United Way of Greater Los Angeles in partnership with Genesis LA and a unique racial equity bond designed by U.S. Bank funds development of lower-cost, by-right affordable housing through streamlined development, innovative design, and cost-effective construction
LOS ANGELES, CA — United Way of Greater Los Angeles announced its Affordable Housing Initiative (AHI) with funding of $62 million to create homes for nearly 600 people. The initiative helps provide solutions to LA’s housing crisis through innovative use of small lots, resourceful financing, and cutting-edge development designs including sharing of kitchens and common areas. The initiative will fund approximately 10 developments that will house more than 500 Angelenos, with units under construction today expected to rent for less than $1,000 per month to serve people experiencing homelessness and at risk of entering homelessness. All AHI homes will offer tenant services including mental health services, financial literacy, drug treatment, childcare, or workforce training programs.
“The Affordable Housing Initiative is building homes and opening doors faster than ever before, at rents that working Angelenos can afford,” said Elise Buik, President & CEO of United Way of Greater Los Angeles. “Housing and homelessness are the biggest crisis facing our region, and the work together of business and nonprofit leaders, philanthropic partners, and caring individual donors can give us hope.”
According to the California Housing Partnership, the Los Angeles region is 499,430 units short of what is needed to meet the current housing demand. A key driver of homelessness is the disappearance from our housing stock during the past 10 years of 200,000 units that rent for less than $1,000 per month. The Affordable Housing Initiative creates a model to replace that missing stock that can be replicated by other builders in Los Angeles and by other cities facing housing crunches.
The fund will support construction of apartment buildings including sites in Koreatown, Boyle Heights, Chinatown, and at LA Trade Tech. Locations have also been proposed in Little Tokyo, Wilmington, South Central, and other neighborhoods. Several projects will have a development cost per unit in the low $200,000 range, and residents will save around $6,000 annually in rent over comparable units.
“Rising rents and inflation make life in Los Angeles untenable,” Councilmember Marqueece Harris-Dawson stated. “The Affordable Housing Initiative of the United Way of Greater Los Angeles can keep individuals from leaving our district. This will assist individuals and families who are homeless, as well as those who are on the edge of becoming homeless.”
An innovative approach to financing affordable housing
U.S. Bank helped structure a $25 million racial equity bond with community development financial institution (CDFI), Genesis LA, which is the United Way’s partner on the initiative. U.S. Bank is also the largest investor, purchasing $12.5 million of the bond. Notably, every developer receiving funding through the initiative will be owned or led by a minority – including people of color, LGBTQ+ individuals and women – as a condition of the bond.
“This project brings together the resources and commitment of UWGLA, Genesis LA and U.S. Bank to help achieve our shared goal of providing more safe and affordable housing in Los Angeles,” said Marcus Martin, head of environmental, social, governance for commercial products, U.S. Bank. “In alignment with the U.S. Bank Access Commitment, we’re proud to design social bonds that advance racial equity. The structure of this unique financing will provide investors and other project supporters assurance that the funds are going to minority housing developers and that the project is achieving its intended racial equity impact.”
U.S. Bank structured and closed the racial equity bond with Genesis, which in turn, will lend to individual developers selected for the initiative.
“The funding structure allows the flexibility to finance a variety of projects with a range of innovative approaches that will be critical to addressing issues of homelessness and affordable housing in Los Angeles,” said Tom DeSimone, CEO, Genesis LA. “We can support different project financing needs, from acquisition and predevelopment to construction and mini-permanent loans. As we continue to support various models for affordable housing development and finance, the lessons from this program will have impacts well into the future.”
Investment support also includes a $5 million grant from Kaiser Permanente, $5 million investment from the Conrad N. Hilton Foundation, and grant funding from a variety of other donors.
“For Kaiser Permanente housing is health, and only with a safe place to call home can someone be truly healthy,” said Julie Miller-Phipps, president, Southern California and Hawaii, Kaiser Permanente , Health Plan and Hospitals. “The dual crises of homelessness and housing affordability we face in LA requires innovative partnerships and strategic investments like the work being led by the United Way, and we are proud to be a part of it.”
AHI adds a new model to the ecology of affordable housing construction in Los Angeles. It connects both for-profit and nonprofit, mission aligned, developers with service providers who can help people who have experienced homelessness stabilize their lives. By utilizing existing land use incentives and by-right zoning, AHI is adding affordable, higher-density housing with services to the region’s housing stock at a much lower cost.
AHI is already at work on its first development. Treehouse in partnership PWC Developers broke ground last Fall in the Koreatown neighborhood of Los Angeles to create a 13-unit, 58-bedroom co-living apartment building that is expected to open its doors early next year at a per bedroom cost of only $200,000.
The second AHI funded project is currently in pre-development and will serve Boyle Heights and East LA transition age youth through service provider Jovenes. The project is spearheaded by Fideicomiso Comunitario Tierra Libre, a community land trust that secures and preserves quality and affordable housing for low-income residents through leadership development, community land stewardship, and alternative housing models.
“These strategies are essential because they empower residents to stay in their neighborhood, build collective generational wealth, and define the future of their community.” said Roberto Carlos Garcia-Ceballos, Co-Director, Fideicomiso Comunitario Tierra Libre. “With AHI, we can keep housing affordable forever and strengthen the fabric of our unique communities.”
United Way of Greater Los Angeles is a nonprofit organization fighting to end poverty by preparing students for high school graduation, college, and the workforce; housing our homeless neighbors; and guiding hard-working families towards economic mobility. United Way identifies the root causes of poverty and works strategically to solve them by building alliances across all sectors, funding targeted programs and advocating for change.