Alhambra’s Affordable Housing Crisis Is Worse Than You Think

A housing development on Main and Fifth in Alhambra (Photo – Staff)

Alhambra does not have an updated affordable housing inventory or a list of its current affordable housing covenants and their expiration dates. So, how can Alhambra accurately report its affordable housing numbers to the State?

By Sean McMorris

State law requires that each California city create a Housing Element as part of its General Plan; the Housing Element is a blueprint for building housing for residents of all income levels. Based on California Department of Finance and other data, Councils of Governments (COGs) assigns eight-year housing goals to every California city through reports called Regional Housing Needs Assessments (RHNA). In addition to stating how much housing in general a city needs to build, these assessments specify categories of Very Low, Low, Moderate and Above Moderate Income housing allotments. Cities then submit Annual Progress Reports to the California Department of Housing and Community Development (HCD). Certain state and federal funds are contingent upon cities having a compliant Housing Element. In 2019, Governor Gavin Newsom threatened to withhold state funding to cities who were not making progress on their affordable housing goals.

One way cities create affordable housing stock is through affordable housing covenants entered into with developers and landlords for extended periods of time (usually multiple decades). These covenants ensure housing stock remains affordable to people who qualify as Low-to-Moderate-Income Households, as defined by the Department of Housing and Urban Development (HUD).

Shoddy Record-Keeping

Eric Sunada, founder of the San Gabriel Valley Oversight Group and current member of Alhambra’s HCDA Citizen’s Advisory Committee, began investigating the City’s affordable housing inventory in early 2019 after the nonprofit 501(c)(3) of which Sunada is a co-founder, Grassroots Alhambra (GRA), appealed the Planning Commission’s approval of a mixed-use development with 62 market-rate housing units and zero affordable units. In addition to traffic and environmental concerns, GRA argued that in a city composed of mostly low and moderate income households with anemic affordable housing stock, the City ought to require the developer to provide some set-aside affordable housing units as a condition of approval, especially in light of the fact that the developer had received a conditional use permit (CPU) for the project.  In other words, the project was not by-right development, but conditional and subsidized because of the CPU, which GRA believed should have been leveraged to gain some affordable housing (see GRA’s presentation).

The City Council ultimately denied GRA’s appeal on a 3-2 vote. During the hearing, the City flashed a chart of its RHNA progress. The numbers on the chart, which were also in a city staff report for the hearing (see page 36), were not consistent with Sunada’s previous research. The City was claiming far more progress on its low and moderate income housing than revealed in public data.

After the January 2019 appeal, Sunada tried unsuccessfully for months to get a list of the City’s affordable housing stock. Specifically, he wanted to know how the City arrived at the affordable housing numbers it displayed at the GRA appeal hearing. Sunada was repeatedly stalled with purportedly noncompliant public records requests.

The City eventually admitted that it did not have an updated list of its affordable housing stock.  The City’s position was that it was no longer required to maintain such a list after the state dissolved Redevelopment Agencies in 2011. Incredulous, Sunada asked how the City had compiled its RHNA progress reports without an accurate list of housing stock and, specifically, how had the City compiled the housing numbers shown at the GRA appeal hearing?  Sunada was essentially told: “The state trusts us.” Marc Castagnola, Alhambra’s Director of Development Services, stated through the City Clerk that, “Information provided to HCD for RHNA purposes only requires raw numbers without addresses or details.”

Sunada reiterated his detailed public records request and, on March 29, 2019, Sunada was informed that boxes of documents awaited his viewing at City Hall. What he discovered was troubling.

Based on the records the Development Services Department provided Sunada, the City had grossly overstated its affordable housing numbers at the GRA appeal hearing.  Sunada wrote the following to City Hall:

I was provided 5 boxes, each partially filled with a few files.  Of those 21 records found, all were affordable housing created by the first-time homebuyers fund using HOME funds and all but two were for down payment assistance.  And of the 21 records, only 7 were completed in the current RHNA cycle starting in 2014.  Yet the city provided the below summary as the amount of affordable housing inventory it had created in the current RHNA cycle (107 units claimed), as provided during the quasi-judicial proceedings of the Monterey Bay Appeal Hearing. Given that my FOIA request has been evidently fulfilled, am I to assume that the inventory provided at the appeal hearing [see chart above] is incorrect?”

During a subsequent conference call, the City insisted that 107 affordable units were produced during this RHNA cycle and that they had misunderstood Sunada’s previous public records request; the City claimed to have thought Sunada was interested only in the First-Time Homebuyers program.  Sunada was asked to resubmit his public records request through the city clerk (his first request was in December 2018 and it was now May 2019).The City told Sunada that the new records would clear up any concerns.

Although city management would not admit it on the conference call, Sunada was convinced City Hall was relying on data from 2014, the last time the City had updated its affordable housing inventory. Sunada also worried that the City was recycling old affordable housing stock as “new” from Alhambra’s previous eight-year RHNA cycle.

The City notified Sunada that the result of his new public records request was available for viewing on May 16, 2019.  The new documents confirmed Sunada’s previous findings. Of the 39 additional files provided by the City, all were for housing rehabilitation loans from the City’s HOME funds and only 27 were from the current RHNA cycle (2014 to present). With the two records requests combined, the City provided Sunada evidence of a total of 60 affordable housing cases, which is far below the 107 the City claimed it had produced during its current RHNA cycle at the GRA appeal hearing. Of those 60, only 34 were produced during the current RHNA cycle (post 2013), and all were from the City’s First-Time Homebuyer and Housing Rehabilitation programs (both funded through HUD/CDBG funds).

The documents confirmed that no new affordable units were constructed during the current RHNA cycle.  All of the people who benefited from the aforementioned city programs were homeowners, not renters, despite the fact that 60% of Alhambra households rent.

In addition, Sunada discovered that after 2010 the City had let numerous affordable housing covenants expire without attempted extensions, risking the loss of hundreds of affordable housing units—or most of the city’s affordable housing stock.

A housing development in Alhambra (Photo – Staff)

Follow-Up and Confirmation

Since Eric Sunada’s inquiries, Colorado Boulevard.net followed-up with its own public records requests. Our requests confirm what Mr. Sunada found. In addition, Colorado Boulevard.net was also informed that not only does the City not have an updated list of affordable housing stock, but it also does not have an up-to-date list of its affordable housing covenants and their expiration dates. The City is working on compiling a current covenant inventory, likely as a result of our public records requests, but it is not yet complete or ready for public viewing.

Colorado Boulevard.net also verified, through public documents, Sunada’s conclusion that the City was re-counting old affordable housing stock from its previous eight-year RHNA cycle (4th Cycle: 2006-2013) as “new” affordable housing stock created during the City’s current eight-year RHNA cycle (5th Cycle: 10/31/2013-10/31/2021). For instance, based on the 5th RHNA Cycle housing inventory the City provided both Colorado Boulevard.net and Eric Sunada, which is Alhambra’s current RHNA cycle, seven rental units from Pepper Street are listed as “New Construction.” According to public records, not only are these units not “new” to the current RHNA Cycle (they were built in 1991), but also their affordable housing covenants expired in 2011. In the same document, units at four of the six addresses listed as “New Construction” were all built prior to Alhambra’s previous RHNA cycle (pre 2006).  Furthermore, the affordable housing stock numbers between Alhambra’s last two Annual Progress Reports to HCD show different numbers across ascending years within the current eight-year RHNA Cycle. There was nothing in the files provided to Sunada and Colorado Boulevard.net by the City explaining the discrepancy between progress reports.

Finally, Alhambra’s most recent HCD Annual Progress Report (2018), shows that the City has only produced 34 affordable housing units since 2013, the same number calculated by Sunada, not the 107 units the City claimed at the GRA appeal hearing.

Day of Reckoning?

The current Alhambra City Council was made aware of these findings at the July 8, 2019, City Council meeting. Alhambra City Manager, Jessica Binnquist, was asked to elaborate on the matter. Binnquist confirmed that the City is working on compiling an up-to-date list of its affordable housing covenants. She agreed that some covenants may have expired over the last five years, but she would not elaborate on how many or how much affordable housing stock the city lost as a result. In defense of the City’s failure to renew the expired covenants, Binnquist stated that the City has acquired new affordable housing stock through its First-Time Homebuyer and Housing Rehabilitation programs.

The numbers for affordable housing stock through the First-Time Homebuyer and Housing Rehabilitation programs, however, are low and nowhere near the hundreds of potentailly lost affordable housing rental units due to expired covenants.  Also, it is highly questionable whether these programs constitute new affordable housing stock since deed-restrictions can be removed once a loan is re-paid, allowing the homeowner to sell-out and cash in on the equity.  Nor do these numbers excuse the City’s complete lack of updated inventory and due diligence to extend the covenants.

Alhambra City Attorney, Joseph Montes, implied that there was little the City could do about expiring affordable housing covenants because they essentially are contract provisions that expire by their terms. When Mayor Andrade-Stadler asked Montes if the City could have tried to negotiate extensions of the covenants, Montes replied in the affirmative. When pressed by the Mayor as to whether there had been any such negotiations, Montes said he was unaware of any.

State law requires that cities identify, analyze, and propose programs to maintain existing low-income rental housing stock that is at risk of loss. Alhambra’s 2013-2021 Housing Element (see pages 31-34) identifies 234 Section 8 contracts (over 60% of the City’s total rental housing stock) that would expire between 2013 and 2014 and proposed that the City either provide rental assistance to occupants of those units or purchase the affordability covenants. Why the City did not pursue these options is unclear. The Housing Element notes that these units also are products of HUD Section 202 loans that do not have to be repaid so long as the projects serve very low-income elderly persons for 40 years.  For for the three complexes in question, 40 years would go to 2029, 2034, and 2049. However, there is no guarantee that the landlords of these units will not sell the property or raise the units to market rates and pay off their Section 202 financing. Because the owners are nonprofits, that hopefully will not happen, but without covenants in place, there is no prohibition.

City Manager Binnquist did not respond to Colorado Boulevard.net‘s request for further comment on the matter.

Consequences?

So what are the consequences of Alhambra’s dishonesty about its affordable housing stock and complete negligence with respect to housing record keeping and timely renewal of its affordable housing covenants?

The most immediate and dire consequence is an extreme loss to the City’s already anemic affordable housing stock, which Alhambra’s low-income population must bear. Findings suggest that of the 107 “new” affordable housing units the City is claiming to have produced during its current eight-year RHNA cycle (currently in its 6th year), only 34 were produced in the current cycle.  Those 34 are dubious because they are not newly constructed units or under contract to remain affordable if sold, but rather they are First-Time Homebuyer and Housing Rehabilitation loans.

Worse still is the potential loss of hundreds of affordable housing units in the current RHNA cycle due to expired covenants. This loss constitutes most of Alhambra’s low-income rental housing stock. Alhambra’s most current affordable housing inventory, which was compiled in 2014, lists a total of 407 low to moderate income rental housing units as being under affordable housing covenants. From 2010 to 2019, covenants for 275 of those units were set to expire. A public records request reveals that the City did not renew any of those covenants.

The result is likely a net loss in affordable housing units in Alhambra, which is contrary to the spirit of state law and the RHNA process.

The question remains, is Alhambra accurately reporting its affordable housing stock to the public and the State? Based on the evidence provided by the City, it would appear not, but how could the City even know given its lack of updated affordable housing and covenant inventory records?