Luke Johnson and his neighbors thought they had found the perfect solution to avoid being displaced from their Silver Lake, Los Angeles fourplex: A state program was offering $500 million to help tenants, community land trusts, and other affordable housing developers buy buildings at risk of foreclosure.

Felicia Mello

CalMatters

With their longtime landlords set on selling the building, Johnson and his neighbors persuaded them to sell to a community land trust that pledged to keep rents low.

But six months later, the state program has vanished after failing for three years to give out any of the grants and loans it promised. The deal with their landlords has collapsed. That leaves Johnson, 85, and his husband unsure whether they’ll be able to stay in the rent-controlled two-bedroom apartment where Johnson has lived for nearly half a century.

The sudden disappearance of half a billion dollars of state money meant to help community land trusts has left some housing advocates questioning California’s commitment to preserving existing affordable housing, a strategy that’s less flashy than building new units but can also be less expensive.

“It’s a struggle for us and I’m sure for a lot of other people who counted on getting that grant and didn’t get it,” Johnson said.

State lawmakers created the Foreclosure Intervention Housing Preservation Program in 2021. It was a watershed moment for community land trusts, nonprofits that purchase land and preserve it as permanently affordable housing by renting or selling the buildings on it to low- and moderate-income residents. Residents then manage the property cooperatively.

While community land trusts have tripled in number in California over the last decade, springing up everywhere from coastal and inland cities to tribal lands and the Mexican border, they often struggle to raise enough money to compete with private developers. Access to a dedicated pot of state money was poised to be a game-changer for both the trusts and cities seeking to prevent displacement of low-income residents, said San Francisco Supervisor Dean Preston.

“We had hoped the state would help San Francisco and other cities that want to really ramp up these programs,” Preston said. “(Community land trusts are) a very effective, quick and permanent way of creating truly affordable housing with resident control.”

The state planned to dole out the half-billion dollars in loans and grants over five years, funding purchases of financially distressed buildings of up to 25 units.

Three years in, however, the state agency charged with developing the program, the Department of Housing and Community Development, had yet to give out a single dollar.

This spring, with California facing a projected $56 billion budget deficit, some lawmakers began raising concerns.

“It’s the kind of thing that you look at and it makes your head explode,” Assemblymember Jesse Gabriel, who chaired the Assembly’s budget committee, said in an interview. “This is something of importance to everyone in California, and yet we’re sitting here with this tremendous allocation of resources and making zero progress. That is totally unacceptable.”

Lawmakers scrapped the program in June.

It wasn’t the only state spending on the chopping block this year. But community land trust advocates complained that the state’s slow rollout undermined the program before it could get started.

“We got into the 2021 budget expecting the funds would be available within a year or year and a half,” said Leo Goldberg, co-director of policy at the California Community Land Trust Network. “If the program had been rolled out, there would have been successes to point to that would have made it easier to defend.”

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Three Years In, Zero Progress

Johnson said he immediately felt at home in the diverse Silver Lake of the 1980s, with its vibrant and organized LGBTQ community, Latino families socializing on porches and Russian immigrants filling Orthodox churches. Over the last 40 years, he’s watched the neighborhood gentrify as hipster professionals moved in, bringing their cash with them.

Johnson’s now-husband, Osbey, came to house-sit in 1990 and never left. They and their neighbors, friends who have all lived in the building for at least a decade, hosted community events in the complex’s back garden.

When their landlord signed a contract to sell the building to a for-profit developer, they feared displacement. Average rent for a two-bedroom in Silver Lake had ballooned over the years to nearly $4,000 per month, according to Zumper.com, about four times what Johnson and his husband currently pay.

After he and his neighbors, one of whom had experience organizing with the Los Angeles Tenants Union, launched a phone and email campaign, the private developer backed away from the deal and their landlord agreed earlier this year to sell to the Beverly-Vermont Community Land Trust, giving the trust until this month to raise the $1.5 million purchase price.

That should have worked: California was expected to start distributing the affordable housing preservation funds this year. Land trusts were already having initial conversations with the fund manager selected to run the program about projects that would be eligible.

But by July the expected state support was off the table. The clock was ticking to find a backup plan. The residents started an online crowdfunding campaign and threw a backyard fundraiser with barbecue and a drag show. The land trust pitched the project to small banks and credit unions.

Even if the trust got approved for a loan, the interest on a private loan would likely be much higher than using state money, foiling the tenants’ plans to keep their rent affordable. Kasey Ventura, an organizer with the land trust who had negotiated similar deals, estimated rents on the units would need to rise to at least $2,000 a month — still below market rate, but a significant jump.

The loss of the state fund was a “huge setback” for not only the Silver Lake tenants, but community land trusts across the Los Angeles area who had been banking on the support, Ventura said.

“We have dozens, if not hundreds of units that are in this bubble now of ‘How do we do this?'” Ventura said.

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Why Did This Program Take So Long to Roll Out?

New government programs often take months, if not years, to roll out. But even by state standards, the glacial pace of the Department of Housing and Community Development’s launch of the housing preservation program stands out.

The state housing department declined to make anyone available for an interview for this story. But in an emailed statement, spokesperson Alicia Murillo said the unprecedented nature of the housing preservation program created a steep learning curve for agency staff.

The program “was very different from any other program HCD manages, both in terms of the types of projects (small-scale acquisition/rehab vs. our usual larger-scale new construction) and in terms of the mechanism for fund disbursement (using external nonprofit lenders rather than disbursing funds ourselves),” Murillo wrote.

Another state effort to create housing stability for low- to moderate-income Californians, created at the same time, launched much more quickly: Lawmakers authorized California Dream for All, a downpayment assistance plan that covers up to 20% of a home’s cost for certain first-time homebuyers, with the same 2021 budget bill that created the housing preservation program.

Less than two years later, the California Housing Finance Agency, a different arm of the state bureaucracy, had already given out all $288 million in initial Dream for All funding to eager homebuyers. This year, the agency overhauled Dream for All to serve a more diverse set of buyers; the revamped program survived state budget cuts and awarded an additional $250 million in no-interest loans.

“It’s the kind of thing that you look at and it makes your head explode.”

Assemblymember Jesse Gabriel, democrat from encino

By contrast, the state housing department took a year to draft guidelines for the housing preservation program, then another eight months to turn those into final rules. The plan called for a nonprofit fund manager to run the program, but the state didn’t award that contract until July of 2023, two years into the program’s five-year timeline.

That’s unusual, said Ben Metcalf, managing director of UC Berkeley’s Terner Center for Housing Innovation, who led the state housing department from 2015-2019. While it can easily take two years to launch a new program, he said, that timeline can shrink by a year if lawmakers have already appropriated the money, as they had for the housing preservation program. And things can move even faster, he said, “when an agency or director is motivated, or you have the right staff to implement it.”

Housing department spokesperson Pablo Espinoza said by email that part of the delay stemmed from the need for changes to state law that would allow officials to transfer money to the fund manager and pay its administrative expenses. It took several months for those adjustments to pass the Legislature, he said. California Dream for All didn’t face those hurdles, he said, because it was administered similarly to the Housing Finance Agency’s existing loans.

To design the housing preservation program, the department did “a ton of outreach” to community land trusts and others involved in preserving affordable housing, said Elizabeth Wampler, Bay Area executive director for the Local Initiatives Support Corporation, the fund manager awarded the contract.

Wampler’s group was drawn to the project after lending money to community land trusts to preserve affordable housing in the Bay Area, she said.

“We saw those deals had incredible impacts for communities of color,” Wampler said. “We know it’s a huge anti-displacement strategy to keep people in their homes. It helps to increase affordable housing stock — there are a lot of reasons why it’s a good strategy.”

“We got into the 2021 budget expecting the funds would be available within a year or year and a half. If the program had been rolled out, there would have been successes to point to that would have made it easier to defend.”

Leo Goldberg, co-director of policy, California Community Land Trust Network

Affordable housing groups had identified 162 buildings they hoped to buy and preserve as affordable using the state funds, according to a survey Wampler conducted.

But the state’s design process took so long that by the time it was complete, the state budget picture had changed and the department never signed a contract with Wampler’s group. Instead, the department put the program on pause in late 2023 — at least six months before lawmakers officially cut its funding.

“I think it was hard that the program hadn’t launched and hadn’t funded any projects,” Wampler said. That made it a target for lawmakers looking to save money, she said. “I think everybody involved was like, ‘Oh god, why didn’t we just get it done six months ago — we would have been in such a different position.’ ”

The department did already have some experience with affordable housing preservation through another program designed to help mobile home park residents and nonprofits buy and fix up parks. Like the housing preservation program, the Manufactured Housing Opportunity and Revitalization Program provides loans to purchase existing properties, some of them with fewer than 25 units. Both aimed to support residents banding together to manage their housing cooperatively.

Between 2013 and 2023, the department only approved a single loan application for the mobile home park program, CalMatters reported last year. But lawmakers have since redesigned it, and in 2023 the department awarded more than $100 million to indigenous tribes, local governments, resident cooperatives and nonprofits like Habitat for Humanity.

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Community Land Trusts Seek Big Bank Buy In

Last year, while the Foreclosure Intervention Housing Preservation Program languished, more than 31,000 California properties that would have been eligible for the program received a notice of default, according to a California Community Land Trust Network analysis of Property Radar data.

Among the state’s distressed properties was Oakland’s Warriors House, a local landmark near the 580 freeway painted in the splashy blue-and-gold color scheme of the Golden State Warriors basketball team and festooned with team memorabilia.

Owned by a local family for more than 50 years, the house needed extensive repairs when the family’s matriarch passed away after taking out a reverse mortgage, said Steve King, executive director of the Oakland Community Land Trust. The trust had hoped to use the state program to buy the home, both preserving the iconic property as affordable housing and preventing the woman’s son from being displaced, King said.

But without state support, the trust did not raise enough money in time, King said. A bank took possession of the property and sold it to a private buyer last year. The woman’s son, Lloyd Canamore, passed away shortly before the sale after moving to a rental in a different part of the city.

“It really messed him up,” said Michelle Easley, a neighbor who recalled Canamore as “a sweet man” who loved sports, his dogs and taking pictures with fans who would stop by the house.

“We’ve encountered similar situations of houses in probate, longtime Black families losing the family home, and it’s devastating,” King said.

In 2020, concerns about private equity firms buying distressed properties and converting them to market-rate rentals led to the passage of a state law that gave tenants whose foreclosed homes were sold at auction — or nonprofits working with those tenants — 45 days to match the winning bid.

But tenants and community land trusts still struggled to come up with funds to take advantage of the law. The housing preservation program aimed to change that.

“Time will tell whether the agencies can respond fast enough, but the reason I believe the governor agreed to this funding is that no one wants to have homelessness go up due to foreclosures,” Sen. Nancy Skinner, a Berkeley Democrat who championed the auction change, told online news outlet Next City at the time.

Skinner declined to comment for this story.

Preston, the San Francisco supervisor, said he thought elected officials at the state and federal level underestimated the importance of preserving existing affordable housing. Building new housing is important, he said, but so is stemming the constant hemorrhage of affordable units as they are purchased and flipped to luxury abodes out of reach of many Californians.

“It’s not production in terms of building something from the ground up, but it is producing when you take something that would otherwise be renting for $4,000 a month and instead have it renting for a reasonable percentage of someone’s income who is low-income,” he said. “That is creating affordable housing for working-class people who otherwise wouldn’t be able to afford to live in San Francisco.”

Without state support on the horizon, community land trusts across California are now pooling their efforts to create a joint capital fund, powered by philanthropy and private banks, that could eventually provide low-interest loans to buy buildings like the one in Silver Lake.

They’re hoping banks will be attracted by the opportunity to fulfill some of their obligations under the federal Community Reinvestment Act, which requires financial institutions to prove they are meeting the credit needs of historically disadvantaged communities.

The goal is to create a one-stop shop for lenders who want to support community ownership, raising $20 million in 2025 and eventually growing that to $100 million that community land trusts could combine with public subsidies to buy properties, said Jazmin Segura of the Common Counsel Foundation, which is hosting the fund.

Johnson and his husband still hope they won’t have to leave their home. The deadline to put down a deposit on the Silver Lake building came and went, with the land trust unable to come up with a Plan B that would have raised the money any sooner than next year. He and his neighbors are asking their landlords for more time to come up with a solution.

If they don’t succeed, Johnson fears he and his husband would have to leave Silver Lake.

“We really don’t know what the future is,” Johnson said.

About the Author

Based in Oakland, Felicia Mello covers the state’s economic divide, including such issues as affordable housing, labor rights and environmental and social justice. Her recent stories covered the impact of legal representation on eviction cases and unions’ quest to win unemployment benefits for striking workers.

About CalMatters

CalMatters is a nonprofit, nonpartisan newsroom committed to explaining California policy and politics.