The Los Angeles Housing Department is preparing to distribute $387 million to developers across the city to build affordable multifamily residences, marking the biggest such allocation of funds from the Housing Department in the agency’s history.
Most of the funding comes from Measure ULA, or the so-called “mansion tax” that charges a transfer tax on all property sales in the city above $5 million, the Los Angeles Times reported.
The pending funding round consists of $316 million from ULA funds and $71 million from state and federal programs. It’s the city’s biggest ULA commitment since the measure took effect in 2023. Since then, the tax has raised more than $784 million, but much of it hasn’t been spent due to concerns that the tax could be overturned in court. The city passed a ULA spending plan of $150 million last year and another $425 million spending plan this July.
Each round of funding usually receives about 30 to 35 applications from developers, though this round will likely attract more due to the amount of money available. Applications for the notice of funding availability open Friday and close Oct. 20.
It’s unclear how many total units of housing might be involved in the projects that get funding, although recent reports indicate development costs of nearly $900,000 per unit for affordable housing in LA. The round of $387 million might make a less-than-significant dent in what’s widely considered a chronic housing shortage in the city, adding 450 or so affordable units.
Nonprofit and for-profit developers, community land trusts, limited equity housing co-cops, public entities and other organizations will have access to the funds. In addition to funding new construction, the money will also support housing preservation and assistance funding operations, according to Housing Department general manager Tiena Johnson Hall told the L.A. Times.
The $387 million notice of funding availability is a significant jump from the housing project funding distributions typically between $50 million and $75 million. The Housing Department will release new funding on an annual basis moving forward as Measure ULA is a continual source of funds.
Previously, the city doled out funds based on the number of units in a project, but now, funding is based on a percentage of development costs. As a result, developers will receive higher awarded amounts than they usually do. The new system allows the city to better determine funding amounts to help developers meet the ballooning costs of development, Johnson Hall said, per the Times.
Under the new approach, ULA funds can cover anywhere from 30 percent to 100 percent of costs, depending on the project. Categories include affordable housing construction, affordable housing preservation and construction of adaptive reuse projects.
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