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CES In The News

Los Angeles Times
Monday June 9, 2003
Los Angeles Council Votes to Save Housing Stock
New program is designed to manage privately owned, low-income units.

By Jocelyn Y. Stewart

Times Staff Writer

Amid concerns that more than 12,000 federally subsidized housing units could soon revert to higher market-rate rents, the Los Angeles City Council has voted unanimously to create a program to preserve and manage the current stock of low-income housing.

Advocates praised the creation of the Los Angeles Affordable Housing Preservation Program, viewing it as a major step for a city that has the nation's largest stock of privately owned, federally assisted housing.

Mayor James K. Hahn, who had urged the council to create the program, said, "The proposed preservation policy is a cost-effective way to preserve affordable housing and to leverage the city's investment to attract federal and state funding."

The Apartment Assn. of Greater Los Angeles, has not taken a position on the program, said James Fleck, a spokesman for the group. However, the California Apartment Assn. supports preservation efforts "as long as the efforts of local governments don't interfere with the rights and obligations of the owner," said Tom Bannon, chief executive of the state association.

The new program, approved last week, targets units that have been labeled at-risk. Such units were built with, or operate under, some form of federal assistance. In exchange for the aid, owners were required to offer low rents. But, as those requirements expire, owners are no longer required to keep rents low.

From 1996 to 2002, 3,525 units that had been affordable to low-income renters reverted to market-rate rents as owners prepaid mortgages with low-rent requirements or left the federal Section 8 program. Under Section 8, rents are subsidized by the federal government.

Locally, 10,800 federally assisted units _ those with federally insured mortgages or those under Section 8 contracts _ could lose their status as "affordable" from 2002 to 2006, city officials have said. An additional 2,000 units _ those built with the assistance of low-income tax credits or other measures _ could revert to market rates.

The issue has been in the public eye in recent months as the city filed suit against owners of a group of buildings known as L.A. Pro VI. The city alleged that the owners had failed to abide by laws requiring them to notify several agencies before removing properties from Section 8. The city and the owners settled the case last month.

Such cases combined with a 2000 city report to fuel the push for a preservation program for subsidized housing, said Steven Brady, an analyst with the city's housing department

In an era of budget problems, officials and advocates find the economics of housing preservation appealing. According to the housing department, on average the development cost for a new affordable unit is $104,063, including a city subsidy of $37,514. However, the average cost to preserve an existing affordable unit is $52,460, including an average subsidy of $10,331.

"It's important for the city to build more housing, certainly," Brady said. "But the affordable housing stock that's there _ by preserving and extending its life you ensure there's additional affordable housing for a longer period of time. It's much more cost effective to do so."

Modeled after similar programs in Denver, Sacramento and San Francisco, the preservation program is to include the creation of a new noticing ordinance, new financing guidelines and the new position of preservation coordinator.

The noticing ordinance, which has not been created, is to enable the city to know when owners plan to convert their units to market rate. The law also could require owners to offer the property to qualified parties who would maintain the units as affordable housing.

In a letter to the council, Hahn said the new ordinance "must go beyond existing laws to include penalties for noncompliance and finally ensure that the city is provided an opportunity to protect its affordable units."

A major component of the program is to be the creation of finance guidelines and assistance to owners who wish to acquire and rehabilitate at-risk affordable housing.

The preservation program "will make the city of Los Angeles a national leader in the effort to preserve subsidized housing," said Larry Gross of the Coalition for Economic Survival, a strong advocate of the program.

Under the program, a preservation coordinator is to maintain a database of the city's stock of affordable housing and to ensure enforcement of the rent stabilization ordinance, among other efforts.

Los Angeles City Councilman Eric Garcetti said the potential loss of affordable units requires immediate attention.

"If we don't act now, in the next four years that means 12,000 families will be lost in the housing shuffle," Garcetti said. His district is home to about 20% of the units that could revert to market rates.

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