By Dennis Lynch | May 21, 2019 05:00PM
Los Angeles County is drastically short on affordable homes and the funding needed to develop them, new research shows.
The California Housing Partnership estimates that L.A. County needs around 517,000 more homes priced at very low- and extremely low-income levels to provide housing for the roughly 750,000 renter households at those income levels.
CHP was created by the state in 1988 to study and help preserve California’s affordable housing stock. Its Housing Emergency Update report released this week depicts a dreadful picture of the county’s housing crisis.
The study found that 58 percent of low-income households are “cost-burdened,” meaning more than 30 percent of monthly income is paid towards housing. Around 14 percent put more than half their income towards housing.
A household is considered low-income if annual income is around 80 percent of L.A. County’s area median income, which this year is $73,100. It is calculated on a sliding scale: a person living alone making $58,500 qualifies, while a four-person household bringing in $83,500 also qualifies.
The study found that around 91 percent of households considered extremely low-income — making less than 50 percent of AMI — are cost-burdened. Four in five of those households pay more than 50 percent of their monthly income on housing.
A family of three would need to bring in around $79,000 — or around 107 percent of AMI — to safely budget in L.A. County for housings costs, childcare, and other expenses.
The CHP recommends that cities in L.A. County cap annual rent increases, which many have done in recent months. It also suggests providing rent subsidies for the lowest income residents living in non-profit-owned housing.
Municipalities could also provide funding to non-profit organizations to buy affordable housing at risk of market-rate conversion. Property owners have converted around 5,250 affordable units to market-rate since 1997, according to CHP.
On the development side, there are significantly fewer state and federal funds available to build housing today than there was a decade ago. L.A. County has lost around half a billion dollars in state and federal affordable housing funding over the last 10 years — a 70 percent decrease from $705 million available in FY 2008-2009 to around $209 million available in the FY 2017-2018.
Other sources of affordable housing funding have also dropped. Between 2016-2018, production of Low Income Housing Tax Credits dropped 31 percent. Those federal tax credits are traded by investors and ultimately fund development and maintenance of affordable housing. They fund anywhere between 20 to 70 percent of development costs for all below-market rate rental properties.
The 2017 tax overhaul indirectly devalued those credits, making less money available to developers.
The report praised the city of L.A.’s popular Transit Oriented Communities program, which provides development incentives for projects that incorporate affordable units near transit and suggested other cities could create similar programs.