Los Angeles Affordable Housing Advocates Work To Stay Afloat Amid Likely Funding Cuts
Los Angeles affordable housing developers have long been fighting an uphill battle to create below-market-rate units for a population that is growing far faster than housing can be built. But with proposed cuts to some programs that provided critical funding, the incline of the hill has gotten steeper.
Anticipated cuts to funding for the Section 8 program would affect approximately 59,293 households in the city of Los Angeles that depend on housing vouchers.
Local affordable housing providers like Bridge Housing CEO Kenneth Lombard are watching and waiting as the impacts of the cuts roll out. He's not pumping the brakes, though.
“There's a host of challenges like that that are in the air,” Lombard told the audience at Bisnow’s Los Angeles Affordable Housing Conference on May 7 at the Biltmore Los Angeles. "We have not stopped any of our projects. We're trying to keep our finger on the pulse."
The city of Los Angeles’ housing authority, which administers the program in LA, stopped accepting new applications in March, pointing to uncertainty about whether federal funding that pays for it would be available in the future.
The housing authority said at the time it didn’t expect Congress to provide the funding it needs to keep current operations running, the Los Angeles Times reported.
"This is not like a free handout," Housing Authority of the City of Los Angeles CEO Lourdes Castro Ramirez said of Section 8. The program subsidizes rents for low-income families and is considered by many to be among the last lines of defense against households becoming homeless.
“I think the greatest challenge that we have right now is ensuring that we're using our collective voices — not just the housing authority, but really the entire sort of financial ecosystem that depends on federal investment — to ensure that those federal commitments continue,” Castro Ramirez said.
On Monday, President Donald Trump presented a budget that calls for $27B worth of cuts to the country’s rental assistance programs and would transform Section 8 from a federal voucher program to one organized around grants at the state level, Bisnow reported. The Department of Housing and Urban Development would see its overall funding sink from $77B to $43.5B.
“I would be very concerned at this point in terms of federal funding for projects,” said Ted Handel, CEO of Decro, an affordable housing developer. “I think that trying to get federal subsidies, rental subsidies at this point is going to be very tough."
It's not going to be easy at a local level either. The city of Los Angeles is facing a $1B budget shortfall and Mayor Karen Bass has proposed an almost 80% drop in city financing for new affordable housing units, sinking from 770 homes in the current fiscal year to 160 homes in the next, LAist reported.
Following the news out of Washington, shifting away from reliance on government funds and the consequences of not doing so was top of mind, with attention given to the city and state’s housing unit shortage, especially for lower-income residents.
Mission-driven and impact investors and programs including opportunity zones were mentioned as potential avenues for making up the difference amid rising costs for construction.
There was excitement about legislation, including a bill proposed by state Assembly Member Buffy Wicks that would allow many multifamily projects to be exempt from the California Environmental Quality Act, potentially removing them from a longer review process and potential challenges that could add to their timeline.
That bill was “knocking it out of the park,” said Abundant Housing LA Executive Director Azeen Khanmalek.
“This state law is helping” to meet the need to add to the housing supply, Khanmalek said.
