A Status Report: Century Freeway Housing Program

Please bring our readers up to date on the current status of the Century Freeway Housing Program?

We are coming to the end of what we call our restructured program which provides for the financing of approximately 3,000 units of affordable housing in metropolitan Los Angeles. We are close to signing development agreements with the last 10 or twelve developments in our pipeline of projects. We'll be done with these projects by the middle of 1995. 

Does that mean that there won't be any RFPs released in the near term? Is the program likely to be a source of financial support for affordable housing in the Los Angeles Basin this winter? 

No. It's means that there will probably be one or more RFPs to come, but unfortunately, the condition of the real estate market has kept us from putting out another RFP. We haven't gotten the funds back from selling other units, what we call our "rollover" money, so that we may put out another RFP.

Last January, when TPR interviewed you, the estimation was that CFHP might have another round of funding this year. Will CFHP have funds available in 1995?

I would say if we are fortunate enough to make some large sales, we could have something in the last quarter of 1995. 

Given that Century Freeway Housing Program has been a major player in affordable housing, providing, as you have confirmed, financing for approximately 5,000 units, what funding source do you expect to fill CFHP's financing role?

I don't really have an answer to that. I think that with the proposed changes by the City of Los Angeles, it looks to me like Los Angeles, either through the Community Redevelopment Agency (CRA) or the Housing Department, however that is resolved, is going to be the major player which will continue to provide important funding. I think that another major source is the continued involvement by many of the major private lenders, the banks that have realized lending for affordable housing units is in their best interest. They have realized that affordable housing can be a money making venture. You are going to be seeing more private lenders involved in the affordable housing market .And, of course, the Feds: HUD will remain an important player, directly or indirectly.

Elaborate on haw you expect the City of Los Angeles' housing production agencies to adapt, given the absence of CFHP, in the next year or two. 

Well, of course, since we are a state agency, our relationship with the City of Los Angeles has been through the good works of the CRA and the Housing Department in co-financing several developments. I wouldn't presume to tell the City of Los Angeles how it should carry out its affordable housing business. I do know that at CFHP, we believe that affordable housing is no longer something you finance as housing; it has to be more than shelter, it has to provide opportunities (in order) to resolve some of the social issues resulting from conditions in the inner-city. 

Give us an example of what is included in a model project. 

An excellent example is the Casa Loma development near downtown Los Angeles which provides childcare for 100 children as part of an intergenerational housing development, so that kids, single parent families and senior citizens all are served together. Another example is the Academy Hall development which utilizes the EXCEL program providing instruction and tutoring on-site, including the possibility of a full tuition scholarship at USC. 

But I'd like to talk about another innovative project which hasn't been done before - the Westside Residents Hall. This project was developed to assist homeless veterans in making the transition from living on the streets to reintegration back into society. The project involves a private for-profit entity providing the real estate management at the same time a non-profit organization, the project's co-partner, provides the social services in conjunction with the Department of Veterans Affairs. 

You have mentioned the possibility of private lenders filling the gap CFHP creates. Are you talking about take-out financing or construction financing? Is there any evidence that private lenders are taking up the slack?

If you are only talking about the take-out or permanent financing, there is evidence that some of the institutions are beginning to realize this might be in their interest. Obviously, the major interest on the part of the private lenders has been in construction financing. It will only be a matter of time before they see that these projects are well-run and economically viable in addition to meeting whatever societal goals that might be involved. 

Are you seeing any evidence of pension funds coming into the affordable housing market? 

As a matter of fact, we have initiated discussions with one of the larger pension funds. I think it's inevitable that the pension funds will want to be major players in Southern California. Major pension funds are involved in the Northern California housing market, and I think it's inevitable for that trend to continue to Southern California. 

What are your thoughts on the impact of the HUD/AFI-CIO housing program? What is its potential for impacting the production of affordable housing? 

It's like any other program. In my lifetime I've seen dozens of programs announced and nothing works until it is proven. When they have financed a project that they can point to and say, "We did that," then I'll believe the program is real. 

What advice would you offer the many affordable hawing project managers who have received predevelopment funding from their cities and have been directed to CFHP for gap funding? What options should they be pursuing now? 

I would suggest that they make a real effort to go back to the private market to try to put together other options such as tax credits or encouraging private lenders to recognize the value in affordable housing developments. 

Finally, if you were writing an executive memo to the Governor on your experiences managing CFHP, what would be three lessons or recommendations for change you would wish to highlight?

First, make all the state and state assisted housing agencies sit down together to resolve the issue of monitoring affordability. I don't know all the answers but that is an issue which needs to be resolved. Secondly, put together a group of individuals in the affordable housing community from the public and private sectors, for-profits and non-profits, to brainstorm financing methods for affordable housing on a more permanent basis. 

Lastly, I would encourage what is already happening in Sacramento, taking a hard look at the roles played by the agencies now involved in the affordable housing business, including the California Housing Finance Agency, the Department of Housing and Community Development and the Tax Credit Allocation Committee, and how to efficiently allocate their resources to assist affordable housing developers.