January 18, 2006 - From the January, 2006 issue

Bridge Housing Promotes Mixed-Use, Mixed-Income Affordable & Workforce Housing

One of the leading developers of affordable housing in California, Bridge Housing has built over 11,000 units, largely in the Bay Area, where rising prices have made affordable housing all the more crucial. With a similar situation in Los Angeles and continued discussion of Mayor Villaraigosa's $1 billion affordable housing bond proposal, TPR spoke with Bridge's president and CEO, Carol Galante, about the keys to building successful affordable housing in California.

Carol Galante

In your experience, what makes an affordable housing project successful in the dense, urban communities of California?

The most important aspect of a successful affordable housing development is high-quality development from the design, to the siting, to the long-term financial structure. In addition to that, I'd also include as part of high quality the long-term ownership and management by an organization that is committed to everything from the training the residents to taking care of the property.

Comment more on inner-city neighborhood infill projects. What has emerged as the best model for building infill, affordable housing?

That's a really tough question. I think the best model is a mixed-income approach and a mix of market-rate rental, market-rate ownership, and affordable ownership and affordable rental, with the retail and community services. That's the best way to serve a neighborhood that has been subject to long-term disinvestment. It is, however, not at all easy to do given the kind of resources and the pigeonholing of resources that are available. It's very difficult, for example, to fund ancillary but important activities such as retail or a new urban park or those kinds of things that aren't housing-dollars specific.

Mixed-use is often an unrealized planning ideal. Isn't it more common that housing advocates focus on exclusively on housing, park interests on parks, the school interests on school seats. When bond issues to support housing are advanced, or when the financial rules are drafted to incent affordable housing, aren't advocates typically undercutting the goals of mixed-use?

Certainly we need some housing-specific dollars, but we also need complementary infrastructure and community amenity, and that is a missing piece at this point. For example, the drafts I've seen of Senator Perata's bond measure include incentives, for example, for building not just affordable housing but mixed-income housing around transit locations, and that bond will make dollars available for some of these kinds of community amenities. That's important but, for the most part, we are operating in that silo-type environment, and that's a problem.

Most state and local housing bond money have been focused on housing for the neediest, but isn't there a dearth of workforce housing in the Bay Area and Los Angeles. What do you see in the way of funding and support for more workforce units?

That poses probably one of the biggest challenges in California, because when you're trying to develop housing that is not subsidized by some public resource and make it affordable, you've got a very limited set of tools. You have perhaps density incentives and fee waivers and things like that, but unless you can bridge the gap between market rate prices like $600,000 and a workforce housing price of $300,000, or whatever number you want to put on it, there aren't many resources for subsidizing that gap difference, and I think we need to develop more of those resources.

Mayor Villaraigosa has recently announced that he will advocate a $1 billion bond to build more affordable housing in L.A. In your experience, what's the best way to draft a bond to achieve the housing ambitions of LA's mayor?

I think it's a great idea, obviously, that a major city like Los Angeles would propose such a measure. San Francisco did it a few years ago and it was very successful. I think putting the money into project-specific programs is the way to do it as opposed to some kind of block grant for a district or some of the other models out there. Creating an actual competition to get developers, non-profit and for-profit, to come forth with very specific projects on some kind of regular basis is probably the most cost-effective way to make it happen.

If you were advising Mayor Villaraigosa on putting this bond measure together, what would you be telling him to include in the bond?

This is a difficult issue. I think it has to include a range. Obviously, there is support for the poor and very needy, and in some way you want public resources to go to the neediest. On the other hand, it takes less of a subsidy to help workforce housing, and I think it's vital to the long-term stability of communities and neighborhoods and the local. Again, I would also encourage that a portion of it be able to assist developments that want to have some ground-floor retail, for example. Projects need to be evaluated on a case-by-case basis to include some of those neighborhood amenities as part of the funding package.

In your experience, how should a public entity evaluate affordable housing developers that apply for public funding?


There are models for evaluating capacity. At the state level, there's the capacity credit program, or the California Housing Finance Agency, which has processes for evaluating borrowers on both their financial strengths and track records. Those processes ask if they have had default, and whether they complied with the variety of program requirements. And they require them to demonstrate whether they have the expertise to take on these complex developments. That scrutiny absolutely should be embedded in how developments are selected.

Now that Bridge is working throughout the state, including Southern California, expand on the company's current agenda.

For many years we focused on the Bay Area, but we opened an office in San Diego about five years ago and have concentrated a lot of activity in San Diego and Orange County over the past five years. That actually represents about 20 percent of our activity right now, and we now have one development in the Inland Empire and one up in the Sacramento region. We are looking to expand to areas that are facing the same kind of high-cost housing issues the Bay Area had.

Certainly, Los Angeles city and county is a huge place we have worked in, but we look forward to appropriate opportunities. Again, when I say appropriate opportunities I think our value is most seen in complicated urban infill types of developments. We can do all types of developments – stand-alone, affordable housing – and we work with master developers who have inclusionary requirements for example.

We bring a lot of experience in getting public approval, for example, for converting industrial property, or failed or underutilized retail centers where you've got commercial relocation issues, toxic issues, etc. You have to create a new vision for a part of a neighborhood, and we have a number of great developments under our belt that have done just that. Those are the kind of projects that we give the most value to in terms of creating new housing.

Given the escalation in housing prices in California, how has the state's housing market changed over the last five years in terms of your work and the work of others like Bridge?

The high costs of housing, both in terms of building it and purchasing it, have created a political environment that is actually more receptive than it might have been even five or six years ago to the kind of work that we do. A large area that we've seen a lot of expansion in and continue to work on is in affordable home ownership opportunities.

A large portion of our work has been in developing rental housing, but this workforce gap that you talked about and people's desire to find some way to get a piece of the American dream of home ownership is something cities and individuals really want to try to access. So, we'll see more policies that focus on those kinds of opportunities.

Are there any other city of state programs emerging in 2006 that offer you hope of either financing or regulatory support to achieve Bridge's goals in 2006?

In addition to the L.A. bond there are a number of infrastructure bond proposals statewide, and I know Senator Perata's infrastructure bond for example has specific allocations for affordable housing as well as urban infill. The other big issue – though it has yet to be seen whether the Legislature will approve something – is CEQUA reform. Reform, or at least a big exemption for, for example, urban infill, will make a huge difference in the ability of the development community to respond to the affordable housing problem.

Several cities, including L.A., are looking for, or have found, new planning directors. What do these cities need to look for in a planning director to ensure a commitment to expanding housing production?

Development is very, very complex, so planning directors and public works people need to understand that complexity and believe in the sense of urgency that is required to move projects forward. The worst thing is that long, slow, bureaucratic processes. Our motto is, "delay is death." That's what we run into frequently, and you need leaders who understand that time is money.


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