Los Angeles housing officials are urging the City Council to throw a lifeline to affordable housing projects seeking to survive under the Trump administration.
Council members are scheduled to vote Wednesday on whether to allocate $5 million to three affordable housing developments from the Hollywood Community Housing Corp., which saw funding fall after the election.
For months, L.A.’s affordable housing developers have been fretting about projects penciling out because they depend on federal Low-Income Housing Tax Credits. That’s the program where developers sell tax credits to corporate investors who want a break on their tax bill.
The market uncertainty resulting from a new presidency and Trump's proposal to cut corporate tax rates has decreased the value of the tax credits, said Paul Habibi, a developer and lecturer on real estate at UCLA's Anderson Graduate School of Management.
Those who purchase the tax credits no longer see them as beneficial as before if business taxes will be reduced.
"You’re calling into the question the value of the tax credits which makes them less favorable for those looking to purchase," Habibi said.
Victoria Senna, housing director Hollywood Community Housing Corp. said its projects – two in South L.A., one in Hollywood — developed funding shortfalls because the tax credits are selling for less than they anticipated.
"We take a big hit as affordable housing developers because that is the biggest source of funds that come into our project," Senna said.
Senna said funding gaps only widen the longer projects are delayed because insurance costs and interests rates go up.
That's why, Senna said, the money from the city is so critical. If all goes as planned, the first of the projects should be move-in ready by the end of 2018, she said.
This story has been updated.