The Neverending Hunt for Affordable Housing Funds

Growth and Housing

The Neverending Hunt for Affordable Housing Funds

In a Q-and-A, Stephen Russell talks about his vision not just for the Housing Federation but for increasing San Diego’s supply of affordable housing.

Funding for affordable housing is looking rather bleak these days.

The end of redevelopment in early 2011 meant the end of affordable housing’s most significant funding source and subsequent attempts to make up for it have floundered or failed. Most recently, a bill written by Assemblywoman Toni Atkins that would have added a small fee to real estate transfers stalled, and another bill to boost the tax credit developers can claim when they build affordable housing was vetoed by Gov. Jerry Brown.

It’s in this uncertain era that Stephen Russell takes the helm of the San Diego Housing Federation — a coalition of affordable housing developers and related organizations — which announced him as its new executive director on Dec. 10.

Russell’s been involved in San Diego’s affordable housing scene for over a decade, including five years as the board president of the City Heights Community Development Corp. In 2002, as a staffer for then-Councilwoman Atkins, he played a significant role in organizing Housing Day, a first-of-its-kind, mega council meeting that launched a number of affordable housing initiatives.

In 2005, he left Atkins’ office to get his degree in architecture, inspired largely by his work on Metro Villas, a multifamily, mixed-use project in City Heights. For six months in 2002, Russell led a bi-weekly working group to help wrangle every possible source of funding to get the project built. Now, with its family friendly layout, community center and proximity to public transportation and schools, it’s lauded as one of San Diego’s best examples of affordable housing.

I met up with Russell earlier this month to talk about his vision not just for the Housing Federation but also for increasing San Diego’s supply of affordable housing. He suggested we do the interview at Metro Villas, which he says is one of his favorite places in San Diego.

This interview has been edited for length and clarity.

So, why did you pick this spot to meet?

The experience of what we did here, where we took down 65 very degraded housing units — and I’m talking about things like someone had a teardrop-shaped trailer duct-taped to the back of the house as an extra room. So we took down 65 pretty degraded housing units and put in about 120. And more than that, we provided one-, two-, three- and four-bedroom units here. So what you have is places where multigenerational families can live together.

What was compelling was how we increased the density, increased the open space, provided a parking [garage], provided all this commercial space. The way we did so much supportive stuff, organizing work, advocacy work, the resident self-sufficiency stuff. It was just amazing. The transformative power of design reminded me that when I was a kid, I wanted to be an architect. And I thought, wow, I still could be one even though I was 41. So this place had a role in turning me to my next career.

And now we’re sitting here talking about your next career.

The job announcement came out in September after [former Executive Director] Bruce [Reznik] had left and I read the description and I thought it described me. Not, like, “I could do this.” It was just, like, “That’s me.” The understanding of a nonprofit, the role of policy, the importance of affordable housing to society. I brought things that they weren’t asking for, like an understanding of the construction industry — and that has huge impacts on policy. The ability to articulate policy, to talk to community groups and the like. All these things are just, like, “Oh my God, this was me.” So, I jumped.

What’s the Housing Federation’s role, both historically and what do you see it being under your leadership?

That’s why this place is important, to answer that question. … Who we are is a bunch of mission-driven folks who are dedicated to increasing the supply of this kind of affordable housing — housing the market will not produce. And because the market doesn’t produce it, we’re reliant on all kinds of different public financing mechanisms and literal public dollars. In some cases, like tax credits, it’s not public dollars, it’s tax policy and social policy that we’re relying on. In the for-profit [housing development] side, they have their interests, they can fund their advocacy. We’re advocating for — you saw the lady who walked by here — she doesn’t have an advocate. She doesn’t have an advocate if we’re not here. The families who live in these houses, the seniors, the disabled, working families who are struggling to get ahead, we are also their advocates.

Could a project like this happen today? So many affordable housing funding sources have gone away, redevelopment is gone.

And that is absolutely the core question for our federation right now, because our No. 1 goal is to see that we establish a permanent, secure, dedicated funding stream for affordable housing.

Nothing the scale of redevelopment has yet been proposed or identified, but there are a lot of other kinds of things that we could be doing, and some of which have been done. So, could this project happen again today? Some things like this are. Community Housing Works, you see some of the work they’re doing — some of it, they’ve used cap and trade dollars. That’s huge. (Note: The state annually awards money from its cap-and-trade program to help build affordable housing projects that are energy-efficient and located near public transportation.) The issue of trying to find and secure that funding is absolutely at the core of what we do.

We had some successes this past year, but we certainly had some things fall short. The bill to put a really minimal tax on real estate transactions would have been marvelous — it still would have been a drop in the bucket compared to what we lost — but my gosh, how wonderful to have had that.

So is increased state funding the best bet for affordable housing? What about local sources?

The biggest funding sources clearly, I believe, are going to come from the state, whether through an actual state-level formula or something that creates local tools, such as redevelopment.

That is so heartbreaking what happened [to redevelopment]. I recognize there were bad actors in that. I won’t name cities that were just egregious violators of the principle. But City Heights was a poster child for all the right things, the right reasons to do redevelopment, and to have that knocked out from under us. There certainly has been talk about how cities should be seeing — I’m not talking about one-time payments, but ongoing increases in property tax revenue. … Redevelopment diverted [property] taxes and they’re now going back to the state. … Can we talk about ways of committing some of those funds? There were commitments made to these communities and just because the [funding] mechanism has changed, these communities’ needs have not changed.

Can we find local sources? The workforce housing offset. But we do need to find local matches. If we’re going to be competitive in [securing tax-credit financing], we need to find local sources to help close these gaps. So, this is leverage money.

We need to look at the SANDAG quality-of-life initiative that’s going to move forward. They’re trying to create an omnibus [measure]. They need everybody on board for this to pass. From the housing perspective, we’d like to see money dedicated to things that are very specifically supportive of affordable housing.

And right now is affordable housing part of the discussion?

Discussion is discussion. What’s on paper is part of the discussion. I have not seen it memorialized in writing with any kind of specificity. So, that’s one of our challenges. We’d like to see if we can get the most out of that. I think that there’s real opportunity.

Transit can benefit affordable housing. Parking is a huge part of the cost … and while we’ve won some fairly significant parking reductions for affordable housing in the city of San Diego, there’s still a lot of work to be done. We need to really put on a 21st century pair of glasses when we look at these issues of the choices people have with transit, with ride-sharing with walkability, bike-ability. Transit investments that are targeted at affordable housing could still make a reasonable dent in some of this stuff.

One of the big criticisms that comes up in any discussion of affordable housing is that it costs too much to build. How do you handle that argument?

We build things like four-bedroom apartments. Three bedrooms, you’ll find in upscale new developments that that are high- to mid-market, truly market rate. Here, the market would never produce them. So, we’re building things that the market doesn’t do and doesn’t do for a reason.

Housing traditionally does not serve all classes. When you go back in history, what you typically have is tenements. You have naturally affordable housing that is obsolete or substandard and therefore not commanding a market price. It’s cheap because it’s not the most desirable. And so that’s how, in most of human history, the poorest people have lived in undignified conditions. Our goal as an organization is to try to provide dignified, safe housing for all members of society.

What about for-profit developers who say, “Just make it easier for us to build market-rate housing, just increase the supply and then there’s … ”

The trickle down? There’s some truth in that. If you want to talk mega economics and go back to [urbanist and activist] Jane Jacobs , she will talk about diversity as being desirable and one of the diversities is diversity of [housing] tenure — the types, sizes, whether people rent or own. Diversity of age is valuable because … in an ideal world, you’re constantly providing almost enough housing so that there is always stuff falling into lowercase-a “affordability” — hopefully it’s not too obsolete and not too degraded.

But we have these incredible housing cycles of boom and bust, so we have big gaps in when housing is aging. There hasn’t been enough housing produced here. I think you’d have to go back to maybe the ‘60s to find a time when enough housing was being produced. … So that’s that boom-and-bust cycle and suddenly nothing older’s coming on the market and suddenly, boom, everything is aged out to 30 years. If we could smooth out the cycles, that would certainly help.

But the core issue: Is just gross supply part of the formula? And the answer is yes, of course. But can we build our way out of it? There’s some builders who are sitting on subdivisions because they know they can make more money releasing it in tranches over time. They have 10, 20, 30-year business plans. Are there people saying, “Release us to build and we shall build,” who actually have land they could build on? There are some of those, yes. Is it too difficult to build? It can be.

But then you have communities that absolutely don’t want you to add another unit of housing.

The question of density is key. From an environmental standpoint, we know that the “City of Villages” is essentially a climate action plan, if you will, of transit-oriented development, really focusing on transit and putting the density in the right place where people can live rich, fulfilled lives within a narrow walking radius.

We’re going to have to work to see that enough multifamily land is zoned. Look at where we are right now. This zoning doesn’t exist everywhere in the city. We couldn’t do this and just replicate it down the street. The issue of density is, one, we have to get more multifamily zoning. In every community plan update we do, we have to look at where it makes sense. And then we have to show how it improves quality of life and I think we’re starting to get more examples.

When [Metro Villas] was being built, there was a lot of community opposition, “We don’t want more affordable housing.” Well, now we hear, “We want to see more things like this.” It’s the high point of the neighborhood. We have marvelous, beautiful examples of affordable housing being the finest housing in the community.

Similarly with density, people are screaming to get into North Park, they’re screaming to get into Little Italy. We simply have to do a better job of demonstrating the quality of life benefits and actually funding improvements to the public realm that make it so that it is more desirable … so that it has a vibrancy as opposed to a crowdedness. Is it crowded or is it vibrant? It really depends on all of these other environmental cues and how did they get there? Are you sitting next to cars and parking or are you in a plaza? All these different kinds of elements come together.

Back to Housing Day in 2002. The Affordable Housing Task Force came out of that and issued a 2003 report that had a lot of great ideas and pretty broad support. Many of those ideas were never implemented and keep getting brought up over and over. Do you see yourself as being able to jump in and get some of those things moving ahead?

I will be a part of that conversation. We will be a part of that conversation to move these things forward. What role we will play will ultimately depend on the quality of trust we can build.

The federation has a remarkable history. Its reputation, its brand, its membership are all stellar. I’m a new guy, so I have to, we have to pull this together and see what can we do. I’m excited. I certainly want to dive in. But I want to be realistic about how much I can do. That feeling of, I was here 10 years ago and we were talking about this — that is what it means to live in San Diego. And then eventually something happens.

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