How affordable housing in LA reinforces economic segregation

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They’re clustered in Downtown Los Angeles. They follow the 110 through South L.A., appearing on vacant lots, and in previously industrial areas. A cluster surrounds MacArthur Park. Some sit inconspicuously under solar panels and pretty facades in ritzier neighborhoods.

But mostly, KPCC found, publicly-funded affordable housing developments in Los Angeles County have overwhelmingly been built in L.A.’s very poorest neighborhoods.

KPCC analyzed census tracts of low-income housing sites involving new construction since 2007.  Map: Stamen. Aaron Mendelson and Maya Sugarman/KPCC

According to a KPCC analysis of state treasurer records and U.C. Census data, nearly two-thirds of projects funded over the past decade using the Low-Income Housing Tax Credit program in L.A. County have gone into areas where the average household earns less than $40,000 a year.

The tax credits serve as a proxy for seeing where affordable housing is built because, experts say, nearly all affordable housing development constructed in the past few decades with more than a handful of units has relied on the credits.

Now, as the City of L.A. is poised to invest $1.2 billion in housing for the homeless in the next decade – and the county prepares to spend hundreds of millions as well – there is a growing consensus that building affordable housing only in poor areas is not a good idea. 

But building housing for homeless and low-income residents presents challenges. By market forces and often by design, developers say, it’s simply harder to build in high-income areas.

And so advocates, developers and officials trying to solve the county's affordable housing and homeless crises face a dilemma: build quickly, or take on the harder task of overcoming economic and political obstacles to develop in neighborhoods where low-income residents might find greater opportunities. 

“There’s this conflict between developing more and more housing wherever it can go and [confronting] issues of segregation and issues of concentrated poverty,” said Michael Lens, an assistant professor of urban planning at public policy at UCLA.

Why neighborhoods matter

There are reasons to invest in low-income neighborhoods by building new housing, said Sarah Letts, the executive director of Hollywood Community Housing Corporation, a nonprofit developer of affordable housing. 

But on the other hand, moving a poor family to a neighborhood that offers greater economic opportunity can be life-changing, especially for young children.

A 2015 study from Harvard researchers Raj Chetty and Nathaniel Hendren, for example, found that the neighborhood where a child grows up has a significant impact on that child's future upward mobility. The study also found that counties with greater upward mobility for poor children shared certain characteristics: lower levels of segregation by race and class, lower levels of income inequality, better schools, lower rates of violent crime and a larger share of two-parent households. 

And a large body of research suggests that for low-income students and those of color, attending a desegregated school brings with it significant advantages, without harming their higher-income classmates. 

“It’s amazing what affordable housing can do,” Letts said. “It’s profound when you’re going to blue-ribbon schools, right? There’s so many jobs on the Westside. And when you can have a 30-minute commute, maybe on public transportation, you can make dinner for your family when you get home.”

Why it's so hard to build affordable housing in high-income neighborhoods

For developers like Letts who use Low-Income Housing Tax credits to build affordable housing, low-income neighborhoods are often the only option. 

“I don’t have tens of millions of dollars to pay cash, I don’t have the ability to go to a bank and get a loan in 30 days," she said. "And meanwhile, a seller – it’s capitalism – [is] going to accept the highest price with the lowest barrier. I can’t compete.”

Then, she said, there’s construction costs, which are inevitably higher in dense urban areas like L.A.’s Westside. Parking, for instance, has to be built underground. The labor costs in a wealthier city might be higher.

“We have a property under construction in South L.A. right now and we’re using a vacant lot next door to stage construction, that saves us money and it’s more efficient,” she said. “Much different than urban infill.”

But costs aren’t the only issue, she said.

“In my opinion it boils down to political will,” Letts said. “When the political will isn’t there, you can just die on the vine. There are so many ways for people to passively let your deal die.”

Indeed, several recent plans by developers to build affordable housing in higher income areas have hit political turbulence.  

A proposal to turn an old motel into housing for the homeless on the border of Temple City and San Gabriel failed after the community protested, the county delayed the approval hearing, and the seller decided not to wait the process out.

And a proposal in Boyle Heights, in the works for over five years now, recently hit another blockade when an L.A. City Council committee decided to allow an opponent of the development to appeal the city’s environmental impact report on the project.

Some upper-income cities in the county say they're simply not interested in the problem at all. 

“The City of Malibu is not in the business of encouraging construction,” said Mayor Skylar Peak, who added that land costs and height and zoning restrictions in Malibu are not likely to change.

“We have a lot of land, but we have a much higher restriction on what can be done with it as far as development goes, and that’s what the people of Malibu want,” he said.

KPCC's analysis of state treasury records show that in 43 of the county’s 88 cities, not a single development utilizing Low-Income Tax Credits has been built in the past decade — meaning, essentially, no low-income housing.

Meanwhile, according to L.A. County’s last homeless count, there are homeless residents in nearly every neighborhood in the county — a problem, officials increasingly say, stemming from a shortage of affordable housing coupled with falling incomes among L.A.’s renters.

“You can look at it innocently and say there are plenty of cities that feel like they don’t have much of a housing supply problem,” said Lens. “But on the flip side there are many places that just don’t want low-income people living within their boundaries.”

The upper-income neighborhoods working towards more affordable housing

Other L.A. County cities  have jumped in to use the Low-Income Housing Tax Credit program, facilitating projects and recruiting developers. Santa Monica, Pasadena, West Hollywood, and Glendale have all hosted recent construction projects aimed at low-income renters.

“We have a great city, a city that a lot of people want to live in and work in and go to our restaurants,” said Meghan Sahli-Wells, a member of the Culver City City Council. “The darker side of that is that when we had redevelopment money, we used it for economic development and did not use it for affordable housing. And in a sense, we’re really living through the consequences of those choices.”

Sahli-Wells said the city’s come around and is starting to commit to affordable housing construction. The city’s seen two developments utilizing credits in recent years.

Meanwhile, in Burbank, officials are realizing that the city's traffic is being caused by people who don't live in the city commuting there for jobs – a problem that could be alleviated, not exacerbated, by affordable housing, said Community Development Director Patrick Prescott.

“We really haven’t built any kind of housing and we’re figuring out in Burbank that that’s a problem for us,” Prescott said. “The impression people have is that more housing automatically means more traffic [but] we’re seeing that what’s driving traffic in Burbank is the number of jobs we have.”

Prescott said Burbank officials are working on a plan for developing housing “at all income levels," but the city has no immediate plans to recruit a developer to embark on a major low-income housing development.

The County of Los Angeles is starting to offer some incentives, announced in recent weeks, to encourage smaller cities to pursue developments. The City of Los Angeles, too, is considering how to encourage developers who apply for fund from Proposition HHH, a bond for homeless housing passed last year, to build in what are called “high opportunity” areas, close to transit, good schools, and other community resources.

The state, which administers the tax credit program, is also looking for a more balanced approach to where projects end up. Mark Stivers of the California Tax Credit Allocation Committee said his office is considering changes that would prioritize larger developments serving families that go into high opportunity areas.

“We’re very interested in better integrating California’s communities economically and ethnically, we’re very interested in making sure our residents have access to opportunity, and we’re looking for ways to achieve that,” Stivers said. “There are many things that are beyond our control, but we’re going to do what we can.”

In Marina Del Rey, Lett's organization, the Hollywood Community Housing Corporation, was able to build a new development for formerly homeless people.

This development took a lot of work and luck – the organization bought the land during the recession, when prices were cheaper. The neighborhood association and city councilman were on board, which meant that required zoning changes could happen easily. And no one filed a lawsuit to stop the project. 

"They had the political will and they got it done," Letts said. 

Patrick Ward lives there, in a one-bedroom apartment where rents average $300 a month – a tenth as much as a similar apartment renting at market value around the corner. Ward had previously lived on Skid Row after injuring his knee and exhausting state disability and his personal resources. 

Now, his apartment is a short distance from a bus stop, and there are medical offices, mental health clinics, grocery stores and food pantries all nearby. 

"It's just fantastic," he said. 

Series: SoCal's Housing Crisis

This story is part of KPCC's in-depth coverage of Southern California's housing crisis. Follow along as we try to answer: How did we get to this point? What’s being done to fix the problem? And where do we go from here?

Read more in this series and let us know your thoughts and questions below in the comments section or on our Facebook page.

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