Cracking the code on affordable housing
Middle-income workers get aid from 3 California agencies
Three California agencies say they have “cracked the code” for providing affordable housing for middle-income workers who are priced out of the communities they work in.
Police, firefighters, teachers, nurses and ordinary office staffers often face long commutes or pay more for housing than they can afford.
They earn too much to qualify for subsidized affordable housing but not enough to buy a home or comfortably rent.
A few years ago, coalitions of local governments called joint powers authorities began experimenting with a novel solution.
The JPAs buy newer apartment buildings, lower the rent and lease most of the units to moderate-income tenants, or those earning 80-120% of the median income. The rest are leased to low-income tenants below the 80% threshold. Existing tenants who earn more than the allowed amount continue to pay market rent but are replaced by moderateincome tenants as they move out.
No property taxes are paid during the life of the bonds used to finance the deal. In exchange, cities gain title to the building when the bonds are paid off.
“These properties are run exactly as they were run before. They’re maintained at a class A level,” said John Drachman, cofounder of Newport Beach-based Waterford Property Co., which is managing six workforce housing projects in Southern California. “When someone comes into the space, we’ll income-qualify them, and that determines the rent. If you make more than 120% (of the median income), we won’t lease to you.”
In February, Waterford took over the Parallel Apartments and Jefferson Platinum Triangle in Anaheim’s Platinum Triangle district and since has leased 196 vacant units to moderate-income tenants. The buildings are now full.
A two-bedroom apartment at Jefferson PT that drew a market-rate rent of $2,800$2,900 a month now rents for $2,361 a month to a tenant earning 80% or less of the median income, $2,383 for someone earning 80-100% of the median and $2,432 for households earning 100-120% of the median. That’s a savings of $368 to $539 a month, or about $4,500-$6,500 a year.
To put that in perspective, the middleincome limit for a two-person household is $102,450 in Orange County, $76,800 in Los Angeles County and $74,400 in the Inland Empire.
We sat down with Drachman in the Jefferson PT clubroom to learn how the program works. The interview has been edited for clarity and length.
Q
Who owns the apartments and how are they financed?
A
The joint powers authority that we work with, which is CSCDA, which