The big problem with affordable housing

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There’s a big problem with most affordable housing in Los Angeles: It eventually flips to market rate.

In the next year,3,260 income-restricted apartments in Los Angeles County may no longer be affordable. In addition, affordability restrictions will expire for nearly 8,000 more such apartments in the next five to 10 years, according to a new report from the California Housing Partnership.

“This is one of the greatest issues of urgency we’re seeing,” says Natalie Minev, a staff attorney at the Legal Aid Foundation of Los Angeles.

The Los Angeles City Council has ordered the housing department to come up with recommendations for preserving the covenants that keep apartments affordable. It requested the report in June and is awaiting the results.

“We need to embrace a policy that’s calling for no displacement, no evictions,” Councilmember Gil Cedillo said in requesting the report nine months ago.

Solutions for holding onto the city’s existing supply of affordable units can not come fast enough, tenant advocates say.

Los Angeles County is already short of the 516,946 affordable units needed to meet existing demand from low-income renters.

Authors of the California Housing Partnership report say losing the homes that exist already “would represent a significant loss” to residents and communities. “Failing to preserve California’s affordable homes should not be an acceptable public policy option,” they write.

According to the report, low-income residents in California save an average of $320 per month, or $3,840 per year, by living in affordable housing. The savings tend to be higher in high-cost coastal cities.

“These savings help put food on the table, pay for transportation and healthcare costs, and enable families to take advantage of educational and workforce development opportunities,” the report says.

Many affordable units only stay affordable for 30 or 55 years after they’re constructed. Private residential developers agree to offer units at lower prices—capping the amount of revenue they can generate—in exchange for special financing or the right to bend local zoning rules in their favor.

In Los Angeles, the amount that tenants pay for affordable housing varies. For example, a tenant searching for an affordable one-bedroom apartment in the 90028 zip code, which covers much of Hollywood, would find prices ranging from about $370 to $1,550, though the amount they pay often depends on their income. (Instead of a rate fixed by a landlord, some tenants pay the equivalent of 30 percent of their monthly earnings.)

Over the past five years, Minev says, more and more residents who live in affordable housing have sought help from the Legal Aid Foundation after receiving notices from their landlords notifying them that their rent is going up.

“We’re seeing more and more, where, because they’re located in rapidly gentrifying neighborhoods, the landlord doesn’t want to continue in the government program,” she says. “[Landlords] are motivated to increase rents to market rate and leave the program.”

The expiration dates can come as a surprise to tenants, who must make less than $58,450 annually (for a solo tenant) to qualify. In some cases, landlords are required to notify tenants three years before the affordable covenant expires, but there’s a standard one-year and six-month notice requirement, according to Minev.

“The notice is intended to give the tenant time to prepare for a potential change in rent,” she says. “But it’s not enough time if you’ve been living there for 30 years and have had for low rent that whole time.”

City leaders have tried for several years now to work out how they might get property owners to agree to extend affordability covenants.

In 2017, the Los Angeles Housing and Community Investment Department reported that in the year prior, it had “assisted in the preservation of 800 units of at-risk affordable housing” citywide. But it also reported that 2,205 affordable units had turned to market rate from 2012 to 2016.

Between 1997 and 2019, Los Angeles County lost 5,057 affordable units, according to the California Housing Partnership report.

The report identified3,260 income-restricted apartments that are at “very high risk of conversion” in Los Angeles County in the next year. Those units have no known overlapping subsidies that would extend the affordability covenants, and they’re located in buildings that are not owned by “large” or “stable” nonprofits or mission-driven developers.

Ed Gipson, director of Los Angeles Housing and Community Investment Department’s development and finance division, says mom and pop housing developers are usually keen to help their tenants, but “we have to have some type of tool available to work with them.”

The bigger challenge, he says, is larger, for-profit developers who tend “to be motivated by a great deal of money.”

“Their motivation is pretty clear—it’s money; it’s money, at the risk of all the tenants in their projects,” Gipson says.

With the housing crisis unrelenting and the homeless population growing, the issue is as vital now as ever.

“Preservation has not been at the forefront of the homelessness discussion—but it’s a major contributing factor to the homeless crisis,” says Minev.

Hillside Villa in Chinatown is one of the affordable apartment complexes that will turn to market rate soon. Tenant Shao Zhao says the building is home to working class residents employed at LA’s luxury hotels and government offices.

“They are the people who help build the wealth of this city,” she told the city’s housing committee last year. “It is a shame they’re being pushed out.”

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