November 30, 1992 - From the November, 1992 issue

Effects of Budget Cuts on CRA’s Housing Programs

By Carlyle W. Hall, Jr. Public interest attorney and housing advocate Carlyle W. Hall, Jr. is a commissioner on the board of the Community Redevelopment Agency of the City of Los Angeles and chairs the CRA’s Housing Committee, which reviews and approves all agency housing projects and related programs.

Despite the urgent need to increase the production of affordable housing in the city of Los Angeles, recent federal actions and shortfalls in both the city and state budgets pose a serious threat to the ability of the Community Redevelopment Agency to maintain its annual production of 1,500 to 2,000 units.

At issue is the depletion of state loan funds and the President’s veto of an extension of low-income tax credits, which account for about two-thirds of the funding assembled by the CRA to fund its housing projects. At a time when the housing shortage grows by 14,000 units a year, the results of CRA’s housing program would be reduced to less than 1,000 units under this scenario.

Although low-income tax credits are likely to return under the Clinton administration, getting a general obligation bond on the next state ballot to provide new state loan funds for housing construction is also necessary for maintaining the CRA’s current level of housing production.

Who Will Pay for Housing?

Following the passage of Propositions 77 and 84 in 1988, statewide redevelopment funds have been used to leverage more than $600 million in state bond funds and federal moneys. But the depletion of the state bond funds and inadequate federal funding leaves redevelopment as the major source of funding for affordable housing.

Making matters worse, redevelopment funds in Los Angeles are now being drained to ease the city’s budget crisis and bail out schools.

Following on the heels of a $25 million transfer of redevelopment funds to ease the city’s current fiscal crisis, a state shortfall will require the CRA to trim an additional $18 million from its proposed 1993 budget of $278 million.

Under a new state law adopted by California legislators to bring the State’s $10.7 billion budget deficit under control earlier this year, redevelopment agencies were asked for a total of $205 million to pay for state funding of public schools. The formula requires the CRA and redevelopment agencies across the state to cut active work programs that generate revenue to build affordable housing and spark economic development.

However gingerly administrators approach this arduous task, communities with the greatest need will ultimately pay the price of reduced funding for child care, economic development, affordable housing and programs serving the poor.

CRA’s Housing Funds

Meanwhile, commercial redevelopment generates approximately $200 million a year for the production of affordable housing in the state. In Los Angeles alone, the city’s Community Redevelopment Agency has earmarked this year more than $55 million in new funds derived from commercial redevelopment, which, when supplemented with carryover funds from previous years, will provide for the production of some 1,500 to 2,000 affordable housing units.

Since property tax revenues generated by commercial redevelopment pay for housing and social-service programs, siphoning redevelopment funds to balance the state budget will divert a key source of public funds away from the communities in which they were generated Commercial projects — which among other efforts target the rehabilitation of several shopping centers in the riot-stricken areas of the city and fund a job retention program to attract and retain the entertainment industry in Hollywood — are paramount to economic survival in communities. If left to deteriorate, they would create an additional drain on already strained state resources.

Further reductions in redevelopment funds will seriously limit the ability of redevelopment agencies to meet the housing and social needs of communities and also undermine economic recovery where it is needed most.

Current Housing Strategies

Mayor Tom Bradley and the Los Angeles City Council have made the provision of affordable housing in this city a priority. The Housing Preservation and Production Department has been created to produce and rehabilitate additional housing and the Mayor has appointed an Affordable Housing Commission to find more solutions to the housing crisis and direct city housing policy.

Both the Mayor and the Los Angeles City Council have given the Community Redevelopment Agency a mandate to increase housing production throughout the city.

Advertisement

The result of this commitment is affordable housing that improves the neighborhood, improves the local economy, and contributes to the quality of life of those who live there.

CRA was directed by the Mayor and City Council to extend its housing production beyond redevelopment project areas in 1980, and has since sponsored the development of more than 24,000 units or new and rehabilitated housing.

The CRA assists both nonprofit and for-profit developers in building affordable housing for low- and moderate-income individuals and families. Nonprofit organizations, based in the community they serve, produce 70 percent or the housing developments assisted by the CRA.

Nonprofits Bridge the Gap

The role of the nonprofit housing developer in producing and operating CRA-assisted affordable housing for low-income groups is expanding. Since operational difficulties encountered by nonprofit developers could severely undermine the volume of housing developed in the city, the CRA is designing programs and policies aimed at increasing the amount of housing produced by nonprofits.

The CRA established a $1.5 million operating support grant program in August to help nonprofits offset planning and administrative costs. Aimed at increasing the organizational and production capacity of nonprofits, the program will provide nonprofit organizations grants of up to $50,000 a year. Subject to satisfactory performance of specific objectives and demonstrated need, the grants can be renewed annually for three years.

A similar program to foster and support new nonprofit organizations is being administered locally by the Los Angeles Collaborative for Community Development, which is a joint effort among local and national foundations and corporations, the United Way of Los Angeles, and the City of Los Angeles.

The CRA program complements the Collaborative’s efforts by focusing its support to established nonprofits with a production record in developing CRA-assisted housing developments.

Reducing Housing Costs

At a time when the need for affordable housing in Los Angeles is escalating, CRA must also consider innovative ways to stretch public dollars to increase the number of housing units built that are reasonably priced yet still maintain quality design. Ways to reduce cost and ultimately streamline the construction of publicly funded affordable housing will be the subject of a study being commissioned by the Community Redevelopment Agency.

The study will be conducted by a team of consultants, which will examine the costs of implementing CRA design and development standards and other city requirements as well as the cost incurred by multiple layers of public financing currently being used to fund the development of affordable housing.

The CRA study will supplement a statewide analysis undertaken by the Local Initiatives Support Corporation (LISC). The LISC study will compare the costs of publicly assisted and market-rate housing in several cities and rural areas of the state.

The CRA study will compare current housing developments assisted by the agency with privately developed housing and agency-assisted projects completed within the last four to five years.

The CRA study contributes to the continuing effort to improve the cost efficiency of producing affordable housing in Los Angeles. Although the redevelopment agency and other city departments are now committing increased percentages of their budgets to housing, it is clear that the magnitude of unmet housing needs is beyond the ability of redevelopment agencies to solve without the assistance of state and federal funding.

<

Advertisement

© 2022 The Planning Report | David Abel, Publisher, ABL, Inc.