Affordable Housing at Luxury Prices

Affordable Housing at Luxury Prices: The Real Cost of Building Under ULA (Part Two)
If you missed Part One, start there for how ULA is calculated and the $12M sale example.

From Revenue to Results

Since April 2023, Measure ULA has generated over $780 million. In July 2025, the City approved an FY 2025–26 expenditure plan of $424.8 million across 11 programs. That leaves more than $300 million still unallocated in the House LA Fund for future award rounds. It’s typical for multi-year programs to stage spending—yet it’s fair to ask: if this is a housing emergency, why isn’t more of the money already at work?

Where the Money Goes (and the 11 Programs)

ULA is split roughly into 70% Affordable Housing and 30% Homelessness Prevention/Tenant Protection, with up to 8% for administration (staff, benefits, compliance, enforcement).

ULA’s 11 Permanent Programs (one-liners)

Multifamily Affordable Housing: Loans/grants to build/preserve deed-restricted apartments.
Alternative Models: Social/community ownership models designed to remain permanently affordable.
Acquisition & Rehabilitation: Buy and rehab existing buildings (e.g., apartments/motels).
Homeownership Opportunities: Early-stage support for affordable for-sale pathways.
Capacity-Building: Technical help for qualified developers and partners.
Operating Assistance: Support for ongoing operations of affordable housing.
Short-Term Emergency Assistance: One-time rental/arrears help to prevent eviction.
Income Support (Seniors/Disabled): Direct cash assistance (up to $20,000 per household).
Eviction Defense & Prevention: Legal services to keep tenants housed.
Tenant Outreach & Education: Know-your-rights, navigation, and referrals citywide.
Protections from Tenant Harassment (TAHO): Intake, investigations, enforcement actions.

What “Gap Financing” Means

Gap financing = the City fills the last slice of a project’s budget so it can break ground. Example: a building costs $60M. The developer lines up $50M (tax credits, bonds, loans, equity). ULA may contribute $10M to close the gap. The City is not building the project; developers are.

Can ULA Buy/Rehab Existing Buildings?

Yes. Under Acquisition & Rehabilitation (and sometimes Alternative Models), funds can help purchase and rehabilitate existing apartments, motels, or residential hotels to preserve affordability and prevent displacement.

Administrative Costs

Up to 8% of ULA revenue funds administration—staff, salaries, benefits, compliance, and enforcement. ULA also supports Tenant Anti-Harassment Ordinance (TAHO) work (outreach, investigations, citations, referrals). Results are mixed: thousands of complaints have been filed, but prosecutions remain limited.

Examples of Program Uses

Preservation: Extending affordability covenants on at-risk units.
Acquisition & Rehab: Buying and rehabbing older apartments/motels to prevent displacement.
Alternative Models: “Social housing” or community-owned structures (permanent affordability).
Tenant Protection: Legal defense, rental assistance, anti-harassment enforcement, and citywide outreach.

By the numbers (tenant & household support)

16,000 households received legal eviction defense.
4,300+ households received emergency rental aid (direct help paying arrears).
500 seniors/disabled households now eligible for up to $20,000 each in direct cash assistance (≈ $10M if fully awarded).

ULA Gap Funding Example

One round committed $55,000,000 across 800 units.

City share ≈ $69,000 per unit (partial subsidy).

City dollars help close the last slice, not pay 100% of construction.

Total Development Cost Reality

Typical all-in cost per affordable unit:

Unit size ≈ 600 sq ft
Total cost ≈ $500,000–$700,000
Implied cost ≈ $833–$1,167/sq ft

ULA’s $69k/unit covers a fraction of total cost.

Why “Affordable” Projects Are So Expensive

Affordable developments commonly land at $500,000–$700,000 per unit. With typical 600 sq ft units, that’s $833–$1,167 per square foot—on par with luxury construction in Brentwood or the Palisades. Drivers include:

Labor requirements (prevailing wage, PLAs) increasing hard costs.
Financing complexity (multi-layered credits/bonds) adding legal and consulting fees.
Soft-cost creep over long timelines (design, environmental, legal, reporting).
Carrying costs & risk (interest during construction, inflation contingencies).
Smaller average units pushing per-square-foot math higher.

Apples-to-apples cost snapshot:

• ULA-subsidized affordable: 600 sq ft units at $500k–$700k → $833–$1,167/sq ft.

• Private 20-unit infill (no subsidy): 800 sq ft units; hard costs $300–$400/sq ft → $240k–$320k hard; about $400k all-in per unit.

Private infill is still expensive—but often roughly half the cost per square foot of subsidized builds.

Ownership vs. Renters for Life

Today’s publicly aided pipeline is overwhelmingly rental. Rentals stabilize payments—but create little household wealth.

Scenario A – Affordable rentals: One landlord, one property-tax bill; tenants do not build equity.
Scenario B – Affordable condos: 80 families own; the City collects 80 separate tax bills (reassessed on resale); households build equity and community roots.

Note: ULA’s Homeownership Opportunities program exists, but it’s early. Steering more subsidy here could grow long-term revenue and family wealth—versus permanent tenancy.

The Ripple Effect of Fewer Sales

ULA targeted high-value transactions, yet $5M+ sales are down 50% citywide. Annual receipts average about $288M—well under early projections. The consequences go far beyond ULA’s ledger:

Lost property-tax reassessments → less money for schools, fire, police, and infrastructure.
Small developers leave L.A. City; they avoid ULA-affected deals entirely.
Local vendors lose work: contractors, inspectors, appraisers, escrow/title, stagers, movers—everyone tied to transaction volume.
Neighborhood commerce softens: fewer families moving in = fewer dollars at local businesses.

Proof is in the receipts: fewer high-value sales means fewer reassessments—schools and core services feel the shortfall.

Pulling It Together – Robbyn’s Take

Voters thought ULA dollars would directly build housing. In reality, the City provides partial subsidies inside projects that still cost $500k–$700k per unit. A $69k subsidy helps, but it doesn’t change the fundamental cost structure—and the system favors large sponsors while many small local builders sit it out.

Meanwhile, the tenant-protection side shows clear value—eviction defense, rental aid, and targeted cash assistance for seniors/disabled households. But we can’t ignore the bigger picture: sales are down, receipts are lower than projected, schools and agencies lose reassessment revenue, and neighborhoods miss out on new investment.

My pivot: Los Angeles should channel more resources into affordable for-sale units. Ownership builds equity for families and the long-run tax base for the City. Rentals matter—but they can’t be the only outcome.

Equity builds wealth—for households, communities, and the state. Renters-for-life do not.

Thinking about buying or selling? Policies like ULA, density bonuses, and zoning shifts can change what’s built next to you—and when. I’m Robbyn Battles, and I stay on top of every change so you’re not surprised two years after you close.

If you want to know whether these rules could affect your property—or you simply want clarity before making a move—reach out today.

Email Robbyn

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The Real Cost of Building Under ULA