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$1 Billion Housing Bond for L.A. Placed on November Ballot Print E-mail

Measure to Fund Affordable Housing and Assistance for First Time Homeowners

By Christopher Honey
BTN Staff Writer

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On July 26, the City Council voted unanimously to place a $1 billion housing bond on the November ballot. The measure will provide the funding to help alleviate LA’s affordable housing crisis – particularly for first-time buyers priced out of the dramatically-escalating market.

Supporters say that the bond would provide enough money in grants and loans to allow developers to build 20,000 affordable housing units and allow workers who are currently priced out of the city’s expensive housing market to purchase their first home.

According to the 2000 census, only 39 percent of Angelenos own their home. Only 12 percent of households earn enough to afford a median priced home in the current housing market, compared to 38 percent in 2000, according the California Association of Realtors. The median price for a home in Los Angeles County rose from $195,000 in 2000 to $508,000 this year.

The measure was introduced by City Council President Eric Garcetti and Councilmembers Ed Reyes, Wendy Greuel, and Herb Wesson. In speaking about the bond to a Building Trades audience earlier in the month, Garcetti explained that the measure will make the funding available over the next 10 years, but that he expects the funds to be spent much more quickly to help quell the crisis in housing the city is experiencing.

“Affordable housing is a critical issue in LA and we want to spend this money as quickly as the market can take to make a real dent in the issue,” Garcetti said.

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Los Angeles has highest bond rating of any big city in the United States, which will help to keep interest payments relatively low. Additionally, every $1 dollar the city spends on housing brings $5 in private investment, meaning that the overall economic effect of the measure could be enormous – especially when one considers that housing construction has been one of the biggest drivers of the nation’s economy over the last five years.

At least 25 percent of the monies would be used to create permanent supportive housing for low-income families and individuals, including the homeless and disabled, who earn 30 percent or less of the Area Median Income (AMI). Another 25 percent, at least, would be allocated to develop affordable rental housing for low-income families and individuals earning as much as 60 percent of AMI.

Mixed income rental housing for residents earning between 60-80 percent of AMI would take up at least 10 percent of the funds. At present only 12 percent of Angelenos can afford a median priced home. For that reason, 25 percent will be set aside to assist first time homebuyers who make up to 150 percent of AMI.

In practice, this means that the bond money will be spent on a mixture of redevelopment, new construction, and land acquisition, as well as assistance for first time homebuyers. Limited administrative costs would also be covered by the bond money.

Much of the money would be used to help developers – primarily nonprofit developers – fund housing projects. Developers would apply to the city and would be required to rent only to low income families, as defined by federal standards.

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Other funds would go to help families purchase homes. For examples, middle class workers who can only qualify for a $250,000 mortgage, could receive loan assistance from the city to purchase a $300,000 home for their family.
On July 13, City Council President Eric Garcetti and LA/OC Building Trades Executive Secretary-Treasurer Richard Slawson spoke to representatives of the buildings trades about the proposed Los Angeles Affordable Housing Bond.

Garcetti laid out the guiding principles behind the bond:

 Serving the neediest
 Leveraging of funds from outside  the City
 Smart Growth/Transit-Oriented
 development
 Increasing overall supply of
 affordable housing
 Stabilization of neighborhoods
 Meaningful oversight and
 accountability
 Flexibility to respond to market
 conditions

Projects funded by the bond would have to comply with the city’s prevailing wage ordinance. If federal funds are successfully leveraged, then projects would have to comply with Davis-Bacon wage rates.
“If we can get all these bonds passed, a lot of money will flow to building trades jobs,” the City Council President noted.

While Project Labor Agreements are not a part of the bond language, Garcetti made a personal pledge to work with the Building Trades to get PLAs for bond funded projects. “You’ve got a City Council that’s extremely sympathetic to getting PLAs,” he said. He also promised that all Community Redevelopment Agency (CRA) work would be performed by union labor.

The bond campaign, dubbed Homes for L.A. Families Committee, is supported by a broad range of groups – from unions to developers, and businesses to faith-based organizations. As of mid July, the group had already raised $450,000. Now that the bond is officially on the ballot for November, they hope to quickly reach their goal of $4 million.

For the bond to pass, it will require two-thirds of Los Angeles voters to support the measure. The bond is currently polling at 68 percent, just over the necessary threshold.
Mayor Antonio Villaraigosa called last year for such a bond measure, and a spokeswoman said that he “will work hard for its passage in November.”

Richard Slawson said, “It’s important that our members hear how vital this is for the city and the building trades.”
 
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