Community Corp. of Santa Monica, a nonprofit that builds and manages affordable housing, is the force behind several projects on the Westside.
That includes Jubilo Village, a 95-unit project located at the site of a church.
Executive Director Tara Barauskas sat down with the Business Journal to discuss a host of topics – working on affordable housing projects, funding, expanding beyond the group’s initial focus in Santa Monica, Measure ULA and the cost of insurance. Her answers have been edited for length and clarity.
Can you tell me a bit about the organization?
Community Corp. was established in 1982 with a very specific mission to improve lives and neighborhoods by providing affordable housing in Santa Monica. The specific concern was gentrification happening, and what can we do to preserve people being able to stay in their communities.
When did it expand beyond Santa Monica?
I came to the organization in 2016 and (it) was sort of my pitch to the board is ‘this is great that you’re doing this in Santa Monica, but what about the rest of the Westside that’s also so very unaffordable?’ And so that was kind of what sparked the conversation about expanding. Within the first four years, we had our first project done in Mar Vista; that was our first one outside of Santa Monica. And then we built one in Westchester, which just finished a few months ago. That was our second one. And now this is our third one, the Jubilo Village project in Culver City.
How do you fund your projects?
We started out just using city of Santa Monica Housing Trust Funds. We had actually started out purchasing existing rent controlled or low-income housing buildings and rehabbing them and then continuing to operate them as affordable housing. And then we started to build new buildings because we wanted to add to the stock of affordable housing in Santa Monica. During the course of those newer buildings, because we were building more units and things like that, we needed to start using the Low-Income Housing Tax Credit Program. A good number of our 95 buildings are just funded by the City of Santa Monica, but there is now a percentage that have low-income housing tax credits, or there’s a state resource called the Housing and Community Development Department, which has some programs to help fund affordable housing construction as well.
Do you have any other investors as well?
When we use low-income housing tax credits, we do get investors, tax credit investors who buy the tax credits. So, we work with a number of big institutional banks that have large tax liabilities and can buy those tax credits. So, (Bank of America), Wells Fargo, Chase, we work with all of them, U.S. Bank, and then we also work sometimes with private banks. They give us, we call them perm loans, but they’re like mortgages. We might add into our layer financing, say, a $2 or $3 million perm loan. That is a hard payment that we pay back over time.
How has funding in areas like Culver City and other areas you are building in now differed from Santa Monica?
It’s been a really interesting journey because we were for so many years just working in Santa Monica, and we were sort of the big fish in the small pond, and we knew everybody, walked down the street and saw the mayor, and we had a really nice, close relationship with all kind of policy makers.
It’s good for us to expand to other parts…but it certainly created some new challenges for us. First of all, you have to learn the community dynamics. You also have to learn the politics. You have to learn some new funding sources. You’re all of a sudden competing with a lot of different other entities who are also trying to get the money and, also, we were an unknown entity.
Can you tell me a bit about Jubilo Village in Culver City?
That project actually was the spark, or the first idea about creating alignment with faith-based organizations. And I’d actually run into somebody just through some of my advocacy work in Santa Monica whose husband is a pastor at that church, or was at the time, of Culver-Palms United Methodist Church. And she said, ‘our church wants to build affordable housing on our lot. Why don’t you talk to my husband?’
And so I talked to him and some of the other church leaders, and that really was the impetus to start this process of building affordable housing on their lot. It’s interesting from a big picture perspective. Churches are also struggling, and so many of them are looking for ways to bring in more revenue and also how to serve their mission. In the case of Culver-Palms, their congregation is really starting to get pretty small, and they have this gigantic parking lot and it’s empty, and they’re like, ‘What are we going to do? We should do something with this.’ And that led to them before they even came to me, they went up their organizational structure, and the church conference decided, yes, we want to build affordable housing here. That was how it started. And they’ve really been an amazing partner. They’ve stuck with us every step of the way.
Originally we were going to do somewhere around 70 units of affordable housing …The property is right on Sepulveda, near all the schools, near employment, near transit. So, we ended up maxing it out at 95 units. And that began the journey of figuring out how to do that. And it had every bump in the road I think you could imagine. It took us seven years to start construction, but the city did step up and is loaning $20 million to the project, and that was a big deal for a small city. So, there was a lot of public discourse about that.
But in the end, there was a very progressive city council, at least three out of the five, who said we need to put our money behind our values, and we need to see this through, and we need to build this housing. They felt that it’s really necessary for the community. Their school districts are losing enrollment and losing families because they can’t afford to stay in the city. So, some of the same issues in Santa Monica, and I think really throughout the Westside. So that was the impetus behind all of it.
The church will be getting a new sanctuary out of it. That’s what I love about these kinds of partnerships, is there’s win-win-win for everybody. The community will be getting 95 units of one, two and three bedrooms, 100% affordable housing for families.
How does that relationship work with the church work going forward?
They are leasing the land to us. Many religious organizations don’t, or can’t, sell their land, but they can lease it, so it’s a long-term ground lease.
You have one project in Santa Monica, Berkeley Station, that used modular construction. Can you tell me a bit about the process?
We initially wanted to explore the idea of modular housing because we wanted to test a theory as to whether it reduces time or reduces cost, and it was a small project that didn’t have tax credits, so it didn’t have major consequences if we wanted to try something a little more unknown. So that was the reasoning behind trying modular there, and I’m really glad we did because you don’t really understand how something works until you just try it, at least that’s my philosophy. Like, you can hear about it, read about it, but until you do it yourself and you physically experience all the different elements, it’s hard to really wrap your head around. It is built, and it’s up and operating. And I would say overall, the process, it went well. We learned a lot of things about it. We didn’t save any money. So, we learned some good lessons and some bad lessons.
We understand the reasons why. We understand now what we would need to do differently in order to get those cost savings. But we did get time savings to some degree, and we also learned about the process…There’s just a lot of elements that you just have to kind of learn by doing and overall, I’m really happy we did it, and I want to apply the lessons to try it again.
What size projects are you interested in?
Affordable housing is really hard to build right now. We are very dependent on government funding sources, and those government funding sources are not the most dependable because they’re also subject to budgets and politics and all different kinds of things, whether it’s at the local level or the state level. So, it’s hard for me to say what kind of projects, size, minimums or whatnot. A lot of it depends on where exactly it is and all the sort of different project elements…
We’ve been talking about funding quite a bit. What are some of the other challenges right now, as far as building affordable housing?
Funding is the major challenge we have with building affordable housing. There are always things like NIMBYs and push back and politics and things like that, but that doesn’t compare to the problems that we face funding our projects, because if we can’t find the money, we can’t build a project. That’s just been a real challenge that, as an industry, we’re all working through, that’s why ULA is so important, because that was years’ worth of work by housing advocates to get that funding from the city of L.A. and now it’s sort of being rediscussed or reopened.
So, we’re worried about that.
Government funding is batted around a lot. We are also watching what’s happening with the state budget process. One of the programs at risk is the cap-and-trade program, and I’d heard something to the tune of there could be $2 billion at risk, so it’s very hard to rely on funding sources when they’re just constantly fluctuating. Our other challenges are more on the operating side, which is maybe less glamorous, but it is really important, because that’s actually the mission work is the day-to-day operation of affordable housing, and we’ve just really gotten squeezed since (the Covid-19 pandemic) started…because we had people not paying rent for years in a row, all the while having expenses you still have to pay. And then came city budgets that were decimated because of Covid and Housing Trust Funds running empty.
And then insurance issues happened after the fires. well, I guess sort of during and after the fires, where some of the big insurance companies left California. And we all need insurance, and affordable housing does too, and our rates went up 300% while our rents went up 3%, so the math problem is getting harder to fix, so we’re spending a lot more time thinking about how can we really dig down deep and be more operationally efficient? Are there new strategies to bring in more revenue? We are having to be more assertive or even aggressive on our rent increases, which is something we’ve not liked to do, because it’s affordable housing. We’ve always hovered around 3% or 4% increases, and last year we did 8%. And it’s allowable and everything, but it doesn’t feel good, and certainly our residents have a lot to tell us about that.
How has Measure ULA affected you?
When we build our projects, we use tax credits, but then we layer like three, four or five more funding sources that are all government funding sources that complete a funding stack. I call it the lasagna. And ULA is the biggest one we’ve ever had. It was years of work with housing advocates who came together, formed a big coalition of a variety of different partners to really push this forward. It was just a huge undertaking with the idea that we need to make meaningful change. Having drips and drafts of, here’s $1 million, here’s $2 million, is not going to solve the affordability crisis or the homelessness crisis. The whole idea behind ULA is we need meaningful amounts of money to really build meaningful amounts of housing.
What do the next few years look like for the organization?
We’re going to be focusing a little bit more on how we create more efficiency in our operations. We’re really battling these issues with all the rising costs. I want to do some advocacy. I am on the board of Housing California, so part of my time is spent on bigger industry stuff, and we are always working on bills to try to get more efficiency or more tools for us…And I want to build more affordable housing. We’re trying to look at some new funding strategies that may not just consist of government funding. So that’s an area we’re learning about right now to see if that’s something we can use.
