Los Angeles City Councilmember Mitch O’Farrell was elected to represent the 13th District in May 2013, after serving the area for more than a decade under then-Councilmember Eric Garcetti. In the following original piece for TPR, he describes efforts to remedy the pressing affordable housing issue facing the city. O’Farrell argues that the city must begin by establishing a permanent source of revenue for the Affordable Housing Trust Fund.
"The AHTF is a strategic investment and has supported the creation of 879 new units of affordable housing around mass transit in the last 10 years." —Mitch O'Farrell
We are addressing the affordable housing crisis on the Los Angeles City Council. Last year, I co-introduced two motions that outlined affordable housing objectives and called for a dedicated revenue stream to build permanent supportive housing for our homeless, as well as provide housing for veterans, seniors, and workers who are struggling in this post-recession economy. My motion calling for a dedicated revenue stream was approved unanimously in Housing Committee. It is expected that next month, this affordable housing initiative will be heard at a joint Housing and Economic Development Committee. There is a growing expectation that Los Angeles will have an ordinance in place, within the next 12 months, dedicating a permanent source of revenue to affordable housing.
As you may have heard, the LA metro region recently earned another dubious distinction. According to a Harvard study, we are the most unaffordable metro region in the United States. Furthermore, Los Angeles is the only “high cost” city in the country without a permanent source of revenue to fund the construction of new affordable housing. It is a stark reality that while income levels remained flat from 2000 to 2010, rents increased by over 30 percent. A majority of residents in Los Angeles are renters and over 60 percent of renter households are “cost burdened,” which means they pay more than 30 percent of their income for rent, diminishing their ability to afford the most basic needs, such as food.
This is not just a problem—it's a crisis that affects the quality of life for a majority of us and it is harmful to our economy. Lack of affordability discourages expanding companies from staying here long-term and others from relocating to this region. There's a reason only two Fortune 500 companies have headquarters in Los Angeles. The high cost of doing business is a factor, but so is our affordability rating.
We did not get into this situation overnight. The City's inability to house our homeless and provide adequate workforce housing has been compounded by severely decreased federal Housing and Urban Development (HUD) funding, state funding, and the dissolution of our Community Redevelopment Agencies (CRAs). Funding for the Affordable Housing Trust Fund (AHTF) has declined from its peak of approximately $100 million in 2010 to approximately $26 million this year. CRAs, funded by tax increment revenues, were required by the state to set aside incremental increases in local property taxes from real estate transactions to construct affordable housing. This was an important economic development tool because it enabled the city to reinvest locally generated incremental increases in property taxes into our local economy. Two years ago, with the dissolution of the CRAs, this money began going directly to the city's General Fund to plug our perpetual budget deficit.
My plan calls for setting aside at least 25 percent of those funds so we can annually replenish the AHTF. We will then begin to have the resources we need to preserve the affordable housing we have and build the housing we desperately need along our network of transit corridors. As we develop more livable streets and encourage multi-modal transit options, this in turn will provide a more environmentally sustainable way of life at our urban core. The AHTF has been decimated over the past several years and if we don't act now, it will cease to exist at all.
There is no doubt we need to manage the city's finances, balance our budget, and continue to climb out of the doldrums from the Great Recession. But as we begin considering multi-million dollar tax rebates to construct new hotels, negotiate multi-million dollar wage and pension benefits for city workers, and consider lowering or eliminating our gross receipts tax to foster business growth, permanently dedicating resources to address our acute housing and homeless crisis must be among our top priorities. Because of our deliberate approach to address this issue, we have the support of homeless advocates, tenant rights advocates, the business community, and the development community.
It must be emphasized that the city currently has the AHTF in place to create and preserve affordable housing units. The AHTF has become a known commodity to the affordable housing community and we know it works. I strongly believe that as a city, we need to make the tough and deliberate decisions to fund successful programs. Our budget must be reflective of our values. The AHTF is a strategic investment and has supported the creation of 879 new units of affordable housing around mass transit in the last 10 years. According to our own Housing and Community Investment Department, we leverage $4 dollars into the economy for every $1 of investment for affordable housing. That translates into thousands of good paying jobs, stabilizing communities and supporting Los Angeles as a growing economic region. It is also half as costly to house a homeless person than to have them live on the street, once medical and emergency costs are factored in. Additionally, it is much more cost effective to preserve existing affordable housing units than to construct new units—but we must aggressively do both, and the AHTF does.
The City is in a unique position to create new affordable housing now by managing our own tax credit allocation. Just this year, my Council colleagues approved approximately 400 AHTF-funded affordable housing units in key areas of the 13th District: Westlake, Historic Filipinotown, East Hollywood, and Beverly Junction. I am proud of the fact that the 13th District is attracting new affordable housing development. In addition, I am in contact with developers of projects who are ready to open their doors and lease units to members of our workforce, such as police, firefighters, and teachers. We are making progress on fixing this crisis, but need to do so much more.
We all know this won't be easy and that there will be differences in opinion along the way, but we must collaborate on a fair approach that will add to safe, vibrant neighborhoods. It's time to call upon our true spirit in the City of Angels and fulfill our responsibilities. The first step in addressing the affordable housing crisis is to provide a permanent source of revenue to the AHTF. This should not be the only action we take, but it can and should be done now. The health and well-being of our city depends on nothing less.