There are well over half a million homeless people in America and over 40 million living in poverty, and thus, constantly housing insecure. Nationally, over half of all renters are “cost-burdened.” That is, they pay over one-third of their income for shelter. The coronavirus pandemic and its disproportionate deleterious economic effect on low wage processing and service industry jobs have only served to further illuminate and exacerbate this problem, as millions of these workers are in danger of eviction. Yet even before COVID-19, homelessness and an acute lack of affordable housing for the working poor had become a defining issue of our time.
Most of the chronically homeless find themselves on the street due to substance abuse and mental illness or some combination of the two. These are difficult, complex issues, which require professional medical intervention and consistent support services. But a significant number of the homeless and housing insecure are working individuals or families with working members who simply need an affordable path toward the American dream.
It has long been the case that the most secure and well-proven method of growing wealth in America is through ownership of your own home. Yet in many, if not most housing markets in this country, the cost of a house has quickly outstripped the ability of wage earners and even young professionals to pay for one. In Southern California, this disparity is particularly extreme.
Pasadena has a well-earned reputation for the quality of its care for the chronically homeless. Local organizations like Union Station and Pasadena Partnership have helped reduce the Pasadena homeless population by half from its 2011 peak of 1,216 to 575 people during the Jan. 2020 homeless census. The city and surrounding San Gabriel Valley also display an admirable commitment to and support of affordable low- and moderate-income housing—housing that provides a path to homeownership for those that could not otherwise afford it.
A Historic Partnership
Heritage Housing Partners, a local 501c3 nonprofit developer, and RAAM Construction, a general contracting firm specializing in historic and low- and moderate-income housing, came together in 2006 to build Fair Oaks Court: an award-winning, mixed-income development. This was the first project for RAAM construction, owned and operated by La Cañada Flintridge residents Richard and Lisa Lara. Serendipitously in 2004, Charles Loveman, the executive director of Heritage Housing Partners, had secured funding for the developer’s first foray into large multi-unit development and was looking for a suitable partner.
As Richard Lara relates, “We (he and his wife Lisa) were two professionals making good paychecks and we still couldn’t qualify for a loan. It was a big stretch to get into a single-family home, we really struggled through that process.” As children of immigrants (Lisa is the daughter of migrant workers) and imbued with the idea that America meant promise, the Laras were committed to the idea of building a company that could facilitate that goal and make that promise truly accessible to everyone. “When we started the company, we wanted to give back to the community,” he says. “We love building, that’s where our passion lies, but we wanted to go a step further and focus on building something for working-class people. People with limited resources.”
Fortunately, in Charles Loveman and Heritage Housing Partners the Laras found a partner who not only shared their commitment to building affordable housing but had a particular affinity for doing so in a historically-conscious manner—an ethos that meshed perfectly with both the City of Pasadena’s humanitarian and preservationist reputation.
Loveman had come to Heritage Housing Partners in 2001, shortly after its original founding as a support organization to Pasadena Heritage in 1998. Heritage Housing Partners had been formed at the behest of the National Trust for Historic Preservation to create a nonprofit focused on producing affordable housing in historic buildings. This was the perfect mission for Loveman, a former city planner with an affinity for historic buildings and a belief in the vital nature of affordable housing.
With Loveman as executive director, Pasadena Heritage Partners started small by doing a single-unit project. Soon, they had produced several six-unit projects when they were determined to go bigger, beginning work on a 44-unit project. This was Fair Oaks Court, their first partnership with RAAM Construction. “It’s been a great fit,” says Lara. “Pasadena has been a great city to partner up with as well. They are committed to meeting the low- and moderate-income targets mandated by the state. They truly believe in this.”
Loveman echoes the bonhomie. “[Lara] had just started his company,” he says. “It was a big stretch for both of us but we pulled it off. I like to say Fair Oaks Court created the DNA for our organization—homeownership, mixed-income, beautiful architecture, lots of open space. Now we’ve become friends and that friendship is more important than the business relationship or any contract we’ve signed.”
It’s not only the creation of affordable housing stock that motivates Loveman and the Laras. Both are committed to creating that stock from existing historic structures. This is a commitment born not out of a quest for maximum profit but civic duty. “I think we have a moral obligation to save any historic structure where it is at all feasible,” says Lara.
“It’s definitely a mission for us,” says Loveman. “Richard also has conventional clients, but I know he likes the fact that our projects are more architecturally interesting.” They are also considerably more complicated than new construction. “There is always something new that comes at you,” he says. “It’s a unique skill set…it’s not about production…you have to slow down, take your time, and make sure all the construction is compatible with the historic features.”
All this construction is well and good, but who qualifies to occupy it and who decides? Essentially the state does, explains Loveman. The Southern California Association of Governments, on behalf of the state, mandates affordable housing targets for every city in Southern California. Originally these goals were aspirational, but Loveman says that enforcement mechanisms are now in place that results in loss of state funding for failure to meet the mandated targets.
To qualify, first neither you nor your spouse can have owned a home in the last three years. Then for the purposes of income classification, the state looks at three thresholds. Designating them low, moderate, and middle income depending on how much is earned annually and the number of people in the household. (The chart below details the current 2019 income thresholds. They are updated yearly.)
|Household Size||Low Income||Moderate Income||Middle Income|
|1 person||$36,550 to $58,450||$58,450 to $87,720||$87,720 to $109,650|
|2 persons||$41,800 to $66,800||$66,800 to $100,200||$100,200 to $125,250|
|3 persons||$47,000 to $75,150||$75,150 to $112,800||$112,800 to $141,000|
|4 persons||$52,200 to $83,500||$83,500 to $125,280||$125,280 to $156,600|
|5 persons||$56,400 to $90,200||$90,200 to $135,360||$135,360 to $169,200|
|6 persons||$60,600 to $96,900||$96,900 to $145,200||$145,200 to $185,850|
Once your income is determined, the state then calculates an “affordable sales price” using a formula that ensures no buyer will pay more than 35% of their available income. That payment will include your mortgage, property taxes, utilities, and HOA (if it’s a condo.) “A lot of folks end up spending less on one of these homes than they did while they were renters,” says Loveman. Not only may they be spending less, but at this point the buyer can enjoy all the advantages of owning a conventionally purchased market-rate home. This includes the all-important ability to build equity, either by paying down the principle or by selling the home to another qualified buyer based on an appreciated affordable sales price. According to Heritage Housing Partners, the affordable sales price typically rises between 1% to 3% per year.
Clearly the demand remains acute. “The need is huge everywhere, across all income brackets,” says Loveman. Echoing the urgency, Lara says, “We usually have three or four applicants for every unit. The demand is there. The supply is not. We can’t keep up.” Fortunately, Heritage Housing Partners and RAAM Construction continue to work to fill the gap despite the interruption imposed by COVID-19. RAAM has had a couple of crew members test positive, but they’ve implemented safety measures and continue to monitor their crews daily while keeping a number of projects moving forward.
Loveman and the Laras know this is not a problem they can solve on their own, but they remain committed to doing their considerable part. “We need to house everybody,” says Loveman. “To do that we are going to need both public and private funds to make it happen. In the end, we believe the healthiest communities are mixed income with home ownership.”
Photos: Courtesy Heritage Housing Partners/RAAM Construction