In December of 2024, I, along with my colleagues and partners were fortunate to celebrate the groundbreaking of a 48-unit, mixed-income, transit adjacent project developed in partnership with a local legacy landowner (The Clark on 54th, the first Black-, woman- and locally-owned development in Los Angeles’ Crenshaw district).

Getting there was brutal: entitlements took nine months; plan check approvals took another 14 months; and the debt and equity raise took over a year. During this time, we as the developer took no compensation and, alongside our partners, made significant investment and took significant risks.

Despite these challenges, there are hundreds if not thousands of legacy family owners across the L.A. region who, with proper capitalization and strategic partnership, could leverage their ownership and build generational wealth while playing a key role in housing development. Projects like these need to be encouraged, incentivized and supported.

New factors in place

Since we started working on this project in 2021, interest rates have increased dramatically; Measure ULA was adopted resulting in negative impact on the ability to raise equity; capital has commensurately increased its expected return thresholds; and now we have the double hit of tariffs and a crackdown on immigrant labor, driving up already extreme construction costs.

The financial landscape for new construction of multifamily housing is a battlefield. Even with endless runway on the demand side, repeatedly, I am told by debt and equity providers, “We no longer invest in Los Angeles.”

Policymakers, and those in philanthropy interested in supporting housing creation in the region, need to hear this loud and clear; and partnerships and innovative thinking need to be encouraged and capitalized.

Public-private partnerships

A common development acronym is PPP, or public-private partnership. Allow me to propose a different version:

• P1: Public sector policy and practice must support vs. deter new housing construction. The policies in place today are not working to create a smooth and certain path to the issuance of building permits. And, while permanent supportive housing (affordable housing with support services) and 100% affordable projects are vital solutions, they cannot be the sole focus. The backlog for mixed-income and market-rate projects is too vast. To create healthy communities, we need new housing starts at all levels.

• P2: Private sector capital must take its blinders off to see the long term, macroeconomic benefits of investment in the region.  The Los Angeles metro area’s gross metropolitan product (GMP) ranks third globally with an effective GDP of $1.5 trillion. Demand for new housing far outweighs supply. Private sector capital that can be growth-focused with both patience and flexibility will be rewarded.

• P3: Philanthropy must step up in a different way. In today’s environment, without philanthropic support, housing starts will be non-existent. Pre-development capital, residual receipts and/or participatory loans, program-related investments and balance sheet guarantees can be committed earlier in the development process with performance tied to specific benchmarks. These tools are needed now.

Supply/demand imbalance needs to be addressed

With an approximately 1.2 million-unit deficit of housing in the L.A. region, the supply/demand imbalance mandates that we treat new housing development as a critical emergency.

Through fire recovery, the PPP community has demonstrated that it can move quickly with creative solutions and the dedication of significant financial resources. We must bring the same urgency to the housing crisis. 

In particular, small, local developers, legacy owners and mission-driven nonprofits need PPP support throughout the development process, including predevelopment. Experienced, local knowledge matters and deserves investment and support. We cannot be expected to be “volunteers” in creating housing; and we cannot afford to move slowly, as it’s clear that “business as usual” has failed us.

All housing, at all levels, needs to be prioritized as an emergency, with an emergency response:

• Measure ULA should be amended by emergency order, to exempt all new multifamily housing starts for at least 10-15 years. 

• Corridor development; urban infill; and projects compliant with underlying zoning and/or state law should be expedited as “straight-to-permit” projects without the imposition of burdensome conditions and/or arduous and protracted processes. 

• We cannot rely on government funding. Philanthropy has an opportunity to step up and fill the void. If we come together locally – P1, P2 and P3 – we can truly make a difference and have an impact on housing production.

• Finally, diversity matters. Full stop. As a woman in the business, with nearly 30 years of experience, there are still very few of us in the development space. The same is true for people of color. We can do better.  Diversity is not only good policy; it is good business. 

The time for action is now.  As part of an ad-hoc group named WIRED – Women In Real Estate Development (acknowledging Women’s History Month) – my colleagues and I will be discussing all of this and more at Urban Land Institute (ULI) Los Angeles’ upcoming Urban Marketplace on March 26th at the Huffington Center.

Kacy Keys is founder and chief executive of Praxis Development Group based in Los Angeles.