Century Housing Now Provides "More Than Shelter" Financing

Allan, let's reflect back nine years. What was the stated vision and promised goal when you & Judge Harry Pregerson sought to privatize the Century Freeway Housing Program?

The stated goal was that Century would become, as a nonprofit corporation, a resource in the community to help provide what has become our theme, "More Than Shelter®" for all of the people whom we serve in the Century community.

Before the privatization, we primarily were a housing financing organization. However, we have transformed the company since privatizing by trying to create a community in every place where we are involved. That drive to create community has included the development of programs for kids, veterans, seniors and other underserved segments of our neighborhoods. We also recently created the More Than Shelter Fund, which will help perpetuate these More Than Shelter® programs beyond what Century can do.

With Century changing from a financier of affordable housing to a company offering an array of programs to serve healthy neighborhoods, how would you now characterize the mission of Century Housing?

The mission of Century Housing is to be a leading provider of excellent and affordable housing, to be a creator of socially responsible shelter and economic development for the communities we serve, emphasizing more than shelter, while remaining committed to the highest standards of product quality and professional service.

To accomplish that mission, we started with about $120 million in capital, which we have turned over now three or four times. We also have upwards of $500 million in lending activity that we have used to create more that 11,000 units of affordable housing in the Los Angeles-Orange County area. The most important resource is, of course, the people that we've been fortunate enough to attract to be part of the Century Housing family.

We have worked both with for-profit and non-profit developers-a lot of non-profit CDCs here in L.A.-to make it possible for them to finance tax credit projects and other types of affordable housing. Typically we'll do site acquisition, construction loans, or bridge loans, acting as a facilitator in a smaller role in a bigger deal. However, our ability to be flexible, which not all other lending institutions have, gives us a chance to close a deal and create an opportunity where traditional means of financing would have fallen through. We always try to look at what the end result is going to be. Is this going to be more affordable housing for the community? Then, we'll try and stretch whatever we can do to make a deal happen.

One of Century Housing's "more than shelter" programs supports early learning centers and after-school education. Elaborate.

The Century/LIFT (Century Learning Initiatives For Today) program has about 300 kids a year participating. We're very excited about the way these kids can respond, and do respond, to a greater emphasis on academics. As a result of our terrific partnership with USC and Pitzer College, just last week another one of our graduates of the Century/LIFT after-school tutorial program has been accepted with a full scholarship to Pitzer College.

We're currently taking the Century/LIFT model and applying that to the development of a charter school in Inglewood. We hope to have the doors open for middle school students beginning in September of this year. Eventually, we see the school offering elementary and high school as well.

Allan, as you've said, your tag line to Century Housing is "More Than Shelter®," and you've spoken a bit about your desire to help build stronger communities. What have you learned about the degree of difficulty involved when collaboration and partnership among public agencies and communities are required for successfully building stronger neighborhoods?

We're finding that it's difficult to do. It would be great if it were easy to do, but when you involve different properties and different people, it becomes much more complicated. In El Sereno, for instance, we provided land both for a new elementary school and for a new library. In the process, we've partnered up with Barrio Action, a very effective educational group in that community. With the help of Councilman Villaraigosa in that district, we are figuring out what is the future of that area and how the real estate, which we now own, should be put to its highest and best use for the community. However, the collaboration necessary to meet the needs and desires of the community is not simple.

Century Housing has generously supported the work of New Schools-Better Neighborhoods, specifically on a master planned, mixed-use school- housing project in Westlake/Pico Union. And, you've also had opportunities to meet and discuss with LAUSD Superintendent Romer how best to invest the district's $13 billion now available for new school seats in our inner cities and suburban neighborhoods. Elaborate on your thoughts re the promise, opportunity and challenges of leveraging those bond resources to strengthen neighborhoods?

Anytime somebody has $13 billion to place, whatever its stated purpose, into any community, that someone is going to be the 600-pound gorilla and has a great opportunity to make a big difference. But, the law of unintended consequences always seems to crop up. And, while one might admire a focus on the great need for more schools and seats for students, we can't ignore the fact that when schools come into an area-and especially now that most of the readily available sites have been taken-housing stock will be taken away from the community. We're going to lose housing stock at a time when Los Angeles needs about 250,000 units of housing-we're that far behind!

Something people don't understand is that the Los Angeles metropolitan area has now become the most overcrowded metropolitan area in America, exceeding even New York City. And all you have to do is go down some of these streets and see people living in garages and families doubling and tripling up in order to understand how difficult it is for people to find housing.

Compare and contrast Century Housing's affordable housing success with the efforts of cities and counties to do the same tasks - to put together their own housing trust funds and community development banks to stimulate housing production and neighborhood investment? What accounts for your success? What accounts, in constrast, for the failure of Los Angeles' Community Development Bank?

It's the nature of government. I've been in government at the local, state and federal level. I think I understand a little bit about government and how it works. There is little accountability built into the government system. As a result, the system also lacks in risk-taking and innovation. And that's the difference. We, as an independent, private entity, are able to go out and assess the risks inherent in the types of projects we've been able to do. Government just cannot do the same thing.

When I first came here, the state government was trying to build housing and they weren't doing a very good job. This is no surprise, as government traditionally has had a tough time in the real estate development business. We were able to change the program around so that the government was limited to a financing role. And that is a role government can fill quite ably.

Elaborate on the lessons learned from the failure of the LA Community Development Bank? How might we best utilize the housing trust fund that Mayor Hahn has established?

The LA. Community Development Bank is a great example of a wonderful concept gone awry. I think it suffered from too much governmental and political influence and not allowing enough leeway for professionals to run the organization. The community development bank was a risky venture. Going into a community, investing in small businesses and expecting jobs in return is a risky model. If you're going to do that and expect a winner every time, you will be disappointed. And, if on top of that, you say you're not going to be able to make these loans unless a political body, like a city council, approves them, then it just is not going to be successful.

I admire Mayor Hahn for his focus and attention to housing. He is very fond of saying that "housing is where jobs go to spend the night," and he's absolutely right. Jobs and housing are just tremendously interlinked. One way to realize economic growth is to encourage housing, and I think that's what Mayor Hahn has tried to do with the Housing Trust Fund. Having been able to play a little part in that, I think it's great that the city of L.A. has stood by its commitment and raised $100 million for the Fund.

As we do this interview, the Los Angeles City Council, like other city councils around California, is considering adopting an inclusionary zoning ordinance. Century Housing has done a number of monographs and conferences on this subject. What instructions, thoughts, or wisdom can you offer the council?

As the current chairman of the National Housing Conference, which is the oldest national advocacy organization for affordable housing, I'm very aware that NHC has published a series of research reports about inclusionary zoning. Our most recent one, about inclusionary zoning in California, has shown that there are now more than 120 cities and counties in California that have established inclusionary zoning as a way to assist their communities in finding affordable housing for their residents.

The opponents of such methods just aren't aware of the benefits of what can happen here. If you properly and fully incentivize the private sector, inclusionary zoning can be quite successful as a way to bolster affordable housing development.

Well, the devil's always in the details, and there are a variety of model ordinances to examine. Why do you believe there is significant resistance from much of the development community to an inclusionary zoning ordinance for L.A.?

Having been in the for-profit real estate development business for many years, I have a lot of empathy for the issues that turn into more regulation for a developer. Los Angeles as a city already is a very difficult place to build housing and a most difficult place to create affordable housing. However, if appropriate incentives were given to developers-such as a predictable and quicker approval processes-you could see a lot more housing being built. In the end, that is what is needed here, more housing. The creation of more housing must be the emphasis.

Let's turn to Century's workforce housing agenda. What are the instructive models to emulate? What develoments should be emphasized given the increasingly unmet need for such housing in Southern California?

We have believed for the last couple of years that workforce housing is the area that is most underserved by developers. You have people who are building upper-end multifamily units all over L.A. You have some people who are building affordable multifamily units. What you haven't had is much housing developed serving those who are between 50% and 120% of median income. There are no subsidies for those folks.

We've tried to emphasize being more effective and being more efficient in putting together the financing for some of these deals. As a result, we are currently financially involved in seven different developments in or around the downtown area.

These developments are unique in that there are no government subsidies involved. That's the difference. You can put together deals where you have some government financing for a portion of the units, but you've got to figure out another way to finance the rest of them. It's a tough segment of the market to serve, because rents need to be maintained at a level that is not so far below market rates, but not far below.

This interview clearly confirms that Century Housing is in the business of place making. What are the best and most practical strategies, in a dense metropolis like Los Angeles or Southern California, for advancing housing production and livability? How do you gain public acceptance for infill development and higher densities?

The first component is vision. We tend to expect our political leaders to be all things to all people all of the time, but they just can't do it. You can't rely on the politicians to be the only visionaries here. It's not in their nature, and that's not how they get elected. So, you have to look to other parts of the community, particularly the business leadership. You have to look to the Chambers of Commerce and similar associations. We've got one very large industry in this town that I don't believe has stepped up at all-the entertainment industry.

We have freeways that are so clogged we can't drive on them; we don't have enough housing for people to live in; we're staring at clean-air conditions that are strangling us; what are we doing about it? I often communicate my frustration to the younger people around this office because they are going to be forced to make some difficult decisions about these issues facing our region. I don't know what is the right formula to raise awareness, but it is clear to me that the appropriate level of civic awareness is not in the public consciousness.