L.A. politicians weigh plan to replenish affordable housing fund

Funding to help build affordable housing in Los Angeles has plunged sharply in recent years — a drop that city officials say has intensified the difficulties facing poor tenants.

Now politicians have a plan to replenish the housing fund. But it relies on a key source of money that Mayor Eric Garcetti has earmarked to balance the city budget and help erase a $242-million deficit. Tapping it could trigger cuts in other services.

Housing advocates and the low-income tenants they serve argue that more investment in affordable homes is sorely needed and worth the cost. Deborah Zelinsky, who spent decades on and off the streets as she struggled with addiction and mental illness, said the low-cost apartment she now rents in Pacoima had saved her life.

“And there’s a lot of people out there that still need saving,” Zelinsky said.

Six years ago, Los Angeles had $108 million to spend in its affordable housing trust fund. This year, that amount fell to about $26 million. The city housing department estimates that the difference in funding levels would subsidize more than 1,300 affordable units. The money helps offset costs so developers can offer cheaper rents.

“Anybody that does development is looking at this and saying, ‘There really isn’t enough money to support all of our ventures,’” said Tony Salazar, a principal of the real estate development company McCormack Baron Salazar.

At the peak of funding in 2008, the city helped fund roughly 1,200 affordable units annually, said Rushmore Cervantes, the city’s interim general manager of housing and community investment. If no new funding is added, that number could drop to roughly 250 in coming years, once the department finishes projects already in the pipeline, Cervantes said.

Affordable housing is so scarce in L.A. that waiting lists for new buildings are often quickly closed because they stretch so long, said Molly Rysman, Los Angeles director of the national Corporation for Supportive Housing. “There’s no point in putting people on a waiting list that’s 20 years long,” she said.

Several things have contributed to the drop: Federal funding was slashed. Redevelopment agencies that poured property tax money into affordable housing were dissolved.

City Council members Mitch O’Farrell and Gil Cedillo want the city to draw on some of the tax money that previously went to redevelopment agencies to help build more affordable housing. Other California cities and counties are already doing so, including San Francisco and Los Angeles County.

“We’re getting left in the dust,” O’Farrell said.

O’Farrell wants at least 25% of the tax money that went to redevelopment to flow into the city’s affordable housing trust fund each year. One of two proposals put forward by the housing department would do that. An alternative would slowly increase the share of the money going to the housing fund from 10% up to 35% over the course of three years, then continue at that higher rate.

City officials estimate that over the next three years, Los Angeles will get an average of $49 million in former redevelopment tax funds. If 25% of that money is allocated to the affordable housing fund, that would total $12.25 million each year, according to a housing department analysis. That $12.25 million could be “leveraged” to help developers obtain more than $36 million in other government or private funding, the department estimates.

The money would not solve L.A.’s problem. The city recently estimated that 82,000 additional affordable units will be needed by 2021. Even if 35% of the former redevelopment revenue were committed to affordable housing, fewer than 500 units could be produced annually, officials estimate.

Garcetti is consulting with council members on the issue, mayoral spokesman Jeff Millman said. But if the redevelopment funds are set aside for a specific purpose — such as housing — it “would create a hole in the budget,” City Administrative Officer Miguel Santana said.

O’Farrell argued that the economic benefits of investing in affordable housing would ultimately offset the costs.

“And I think we have a moral obligation,” he said.

emily.alpert@latimes.com