Developers rejoice: L.A. is about to divvy up $387 million for affordable housing projects.
The money is being doled out by the L.A. Housing Department, and it’s the largest solicitation in the department’s history. The majority is funded by Measure ULA, the so-called “mansion tax” that charges a transfer tax to all L.A. property sales above $5 million.
Applications for the notice of funding availability, or NOFA, open Friday and close Oct. 20. Funds are available to nonprofit and for-profit developers, as well as community land trusts, limited equity housing co-ops, public entities and other organizations.
Housing Department General Manager Tiena Johnson Hall called it “historic moment,” saying that the funding will go toward not only new construction, but housing preservation and operating assistance funding.
The $387 million — which consists of $316 million from ULA funds and $71 million from state and federal programs — represents the city’s biggest commitment of ULA spending since the measure took effect in 2023. The tax has raised more than $784 million in the last 2½ years, but much of it hasn’t been spent due to concerns that the tax could be overturned in court.
As legal challenges faded, the city passed a $150-million ULA spending plan last year and a $425-million spending plan in July.
Johnson Hall said the department doles out funding to housing projects every few years, but typically within the range of $50 million to $75 million, so the $387-million NOFA is a massive step up. Since Measure ULA is a continual source of funds, the Housing Department will be releasing new funding on a yearly basis going forward.
Typically, each round of funding receives about 30 to 35 applications from developers, though this round probably will attract more since there’s more money to go around.
The funding marks a strategic shift as the city looks to expedite construction in the midst of a housing crisis. In previous rounds of funding, the city doled out money based on the number of units in a project. This time, funding is based on a percentage of development costs, and developers will receive higher awarded amounts than they usually do.
Johnson Hall said the new approach gives the city flexibility to better calibrate funding amounts to help developers meet the fluctuating cost of projects.
Funds can cover 30% of costs all the way up to 100%, depending on the project. Categories include multifamily construction, affordable housing construction, affordable housing preservation and construction of adaptive reuse projects, such as turning empty commercial buildings into housing.
The money is awarded as either gap financing or soft loans, which have little or no interest.
Critics of Measure ULA claim that the tax has stifled commercial development and slowed sales. A UCLA report earlier this year claimed that the chilled market led to a $25-million loss in property tax revenue.
Proponents, however, said the UCLA report’s methodology was flawed, calling the measure a crucial fundraising tool for the city’s housing and homelessness-prevention initiatives.
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