-income criteria.
In many cases, that would be a second loan to help bridge the gap between a market-rate loan and the price of a home. For example, a middle-class worker who qualifies for a $250,000 mortgage but needs a $300,000 home loan could apply for assistance.
Bond measure proponents point to a grim picture of housing needs in Los Angeles, noting that the median monthly rent for a two-bedroom apartment is $1,426 -- double what it was seven years ago. The median home price in the county has risen to more than $500,000.
The median household income for Los Angeles residents was $40,876 according to the 2000 Census, making rents hard to meet and homeownership nearly impossible for many.
“Look, we have an imbalance between what people make and what these things go for,” said Lisa Payne, policy director of the Southern California Assn. of Non-Profit Housing. “We can either raise wages to $25 or $30 an hour, or we have to do something else.”
In the past, it was largely the federal government that ponied up the money in the form of tax credits to developers, low-interest loans and payments to low-income tenants to help with rent.
But that has changed. Since 1976, federal dollars for housing assistance programs have fallen by 59%, according to the National Low Income Housing Coalition.
“There is no other means available other than a bond,” said Henry Cisneros, the former secretary of the Department of Housing and Urban Development, who is a co-chair of the bond campaign. “No city has that kind of revenue in their general fund.”
In 2001, Los Angeles created an affordable housing trust fund to provide loans and grants to developers. Facing difficulty finding money for the fund, Garcetti and Councilman Ed Reyes pushed for a law that would have required all developers to set aside some of their projects for affordable housing.
It went nowhere. So now they’ve turned to the bond measure.
The measure has received wide support from the business community and labor unions. Mayor Antonio Villaraigosa has promised to campaign hard for it.
Still, it could be a tough sell. It would increase annual property taxes about $14 for every $100,000 of the assessed value of a home. The measure will appear on the same ballot as several state proposals that are also asking voters for tax hikes. And some voters are philosophically opposed to raising their own taxes to pay for someone else’s housing or don’t believe government should be in the housing business in the first place.
Many observers believe that ultimately the bond will be a test of how much the city is ready to embrace the notion of Truman’s 1949 act -- to provide “decent homes in wholesome surroundings” -- and to spread housing for all income levels to all quarters of Los Angeles.
“We have to have housing opportunities everywhere in the city,” said Reyes. “For me, it’s an issue of whether we can overcome our stereotypes and generalizations.”