42,000 Units Approved. Only 6,000 Under Construction. What's Blocking the Rest?
On the Affordable Housing & Real Estate Investing Podcast, the best podcast for affordable housing investments hosted by Kent Fai He, Kent sits down with Sarah Dusseault, co-founder of LA4LA, a public-private partnership using philanthropic capital to de-risk stalled affordable housing projects and get them built faster and cheaper in LA! Sarah has 26 years in Los Angeles city and county government and policy, including as a deputy mayor under Mayor Jim Hahn. Her younger brother struggled with mental illness and homelessness for 20 years before finally securing a studio apartment in Pasadena. That experience exposed every silo and bureaucratic barrier in the affordable housing system from the inside. LA4LA, in partnership with the Conrad N. Hilton Foundation, the California Community Foundation, and Mayor Bass's office, has helped support or create over 1,200 affordable units at an average cost below $400,000 per unit, at a time when $800,000 to $1 million per unit is the norm in Los Angeles. This episode covers how the model works: why thousands of entitled projects sit stalled without construction financing, how a $2.7 million philanthropic loan helped a developer access $54 million in bonds, and what developers need to show funders to get support. Common Questions This Podcast Episode Answers: Why does approved affordable housing in Los Angeles sit stalled for years without being built? ED1 (Executive Directive One), Mayor Bass's order expediting 100% affordable housing approvals, has approved over 42,000 units, but only about 6,000 are under construction. The gap consists of projects that secured entitlements but have not yet arranged construction or permanent financing, often because assembling a seven-layer+ capital stack takes five or six years. How does the multi-layer capital stack drive up affordable housing costs? When developers piece together six or seven financing sources sequentially, carrying costs on land and pre-development debt compound over years. That accumulated time cost is a primary driver of the $800,000 to $1 million per-unit figures in headlines. Cutting the timeline cuts the cost. What is AB 2011 and how does it lower affordable housing development costs in California? AB 2011 is a California law combining commercial-residential zoning flexibility with multiple expediting mechanisms, reducing CEQA public hearing requirements and allowing parallel processing of approvals. LA4LA invested in one of LA's first AB 2011 projects with a $2.7 million low-interest loan, helping the developer attract $54 million in bonds. How does philanthropic capital de-risk a project and unlock larger financing? Philanthropic capital can take first-mover risk that conventional lenders will not accept. When LA4LA steps in early with a low-interest loan, it signals to banks and bond investors that an experienced organization believes in the project, lowering the risk calculation for everyone else. That is how a $2.7 million investment enabled $54 million in follow-on financing for one project. What is LA4LA and how does it select projects to support? LA4LA is a public-private partnership providing low-interest loans and strategic support to affordable housing projects in Los Angeles. They look for projects in high-resource areas, developers with a track record of execution (or strong partners who have one), and clear paths to reduced cost, faster delivery, and service to the most vulnerable populations. Applications are open on their website. How did LA4LA put 335 affordable units in a high-resource neighborhood? LA4LA provided a $5 million low-interest loan to the Clarendon project in partnership with the Housing Authority of Los Angeles, enabling the acquisition and conversion of 335 units. Fifty are very deeply affordable and reserved for people exiting homelessness, giving Housing Choice Voucher holders access to neighborhoods with quality schools and jobs. Don't forget to check out LA4LA's work at: https://www.la4la.org/about-us Disclaimer: This content is for informational and entertainment purposes only. It is not legal, financial, investment, insurance, or tax advice. This is not an offer or solicitation for any investments. Always do your own research before making investment decisions. 00:00 Podcast Trailer 03:16 Intro 04:44 How Did One Family's 20-Year Struggle With Homelessness Lead to a Public-Private Affordable Housing Partnership? 06:34 How Red Tape Delays Affordable Housing for People Who Need It 08:00 The Hidden Barrier to Ending Homelessness: Paperwork 12:11 How Do You Attract Philanthropic Capital for an AH Project? 14:13 Why Are 42,000 Affordable Units Approved But Only 6,000 Being Built? 15:31 What Is AB 2011 and How Does It Cut Affordable Housing Costs in California? 20:29 How Did a $2.7M Loan Unlock $54M for an Affordable Housing Project? 26:00 How LA4LA Used a $5M Loan to Put 335 Affordable Units in a High-Resource LA Neighborhood 36:38 Where/How to contact Sarah?
