Los Angeles County Development Authority Loan Program

Since 1999, HR&A has provided on-call affordable housing advisory services to the CDA and the County’s Housing Authority, and since 2007, to the Department of Mental Health.

Challenge

The County of Los Angeles administers several loan programs to fund permanent supportive and other forms of affordable housing located in cities and unincorporated areas throughout the County. These include an annual Notice of Funding Availability (NOFA) program administered by the Community Development Authority (CDA), originally using litigation settlement funds derived from the former City of Industry redevelopment project area, and later, allocations from the County General Fund and other sources. The CDA requires technical assistance to review and evaluate non-profit developer loan applications for allocations of available funds. In 2007, the Los Angeles County Department of Mental Health was awarded an initial $116 million allocation from the Mental Health Services Act (MHSA), a voter-approved initiative charged with expanding mental health services in the state of California. Among its many initiatives the Act allocated funding to each county to provide pre-development, permanent financing, and capitalized operating subsidies for new, permanent supportive housing for persons with serious mental illness who are homeless or at risk of homelessness. But the County’s Department of Mental Health lacked expertise to design and implement the program and evaluate applications for use of its funds.

Solution

HR&A has supported implementation of the CDA’s NOFA loan program by reviewing and scoring dozens of detailed competitive developer proposals, and for some projects awarded funding, conducting due diligence reviews, assisting applicants and County staff to finalize deal structures, drafting complex loan documents and providing other program implementation services, including project financing review, loan evaluation, and loan underwriting. For the County’s MHSA Housing Program, HR&A assisted staff to design all program operating and administrative procedures and NOFAs, evaluated applications from non-profit developers, and performed more detailed financial reviews for applications selected for funding.

IMPACT

Through HR&A’s work for the CDA, more than 100 projects have received funding from the its programs, which has been critical to securing federal low-income tax credits to complete the capital stack needed for total project financing. For the MHSA Housing Program, about $138 million has been committed to 52 affordable housing developments to date, with most of the projects either completed or under construction. Projects selected for funding will leverage over $400 million from other sources to produce about 2,500 units of affordable housing, of which 1,118 are targeted to MSHA Housing Program clients. Under both County programs new permanent supportive affordable housing, targeted to a range of populations – including seniors, families, and transitional-age youth – will be developed in all five Supervisorial Districts and nearly all of the County’s eight mental health services areas.