Originally Posted: August 12, 2007 (And re-posted: Wednesday, February 27, 2008)
Are A Few Developers Getting the Lion's Share of FEDERAL Affordable Housing Money, Maxinming Cost Per Unit and Allowing Less Units to Be Built?
How you can make much bigger profits building non-profit affordable housing than the luxury for-profit stuff and how this drives up cost per unit and we therefore get way less units, then Jan Perry has to pretend like more has to be done, when all that has to be done is stop running a cahoots racket that allows a few well connected developers in the know to run a shell game scam on the City and the public.
I can hear “The Broadfather” crying to Robin and the Mayor, now: “Boo hoo hoo, Antonio and Robin. I have this great idea for a fantastic project that will save the City, but I can’t do it without subsidies and hotel tax breaks, even though we initially said it would all be privately funded at no cost to the City.” I can imagine Wendy Greuel saying, “Yeah, it will be great! You can walk across the street with your kids on a Saturday morning from Mocha or Disney Hall. That’s what we want to see Downtown. (That’s something that we think is critical to the future of the City." Just ignore all the aggressive panhandlers, though. As long as you just ignore them, they may leave you alone.) Zuma adding, “Yeah Antonio, you should build Grand Avenue Project first, then start taking the actual measures needed to address the problem of the 'Skid Row Nation' expanding throughout LA City streets with new people everyday."
IS THIS HOW “AFFORDABLE HOUSING” DEVELOPERS ARE LAUGHING THEIR ASS OFF AT THE “MARKET RATE” DEVELOPERS BECAUSE YOU CAN MAKE WAY MORE PROFIT BUILDING AFFORDABLE HOUSING, AND SINCE THIS PROFIT IS BASED OFF PUBLIC MONEY THEY ARE GIVEN TO BUILD AFFORDABLE HOUSING, WE END UP WITH WAY HIGHER TOTAL COST PER UNIT AND THEREFORE WAY LESS AFFORDABLE UNITS THAN WE SHOULD BE GETTING FOR THE MONEY? (Who says ZD needs to be re-written by editors?)
As a pre-condition to City approval of market-rate (for profit) projects in the City of Los Angeles, a certain amount of affordable housing units are usually a condition in approving these for-profit, market-rate projects. (Especially when you need zoning changes, other variance approvals, CRA approval, etc.)
And if the applicant/developer doesn’t agree to pay for an agreed number of affordable units, as an up-front condition, don’t expect the project to be approved.
Ultimately, the developer’s out-of-pocket expense of this affordable housing is factored in/passed on to the market-rate tenants, because “for-profit” developers aren’t in the business of strategic planning for the long-term best interest of the public or success of the city; just their balance sheets. And that means there is no room for profit "under-utilization". So this is how the biggest corporations of the wealthiest people in the world continue to cry to the City that they just can’t make anything work in this town, unless the City can “hook a brother up” with subsidies and/or tax breaks.
Wanna make some real profit? Build 100% affordable only housing (“non-profit”) units.
[Hey investors, contact Zuma Dogg and please add him to your list of paid consultants if you start doing this. And to my critics (even though I don’t think I have any), there is nothing wrong with ZD wanting to profit massively off these projects, since it is obviously legal, if the City is allowing it to happen.]
LA City affordable housing projects are financed completely by public money from various government sources, or through private investor “tax credits” that ZD counts as public money, too, since it’s money that will now not be going into the general fund for all the other services they come running to taxpayers for more money over (trash, bulky item, solid waste removal, bonds, etc.). The City takes all this public money and hands it over to a non-profit organization who is in charge of getting the project done.
And since it is a non-profit, they don’t have to put down a deposit or any financial investment. (Huh…huh….huh…ZD wants to set up a non-profit like that!)
The developers and general contractors are supposed to make a “reasonable profit” based on the fees/cost of the project. But that is decided by a fixed percent and a lot of developers don’t like these ‘fee-based” projects because everyone knows there’s not much profit in “non-profit” (low-income/affordable) projects because of this fixed percentage cap on profit.
But these uninformed, naïve, non-shady-angle-knowing, knocking-themselves-out-to-try and-make-a-profit-on-the-luxury-stuff-when-the-City-has-rigged-the-system-for-everyone-to-make-way-more-easy-money-in-the-non-profit-world-developers don’t realize that since these shady, non-profit rackets don’t put down any actual money, there is nothing to base the percentage of off. So it is based on the “total cost" of the project!!!!” (Needed an extra “fourth” exclamation point, instead of the usual three!!!)
We need a Dr. Deming séance to channel his spirit to explain how this produces the most expensive “affordable housing” humanly possible, and pours huge amounts of money into fewer units, meaning less units are being built in the City, and the problem spills out all over the sidewalks of Los Angeles, and even though people are scared to move into the new retail and residence you have already built, you want to use the money and land to clean up the problem and use it for Grand Avenue and LA Live's luxury Ritz-Carlton condos, Five Star Hotels and “boutique specialty shops” as these projects boast about in their press releases.
Gee, I wonder if you base the amount of money someone walks away with on how high the final price tag is, if that would cause people to try and do everything possible to use methods of fraud, waste and abuse (corruption) to drive up the total cost?
This is how by adding Zuma Dogg to your list of paid consultants on your non-profit projects, you will actually be making more profit! (Win-win, y’all…yeah, yeah!)
Plus, once you add me to your paid consulting list, we can discuss all the other ways to maximize total inefficiency and increase waste toward the goal of increasing total cost so your fees (that the percentage is based off of) can be like Jigsaw: ”Skyhigh!”
How you, too, can make your 100% affordable units end up costing much more than even the luxury "for-profit" ones.
Alright, you don’t HAVE to wait for my Don Dupree style infomercial and wait for the tapes to arrive (or add me as your paid consultant) in order to hear how I would suggest grabbing as much public money earmarked for affordable housing as possible.
After all, they’re just GIVING it away to people like Eli Broad and Bill Witte (who the City, County and State didn’t already give enough to). He just still needs more already, to help get his job done. You may remember Bill from my LA Weekly article that was already out a couple weeks ago. Here he is talking to the LA Times about it yesterday.
“Bill Witte, the Related Cos. chief who's in charge of that project, told me he plans to lobby the state for enough additional funding, on top of the budgeted $50 million in local funds, so there's a chance to build one of the great public spaces of the world.”
I bet he's going to lobby for additional state funding. I can think of no finer project that needs more public money than these billionaire boys club projects. We should pour even more money into THIS specific project, instead of having it go to another area of the city that doesn't already have $50 million in local funds. Is building "one of the great public spaces of the world” really one of the problems plaguing the city that needs this much public money thrown at it. I mean, you're talking about "space". Do we really need billionaire quality luxury "space", when we can't deal with all the problems surrounding this tranquil five start luxury "space".
HEY VAAAAAALEEEEEEEY...Aren't they buzzing about secession again at the NC level? I
SAY GO FOR IT...THIS IS SICKENING!
So you are wondering what that has to do with it? Here’s how a few mouths keep getting all the food, while the rest of the mouths go unfed. (A few project developers know how to work the system for the most amount of money, then inappropriate amounts go to one unit on that project, instead of many units throughout the city. AND JAN PERRY CALLED ME “OFF TOPIC” DURING MY COMMENTS ON AFFORDABLE HOUSING INEFFICIENCIES, DURING AN AGENDA ITEM ABOUT THE AFFORDABLE HOUSING CRISIS.
HERE’S WHAT I WOULD DO IF I WANTED THE CITY TO HAND ME AS MUCH MONEY FROM THE PUBLIC AS LEGALLY POSSIBLE: (But I can't actually guarantee it's legal.)
Just go to a bunch of different government money sources who funnel public money and trust into these non-profits with zero accountability. Each individual government source doesn’t know or care who else, or how many other sources, are paying into the same unit; or how much they are contributing.
All they know is that they have the money to give away if you qualify and it doesn’t appear to ZD that there is any cap on how much can be spent to crank out a unit of affordable housing.
Since Laura Chick couldn’t hire that other guy to be her consultant, maybe she can hire me and the first thing I will suggest is that she gets a pair of glasses…or at least opens up her eyes and take a look.
I’ll be glad to write the whole report for her saying, “The reason we are short of real affordable housing in the City, contributing to the housing crisis, homeless crisis and every other housing related crisis is because certain developers are applying for multiple government funding sources, and since there is no cross checking or oversight, inappropriately excessive amounts of money go into one project, at one location; instead of several projects throughout the area and city. We should be building more units for the same amount of money.”
As controller, Zuma Dogg would never say, "We need take more money and hand it over to shady non-profits and loop-hole loving greedy developers who are using the system to rob society as a whole.” But as radio talk show hosts, blog readers and City TV 35 watchers know, City Hall works in “cahoots” with these non-profits and developers to make sure everyone gets as much gravy off the train. We need a City Controller to de-rail the gravy train, tell them to add more trains.
So it’s Mayor Antonio Villaraigosa talking about spending more even more public money for even more affordable housing (with his friend, mentor and advisor Richard Alatorre working as his affordable house “consultant”). And City Council and the Mayor are able to tolerate each other, as they help facilitate and expedite the effort.
Nobody would speak out against a 100% affordable housing project, or put their foot down on shameless requests for more and more subsidies for the same affordable unit/ project?
Too bad these non-profit projects (affordable housing, charter schools, parks and rec, health care and other publicly funded projects don’t have as much accountability (if any at all), as a regular for-profit projects do.
ZUMA’S “NO MONEY DOWN” (NON-PROFIT) PROFIT WINDFALL SYSTEM
Based on the system created by “The Broadfather”, Latham & Watkins, Antonio Villaraigosa and your Los Angeles City Council (plus all these people’s friends, family, associates -- and enemies they have to come together with in order for everyone to get their biggest piece of the public money pie).
If you wanna jump into the private housing construction business without any experience, like Los Angeles City Council has decided to with the Grand Avenue Project and like Zuma Dogg now wants to do, here’s the formula from my infomercial system and affordable housing consultancy:
Get a “wedge in” by building some of those extra profitable 100% affordable housing units somewhere else in the city. Anywhere! Use illegal, non-documented construction workers to cut cost if you have to. This is not only a good way to make a nice, guaranteed profit right to help fund future public money takeover attempts; it will make you look as philanthropic as Eli Broad and all the other developers that the City likes to bend over backwards for. (As only someone with no “leadership or public accountability” spine would be able to do.)
Because with this one project under your belt, you are in the club, know the secret handshake and are ready for some of the “market-rate” projects. And although they are not as profitable as the publicly funded projects, if you are tugging on affordable housing heart strings, you can probably do nicely on the more highly demanded (and therefore more highly profitable) housing projects in LA City that require zoning variances or special approvals in order to get off the ground. (And into the sky.)
And who more deserving of being able to make lemonade out of lemons than those nice, philanthropic folks (Garcetti calls it “civic activism”) who are dedicated to helping provide affordable housing out of the goodness of their hearts, in order to help bring this city out of the crisis this shady racket of a system has created.
You have heard Zuma Dogg complain that he was miffed with Downtown Councilmember Jan Perry for using her fear-based, arrogance and bad judgment to call me off topic during a committee meeting on the topic “affordable housing” things we can do to solve the problem.
And although the other people on the committee were nodding their heads up and down in agreement, the pompous and despicable threat to public interest and overall safety, decided that my comments on how, “If the city made developers include the affordable housing they are required to in these cases, you wouldn’t have to “fudge” the situation in the ways you are discussing here.” (And for that, my federally protected rights were violated.
So I have to take it to the blogs and radio stations, instead of that little committee room on the 10th floor of City Hall that wasn’t on TV and about ten other people were there for. And I apologize to all of the homeless people suffering on the streets of Downtown, and all the people who will be experiencing a reduced quality of life (refrigerator sized market-rate housing units that will add density, crime, infrastructure, water, school, trash removal, parking and traffic problems) with Jan Perry as your elected representative, who is supposed to be looking out for the PUBLIC best interest, not the billionaires’ and developers’ whose projects she helps facilitate by approving variances and working to have new zoning laws passed that will add record levels of congestion without the public transportation lines or anything else that is needed to go along with it.
Originally posted Sunday, August 12, 2007