December 14, 2005 - From the December, 2005 issue

Century Housing's Kingston Opines On Region's Need for Affordable, Workforce Housing

Established in 1995, Century Housing, a private nonprofit corporation, has become, over the decade, a valuable financial intermediary of affordable housing in the Los Angeles region, and its success proves that affordable housing can be More Than Shelter. In this TPR interview, Century's President and CEO Allan Kingston discusses the future of affordable housing in the region and the need and prospects for Mayor Villaraigosa's $1 billion housing bond proposal.

G. Allan Kingston

Ten years ago Century Housing privatized itself as a nonprofit and began its mission to provide quality, affordable, attractive housing, enhanced by what you call "More than Shelter" social services. What's the return on investment?

The return on investment is that we've been able to start with a little over $100 million and roll that over three-and-a-half times in lending activity. We've actually put out about $350 million for affordable housing in the Los Angeles area, and we have also been able to leverage that with other funding probably into the neighborhood of $1 billion worth of housing throughout the urban area. The other thing it's allowed us to do is to move on all of our social programs -- to develop the right kind of job training and placement so that 1,700 people got a new chance at making more money in the building trades, and so that two thousand kids were able to do better in school because of our after-school program, and that also about 10,000 homeless veterans could find a way to move on in society, 3,000 seniors can participate in wellness programs, and 4,000 preschoolers can receive child development services.

What model does Century Housing set? What is your contribution to the housing industry in L.A.?

As far as a model that's replicable, I don't know that there is a lot of duplication that can happen with what we've got. I think we're one of a very few financial intermediaries that serve regional areas within the United States. The Community Preservation Corporation in New York is one example; there's an example in Chicago and in Philadelphia, and other than that, there are not many people who do what we do as a nonprofit organization.

In what segment of the housing market is Century Housing focussed? Who does the Corporation partner with?

Up to now we've been almost exclusively involved in affordable housing, which means that we've been dealing with people and families who are at or below 80 percent of the median income. In fact, 25 percent of the people and families we've dealt with have been at the very lowest income level, at 25 percent and below of median income.

In the future, however, with the two new lending pools that we have established -the Century Community Development Investment Fund, and the Century Community Lending Company -we also will be working in the area of what's called workforce housing, with families that have a little higher income level. Why workforce? Because there's just a tremendous number of people and families in Los Angeles who are not served either by the typical affordable housing funding, nor are they served by traditional market-rate housing. There are also many small mom-and-pop type owners who would like to rehabilitate their properties and who would like maybe to build on a lot they own. We will be working more and more with them.

You announced at your tenth anniversary luncheon recently that Century has help create more than 11,000 affordable homes for more than 20,000 families. What precisely does Century Housing add to the development of new housing?

We provide financing –traditionally gap financing – for affordable housing developers. We also provide acquisition financing so they can acquire the sites. This is not something that a lot of lending institutions will do right off the top, especially if it's affordable housing, which is often looked at as a more risky adventure - it's really not, but that's the way some people see it. And we also do construction financing of affordable housing developments that serve the moderate- and low-income populations of our area.

Let's turn to the challenges. Only 16 percent of Los Angeles households presently can afford to purchase a median-priced home, and, at the same time, there's a 60,000-unit shortage of apartments, leaving many working families without housing options. Is Mayor Villaraigosa's proposal of a $1 billion bond a step towards bridging that gap, and what needs to be fleshed out to make it real?

The first part of the answer is yes. This bond issue is absolutely a step towards making the housing trust fund in Los Angeles a viable commitment to affordable housing. The thing about it is that people see some big numbers and think in terms of large numbers of units, but they need to remember that just to create one unit of affordable housing or one house can cost a couple hundred thousand dollars. So the numbers are somewhat skewed, but that $1 billion bond issue will be an attempt to ensure that going forward Los Angeles will have enough money to leverage its money with state funds and federal funds that are available to get our fair share of housing built in a community that, as you have already stated, desperately needs new housing. Now, to get that bond done – the other part of your question – I think that's going to take involvement on the part of a great many opinion makers and leaders in the community who are going to step up and be part of the effort to make sure the bond passes.

In 2004 when TPR last interviewed you, you appropriately criticized the L.A. Community Development Bank and said that the government generally does a poor job building housing and taking necessary risks. So who ought to implement and utilize this bond if it were to pass?

Government is not good at developing housing. Government can be a lender, and it can be an effective lender, if it is properly administered. The housing trust fund administered through the Department of Housing of the City of Los Angeles can be effective in providing funding for low- and moderate- income housing. However, I would not ask them go out and develop sites. I think that's best left to others and best left to the marketplace and people who have done either affordable housing or market-rate housing and know what they are doing.


Is there such a thing as affordable housing? Why isn't the market adjusting to meet the demand for housing?

L.A. has the problem of too much space devoted to single-family detached homes. I think something like 80 percent of the zoned area in Los Angeles encompasses detached housing. That means that there are not many sites left on which you can develop multi-family/multi-unit housing without looking at some changes in zoning and other conditions. And almost always, in every community, some people will say that they don't want their community to change. But the growth of Los Angeles' population is creating a circumstance in which we've become the most overcrowded metropolitan area in America, and we absolutely need to look at the greater good.

That means that people have to be aware that there are times when they're going to see an apartment house on their block where maybe the block used to be all single-family homes. They're going to see maybe instead of a two-story walk-up, a four-story apartment building. And this goes across all income levels. With the exception of the very, very rich, pretty much all income levels need housing in Los Angeles, and I think there's just going to have to be more density in order to make that happen. The sprawl is finished, pretty much.

The sprawl has sprawled, and while there are still some big developments out there on the periphery, people can't get too much farther away from work. We have to develop opportunities for people to be near transit centers where they can actually get to their workplace, and for them to live near where they work.

Century Housing is an offspring of the imagination, in part, of Judge Harry Pregerson, who presided over the court case –regarding the construction of the Century Freeway – that created the idea for the company. We're building no more freeways in Southern California. Is there the infrastructure to support this housing demand and production?

There is an infrastructure to support housing, but there's probably not an infrastructure to support all of the commercial, retail, industrial, and residential activity that is going to happen. I think that's why the governor and others, including State Senate President pro tem Don Perata, have been concerned about passing bonds so that Southern California can once again provide the necessary infrastructure. I think people forget that California has been growing at this tremendous rate, and we have so many people here, we have to face up to the fact that, yes, we may not be building freeways, but we need some way for people to get from place to place. And we need to ensure that we have other transportation facilities as well as good highways and streets.

If you were to offer Mayor Villaraigosa some help on writing the bond measure, what would be included?

I would include funding for different types of housing. And that would be similar to the funding that's been done in previous state bond issues. That would be funds for the local housing trust fund program, for multi-family and workforce development. It would probably include some money in it for an emergency housing program, because shelters for homeless families and individuals - which includes victims of domestic abuse - are not sufficient to meet the need. And a portion of it would probably be available for supportive housing for those with chronic disabilities, and I would guess that there might also be some money for rehabilitation.

What about joint use? We've had many conversations over the years about the school district's building program and other bond measure investment funds and the silo-like behavior of our public institutions to the disadvantage of building dense, mixed-use neighborhoods and communities. What can be done to enhance that in the bond?

I think there could be a place in such a bond for incentives, as a condition of funding, for that. However, the 800-pound gorilla that is affecting development more than anybody else right now is the Los Angeles Unified School District.

With that $13 billion that they're spending, they could be a tremendous force for good, for doing more housing and doing it in conjunction with new schools, and in other ways alleviating some of the issues that deal with new schools. That is something that could be incentivized, but I really think that the funding is there, and we need to think in terms of the larger goal that we can all achieve here together.


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