For Michael Miller, getting a project off the ground is usually a bureaucratic juggling act.
When building affordable housing like the 200-plus units he’s planning in Harbor Gateway and Stevenson Ranch, the president of Bold Communities said he’d typically be forced to find funding through three to five different local and state agencies.
This time around, he’s going to just one: the newly established L.A. County Affordable Housing Solutions Agency.
The agency, known as LACAHSA, bills itself as a one-stop shop for affordable housing financing with offers of construction loans, permanent loans, rental subsidies and other types of funding products. It’s betting that in doing so developers can build low-income homes quicker and cheaper in a county with a bruising affordability and homelessness crisis.
There’s some evidence this is the case. According to the Terner Center at UC Berkeley, each additional public funding source an affordable developer uses, on average, delays a project four months and increases total cost by $20,460 per unit — more than $2 million for a 100-unit community.
“We want to build housing cheaper and quicker, because that means more units,” LACAHSA interim chief executive Ryan Johnson said.
On Wednesday, the agency gave approval to just over $100 million for ten projects, including the two from Bold Communities.
The Terner Center said going to multiple agencies for needed funding adds costs because developers have to endure higher legal, staffing and compliance costs to manage additional applications and contracts.
Each process, of course, also takes time, during which developers pay additional holding costs on predevelopment loans, all the while inflation pushes up the cost of materials and wages.
Miller estimated by going through only LACAHSA, he could cut down total costs around 5% to 10%.
LACAHSA, founded through state legislation in 2022, receives its funding from the recent voter-approved Measure A half-cent sales tax to fight homelessness and build affordable housing.
Until now, the agency had awarded money only for homeless prevention efforts such as direct rental subsidies to tenants.
It’s first batch of funds to build and preserve affordable housing, approved Wednesday, will pay for 554 below market units. The vast majority will be brand new homes, while a small share will be conversions of existing market rate residential units into affordable units and extending deed-restrictions on some existing below-market units.
LACAHSA pointed to data showing that of the top performing quarter of new construction projects that recently applied for its funding, total development costs came in below the typical cost to build affordable units in the county. Savings rose to nearly 12% when project proposals relied primarily or entirely on LACAHSA funding, rather than mixing state funding with just one or two LACAHSA products.
Terner Center managing director Ben Metcalf said it’s unclear to what extent those savings might reflect that cheaper projects just happened to apply for funding from LACAHSA. But he expects at least some of the savings can be attributed to LACAHSA’s structure.
Not only does the agency offer a plethora of financial products, but LACAHSA said it ranks project proposals by their efforts to reduce costs and considers that as a significant factor when deciding to approve funding.
Metcalf, who previously served as director of the California Dept. of Housing and Community Development, said such a focus on awarding dollars based on the estimated development cost isn’t the norm among public agencies.
In part, he theorized that was because “the rising cost of affordable housing has really only become an issue of visible concern over the last few years.”
In 2022, the Times reported the cost to build just one unit of affordable housing in California routinely cost more than $1 million. Voters have also expressed growing frustration at the lack of progress in reducing homelessness and overall housing costs.
LACAHSA isn’t the only effort to simply a complicated funding process, with Gov. Gavin Newsom proposing to streamline state funding as part of this year’s budget.
Meanwhile, LACAHSA plans to approve another round of affordable housing funds in May.
To apply for that funding and the dollars approved Wednesday, LACAHSA said it required developers to be able to break ground within 12 months. Developers submitted 127 applications, seeking a total of $1.5 billion to build 11,625 units.
Long Beach Mayor Rex Richardson, who serves as chair of the LACAHSA board, argued the high interest shows it’s really a lack of “financing and operational support” holding back the construction of more affordable housing in L.A. County, rather than a lack of “sites or community will.”
“LACAHSA was built to meet this moment,” he said in a statement.
The projects that Bold Communities plans in Harbor Gateway and Stevenson Ranch are conversions of extended stay hotels into low-income senior housing.
Now that funding is secured, Miller said he expects the buildings to be full of new residents by the end of next year.
“I think these will be, honestly, pretty straight forward,” the non profit executive said.
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