By Michael Woo, Local Initiatives Support Corporation. Woo is the new Director of Los Angeles Programs for the Local Initiatives Support Corporation (LISC). A trained urban planner, Woo served as a member of the L.A. City Council for eight years and was the runner-up in the last, hotly contested L.A. mayoral election. He lives in the Silver Lake area of L.A.
“Although L.A.’s problems are immense, the situation is not hopeless.”
This blunt question from a long-time housing activist left me at a loss for a simple answer. For almost a week, the furor over ineffective inspection of restaurants had been the talk of the town.
Yet the activist's question made me wonder why the public—righteously outraged over restaurant conditions—was not roused by the daily living conditions of the waitresses, busboys, fry cooks, dishwashers, and parking lot attendants who work at the very same restaurants.
The urban realities of L.A. are so complex, and so well disguised, that one must approach them like a kaleidoscope which requires twisting and turning to get the image into focus.
Beneath the patina of affluence—from Downtown high-rises to the new Getty Center on the Westside—is the reality of unmet community needs which are especially pressing in low-income neighborhoods.
Two out of every five tenant households in the City of Los Angeles pay more than 50% of their income for rent—which frequently leaves a family unable to pay for food, medical care, or childcare.
About 30% of all rental units in the City are overcrowded, with families doubling-or tripling-up lo pay the rent.
The needs of the "working poor"—employed people whose pay does not cover their living expenses—are especially acute in Los Angeles. Half of all L. A. County households receiving food bank donations have at least one person holding a job. According to a recent national survey, 62% of food bank recipients in L.A.—compared to 35% nationally—say that they have had to choose between paying for housing and paying for food.
Although L.A.'s problems are immense, the situation is not hopeless. L.A. is home to more than 50 community based nonprofit development organizations or "community development corporations" (CDCs).
Designed as a cross between an investment bank and a foundation, LISC is a financial intermediary which mises funds from banks and other corporations and foundations (90 % of LISC funds are raised from private nongovernmental sources) and then distributes the money to local CDCs for affordable housing, community facilities such as childcare and cultural centers, and economic development.
If you saw the news coverage last December about President Clinton's visit to the South Bronx, where the President hailed the success of two decades of intensive community development efforts, you saw the long-term results of USC's support of CDCs.
To serve the needs of CDCs, USC offers:
Below-market-rate loans in amounts up to $500,000 for predevelopment, site acquisition, gap financing, or construction.
Grants in amounts up to $50,000 for predevelopment expenses such as options, appraisals, and environmental assessments.
Revolving lines or credit up to $250,000 for predevelopment expenses and working capital.
Asset management and property management training for CDCs.
Equity investments in CDC-developed projects.
There are dozens of CDCs at work in the Los Angeles area, some of them well established, such as the Watts Labor Community Action Committee or the Venice Community Housing Corporation. Other CDCs, such as the East Los Angeles Community Corporation and the West Valley Community Development Corporation, are developing track records in their neighborhoods.
While the range of CDC neighborhoods is diverse, these and other CDCs share grassroots, hands-on orientation driven by residents who know the needs of their own neighborhoods. From the South Bronx to South Central L.A. the national "CDC movement" helps people help themselves by giving low-income neighborhoods powerful tools for community change.
The first generation of CDCs benefited from the confluence of political, philanthropic, and corporate leadership looking for ways to collaborate for community change.
Responding to the urban crisis of the 1960s, corporations and foundations provided seed money and ongoing financial support for their CDCs. Government support in form of housing subsidies and tax credits were more readily available. Developer fees from completed projects—success in bricks and mortar—produced a steady revenue stream for CDCs which sustained their daily operations.
In the 1990s, however, governments at all levels have tended to assign a lower priority to housing and community development programs. And the banking industry, historically the most generous source of grant and loan support for LISC and the CDCs, is being shaken to its roots by pressure to consolidate into larger super-regional banks without their predecessors' long-term accountability to local communities.
Consequently, LISC and the CDC movement must adapt to changing circumstances. As a vital link between funders and the grassroots, the LISC program in L.A. will promote innovative CDC programming and tangible results at the neighborhood level with the following initiatives:
1. Later this month, LISC will launch the Neighborhood Turnaround Initiative, a $3.9 million grant program providing four years of support to L.A. area CDCs which will be selected on a competitive basis. To maximize the prospects for short-term tangible neighborhood impact, CDCs will be invited to submit proposals sharply focused on a small and specific geographic area. While the turnaround program will emphasize housing production, both rental and owner-occupied, it will also offer incentives for CDCs to diversify by incorporating new directions such as retail development, job training, childcare, and health care.
2. Opportunities in the health care field are addressed by the Health Sector Initiative (HSI), a LISC program unique to Los Angeles. With major funding from HMOs and other healthcare organizations, LISC is funding four local CDCs for training of grass-root-preventative care educators, direct provision of clinic services to underserved immigrant groups, and an innovative "tele-medicine" project using a fiber optic system to connect public housing tenants and ophthalmologists al Drew Medical School.
3. Allstate has announced a $10 million loan to LISC, of which $2 million is earmarked for Los Angeles. In addition to the low interest rate—LISC will charge CDCs interest at only 4.5%—the 15-year payment period affords LISC an unusual degree of flexibility which it may offer to CDCs.
Beyond its role as a banker and financial advisor to CDCs, LISC must also provide leadership in the public policy arena.
At the State level, new policies of the State Treasurer’s office and the Tax Credit Allocation Committee have drastically reduced opportunities for nonprofit housing developers to receive the lax credits necessary to finance their projects. LISC will work with CDCs to propose new tax credit allocation policies for the new Treasurer due to be elected in November. In the Legislature, LISC will develop allies to explore new sources of support for community development, including a proposed Neighborhood Assistance Tax Credit.
At L.A. City Hall, the Mayor and members of City Council have proclaimed their commitment to neighborhoods, and yet most sources of community development funding from the CRA, CDD, and the Housing Department are either unchanged or shrinking. The only new program—the Targeted Neighborhood Initiative (TNI) was funded through a diversion of $14 million in existing housing funds from the Department of Housing.
Compared to other major cities, Los Angeles does not measure up in its commitment to the housing needs of its people. The City of New York spends $500 million (11 % of the total City budget) on housing programs; the City of Chicago spends $180 million (6% of its budget) on housing, the City of San Jose spends $90 million (7% of its budget) on housing.
By contrast, Los Angeles spends only $75 million (2.5% of its budget) on housing.
Even if budgets are lean, entrepreneurial city governments need not surrender in the face of its neighborhoods' problems. For example, faced with housing problems comparable to ours, San Francisco Mayor Willie Brown initiated and led a successful campaign in 1996 to win citywide voter support for a $100 million affordable housing bond issue, thus producing significant new resources for the use of nonprofit housing groups.
Even with new tools such as bond revenues and tax credits, local and state governments cannot solve the community development puzzle by themselves. But they can provide the leadership to regenerate a 21st century model of the alliance of public and private interests which transformed the South Bronx from an urban wasteland to an urban oasis.
If it worked in the South Bronx, why not South-Central L.A.?
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