ED 1 Fills LA's Affordable Housing Pipeline, But Questions Remain About Who Is Served

A directive issued by Mayor Karen Bass shortly after her inauguration in December 2022 uses an array of planning tools to pave the way for affordable housing, winning approval from developers and community advocates for its effectiveness. 

With over 6,000 new units of 100% affordable housing approved in a little over a year, Executive Directive 1 has unquestionably bulked up the pipeline of affordable housing in a city where it’s sorely needed. 

But just how much of the need could be met by these projects remains unclear. 

While there are those who believe when it comes to income-restricted housing and housing supply in general, a rising tide lifts all boats, some community advocates are concerned that new units at the higher end of the affordable spectrum could effectively leave out Angelenos in the communities where these projects are proposed. 

A Bisnow review of planning department data indicates the higher end of the income spectrum is a popular place for these projects.

Of the roughly 6,300 ED 1 units approved citywide, about 4,800 of them fall into the low-income category, which has been defined by the state as serving people making up to 80% of AMI.

Lower income bands, including those who make between 0 and 50% of AMI, are classified by the state as “acutely, extremely and very” low-income. The planning department does not track the specific AMI levels of units, characterizing them with categories instead. Also, it should be noted that many, but not all, ED 1 projects go through planning — any by-right projects would go directly to the department of building and safety. 

The streamlining applies to covenanted affordable projects in which the affordability level for low-income units reaches 80% of the area median income, which in LA is more than $70K per year for a single person. These units can be rented for about $1,800 a month. 

But some developers “have gotten into the space and not really done a deep dive into the areas where they want to produce this product,” Century Housing Corp. Vice President of Construction Lending Tracey L. Burns said. 

Culver City-based Century Housing lends to Low-Income Housing Tax Credit-funded projects but also invests in “workforce housing,” which has been its entry to ED 1 projects. It is mostly working with developers who worked in the market-rate world and are looking to branch out to fully affordable projects because of ED 1.

The program has only been in effect for a bit over a year, but already it has been credited with facilitating applications for more than 13,000 covenanted affordable units across the city, which is more than half the number of affordable units proposed from 2015 to 2022. 

Burns said in South LA and some other areas where ED 1 projects are proposed, market-rate rents are lower than what they would be in an 80% AMI income-restricted unit. 

“I think the developers are seeing that this is a great opportunity to increase density, to increase profit, combat homelessness,” Burns said. “But at the end of the day, some of these deals are just not going to pencil out.”

It is not clear how many of the units proposed or approved will be rented at levels affordable at the higher end of affordability, or 80% AMI. 

The city’s housing department tracks the affordability levels in terms of AMI for each project but did not have that information immediately available. 

In interviews with more than a half dozen architecture, lending, mortgage banking and development professionals working on ED 1 projects, almost all of them indicated that having all units in the project affordable at an 80% AMI was a key element to making the ED 1 projects they have encountered or worked on financially viable. 

There is need for housing for the higher end of affordability in LA. Los Angeles, like other cities across the state, has to regularly present to the state a plan outlining how it intends to build housing to meet demand in its boundaries.

The city is tracking to meet only 40% of the targets under the current 2021-2029 regional housing needs assessment for all income levels, Mayor Karen Bass announced last year.  According to that plan, the city’s target for units for households making 51% to 80% of AMI is 68,743, and the target for 81% to 120% of AMI units is 75,091. 

Abundant Housing LA Director of Policy and Research Scott Epstein agrees that getting to rent units at 80% has been a big factor in the directive’s popularity and the significant number of units that have been proposed because of it, but, generally speaking, he doesn’t think that’s a bad thing. 

“There wasn't a lot of this being built,” Epstein said of housing at the higher-end of affordability. “We don't have much of a production pipeline when it comes to housing for working folks.”

Abundant Housing was an early reporter of the fact that ED 1 had attracted developers who would not be using public funds to build income-restricted housing. 

“It's a pretty fantastic deal when we're on the hook for building hundreds of thousands of units in Los Angeles, and not coming close to that on an annual basis,” Epstein said, speaking of the state goals for housing in the city. 

Some who work in the advocacy field support more income-restricted housing at all levels that is privately funded, even if it is catering to the higher end of the affordable spectrum. Such projects could still address needs for below-market-rate housing while leaving subsidies and vouchers on the table for projects targeting the neediest populations, Inner City Law Center Policy Director Mahdi Manji told CalMatters. As the coming year threatens to bring a cutback to state-level affordable housing funding, that might be critical, he said. 

But while the city as a whole needs more covenanted affordable housing, the dispersal of these units is not even. 

The majority of units proposed through Executive Directive 1, about 4,800, or roughly 35%, are slated to rise in the part of the city covered by the South Los Angeles area planning commission, an area that is roughly bounded by the 10 Freeway, Culver City, Vernon and the 105 Freeway where it meets the 110. 

South LA has historically been the top neighborhood for affordable housing, according to city data from 2015 through 2022. The area includes neighborhoods that have experienced prolonged disinvestment and redlining. 

Median household incomes in the South LA neighborhoods where ED 1 projects have been approved ranged from just under $51K to just under $63K in 2022. That's well below the 2022 citywide median household income of about $76K. In 2023, the city’s area median income rose to $98K, meaning a one-person household making $71,000 would qualify for an apartment at 80% of AMI.

Some advocates see a possible disconnect between the median income in the South LA neighborhoods where so many ED 1 projects are headed and the median income necessary to afford rent in those projects. 

“There is a concern and a need for information” about the affordability levels of these units, Strategic Actions for a Just Economy’s Director of Policy and Advocacy, Equitable Development and Land Use Maria Patiño Gutierrez said. 

Patiño Gutierrez authored a report and op-ed in the Los Angeles Times asking for greater transparency about ED 1 projects in general, but especially those that require the demolition of existing rent-stabilized housing or naturally occurring affordable units. She said that while SAJE is a supporter of affordable housing, more publicly accessible information on the projects it facilitates is needed. SAJE wants to see ED 1 tweaked so it can be fully beneficial, she said. 

If rents for many of these new units are set at levels that current residents can’t afford, “we’re not going to be able to benefit from development in our communities.”