Can Silicon Valley Money Save Low-Cost Housing in South Los Angeles?
Technological wealth is coming to South Los Angeles – but not in the way some other parts of the city have become accustomed to.
A new program backed by the personal philanthropic company of Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, aims to help small landowners there so that properties stay in the hands of locals, remain affordable for locals and help to create wealth within the community.
The Los Angeles Local Rental Owners Collaborative is a joint effort of nonprofits, an online property management company, and the Chan Zuckerberg Initiative. It will put $ 5 million in the hands of landlords – especially those who have been criticized by the COVID-19 pandemic – to pay the rent owed by troubled tenants and for any necessary repairs.
“It’s a critical part of having a healthy neighborhood – having local assets,” said Alejandro Martinez, director of real estate for the Coalition for Responsible Community Development, which administers the program.
The program, which kicked off Thursday, will also provide financial coaching to small homeowners, including helping them pool resources for discounts on insurance, mortgages and legal services.
This is the latest deployment of tech money to alleviate a housing crisis that tech companies have been accused of making due to their rapid expansion over the past decade as their offices expand and employees highly paid people were moving to new neighborhoods.
Much of that money, including a $ 1 billion pledge from Google in 2019, was spent on building new homes.
The Chan Zuckerberg initiative – which has invested in efforts such as housing, education and criminal justice reform – has in previous programs donated money to allow nonprofits to acquire existing housing in California.
In this new initiative, funds will go directly to private owners to enable them to keep their properties.
The idea is to directly help small landowners, especially people of color, to stem a potential tide of gentrification and loss of wealth if the pandemic-induced economic downturn leads to a wave of foreclosures and forced sales. similar to what happened in the housing of 2008. screw up.
“Our communities are at their best, and most vibrant, when everyone has a safe and affordable place to call home,” Chan said in a statement. The new program will help “stabilize and improve housing for those who need it most, especially in black and brown communities that have been hit hardest by the pandemic and decades of exclusionary housing policies.” .
The program, which also receives funding from the Roy + Patricia Disney Family Foundation, is launching a pilot project in a specific area in south Los Angeles, but donors are hopeful it can grow in the future.
For now, landlords must have a tenant who is behind on rent and must own two to 20 units, one of which must be in the southern corner of Los Angeles that encompasses the historic districts of South Central, South Park, and Central-Alameda. The boundaries are Washington Boulevard to the north, Slauson Avenue to the south, the 110 Freeway to the west, and Alameda Street to the east.
Ruby Bolaria Shifrin, director of housing affordability with the Chan Zuckerberg Initiative, said the pilot program was designed in this way – targeting the smallest landlords and that specific geography – to help those most in the need.
Homeowners with only a handful of units were more likely to have difficulty paying their bills before the pandemic and are more likely to have issues now, research shows. The mostly low-income, Latino and black neighborhoods that the program will serve have been hit hard by the health and economic effects of COVID-19, reflecting the racial inequalities that the pandemic has exacerbated.
Bolaria Shifrin said the neighborhoods are home to many workers in industries criticized by layoffs during the pandemic. Housing here is inexpensive compared to many areas in Los Angeles and is often owned by BIPOC owners – Black, Indigenous and people of color.
She said the program prioritized helping homeowners who are BIPOC, in part to prevent an expansion of the yawning racial wealth gap, itself a reflection of historic discriminatory policies such as redlining.
A recent survey by Avail, an online property management service, and the Urban Institute that specifically focused on Black and Latino owners found that they were financially more vulnerable than white homeowners before the crisis and now face more problems paying off their mortgage, putting them at increased risk of foreclosure and risk of mortgage displacement. their tenants.
Helping mom and family owners – those who own a small number of units – can have ripple effects far beyond individual owners, program officials said.
On the one hand, these small landlords tend not to increase the rent like large investors and businesses do, making housing more affordable. They are also in their community for the long term: using the income from their property for retirement and passing on an asset through the generations.
About 80% of all LA County homes affordable for someone earning 80% of the median income are because the landlord chose to set the rents there, which means there is no government mandate or special help to keep them affordable, according to a report by McKinsey & Co. Seventy-six percent of these properties – often referred to as natural affordable housing – are owned by individuals rather than businesses.
“Most affordable housing doesn’t come with tax credits or whatever,” said Jacqueline Wagoner, a leader of the affordable housing nonprofit Enterprise Community Partners, who is also involved in the management. of the new program. “It is essential that we do not lose what we have.”
In the years leading up to the pandemic, many tight real estate markets across the country – including South Los Angeles – were losing relatively inexpensive, unsubsidized rental housing as large investors took over properties and redeveloped them into housing. more expensive.
The flood of capital in the greater South Los Angeles area has worried many longtime black and Latino residents, who fear being evicted from certain neighborhoods as richer, often white, people move in.
This latest investment surge came on top of a previous wave of capital that arrived in South Los Angeles in the aftermath of the 2008 financial crisis, when Wall Street-backed companies took over many single-family homes that were were seized, which they did harshly. -hit markets across the country.
The South LA program offers homeowners 80% of what tenants owe them if they agree to forgive 20% of arrears, like the terms of relief programs administered by the city of Los Angeles and the state.
The money will go directly to the landlord, and the tenant will be protected from eviction for the amount of arrears paid and forgiven.
Owners will also receive one year of free access to Avail. And the Coalition for Responsible Community Development will be holding monthly meetings with landlords to discuss new laws and how to access government programs.
In addition to BIPOC owners, the program will prioritize applications from owners of two to five dwellings and those at high risk of foreclosure. It will also prioritize people who have not received financial assistance from other sources, such as the more than $ 2 billion in rent relief currently being distributed statewide. Owners can launch apps here.