Category Archive: National Updates

  1. Opportunity Zones: An Investment in Smart Gentrification?

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    In October 2018, the Internal Revenue Service released regulations for investment in Opportunity Zones, a concept established in the Federal Tax Codes and Jobs Act of 2017. The zones are designed to spur private investment in economic and community developments in economically distressed communities. The State of California now has 890 designated Opportunity Zones out of 8,000 nationwide. The zones would function as a form of impact investing, where private investors are interested in two bottom lines: the capital impact and the social impact.

    Map of the San Diego Promise Zone, which includes the same Census tracts as the new Opportunity Zone

    Within California, Opportunity Zones have the potential to replace public redevelopment dollars lost by the dissolution of redevelopment agencies. Opportunity Zones also allow private investors to contribute to their local communities. The regulations released by the IRS in October were particularly investor-friendly and include a provision clarifying that all capital gains on investments made in Opportunity Zones before 2048 would be excluded from the capital gains tax. Investors may invest capital gains from an asset in a Qualified Opportunity Fund (QOFs) within 180 days of the transaction. The taxes on those gains are then deferred through the end of 2026.

    Given the incentives, investors’ interest in Opportunity Zone funds has grown rapidly. Community advocates, especially those concerned with equitable development, have expressed growing concerns about gentrification and displacement within the Opportunity Zones. Given that the tax subsidy grows as property values increase, investors in quickly gentrifying neighborhoods will receive the highest return on investment. The Brookings Institute suggests that with some guardrails, such as tenant protection policies, Opportunity Zones could lead to “smart gentrification,” or gentrification that does not displace existing residents. The long-term impact of Opportunity Zones is yet unknown, but housing advocates hope it could mean the return of redevelopment.

    Liz TraceyLiz Tracey, Senior Principal, is an expert on affordable housing and community development finance using tools such as the Low-Income Housing Tax Credit and New Markets Tax Credits. For information about community development financing resources, contact Liz Tracey at liz@lesardevelopment.com.

     

  2. U.S. Senate Appropriations Committee Rejects Proposed Cuts to HUD Funding

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    The Senate Appropriations Committee on June 7 rejected the Administration’s proposed cuts to the U.S. Department of Housing and Urban Development (HUD) budget by advancing a bill that includes $44.5 billion in discretionary appropriations, increasing funding by $1.8 billion above FY 2018 levels.

    The Administration had proposed $41.2 billion in FY 2019 funding for HUD, which would have reduced funding by $11.5 billion over FY 2018, eliminated the Community Development Block Grant (CDBG) and HOME Investment Partnership programs, and instituted higher rent levels and work requirements for some programs. The Administration’s proposal also would have resulted in shifting more of the costs of building affordable housing to state and local governments.

    “This bipartisan bill is the product of considerable negotiation and compromise,” said U.S. Senator Susan Collins (R-Maine), chair of the Subcommittee in an official statement. “The funding in this legislation will allow us to invest in our nation’s infrastructure, while fully funding the renewal of housing assistance for low-income seniors and other vulnerable populations, such as teenagers and veterans who are homeless.”

    Rental Assistance

    The bill includes $42.8 billion in rental assistance funding, which currently supports an estimated 5 million families nationwide. The budget reflects modest increases for tenant- and project-based rental assistance programs, as well as public housing capital and operating funds. Included within the rental assistance funding is $40 million for new vouchers dedicated to homeless veterans. The Administration’s FY 2019 proposed cuts to all three programs and would have eliminated capital funds to repair and maintain public housing.

    The bill renews funding for Housing for the Elderly at the same level as FY 2018 and includes $51 million that would be used to produce new dedicated housing units for seniors. The bill also reduces the FY 2019 appropriation for Housing for Persons with Disabilities to $154 million; however, the decrease reflects on partial-year funding to reflect the time required to put an estimated 30,000 new vouchers funded in FY 2018 into circulation.

     Community Planning and Development

    Similar to the House bill, the Senate bill renews funding for community planning and development at $12.9 billion, and rejects the Administration’s proposal to eliminate the CDBG and HOME programs. These programs, which provide entitlement funds for state and local governments to build housing and address other development needs, continue to have strong bipartisan support.

    Other community development initiatives funded in conjunction with the HUD appropriation include the Choice Neighborhoods Initiative and the Neighborhood Reinvestment Corporation. The Senate bill provides $100 million for the Choice Neighborhoods Initiative, which provides funding for state and local governments to redevelop HUD-assisted housing. The bill reflects a $50 million funding cut from FY 2018, but does not eliminate the program as recommended in the Administration’s budget. The House bill proposed maintaining funding at FY 2018 levels and giving priority to previous planning grant recipients when awarding implementation grants.

    The Neighborhood Reinvestment Corporation, which supports an estimated 250 community development organizations nationwide that provide housing and counseling services through the NeighborWorks’ network, would see a budget increase of $7 million under the Senate appropriations bill. The Administration had proposed winding down the program over two years.

     Homeless Assistance

    The Senate bill maintains FY 2018 funding levels for the United States Interagency Council on Homelessness at $3.6 million, and increases funding for Homeless Assistance Grants by $100 million to $2.6 billion with an emphasis on housing and services for specific populations, including youth and survivors of domestic violence. Specifically, the bill includes $80 million to support Continuums of Care in developing comprehensive approaches to ending youth homelessness, and $20 million to fund 2,500 rental assistance vouchers for youth aging out of foster care. The bill also provides $50 million to assist an estimated 3,750 survivors of domestic violence to secure housing through Rapid Re-Housing programs.

    The bill also includes $40 million for the HUD Veterans Assistance Supportive Housing program, providing 5,100 new vouchers for veterans experiencing homelessness.

    The table below highlights how the Administration, House, and Senate FY 2019 budgets differ from the enacted FY 2018 budget:

    U.S. Department of Housing and Urban Development Program Budget

    Program

    FY 2018 Enacted

    FY 2019 Proposed

    FY 2019 House

    FY 2019 Senate

    Tenant-Based Rental Assistance Programs

    $22 billion

    $20.5 billion

    $22.4 billion

    $22.8 billion

    Project-Based Rental Assistance Programs

    $11.5 billion

    $11.1 billion

    $11.7 billion

    $11.7 billion

    Public Housing Operating and Capital Funds

    $7.3 billion

    $3.28 billion

    $7.3 billion

    $7.5 billion

    Housing for the Elderly

    $678 million

    $601 million

    $632 million

    $678 million

    Housing for People with Disabilities (Section 811)

    $229.6 million

    $140 million

    $154 million

    $154 million

    Community Planning and Development

    $7.7 billion

    $2.7 billion

    $7.6 billion

    $7.8 billion

    Community Development Block Grant

    $3.4 billion

    $3.4 billion

    $3.3 billion

    HOME Investment Partnerships Program

    $1.4 billion

    $1.2 billion

    $1.4 billion

    Housing Opportunities for Persons with AIDS (HOPWA)

    $375 million

    $330 million

    $393 million

    $375 million

    Choice Neighborhoods Initiative

    $150 million

    $150 million

    $100 million

    Neighborhood Reinvestment Corporation

    $140 million

    $27.4 million

    $150 million

    $147 million

    McKinney-Vento Homeless Assistance Grants[2]

    $2.5 billion

    $2.4 billion

    $2.5 billion

    $2.6 billion

    U.S. Interagency Council on Homelessness

    $3.6 million

    $630,000

    $3.6 million

    $3.6 million

    The Senate bill also includes $26.6 billion in FY 2019 discretionary appropriations for the U.S. Department of Transportation, $698 million less than the FY 2018 enacted budget. Congress must pass the FY 2019 appropriations before September 30 or issue a continuing resolution to avoid a government shutdown.

    Sources:

    U.S. House of Representatives Appropriations Committee. (2018). Departments of Transportation, and Housing and Urban Development, and Related Agencies Appropriations Bills, 2019 Report.

    U.S. Senate Committee on Appropriations. (2018). Subcommittee Approves FY 2019 Transportation, HUD Appropriations Bill.

    U.S. Senate Committee on Appropriations. (2018). Summary: Subcommittee Approves FY 2019 Transportation, HUD Appropriations Bill.

  3. Omnibus Bill Preserves Key Housing Programs, Strengthens LIHTC

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    Congress narrowly averted a government shutdown on March 23 when President Trump signed the $1.3 trillion Consolidated Appropriations Act of 2018, which funds the government through September 30, 2018. The bill, which covers a wide range of budget areas, increases defense spending by $66 billion and domestic spending by $52 billion.

    FY18 HUD Budget Appropriations

    The $42.7 trillion in net discretionary appropriations Congress allocated to the U.S. Department of Housing and Urban Development (HUD) represents a $3.9 billion increase over FY2017 and a major win for housing advocates who fought White House efforts to cut key housing programs. The final bill provides for the construction of housing, preservation of rental assistance, and economic development, and also funds HUD at higher levels than originally proposed by either the House or Senate.

    The following FY18 HUD budget summary integrates data from a variety of sources to highlight key elements of the bill: [1], [2] , [3], [4]

    1. The bill provides $33.5 billion for Rental Assistance Programs, which will help meet the housing needs of 3.5 million households. Tenant-based rental assistance will increase 8.5% over FY17 to $22 billion, including $19.6 billion to fund the renewal of Section 8 Housing Choice vouchers. The bill provides $11.5 billion for project-based rental assistance programs.
    2. Public Housing Programs received $7.5 billion. The Operating Fund received $4.55 billion and the Capital Fund received, $2.75 billion, a 42% increase over FY17. The increase will primarily be used to expand the Rental Assistance Demonstration (RAD) program from 225,000 to 455,000 units and extend the program through 2024. RAD allows public housing authorities to leverage public and private debt and equity to fund capital improvements. The day before the budget passed, the Government Accountability Office released a study that found that HUD’s evaluation and monitoring procedures did not provide adequate data to assess RAD’s impact on housing authorities’ access to funding, resident safeguards, or the long-term affordability of housing units.
    3. Funding for the Community Development Block Grant program increased 7.8% to $3.3 billion, and the HOME Investment Partnership Program secured $1.36 billion, a 43.4% increase over the previous year.
    4. The bill provided $2.5 billion for McKinney-Vento Homeless Assistance Grants, which includes $2.1 billion for Continuum of Care and Rural Housing Stability Assistance, $270 million for Emergency Solutions Grants, $80 million for youth homelessness, $20 million for Family Unification vouchers, and $40 million for new VASH vouchers for homeless veterans. In addition, the bill reauthorizes the U.S. Interagency Council on Homelessness for two years.
    5. The bill included $907.6 million for the Housing for the Elderly and People with Disabilities, which represents a marked increase over FY2017. Specifically, the bill increases funding for the Housing for the Elderly by 35% to $678 million and funding for Housing for Persons with Disabilities by 57% to $230 million.
    6. The Native American Housing and Community Development program will receive $821 million.
    7. The Housing Opportunities for Persons with AIDS received a $19 million increase, bringing the total program budget to $375 million.
    8.  A $2 million increase to the Community Development Financial Institutions (CDFI) Fund, bringing the FY18 budget to $250 million. The CDFI Fund provides the financing to the New Markets Tax Credit program, among other economic development activities.

     

    While the FY18 budget demonstrates bipartisan Congressional support for housing programs, housing advocates are already gearing up to oppose the Administration’s FY19 budget, titled “Efficient, Effective, Accountable – An American Budget,” which aims to eliminate the Community Development Block Grant Program, HOME Investment Partnership Program, Choice Neighborhoods Initiative, and Self-Help Homeownership Opportunity Program. Eliminating these programs would shift the activities and associated costs to state and local governments.

    LIHTC Allocations Increased

    In an effort to attract private investment to affordable housing, the omnibus bill increased the Low-Income Housing Tax Credit allocations by 12.5% for four years. The increased cap aims to offset anticipated losses resulting from cutting the corporate tax rate from 35% to 21%. Accounting firm Novogradac & Company estimates that the increased allocations would result in an additional 28,400 rental homes. In California, the Tax Credit Allocation Committee will make the additional credits for this year available during the second round of competitive funding, which closes July 2, 2018.

    New LIHTC Income Averaging Provision

    The bill creates a third set-aside option for rental properties to qualify for LIHTC credits. Income averaging, an option originally introduced in 2016 as part of the Affordable Housing Credit Improvement Act, aims to promote development, neighborhood revitalization, and affordable housing preservation by making LIHTC properties available to households with a wider range of incomes. Specifically, income averaging would allow households earning up to 80 percent of the Area Median Income (AMI) to qualify for certain LIHTC units provided that 40% of the units are rent-restricted and the average household income for the project does not exceed 60% AMI.

    LDC will continue to follow how changes to federal program funding, as well as how the increased LIHTC allocations and income averaging option, impact housing and economic development statewide.

    Liz TraceyLiz Tracey is an expert on affordable housing and community development finance using tools such as the Low Income Housing Tax Credit and New Markets Tax Credits. For information about community development financing resources, contact Liz Tracey, Senior Principal, LDC at liz@lesardevelopment.com.

    [1] U.S. House of Representatives Committee on Appropriations – Democrats. (March 2018). FY2018 Omnibus Appropriations Act: Summary of Appropriations Provisions.

    [2] Congress.gov. (March 2018). H.R. 1625 – Consolidated Appropriations Act, 2018.

    [3] Novogradac & Company LLP. (March 2018). Congress Agrees to Historic Funding for HUD in Fiscal Year 2018 Omnibus Spending Bill.

    [4] U.S. House of Representatives Committee on Appropriations. (March 2018). FY2018 Omnibus – Transportation, HUD.

  4. HUD Suspends Fair Housing Rule

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    U.S. Department of Housing and Urban Development

    On January 5, 2018, the U.S. Department of Housing and Urban Development (HUD) announced that it had suspended the Affirmatively Furthering Fair Housing (AFFH) final rule, an Obama-era effort aimed at addressing racial discrimination in housing. HUD also extended the deadline for local governments to submit an Assessment of Fair Housing (AFH) from 2018 until after October 31, 2020, and in many cases until 2025. HUD also discontinued reviewing AFHs, claiming that program participants needed additional time and technical assistance to adjust to the new AFFH process.[1]

    The AFFH final rule, released in July 2015, embodied a long-awaited effort to give teeth to the federal Civil Rights-era Fair Housing Act, which requires local governments to take active steps to end racial segregation.[2] AFFH requires local governments to use the Assessment of Fair Housing Tool for Local Governments, which was approved by the Office of Management and Budget, to assist them in meeting their statutory obligation to affirmatively further fair housing.[3] According to the HUD notice, local governments will not be required to submit an AFH using the tool, but must comply with existing obligations to affirmatively further fair housing. Local governments with an AFH already accepted by HUD must continue to execute their stated goals. Local governments with completed AFHs not accepted by HUD are encouraged to use those drafts to conduct the required Analysis of Impediments to Fair Housing Choice.[4]

    Although the HUD notice does not revise AFFH or change the AFH requirement, fair housing advocates fear that the rule’s suspension signals that the Trump Administration is moving toward halting AFFH implementation, negatively affecting local jurisdictions’ proactive steps to tackle racial segregation in communities nationwide.[5]

    Reza Mortaheb, Research Analyst, employs his experience as an architect and urban planner to cover federal housing policy and research on Accessory Dwelling Units (ADUs). To learn more about these issues, contact him at reza@lesardevelopment.com.

    [1] Federal Register / Vol. 83, No. 4 / Friday, January 5, 2018. https://www.gpo.gov/fdsys/pkg/FR-2018-01-05/pdf/2018-00106.pdf. P.684

    [2] The United States Department of Justice, “Fair Housing Act,” https://www.justice.gov/crt/fair-housing-act-2. Date of Access: January 23, 2018.

    [3] The US Department of Housing and Urban Development, “HUD Rule on Affirmatively Furthering Fair Housing,” https://www.huduser.gov/portal/affht_pt.html#final-rule. Date of Access: January 23, 2018.

    [4] Federal Register / Vol. 83, No. 4 / Friday, January 5, 2018. https://www.gpo.gov/fdsys/pkg/FR-2018-01-05/pdf/2018-00106.pdf. P.684

    [5] CityLab, “The Trump Administration Just Derailed a Key Obama Rule on Housing Segregation,” By Kriston Caps, January, 4, 2018. https://www.citylab.com/equity/2018/01/the-trump-administration-derailed-a-key-obama-rule-on-housing-segregation/549746/. Date of Access: January 23, 2018.

  5. Congress Passes Tax Reform

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    With President Trump’s signature on the tax reform bill, Republicans have achieved their most significant legislative victory of 2017. The bill, which is the first major overhaul of the tax code in 30 years, aims to boost the U.S. economy and increase employment rates by cutting corporate tax rates, initially lowering tax rates for some individuals, and doubling the standard deductions. However, the bill will also add $1.4 trillion to the deficit and has significant negative implications for affordable housing – it is expected to reduce production of affordable housing by nearly 235,000 homes over the next 10 years.

    Specifically, cutting the corporate tax rate from 35 to 21 percent will lower the value of LIHTCs, thereby reducing the amount of equity available to developers for building low-income housing units. Second, the bill changes the inflation factor for future LIHTC allocations from a factor based on the consumer price index for all urban consumers (CPI-U) to one based on a “chained” CPI-U. Many economists believe that the chained CPI-U provides a more accurate estimate of changes in the cost of living from one month to the next by accounting for the effects of substitution on changes in the cost of living. However, this change could decrease inflation adjustments in LIHTC allocations in future years, and would lead to a loss of 8,200 more affordable rental homes over 10 years.

    The final bill was not all bad news, because it retained the tax-exempt status of private-activity bonds (PABs), which are essential for housing production. The House version would have repealed PABs, including multifamily housing bonds. If the 4 percent tax credit had lost value to investors, financing multifamily housing projects would have become more difficult, resulting in the loss of between 788,000 and 881,000 units in the next decade alone. LDC will continue to monitor and share news on the bill’s impact on affordable housing, homelessness, and other issues.

    Reza Mortaheb is an architect, urban planner, and urban researcher who monitors how federal and state housing policy affects housing affordability and community development. For more information, contact Reza Mortaheb, Research Analyst, at reza@lesardevelopment.com.

  6. Unlocking Land for High-Impact Development

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    Modern apartment buildingThe most recent forecast shows that California needs 1.8 million new homes by 2025 to keep pace with population growth, projected to reach 39 million to 50 million by 2050, yet annually produces fewer than half the homes necessary to meet those needs. As a result, cities and counties throughout the state now face an unprecedented affordable housing crisis that threatens economic growth.

    While new sources of housing financing are part of the solution, many jurisdictions are also taking steps to maximize the development potential of existing land. According to the widely circulated “A Blueprint for Addressing the Global Affordable Housing Challenge” and its California companion report “Closing California’s Housing Gap,” both published by the McKinsey Global Institute, efforts to “unlock land” are the most important measures jurisdictions can take to reduce the costs associated with housing production. This is especially true in California where the growing population and limited availability of buildable parcels makes it imperative to prioritize sites based on their capacity for high-impact development.

    In recent years, many jurisdictions have turned to transit-oriented development to unlock land with existing infrastructure near transit hubs and corridors. Since 1995, the Los Angeles County Metropolitan Transportation Authority has routinely sought opportunities to collaborate with developers to increase transit use by building pedestrian-friendly communities on Metro-owned properties. To date, the agency has completed more than 2,017 housing units, as well as nearly 1.5 million square feet of combined retail and office space, across 18 projects. In 2015, the agency updated its joint development policies to require that 35% of the total housing units be affordable to households earning no more than 60% of the area median income.

    San Diego has also taken steps to develop or repurpose government-owned land. In June 2017, San Diego County Supervisors Dianne Jacob and Ron Roberts announced an affordable housing initiative that included identifying 11 county-owned properties for evaluation to determine whether they can be redeveloped. County officials are currently evaluating these sites to determine the feasibility of different redevelopment options.

    Other jurisdictions are working with private landowners to spur development on underutilized or idle land. Last year, Alameda County passed a general obligation bond to provide $580 million in funding for affordable housing initiatives. One initiative capitalizes on the interest faith-based and community organizations expressed in developing their available land and buildings for affordable housing. To launch the Housing Development Capacity Building Program, the County Board of Supervisors has allocated $750,000 to provide qualifying organizations with the capacity development and training necessary to convert their assets into affordable housing. The County also seeks to leverage its contribution with other resources to expand its services.

    In addition, more communities—including Santa Monica—are adopting inclusionary zoning policies. In July, the Santa Monica City Council voted to require most new developments to set aside up to 30 percent of units for low-income households.

    As local governments seek to resolve the affordable housing crisis, they will need more innovative strategies to spur development by unlocking land. By analyzing how available land is currently used, local governments can determine which locations offer the greatest potential for lower-cost, high-impact housing development.

    To learn more about LDC’s policy services, contact Artemis Spyridonidis, Senior Associate, at artemis@lesardevelopment.com.

    LeSar-Artemis-4x5Artemis Spyridonidis covers housing policy issues, including structural solutions to the housing affordability crisis, consolidated plans, housing elements, accessory dwelling unit policy implementation, and regional issues across the state of California.

  7. Harvard Report Calls for Expanded Range of Housing Options

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    Harvard_2017_Housing_ReportNational home prices reached pre-recession peaks last year despite home prices exceeding previous highs in only 41 of the nation’s 100 largest metro areas, according to a recent report by Harvard University’s Joint Center for Housing Studies. High-income neighborhoods saw significantly greater gains than low-income neighborhoods, resulting in regional growth patterns that show price appreciation along the East and West Coasts and declines in the Midwest and South.

    The impacts of historically low construction on housing supply have disproportionately affected the entry-level housing market and tightened the rental market where prices have far outpaced inflation. While household growth rates have picked up largely due to gains among the millennial generation and immigrants, rates are expected to slow again as the baby-boom generation declines.

    To meet the demand for affordable housing, the report calls for national policies to address the diversity of housing markets nationwide, and for state and local governments to take the lead on developing policies and securing resources to meet the unique needs of their communities. Read more…

    For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

    Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

  8. Cecilia Estolano Reappointed to California Community Colleges Board of Governors

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    Cecilia V. EstolanoCongratulations to Cecilia Estolano, Co-CEO of Estolano LeSar Perez Advisors, on her reappointment to the California Community Colleges Board of Governors. She is currently serving as the Board President.

    The California Community Colleges is the largest system of higher education in the United States with more than 2.1 million students on 114 campuses. For every $1 California invests in students who graduate from college, it will receive a net return on investment of $4.50.

    “I am honored to serve on the Board of Governors, and advocate for the quality educational opportunities that every student deserves,” said Estolano. “Our community colleges are the backbone of California’s workforce training and higher education system. I look forward to continuing to work with students, faculty, staff, administrators, and community leaders who help to make California Community Colleges the nation’s most affordable and effective portal to higher education and career advancement.”

    The Board of Governors, which is appointed by the governor, sets policy and provides guidance for the 72 districts and 114 colleges that constitute the system, selects the chancellor, and formally interacts with state and federal officials and other organizations.

    Estolano was first appointed to the board in 2014, and served as vice president before becoming president.

  9. Register Now for the 2017 California Economic Summit

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    CES logoRegister for the 2017 California Economic Summit taking place in San Diego on November 2-3, and save $100 on registration through August 31 using LeSar Development Consultants’ special code: LESAR17.

    Join the state’s largest existing coalition of public- and private-sector leaders, coming together for the sixth annual Summit to advance three ambitious goals:

    • Create a unifying triple-bottom-line vision for increasing economic security and upward mobility
    • Expand the strength and diversity of the Summit network to increase its influence on state and local policy decisions
    • Mature the Summit as a formal civic partner with government to advance triple-bottom-line policies

    The Summit highlights progress on The 2017 Roadmap to Shared Prosperity, which offers detailed action plans to improve the workforce pipeline, increase the supply of housing near jobs and transit, and expand regional water management of the state’s vital water supplies.

    register_now

    Jennifer LeSar, CEO of LeSar Development Consultants and Chair of the Summit Host Committee, was among the local leaders who collaborated to bring the Summit to the San Diego region.

    For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

    Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

  10. Promoting Housing Affordability: Collaboration Key to Improving Policy, Market Conditions

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    Two recent events—the Terner Center for Housing Innovation Conference and the release of the UCLA Anderson Forecast—examined the role of market conditions and public policy in the current housing crisis, and what can be done to improve housing affordability in high-cost regions.

    LA Aff HousingAt the Terner Center for Housing Innovation Conference, Enrico Moretti, Professor of Economics at the University of California – Berkeley, pointed to the weak housing supply as a “self-inflicted problem” related to zoning and land use restrictions, CEQA (California Environmental Quality Act), construction delays, and the proliferation of lawsuits. He also cited new research showing that underdevelopment limits access to jobs, which results in opportunity costs of $7,000 per year for the average Bay Area worker. It also contributes to rising inequality and depresses the State’s economy.

    The situation is similar in Los Angeles, where the growing number of rent-burdened households makes it difficult for people to escape poverty and increases the need for renter assistance, according to Stuart Gabriel, Professor of Finance and Arden Realty Chair at the University of California – Los Angeles Anderson School of Management.

    What can be done to address these issues? Solutions raised by the speakers and panelists include:

    • Updating zoning codes to allow for ADUs and multi-family development,
    • Implementing consequences for localities that fall short of RHNA goals, and
    • Revising parking requirements that restrict development, especially as transportation innovations transform commuting and travel.

    In addition, speakers at both events cited the need for greater regional and local collaboration. In a conversation with the Terner Center’s Carol Galante, Shaun Donovan, former Secretary of the U.S. Department of Housing and Urban Development, acknowledged Congress’s limited appetite for investing in infrastructure and the economy and encouraged regional and local leaders to come together to build the public will for local solutions. He also cited examples of successful interagency collaboration from the Partnership for Sustainable Communities, which brought together the U.S. Department of Housing and Urban Development, U.S. Department of Transportation, and the U.S. Environmental Protection Agency to help communities improve access to affordable housing, increase transportation options, and lower transportation costs while protecting the environment.

    Along similar lines, one of the panels at the UCLA Anderson Forecast discussed the need to help planning agencies and communities rethink the meaning and importance of “affordable” housing as part of the larger housing continuum. By building housing across every income level, communities will not only reduce inequality, they will also strengthen the economy.

    For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

    Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.