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Committee approves $4.1 million preservation pilot to shore up at-risk affordable housing reserves
Summary
The Los Angeles City Council committee approved a LAHD proposal to use remaining preservation grant funds to stabilize operating deficits at select affordable housing projects, awarding up to about $15,000 per unit for capital or operating shortfalls and requiring a stabilization plan before funds are released.
The Los Angeles City Council Homelessness and Housing Committee voted unanimously May 14 to approve the Los Angeles Housing Department’s proposal to use remaining preservation grant funds to stabilize financially distressed affordable housing projects.
The committee approved the department’s recommendation to allocate remaining grant dollars across three projects that the department and partners identified as having persistent negative operating cash flow and physical needs. Los Angeles Housing Department staff described the pilot as an infusion to “stabilize those projects” and said the department expects awards to average roughly “15,000” per unit for capital or habitability repairs.
The measure targets projects that show at least two to three years of operating deficits and typically have 20 or more units, officials said. LAHD staff said partners produced lists of projects flagged for operational deficits and for physical needs (PNA). The department and partner Enterprise estimated the average monthly shortfall tied to voucher/income gaps at about $560 per unit.
LAHD staff said the pilot is not expected to solve every project’s structural problems but to provide temporary stabilization while a longer-term route to sustainable operations is demonstrated. The department said projects will need to document a “route to stabilization” showing how they will achieve positive cash flow before receiving funds, and the department will follow up with reports on whether the awards stabilize the properties.
Committee members pressed staff on accountability, portfolio monitoring and potential perverse incentives if public funds repeatedly fill shortfalls in some owners’ portfolios. A member said the city needs more frequent cross-portfolio reporting so councilmembers can see how investments and subsidies are distributed across a developer’s holdings.
The committee approved LAHD’s report and recommendations by a 3-0 roll call. Councilmembers Rahman, Jurado and Bloomfield voted yes.
Committee members and LAHD staff said the program aims to return non-habitable units to service where feasible but noted many units require significant capital work and may remain offline until repairs are complete. LAHD said it will report back on outcomes and metrics, including occupancy and whether awarded funds lead to sustained operations.
