Why would the City of Industry pay $61 million to build homes in places like Pomona, Norwalk, Pasadena, and Los Angeles?

The short answer is that Industry policymakers don't want new homes in their city. As a result, about a third of the money spent yearly on affordable housing by L.A. County government comes from a city where new-home construction doesn't occur.

The city of Industry is famous for its unusual decision to incorporate in 1957 with no zoning for housing, laying the groundwork for a city that would live and breathe business. (The few houses that do exist in Industry were built prior to the city's incorporation.) Like other cities, though, Industry has its share of blighted areas, and formed a redevelopment agency to fix them up.

The rub is that when an agency creates a redevelopment zone and uses bond money to rehabilitate the area, it must repay those bonds with "tax-increment financing" meaning the additional sales and property tax dollars generated by the now-more-valuable properties. State law requires that 20 percent of the tax-increment funds be set aside to build affordable housing.

In the city of Industry, that means more than $10 million a year in tax dollars that must be spent on housing. Which isn't easy to do in a city that forbids housing.

The solution came through state legislation in 1992, which allowed the city to spend its housing funds outside city limits. The move prompted a lawsuit by the Industry Civic Planning Association that held up the effort until 1997, leaving the city with $61 million that it has been giving out for the past three years.

That $61 million windfall is now being used to build 2,554 apartments across 75 locations in various cities around the county, under a plan approved by the Board of Supervisors in 1997. More money will be transferred on a yearly basis until the redevelopment-area designation expires in 2017.

The money can go to any new project within a 15-mile radius of the city's borders. All are projects for senior housing, low-income housing, and special-needs housing for people with mental disabilities, handicapped people, and people with AIDS.

"At this point it's a very good partnership between us and Los Angeles County," said Industry City Manager Phil Iriarte said. "It meets their needs and ours. Within 15 miles of our border (means the money can be spent) almost anywhere in Los Angeles County."

Housing officials say the city of Industry's funding is providing a major boost in a county where the affordable housing shortage threatens to constrain the economy because low-income workers can't afford to live in the area.

In the city of Norwalk, where the city receives little in the way of redevelopment income from the state and federal governments, the money is crucial, said Tom Lynch, the city's assistant city manager.

Norwalk officials plan to soon begin notifying the seniors selected to occupy 240 one-bedroom apartments now being built next door to a senior center. The units will rent for less than $500 a month.

"(The project) probably wouldn't be underway today (without the city of Industry funding)," Lynch said.

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