What happens when LA's affordable housing contracts expire?

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Thousands of low-income apartment dwellers in Los Angeles benefit from what's known as "affordable housing" contracts.

Under these agreements, landlords typically charge below-market rate rent to these tenants in their buildings. Landlords are legally obligated to do this because of contracts they signed when they built their apartment complexes.

Typically in these situations, the city agrees to give developers special financing or loans to help build the housing. In exchange, developers agree to provide affordable rents for a set period of years or decades.

But when these contracts expire, landlords can hike the monthly rent up to market-rate. Lower-income tenants often can't afford it, and move out.

Over the next five years, L.A. is expected to see about 15,000 affordable housing units become market-rate apartments, as more of these city contracts expire.

Last week, Councilmember Gil Cedillo proposed extending soon-to-be-expired housing contracts by giving landlords financial incentives. In his own district, he wants to use $9 million as capital to incentivize landlords to keep their contracts in place. 

"Rather than have tenants move out, be in crisis, we simply go to the landlord and extend the relationship," Cedillo said.

The $9 million is money from District 1's redevelopment fund. In it, are bond proceeds, which were left over from the city’s former redevelopment agency.

Rushmore Cervantes, who heads the city's Housing and Community Investment Department, said he supports the idea and would commit $4 million more to the effort. While some housing advocates have argued the city should build more affordable housing complexes, Cervantes said it's also important to hold onto the current affordable units that the city has.

"This doesn’t necessarily create opportunities for ribbon cutting," Cervantes said. "But this is, more importantly, spending money wisely to preserve the existing housing stock."

Jim Clarke of the Apartment Association of Greater Los Angeles said Cedillo's plan sounded "well-intentioned," but that he needed more information.

Clarke added that some of the landlords who provide affordable housing have been doing so under very long agreements - some for up to 30 years.

"AAGLA would insist that (the building owners) have a clear choice whether or not to enter any new rent subsidy program," Clarke said.

Cedillo's plan was embraced by tenants' advocate Larry Gross of the Coalition for Economic Survival. He urged other city council districts to consider similar plans.

"It’s far cheaper to preserve these units than to build new units," Gross said. "We can’t build our way out of an affordability crisis."

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