Los Angeles has always been a city of extremes, but the homelessness crisis is exposing the divide between rich and poor in shocking ways.
A-listers in designer gowns and million-dollar jewelry Parades on red carpets, blocks from tents where people live in unsanitary conditions. Private jets take off from Van Nuys Airport, flying over streets filled with RVs and crowded apartment complexes.
Rising housing prices are severely impacting the finances of home owners, while others are becoming unable to afford a roof over their heads.
Now, Mayor Karen Bass is calling on L.A.’s wealthy residents to help close that economic gap with a new initiative that will rely on private donations and loans to buy apartments for the city’s homeless people. finally count The number exceeds 46,000,
Philanthropic and real estate leaders reacted with hope and skepticism to the initiative, LA4LA, which Bass unveiled during his State of the City address on Monday. LA4LA will target corporations and foundations as well as individuals.
While Bass’s colleagues lauded his work on homelessness, others privately questioned how far the donations raised by LA4LA would go, arguing that billions are ultimately needed to fix the problem.
Bass’s campaign comes as wealthy Democratic donors in Los Angeles — some of the same people the mayor is counting on to open their wallets — are hyper-focused on raising money for President Biden’s re-election campaign .
And urban taxpayers of all income levels have already spent billions of dollars to reduce homelessness, even as the population on the streets and in temporary housing continues to grow.
Donna Bojarski, co-founder of a nonprofit dedicated to building civic culture in L.A., predicts that Bass’ deep commitment to reducing homelessness will inspire people to give to LA4LA.
“People are a little less cynical, because he’s shown that things can be done,” Bojarski said, pointing to Bass’ executive order to accelerate affordable housing construction and other programs led by his office.
LA4LA leaders said the initiative will target a specific need amid the larger homelessness crisis.
Bass’s signature homeless program, Inside Safe, has cleared some encampments and moved some homeless Angelenos into hotel and motel rooms. But many people stay in those rooms with no other place to go.
Bass has said that he initially expected Inside Safe participants to spend three to six months in temporary housing, but later realized that for many the stay would last one to two years due to the lack of affordable housing.
LA4LA will target financially distressed multifamily properties that are approved but not yet built, properties that are close to opening or properties struggling with high vacancies with the goal of converting them into affordable housing.
Because LA4LA is a philanthropic enterprise — overseen by the California Community Foundation, a charitable group — it will be able to offer financing at lower interest rates than a bank, LA4LA leaders said. In some scenarios, investors will be offered smaller returns, according to Sarah Dussault, chief strategist at LA4LA.
Building more apartments would also allow the city to take advantage of federal housing vouchers that are now going unused because people have no place to live.
The city has had to return some of the voucher money to the federal government, frustrating officials.
One of LA4LA’s leaders, Hollywood mogul Jeffrey Katzenberg, has already donated $300,000. He told The Times in a written statement that the initiative “uses the flexibility of philanthropy to rapidly activate housing units for those who need it right now.”
So far, LA4LA has raised more than $10 million, Dussault said.
LA4LA is modeled after a similar program in Atlanta, which raised $150 million from philanthropic groups, corporations and individuals. The program provides loans and grants to developers of mixed-income housing that includes affordable units.
Sarah Kirsch, managing director of affordable housing funds at the Community Foundation of Greater Atlanta, said one of the funds offers investors a 3% return.
Although they may get higher returns elsewhere, corporations and other investors are interested in helping create a city where their workers can live, he said.
“We measure return on investment beyond just financial returns,” Kirsch said.
LA4LA is already partnering with the Housing Authority of the City of Los Angeles, a state-chartered agency that manages the city’s public housing developments, to provide loans to purchase buildings.
HACLA Chief Executive Douglas Guthrie said the authority is close to purchasing the buildings using LA4LA financing and expects to close on the new apartment units soon.
Outside donors want to help in the crisis, Guthrie said, and they “just need to know how.” “We’re trying to give them avenues to do that.”
Other philanthropic groups are already tapping wealthy donors to help end homelessness, among them the Mayor’s Fund, a separate nonprofit affiliated with Bass that focuses on preventing people from becoming homeless. Is.
Stephanie Clasky-Gamer, president and CEO of LA Family Housing, a homeless services provider and affordable housing developer, also attracts donors.
Clasky-Gamer said Bass and his team at LA4LA will likely have access to individuals and corporations that groups like his don’t have.
He called Bass “aggressive and committed” but also talked about the reality of homelessness.
“We’re raising more money privately and publicly, we’re helping more people, yet more people are becoming homeless, and that’s disappointing,” Clasky-Gamer said.
Housing in Los Angeles remains extremely expensive, hampering the city’s efforts to acquire units.
At a recent town hall hosted by KNX News, Bass revealed that he had launched an unsuccessful “crusade” to purchase a partially completed downtown skyscraper that became a national landmark after it was tagged with graffiti on almost every floor. Became a spectacle, and used it. For affordable housing. The unfinished building is estimated at $850 million, he said, and will likely have to be demolished.
Jay Liebick, national director of multifamily analytics at CoStar, a commercial real estate data provider, said LA4LA’s model “makes complete sense” given concerns about the multi-unit housing market.
“If there becomes a crisis for multi-family (buildings), this is a way to keep as much housing as possible,” he said.
Vacancy rates are rising in the luxury apartment market in Los Angeles County, according to CoStar data, and those units are taking longer to lease.
Real estate experts say that building owners are also struggling with rising interest rates.
Gregory Harris, executive managing director of Institutional Properties Advisors, was more cautious. He called LA4A a “noble” idea, but said economically distressed projects in Los Angeles are “few and far between.”
When projects come up for sale, there are usually multiple bidders, Harris said.
Stuart Waldman, president of the Valley Industry and Commerce Association, said he hopes the business community will contribute to LA4LA.
Bass’s push for private donations matters more than getting back to the ballot box, he said.
Over the past decade, voters have approved Proposition HHH to build housing for the homeless, Measure H to provide services to the homeless, and Measure ULA to prevent people from becoming homeless.
Civic leaders are now considering doubling the size of Measure H, taking it from a quarter-cent sales tax to a half-cent.
Waldman pointed to the narrow passage of Gov. Gavin Newsom’s $6.4 billion bond measure to improve California’s mental health system in the recent March election as an example of voters’ wariness about funding more homeless services. Is.
“People are tired and done,” Waldman said. “The only way they can get more money is through private donations.”
Times staff writer David Zanisser contributed to this report.
