Our Work to Find a Robust Local Revenue Source for Affordable Housing

LOS ANGELES COUNTY FACES an affordable housing crisis. Over 57% of LA County renters pay half of their income in rent and LA County needs 551,807 more affordable rental homes to meet the current shortfall. Households earning less than half the median income are spending 70% of their income on rent, leaving very little for food, transportation, health care, and other needs.

This is, simply put, socially unsustainable. We need transformational policies and new funding sources to protect and build more affordable housing. We need transformational solutions.

Move LA’s work over the past eight years has recognized that there is a reciprocal relationship between transit system success and healthy community development near transit. It is especially important that our policies ensure that core transit users, who tend to be low-income working families, comprise a significant share of the population near rail transit stations and bus corridors.

Transit system improvements can make neighborhoods around stations areas more desirable, which is mostly a good thing. But it can also contribute to gentrification pressures that displace lower income residents. Local governments need the tools, the resources, and the courage to address this situation. It will not be easy.

We need to develop strategies to combat displacement and to create the public resources, the authority, and the political will to ensure that new housing for low- and moderate-income families is an integral part of transit station area development throughout Los Angeles County.

Sacramento’s approval of a package of housing bills in the 2017 legislative session, especially SB 2 and SB 3, will increase funding for low- and moderate-income housing projects. Local measures for affordable housing in the City of LA and other local cities are also promising. But we will still fall short of building the affordable homes needed in LA County. We need a more robust local revenue source to fully address the housing needs of low- and very-low-income people.

Move LA believes a combined annual revenue stream of $1 billion a year from state, county and municipal revenue sources would result in a much more robust affordable housing program in LA County. We should ensure that most of these units are built proximate to high-density transit services.

Our recommendations include:

• We must preserve the affordable housing we have. We need to strengthen renters’ rights, provide increased rental subsidies and/or subsidize rent for more people, and to create other protections for renters.
• Sacramento should adopt legislation that provides cities with the opportunity to create tax increment financing districts near transit stations or along boulevards with high-frequency transit service. These districts could then capture a share of the increase in property taxes when property is sold and developed, and they should be required to dedicate at least 50% of the tax increment to the development of deed-restricted affordable housing near transit services. (This idea is elaborated upon below.)
• We should encourage the development of multi-family housing in mixed-use projects on underdeveloped commercial boulevards throughout LA County, where land costs can be lower, and especially along boulevards that also support high frequency transit service, such as Bus Rapid Transit. These boulevards represent the largest supply of underdeveloped land in LA County where housing for all income groups could be developed.
• We should find partners to support a countywide ballot measure that would provide a revenue source dedicated to the development of affordable housing throughout LA County—much like a "Measure M" for housing (Measure M funded transit projects throughout the county). For example, a quarter-cent sales tax could raise over $350 million per year for affordable housing.

An elaboration on Transit Oriented Development Tax Increment Financing Districts (TOD-TIF Districts)

What follows is a proposal for legislation that could facilitate the development near transit of housing in general and, especially, more affordable housing.

• Cities should be enabled to create TOD-TIF districts that:
  • Facilitate successful community revitalization near transit stations and along transit-rich boulevards;
  • Facilitate the development of much-needed affordable and mixed-income housing near transit;
  • Facilitate enhanced transit ridership and reduced emissions of air pollution and greenhouse gases;
  • Mitigate the displacement of households living near transit improvements, and
  • Provide opportunities for permanent supportive housing near transit for people who had been homeless.
• These TOD-TIF districts could include:
  • Properties within a half mile of a rail transit station, including a regional commuter rail station, or
  • Properties adjacent to boulevards served by Bus Rapid Transit or other high-frequency bus service.
• Thereafter these TOD-TIF districts should be enabled to capture the full increment of property tax increase within the district, except the share that is dedicated to schools, so long as:
  • At least 50% of the tax increment generated within the district is dedicated to the development of multifamily housing affordable to and occupied by households with incomes below 60% of the area median income—and including the costs of predevelopment and of operations, and
    • Half of the funding for affordable housing should be expended on permanent supportive housing for people who were homeless or for extremely low-income people;
    • Priority for the occupancy of this housing should be given to households displaced from the district through no fault of their own; second priority should be given to people who are employed within 2 miles of the district.
• Cities where the districts are located should provide a 25% local match for the share of tax increment that is used for affordable housing.  
• The remaining share of the tax increment should be available for investments within the district including:
  • Urban forestry and other landscaping and greening improvements to enhance district livability;
  • Publicly owned decoupled/detached parking in lieu of on-site parking in proposed developments;
  • Improved first-last-mile access to transit service including pedestrian and bicycle improvements;
  • Improvements to facilitate access to transit services for older adults and people with disabilities;
• Rail station or bus stop improvements.
• Within such districts mixed-use projects with 60 multifamily units or fewer and with at least 20% of the units deed-restricted affordable to and occupied by low-income households should be categorically exempt from CEQA so long as:
  • Pedestrian-oriented commercial uses occupy at least 50% of the ground floor;
  • There is no demolition of existing multifamily units or displacement of existing residents.