More with less
Conference examines creative ways to provide affordable housing for families, seniors and low-income residents
By Rebecca Kuzins 04/12/2012
When William K. Huang, the city’s director of housing, describes the state of affordable housing in Pasadena, he often points to a bar graph that illustrates how available funding has plummeted over the past six years.
In the fiscal year ending June 30, 2006, the illustration shows the city received about $8.5 million in local fees, state redevelopment money and federal funds to construct affordable housing; in the fiscal year ending this June 30, this revenue dropped to about $2.8 million — a 68 percent reduction.
However, despite the budget hit, Huang says the city is responding to the housing finance crisis by obtaining “some new resources,” including Section 8 vouchers for non-elderly disabled people with very low incomes and other vouchers to provide permanent housing and health services to homeless veterans. He also cites Project Housed, a joint effort of the city, social service providers and the business and faith communities that seeks to identify the most chronically homeless people in Pasadena and house them in privately owned residences.
In addition, four affordable housing projects are under construction in Pasadena that will provide about 70 rental and home-ownership units for seniors, people transitioning from homelessness into mainstream society and other residents. These projects, Huang says, are of “outstanding quality” and have created local jobs, preserved historic buildings and “really strengthened neighborhoods by taking away blight.”
But at the same time, Huang can’t help but point out the irony that his department has really hit its stride in creating low-cost housing at the same time its efforts have been undermined by an unprecedented loss of resources.
The Great Recession, the massive number of home foreclosures and the elimination of state redevelopment agencies, among other factors, have created a crisis in the city’s affordable housing market that has sent Huang, along with other municipal officials and housing advocates, scrambling in search of new funding sources and alternatives to new construction.
Huang and others will examine that challenge at a forum on the affordable housing crisis in Pasadena, 7 p.m. Wednesday at the Pasadena Jewish Temple & Center, 1434 N. Altadena Drive. He will be joined by Michelle White, executive director of Pasadena-based Affordable Housing Services, a nonprofit agency that develops and advocates for affordable housing, Peter Dreier, chair of the urban and environmental policy department at Occidental College, and moderator Arnold Siegel, board chair of Pasadena’s Union Station Homeless Services.
By some estimates, as many as 20,000 of the 55,270 households in Pasadena are in need of affordable housing options because their occupants are paying more than 30 percent of their incomes for their apartments or homes or are living in overcrowded or substandard housing. “The tragic victims of the housing crisis are the working people paying 50 percent of their income just to keep a roof over their heads,” says Dreier.
In an effort to provide affordable housing, the city adopted an inclusionary housing ordinance requiring developers building housing of 10 or more units to set aside 15 percent of those units for people with low or moderate incomes. Huang maintains the ordinance has “been very successful and productive,” resulting in the construction of several hundred units of affordable housing.
But some housing advocates express a more cynical opinion. “There’s a huge loophole,” says White. “If developers opt to pay a fee, they don’t have to provide the units.” The fee is determined by several factors, including the location of the development itself. “In the Northwest, it’s virtually nothing,” says White. “So, of course, many developers chose to pay the fee.”
Six years ago, the city took in just under $5 million in inclusionary housing fees. This year, the amount has fallen to $115,200 — a 97 percent decline. Huang attributes this dramatic decrease to the recession, which forced many developers to abandon plans for new housing projects. “The ordinance only works when there’s a lot of market-rate development happening. When that’s not happening, the fees are not coming,” he says.
The recession also resulted in reduced funding from the US Department of Housing and Urban Development (HUD). According to Jim Wong, manager of the city’s housing production section, Pasadena “has historically relied on three key federal funding sources from HUD to accomplish its affordable housing and community development objectives: Community Development Block Grants (CDBG), HOME funds and Section 8 subsidies.”
In the fiscal year ending June 30, 2008, the city obtained about $2.3 million in CDBG funds for housing programs and their administration. In the fiscal year to end June 30, 2013, funding is expected to decline to about $1.8 million, or 23 percent. During the same period, the city expects the HUD HOME homebuyer funding program to fall 49 percent, from about $1.21 million to $618,267.
Section 8 funding, which provides direct subsidies to about 1,350 very low-income households in the city, has increased 20 percent over the past three years, with the city receiving about $11.7 million in the current fiscal year. That increase, however, can’t begin to meet the local demand for this assistance. “Three thousand people are now on the waiting list for Section 8 housing,” says White. “The waiting list is closed for at least four years.”
And while the city is receiving a little more money for Section 8 subsidies, funds to support the administration of this and other federally funded programs have severely declined, forcing the city to reduce its staff from 28 to 14 people in the past three years. “We’re doing what any organization would do,” says Huang about his department’s response to the cutbacks. “We’ve reduced expenses and implemented new technology to work more efficiently.”
A massive blow to affordable housing was dealt last year, when state legislators and Gov. Jerry Brown passed a law eliminating the Pasadena Redevelopment Agency and more than 400 similar city and county organizations. The state traditionally provided redevelopment agencies with funds for new development, with 20 percent of this money set aside for affordable housing. Six years ago, Pasadena obtained about $2.3 million from this source. In the current fiscal year, the amount declined to $1.5 million.
This figure is deceptively low, White explains, because “redevelopment money is leveraged money.” Since nobody wants to fund an entire project, the city would typically obtain additional revenue from public and private sources to augment the redevelopment set-asides. “If you got $3 million from redevelopment, you could increase that to $15 million,” she explains.
State lawmakers have introduced two bills aimed at restoring funding that had been committed to redevelopment agencies before their elimination. Senate Bill 654 and Assembly Bill 1585 would preserve $1.4 billion in redevelopment money for affordable housing. According to Huang’s calculations, Pasadena would obtain $1.7 million in the fiscal year starting July 1, with the amount climbing to just under $4 million in the fiscal year beginning July 1, 2016. AB1585 passed the state Assembly last month and moved to the Senate as an urgency measure.
SB1220, would impose a $75 fee on the recordation of each real estate document in order to permanently fund the Housing Opportunity and Market Stabilization Trust Fund, which would support the development, acquisition, rehabilitation and preservation of affordable housing for low- and moderate-income households. While this bill is backed by affordable housing advocates, it is opposed by the California Board of Realtors, which argues that it will add to the cost of buying a home at a time when the housing market is struggling to recover.
“Pasadena is experiencing a perfect storm scenario with increased demand for housing and housing programs and funding reduced to unprecedented levels,” Huang says. “The challenge is to find innovative and effective ways to serve the needs of the low-income population with significantly fewer resources.”