New housing units in Florence-Firestone, adjacent to Huntington Park and four miles south of downtown Los Angeles…could provide a path forward to help alleviate some of Los Angeles’s affordable housing and homelessness crisis. The Aster, scheduled to be completed by the end of 2021, will have 56 units along with a variety of on-site resources for its residents, including medical and employment services, helping residents make a transition towards self-sufficiency.
In LA county, which lacks more than 500,000 units of affordable housing, more than 60,000 people are experiencing homelessness each night, many of whom are sleeping on the street. The construction of The Aster is taking place with little fanfare. However, its promise lies in a new funding model that could prove to be a blueprint for future affordable housing projects.
“We just don’t have enough affordable housing in the Los Angeles market,” said Andi Israel, 32, the L.A. developer at the center of the project.
Lack of affordable housing in larger markets is in part due to the limited market of developers interested in these traditionally high-cost
projects which can be administratively burdensome with limited profit margins. Private companies seek profit on investments, and traditional financing for affordable housing, which often relies on tax credits, doesn’t provide the same profitable returns.
So, Israel decided to create a new model, based on private financing models, in order to find another way.
“Social Impact Investors are investors who aren’t only looking to make a financial profit on their investment,” Israel explains. “They want to make a positive impact on the world, so they make investment choices that consider both social impact and financial return. Unlike traditional market-rate deals, The Aster is being built specifically to serve our most vulnerable unhoused neighbors, and its investors understand that this deal is not expected to yield traditional market-rate returns.”
As a “social entrepreneur,” Israel, through her development company RxLA, is creating a way for people and companies to make an impact investment. The building, which is being financed through conventional debt and private equity, will have a smaller return compared to commercial ventures, but she touts the project’s social impact, which will also appear on investor reports.
Celina Alvarez, an experienced housing advocate and the Executive Director of Housing Works – the social services provider that will be managing the on-site services at The Aster – explained that this new model might just work.
“Andi has cracked a code that, I believe, will now allow for much needed dialogue to take place,” Alvarez wrote in an email.
Located in an unincorporated part of Los Angeles County, The Aster will operate much like a normal apartment building. Tenants will have leases, but will only pay 30 percent of their incomes towards rent, some of which can come from Social Security benefits and/or earned income; the remainder will be subsidized by the LA County Department of Health Services. To find tenants, RxLA is working with the Los Angeles Homeless Services Authority, who will match perspective tenants to the apartments based on their needs.