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Saying Yes to Affordable Housing in LA’s Backyards: Q&A with Helen Leung

Helen Leung grew up in LA's Frogtown and understands well how the affordable housing crisis has torn at the social fabric of her city. As a 2019 Rubinger Fellow and co-director of LA-Más, she's helping pilot an accessory dwelling unit project that could go a long way to addressing the housing shortage and economic disparities in LA's low-income communities and beyond.

It’s no secret that Los Angeles is in the midst of a housing crisis, the latest signal being news of a 16 percent year-over-year surge in the number of homeless people living on the city’s streets. Helen Leung, a 2019 Rubinger Fellow and LA native, is piloting an ingenious homegrown approach to this challenge as co-executive director of LA-Más, an urban design nonprofit committed to fighting displacement of lower-income Angelenos.

Two years after California passed a law allowing the construction of accessory dwelling units (ADUs), LA-Más’s Backyard Homes Project models a way to bring the benefits to people who feel the housing crunch most acutely. It gives local homeowners of modest means the help they need to finance and build an ADU on their property; in exchange, they commit to renting their “backyard homes” to Section 8 voucher holders for at least five years.

Q: The essence of Backyard Homes is to create more housing by increasing density in LA’s half a million single-family lots. Is that something Angelenos are ready to support?

A: Increasing density is a topic of much debate. Senate Bill 50 [tabled in May] didn’t make it because it was proposing a lot of density, by-right, near transit. What‘s interesting is there has been informal density in the form of ADUs that have existed for decades. Academics have calculated that there are currently 50,000 unpermitted ADU units. So this is not a new typology in any way. It’s just that now, finally, policy is getting out of the way to make it feasible to create new ADUs or permit the ones that are already there.

A newly-constructed ADU in Los Angeles, part of a City pilot to inform future policy.
A newly-constructed ADU in Los Angeles, part of a City pilot to inform future policy.

You’re talking about new state regulations on ADUs. How do they change the game?

Specific barriers in Los Angeles included a requirement for a ten-foot passageway from the front of the lot to the back, and parking has always been a big challenge. Now there’s no passageway requirement and parking can be uncovered, and tandem, or not required if you build within half a mile of transit or if you’re in a historic zone.

But the really important point is that ADUs are now by-right. Local jurisdictions will have to abide by the state law, and neighbors can’t, in the spirit of NIMBYism, oppose someone building an ADU.

LA-Más has created designs for ADU models of different sizes in three different architectural styles. What goals guided the design process?

We started off with not wanting our ADUs, which are going to be affordably constructed, to look like affordable housing. We wanted to have design excellence that was contextual as well as affordable. And we chose architectural styles—modern, Spanish, and craftsman—that would give us some flexibility to adapt to housing styles that are predominant in Los Angeles.

Given the lowered barriers, what do homeowners still need from Backyard Homes to make building an ADU possible for them?

Because of the state law, in 2018 there were over eight thousand applications for ADUs, compared to just a few hundred in years prior. But my guess is that most of these applications are from middle- to high-income homeowners who have the resources and wherewithal to go through the process. Or investors and flippers who are purchasing properties and then adding another unit and reselling.

Our focus is to support low- to moderate-income homeowners, homeowners who are cash-poor, asset-rich, who bought their home many years ago, but they don’t have enough savings, they can’t get a line of credit, they aren’t familiar with the process of hiring professionals.

We’re removing all those barriers. LA-Más is serving as their project manager while also providing the architecture and the permitting. We’re also partnering with nonprofit general contractor Restore Neighborhoods LA to build the designs at a preset price-point. Which is a big deal. The other barrier is financing. We’re working with Self-Help Federal Credit Union and Genesis LA, two community development financial institutions (CDFIs), to create a new mortgage product. It’s like a cash-out refinancing, but today banks aren’t looking at the future value of the ADU and providing a mortgage for that. So it’s innovative and we hope larger banks will adopt the model. We’re also offering a predevelopment loan to front costs before the mortgage comes through.

So will homeowners be able to service the debt on their ADU with the rent that comes in?

Yes, we don’t want any homeowners to be placed in a financially risky position. So the idea is that Section 8 rent, which is about $2,000 for a two-bedroom unit, should cover not only the mortgage but also the insurance and maintenance and all the other increases involved in being a landlord.

Landlords in LA can discriminate against Section 8 tenants, resulting in roughly half of all vouchers actually being returned because tenants can’t use them. Tell us about how Backyard Homes addresses that.

We’re excited to partner with the Housing Authority of the City of Los Angeles (HACLA) and they’re excited to partner with us, because they see this as a Section 8 marketing tool. Many of the homeowners that we talk to think of Section 8 as a very bureaucratic process. We’re streamlining the process for the homeowners. And then we’re also helping them, through our partners LA Family Housing and St. Joseph Center, match with the Section 8 tenant they want. There might be someone who would love to house a veteran. Or they want to house a family or senior. In addition, their tenants receive support from our partners.

Unveiling improvements to the Western Ave. commercial corridor as part of the City's "Welcome to Western" initiative, which is making the avenue safer, more walkable and community-friendly.
Breaking ground on City of LA ADU pilot project.
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So we’re bringing new Section 8 landlords into the mix, and really personalizing the process and helping them understand who these tenants are. In fact, we have some people who were voucher holders at one point and now they’re homeowners—and they are more than happy to participate as landlords.

This is a pilot, looking to build or convert ten or 12 ADUs in the first year. How do you hope Backyard Homes influences policy or scales up?

There are lots of community organizations and community development corporations that already know how to do a lot of this, and we hope they’ll start incorporating this model into their portfolio of work.

And all of our homeowners that have applied have done it without free money, without cash incentive. For many of these homeowners, a $10,000 to $30,000 cash incentive makes it feasible to develop the ADU if they put in the rest themselves. The cost to government would still be much lower than the typical subsidized affordable unit. So our hope is there might be future cash incentives supported by foundations and government, perhaps in the form of waived fees, which would get more low- to moderate-income homeowners participating.

Right now, most affordable housing projects are tax credit-funded. They’re very important, but they’re also at a larger scale, higher price point, and often require a longer timeline. Backyard Homes tests an alternative that’s spearheaded by the average homeowner, who also benefits by building equity and earning income.

How has the Rubinger Fellowship enhanced your work?

What’s great about being a Rubinger Fellow is having a national platform to share the pilot initiative, and having the support of the LISC family to think through the financial implications, the programmatic components, what this looks like as a scalable approach to community development overall. It gives me the space and time to think on a different scale. I’m in a cohort of amazing fellows doing different work, but all trying to do something new. That’s inspiring.

 

Webinar: Accessory Dwelling Units

In this webinar, Helen Leung and Brian Guyer, from Human Resource Development Council, discuss how they’re leveraging ADUs in their unique markets.

Watch Webinar
A One-Stop Shop for Affordable Backyard Homes Advances in L.A.

CityLab covers the Los Angeles program to finance and build accessory dwellings for homeowners who agree to rent them to Section 8 voucher-holders.

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