Maria Cabildo
OK great. So I'll start by letting you know that I don't have a cold, wasn't at a rock concert last night, I have a voice disability and that's why my voice is a little raspy. So I am coming from this I was described as someone who is dedicated most of her career to building the East side of Los Angeles, so I have been an affordable housing developer since 1993. And I started my career by building special needs housing for people with disabilities in Korea Town and I founded a nonprofit called East L.A. County corporation and during my tenure there I was able to attract about 200 million dollars of investment into a community that had been long neglected by both the public and the private sector. So I am presenting today as a practitioner. I have not heard about price elasticity since I was a graduate student at MIT in 1990. I am an urban planner by trade and I became a developer because I actually wanted to shape the environment in a lot of players just get to plan for development but don’t actually do it. So I'm not going to try to convince you that there's a housing crisis, I'm just going to talk a little bit about what I think people need to think about when they're wanting to address the housing crisis.
I want to start by just mentioning an organization that I was on the board of for about eight years called the National Local Housing Commission based out of D.C. huge advocates for affordable housing. And they do an annual study called out of reach and in their study they found that there wasn't a single congressional district in the entire country where a minimum wage earner can afford the fair market rent an apartment on a two bedroom apartment. OK. So over the course of my career I've been able to go to a lot of groundbreaking. I've actually had my own and gone to others and a lot of times people think well this is the end right we work so hard to get it built. So you know is this the end, is this the beginning. And of course I got to cut the ribbon on my own apartment building. This is one of them. I've been able to walk those hundreds of people home. Families have been living in converted garages, veterans who've been sleeping in their cars; people live in the streets and are able to welcome them home. So I think now our work is done and I want to remind people that actually our work isn't done when a family moves in. It's actually the beginning of a new journey because they're able to do things that were really outside of what they could have imagined doing before.
So this is actually a family that moved into managed housing managed by the housing authority of the county of Los Angeles and that is a site that houses formerly homeless families. And my boss told me about this family and so I went to find their picture and he said you know when his family moved in the kids were so excited. You know they went to every room there is a two bedroom place. They jumped on the couch and they said to their mom Hey mom how long can we get to stay here. Because they had been going from shelter to shelter to shelter and when he was able to stay you got to stay here forever. I mean just the joy in that family. So just remember we worked really hard to build stuff but it's really the beginning of a journey what it mean that these kids don't have to keep changing schools. What does it mean that they have that dignity of a home? There you go. That's a ribbon for it and here’s the family a wonderful family that moved in, these two kids had been living in a car and bounced in and out of homeless shelters.
So this is Orange County. So the average asking rent for two better apartment Orange County is $1,903 which means that you need at least thirty-six dollars an hour to afford that. So the common marker of something that is affordable is when you're paying no more than 30 percent of your gross income towards housing. So you can see that a minimum wage someone earning the state minimum wage basically doesn't have enough money to afford what does average two-bedroom apartment in Orange County. And you know you just go down the list, I mean these are jobs you would think are pretty good; customer service representative, construction labor, or teacher's assistant, so really housing rental housing very much out of reach. At the same time we have rents on the rise in Orange County and incomes declining. So in Orange County since year 2000 rents have gone up by 24 percent and median renter household income has declined by 10 percent adjusted for inflation. So a renter who is earning the minimum wage needs to have 3.7 full time jobs to afford the average two-bedroom apartment in Orange County.
So I did the math there. It was tough for me but basically you know you have to work 148 hours minimum wage to afford an apartment in Orange County. So the organization called the California Housing Partnership helps calculate what your gap is. So right now you need 101,000 units to fill that need for affordable housing in Orange County. This is rental house and of course to build housing. We need our resources and we had huge hit when Governor Brown did away with redevelopment agencies. So you can see that Orange County since 2008 has lost 72 percent of the resources that it used to have to address this problem. So you can see state redevelopment gone, to state where resources are declining and also HUD just keeps cutting. And with the budget control act it just gets cut even more. And I just heard earlier this month that HUD might actually cut Section 8, so who actually know that was going to happen to Home and CBG, huge blow. And so let me tell you about what funding sources we need when we actually want to build those beautiful apartments that our family gets to move into. So we typically go out and we borrow money.
And I might tell you that I have projects that I have built that were 26 million dollars to build and probably had a permanent mortgage less than those luxury homes that you showed us. Because when you're renting when you're operating affordable housing it's affordable. So it doesn't generate a whole lot of extra income to pay for debt. But we typically do still carry debt and I think a lot of people have this notion that we're building we're paying for affordable housing through HUD. Or do you think like of HUD, Housing and Urban Development but it’s actually the Department of Treasury that supplies most of the resources to build affordable housing. And that's because it's financed through a low income tax credit which is purchased by corporations and then you developers take that capital to build upon it. We have debt from state city and county. The Federal home and bank is involved and gives small grants as well and reasonably affordable housing and sustainable communities grant also known as cap and trade has created many resources available for affordable housing that's located near transit because that's what we need to reduce vehicle miles. And of course there is private fundraising or some other resources. So it's small but this is still what's available.
So now I want to just think about it you all are I'm sure you guys feel as passionate about Orange County as I feel about my home community in L.A. County. So what did it kind of give you a little bit of like a framework to think about well what do we need to be thinking about when we think about our need to build these 101,000 units that we need. So I created this little diagram. For me I like a visual thinker so my office is covered with paper and all kinds of my maps. So I created this little one and when you think about the three Cs; community, capital, and capacity. Those are things that you need to take this on. So again with capital things that you need are the like the low housing income tax credit which is potentially in peril because of Donald Trump actually right after the election the low income housing tax market took a big dive and created huge gaps in our whole pipeline of projects in Los Angeles. All of its CBG it's critical that we protect those we need to. And of course local sources and also we're talking about the need for capital we need interim capital sources. An interim capital source is when a developer is out looking for land, it takes a very long time to line up all of your resources. So you need to have money that can move much more quickly to help you tie up property. So we need to have pre-development loans and a lot of the time housing developers end up partnering with community development financial institutions to help us secure that kind of debt to buy land, pair architects and get things going. Of course it's a public-private partnership. So we also partner with banks for the loans that we need. So we need all these permanent sources that are going to stay there forever like a mortgage on your house. And then we need these kinds of interim resources that all eventually get paid back with a tax credit. Now, you can have all the capital in the world. But if you don't have capacity on the ground to deploy it doesn't do you any good. Right now I'm the director of homeless initiatives at the county CDC and we're looking at probably in the next 12 to 18 months having about 250 million dollars a year to build housing for homeless in L.A. County. But if we don't necessarily have the capacity to absorb that again it won't actually need help. So what I mean what do I mean by capacity. You need to have the development community that has experience with these capital sources you need all of our great support to support nonprofit developers. You need to have a trained workforce that knows how to build these units and you need to have land so hard for multi-family development. And if you need to have systems that help expedite projects through the land use approval process as well. And you have to get again enough predevelopment and acquisition and seem to build a pipeline of development. And so the next piece is community because again you can have all the capital in the world and you have all the capacity. But if you can actually build it because you have the community residents that are opposing your development again you're not going to get very far. So really you have to build support for things like affordable housing. You have to engage community in a planning process and everyone has to pitch in. You know we see this like in L.A. County where you have some cities that are ready to go, it's usually just a handful of them, you can count them on one hand, and then you have 83 other cities that don't want to do anything else right. So it has to be shared responsibility across jurisdictions. There needs to be political will and you have to have long-term support to counteract NIMBYism. And I think what we're talking about more now is needing to build a YIMBy movement, a Yes in my backyard.
So again I want to remind you just if you leave with nothing else thinking about how do we chart a course for Orange County. The three C's made it possible for your capital capacity, community. We need all those things to be done to tackle these 101,000 unit gap in units.
Really quick, because I am with the community development commission, I just have to plug a little bit about what we do that’s special. We have programs to help veterans, and homeless through our Section 8 program. We've committed our turnover Section 8 vouchers to the homeless population to help get them off the streets. But we also provide support to keep them housed. Our county board of supervisors actually voted to put that money that came back to the county because of the end of redevelopment into an affordable housing trust fund and it's growing by 200 million dollars a year up to the point it reaches 100 million. And also we have talked about the need for pre-development acquisition financing so the county board of supervisors also put up money as a loan loss reserve to create a large fund LAHA fund which is at the L.A. County Housing innovation fund to help developers acquire land to pay for their pre-development expenses and has a hundred percent loan to value ratio which is a very good. So these are good.
I talked about the county and now these are my great recommendations for you which I think would be really helpful if Orange County as a county drop a affordable housing strategic plan that included number goals by jurisdiction, we need to incentivize the production of affordable housing market rate multi-family developments and that is what Emily talked about in terms of inclusionary. Really great, a local funding source for that home in affordable homes in the city of L.A. You've probably heard past the Triple H bond in November with the idea of building 10,000 units of new housing with that fund and we just look at resources in municipal you know just land that is owned by government and look at whether or not we can redevelop land it's owned by government to build affordable housing. And you know small things but also big things. Masterplan developments include a significant percentage of units that are affordable and of course create more by-right zoning for projects that are 100 percent affordable. So these are some of the ideas that I think you should think about as you look at Orange County’s housing needs. And in the end I just want to show a picture when Mayor Villaraigosa has a standing invitation to visit because he was instrumental in helping me build it. I'm always very appreciative of his support in building a hotel coming block which was one of Joe Matthews favorite coffee shops is right there on the first floor. So thank you very much.