As Los Angeles grapples with a pressing need for affordable housing, there is a noticeable trend of affordable housing developments making their way into neighborhoods and cities that have typically been more affluent.
With areas like West Hollywood, Pasadena, and Marina del Rey showcasing such developments, the median household incomes in these regions exceed that of L.A. County overall by 8%, 18%, and 62%, respectively, according to Data USA.
This shift can be attributed to a combination of growing public awareness, increased empathy for housing needs, and efforts to comply with local and state mandates.
Welton Jordan, the chief real estate development officer at EAH Housing, a San Rafael-based nonprofit that focuses on affordable housing in California and Hawaii, notes that, over his 12 years in the field, there has been a marked increase in interest surrounding affordable housing.
“People are starting to recognize the necessity for everyone to have a place to live,” Jordan shared. “As society ages, these issues are becoming more prominent.”
However, acceptance of affordable housing varies by community.
Currently, EAH is in the construction phase for two affordable housing projects in West Hollywood.
The first, Lexington Gardens at 1201 N. Detroit St., will feature 47 studio apartments reserved for individuals earning between 30% and 60% of L.A. County’s area median income (AMI).
The second, Marigold West at 1041-1049 N. Martel Ave., will offer 50 units of studio, one-, and two-bedroom apartments intended for seniors and individuals with special needs, also falling within the same AMI criteria.
Moreover, half of Marigold’s units will be allocated to individuals with permanent supportive housing vouchers.
West Hollywood’s Affordable Housing Trust Fund facilitates partnerships between the city and nonprofits like EAH for such developments.
“From a regional perspective, there’s a recognition of the need for affordable housing across the board. Yet, some municipalities take it more seriously, and West Hollywood is definitely one of those,” Jordan stated. “They aspire to be an inclusive community and actively support affordable housing initiatives.”
He emphasized that both projects have not faced any significant pushback from the West Hollywood community, which reflects the city’s supportive stance.
County-level partnerships are also crucial for advancing affordable housing in these regions.
In 2022, the L.A. County Board of Supervisors revised the affordable housing policy in Marina del Rey after analysis revealed the area’s policies lagged compared to neighboring jurisdictions.
The update raised the percentage of affordable units required in new developments from 15% to 30% and introduced improvements to rehabilitation standards.
Furthermore, the revised policy streamlined the waitlist process for tenants seeking affordable housing.
Launching the Marina del Rey for All initiative, the county aims to utilize county-owned land for affordable housing developments to ensure equity and access for all L.A. County residents.
This initiative set the stage for a 100% affordable housing project at 4206 Admiralty Way, which will transform a 90,000-square-foot parking lot owned by the county into a residential complex.
San Francisco-based nonprofit Mercy Housing has been selected as the developer for this ambitious project, which will feature a 120-unit, seven-story building catering to individuals earning between 20% and 80% AMI.
A quarter of these units will specifically assist individuals with disabilities, and the development will also include retail space and community gardens.
While the project timeline remains undetermined, county representatives have indicated the need for community engagement and project refinement over the next year or so.
The financial specifics of the project are still being developed, as county officials acknowledge that such a significant endeavor will necessitate substantial investment from various sources, including state and federal housing credits and local funds.
Meanwhile, Pasadena is also gearing up for a new affordable housing project on a vacant former Kaiser Permanente site.
In 2023, the county identified a need for more affordable housing and mental health services in north Pasadena, leading to a partnership with the county to acquire the 2.4-acre site at 434-470 N. Lake Ave. for $12 million.
Plans include converting the property into a facility that will offer health services and housing, ensuring a minimum of 25% of units are affordable.
Currently, Pasadena is evaluating 12 development proposals, with a mandate that the city must choose the bid that maximizes the number of affordable housing units.
If multiple bids feature the same number of affordable units, priority will be given to the proposal offering the lowest average cost of units.
To make affordable projects appealing in upscale communities, several key aspects must be carefully considered by developers, according to Deborah La Franchi, CEO of SDS Capital, an investment firm focused on affordable housing.
“Selecting the appropriate site is crucial,” La Franchi explained, emphasizing the need for developers to choose locations that complement the character and needs of the community.
For multifamily complexes, this means positioning developments within commercial corridors and close to public transportation, steering clear of existing single-family residential neighborhoods.
Quality in construction and design is another pivotal factor in garnering community support.
“Building in higher-income areas necessitates attention to aesthetics and details,” La Franchi emphasized.
Such considerations help combat the misconceptions that affordable developments could diminish property values; research from the University of California, Irvine has shown that affordable housing projects often do not negatively impact property values.
In some cases, they may even correspond with rising property values.
Furthermore, La Franchi asserts that including various amenities and services for tenants—such as common areas, after-school programs, and support systems—enhances the value of the development for the broader community.
“When projects integrate well within the community fabric and provide a supportive environment for residents, the community perceives them as assets rather than liabilities,” she said.
Having spent over two decades in Los Angeles’ affordable housing sector, La Franchi noted the challenges developers face in securing financing for these projects.
EAH Housing leveraged diverse financing partners to support their West Hollywood projects, set to open later this year.
This includes investment from the city of West Hollywood, the L.A. County Development Authority, and various low-income housing tax credits.
For instance, the total financing for the Lexington project reached $40 million, relying heavily on funding from the state’s Local Housing Trust Fund program and other sources.
Over half of this financing came from low-income housing tax credits, which Jordan sees as the essential component for affordable housing projects.
The Marigold West project, with an estimated cost of $46 million, also utilized Wells Fargo as a funding partner.
Despite a lengthy and complicated funding process, which often spans five to seven years, Jordan acknowledges that achieving successful financing is challenging.
“We must navigate numerous funding avenues, and projects can require multiple sources—sometimes as many as 12,” he said.
The complexity continues to increase as developers face several obstacles, including the time-consuming nature of acquiring financing.
Not all sellers are amenable to waiting for affordable developers to structure their acquisitions, limiting opportunities available to them.
Thus, EAH can only engage with sellers who are willing to be patient, often resulting in finding rare opportunities that require extensive effort.
“The challenges are significant; it’s not commonplace to find a project in West Hollywood where both sellers are willing to wait for the financing,” Jordan noted.
Reportedly, the estimated development costs for the Lexington project stand at approximately $850,000 per unit, while Marigold West has a nearly $920,000 per unit cost.
Understanding the high financial requirements, nonprofit developers are naturally unable to offer the attractive returns that private investors typically seek.
However, Jordan remains optimistic about the long-term benefits, as EAH maintains its properties with long-term leases of up to 99 years.
These affordable housing developments are designed for longevity and sustainability, ensuring they remain affordable for generations to come.
The increasing interest and acceptance of affordable developments in affluent areas represent a positive shift in Los Angeles’s housing landscape.
Yet, as Jordan cautions, it’s crucial to continue prioritizing support for low- and moderate-income communities, ensuring a holistic approach to the housing crisis.
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