State And Local Funding Initiatives May Mitigate Dire Affordable Housing Crunch

The press has begun to point out with editorial support the existence of a state housing crisis and by focusing on the sharp rise in the home prices and the shortage of affordable housing units in our metropolitan areas. You've been speaking out about a housing crisis for years. Why the sudden media attention and what's the political significance of the currect debate?

I think the sudden notice is the fact that people like this newsletter and me and a few others have been saying it for so long that the drum beat is finally beginning to be heard and resonate. So in that sense, it's the result of a number of years of talking about it. Also, the crisis is abating and it's creeping up the income ladder little by little. It's hitting more of the middle class and the media pays a little bit more attention when it hits a larger proportion of the population.

Are you suggesting it takes middle class impact to get a housing bond on the state ballot- Prop 46? Does the bond measure fund new housing programs? How precisely is the bond money to be allocated?

Prop 46 is $2.1 billion and it will be the first initiative on the ballot for people to look at. The bond doesn't create any new programs, it just funds the ones that are already there-programs that have been successful and we know work fairly well. Almost half of it will go to the Multi-Family Housing Program (MHP). The other half will be separated into a number of categories including a couple of different homeownership programs, farm-worker housing, self-help housing, there's about six or seven different programs.

Is this bond measure just a Christmas tree with goodies to match and meet the pent up needs and demands of housing advocates in California? Will the bond support the strategic investment of housing funds for the next decade in California?

I actually think it's a little bit of both. I don't think it's just a Christmas tree, but it is enough money so that it is reaching out to programs that might have been ignored if, say, the bond had been half the price. But because there is enough money in it, we are able to look at programs that we haven't been able to put much money in the past few years. Except for the small portion of it that will go to cities that either have trust funds already or who are willing to start trust funds, there are no other new programs in the bond. So it is going to housing programs that have been around for a while and have significant funding needs. The state of California has not been putting any significant money into housing programs since the last time we had a round of housing bonds in the late 1980's.

Let's segue-way to LA's Mayor Hahn's $100 million housing trust fund, which he's been talking about for months now. What's the substance of this effort? How does this housing trust fund work?

Well the trust fund is being started this year. They put in about $42 million this year and plan to build it to the full $100 million by 2004. Right now, there is an advisory committee of about 30 people that is reviewing ideas and proposals and will make recommendations to the Mayor for the guidelines for the trust fund. Those recommendations will be ready by October.

I think the trust fund will adapt itself to the programs that are already out there, in order to leverage money and bring it into the city. And, in some cases, where there might not be an area to leverage, we'll use the money directly. I sit on that advisory committee. We will have those guidelines and we will build some housing.

Are we just moving money from one category to another and calling it a trust fund? What have we added, in terms of the value to the dollars, available for housing? And, there is so much pent up demand for housing, why is it that the market can't take care of this. Why do we need these programs?

The first question is we're moving money from the city's revenue stream into housing. The benefit for housing is that the revenue has been dedicated to housing, so you don't have to go in every year and say, "Well what are we going to do, housing or street repair?" These are always difficult decisions, but dedicating the existing revenues to housing indicates that the Mayor and the Council have agreed that housing is a priority.

To answer your second question as to why the market can't take care of the housing problem, I think it is because the greatest demand is at the lower level. The problem is that there is a gap between the cost of the development-the land, the building and bricks and materials, roofing and labor-and the potential revenue based on what people can afford to pay. If that gap didn't exist, the market would take care of it. We wouldn't need to do any of this; I could just go off and argue about schools.

How do you tell taxpayers who actually object to the densification of the neighborhoods and the congestion which, they believe, follows it? Rather than allow the marketplace to supply this new housing, how do you convince community members that their tax dollars ought to pay for the provision of this low cost housing in the way of subsidies? How do you justify that to the taxpayers?

Well, we're not only telling them that they're going to use their taxes in the way of subsidies. But, we're telling them that those subsidies will be in those very neighborhoods, because we're not necessarily proposing building new housing farther and farther away from the center core. We are saying that, in addition to spending money on this, we need to do it here. Density is actually something that will enhance our life. It's a tough sell, but if we don't succeed in making that sale, the whole region will suffer. We can't afford to keep going out. Those days are over.

Well, we've carried other interviews that suggest that density has to be accompanied by a holistic notion that the resulting community and neighborhood will be better after the densification. Is targeting money in a narrow way through bond funds the way to get the holistic answer that the neighborhoods need if you're going to be able to sell densification?

Actually, I don't think it's the absolute best way. If I were in charge, I would prefer to have a dedicated revenue stream at the state level so that we wouldn't have to go through the process, and risk, of putting bonds on the ballot. Bonds are a totally appropriate way to build housing if you are looking at housing as part of the state's infrastructure. When you look at it in the broader sense, that housing is not just the bricks and the sticks in the neighborhood, but that it has to be part of a greater comprehensive plan, then my ultimate, and much greater, preference would be doing the bricks and sticks part through a state trust fund-a dedicated revenue source that comes from the state, but then can be utilized with other funds with other sources as part of planning money. These are things that you simply can't do with bond money.

Well let's bring it down to earth and carry this discussion further by talking about dense neighborhoods and the impact of other investments, like schools. You've been part of a working group with LAUSD, which is in the process of building 85-100 schools and displacing thousands of units of housing. What progress has been made in trying to use planning and leverage as a way of rebuilding inner-suburban neighborhoods with both housing and schools and other amenities in a leveraged and planned way?

I think that progress is moving very slowly, much more slowly than I would like. My own sense, in talking with people about this in recent months, is that many are beginning to see that we can put this together. When we met at LA Unified two years ago about what are we going to do, there were only a few people in that room that said that we could figure out how to do this together. And my sense now in talking to people is that there is much more optimism.

There are a couple of examples-San Diego is clearly one of them. And, I think, the slowness of putting things together is a major obstacle. For housing, schools, libraries, and parks, each has different financing and planning mechanisms with separate funding streams. They all have separate approval mechanisms and so it's very difficult for these constituencies to talk to one another.

Continuing with that theme, it is inconsistent to have no language in Prop 46 about collaborating on the $25 billion school bond. There is nothing about collaborating with the library and parks funds. It's strictly a satellite bill for affordable housing. How did that happen?

It happened because of the politics of the legislature. Those of us in housing have been pushing the housing programs and we will continue to push those. But, even if it's not in the actual bond language, we will provide incentives for housing developments that are going to be coordinated with schools. In fact, we've even proposed giving increased points to housing developments that are going to be built as replacement housing.

Let's turn to the Ambassador Site. The 26-acre site needs schools and housing, health access, open space. However, it seems that the legislative process mitigates against our collaborating to build stronger neighborhoods, which provide all of these resources as a result of bond funding.

We do have these two bonds. We're going to have a school bond and a housing bond on the ballot. We have to get them passed and they are what they are. However, I would like to see that we don't have to have another housing bond. I would like to see a dedicated revenue source, such as 35 other states in the country have for housing. In that case, it would be our own money and we would be less vulnerable to the constraints of the bond terms.

Hopefully, this could be the last time where they're done in such silos. But it's going to have to come from the bottom up; it's going to have to come from people working in the communities, the school districts, in the city, figuring out ways to do it and then saying "See, it can be done," and filtering it back up and demanding that it be incorporated and codified in the funding sources and mechanisms that come back down from the state. The state won't do it on it's own.

Should one indict the bond's advocates who failed from the bottom up to sell a holistic housing agenda to the legislature?

I would not use that strong a term. I would say yes, we as advocates are responsible when we function only in our own silos. Yes, we do have to go outside of them. But sometimes you just go for what you've got in front of you as well.

So I tend to be guided by the old Bertolt Brecht line, "When you remember us, think of us with forbearance." Many of us cannot ourselves always be kind, even though we preached kindness. Those of us who always preach collaboration cannot always be the most collaborative. But we need to remember that and we still need to go on preaching it. And maybe, someday, we'll learn it. And at least maybe the people who follow us will even know it better.