I posted about the "WeHouse" master lease concept conversation 6 months ago. This is actually happening! According to the Los Angeles Homeless Services Authority, they have a pilot program that will master lease 800 units in LA County and in process of master leasing the 1317 Grand micro-apartment building in Downtown LA. The building was originally conceived to serve the missing middle renters. I called it the mini-cooper of apartments because it is compact with nice finishes and amenities in a desirable and walkable neighborhood. The building itself is very similar to Permanent Supportive Housing projects, with all studio units having their own kitchen and bathroom, so even though it was not built with the intent to house the homeless, it will work seamlessly with minor tweaks. I'll publish a more in-depth comparison of this, but here are some quick notes:
1. The total development cost for this privately developed project is LESS THAN HALF of the average cost of subsidized affordable housing produced in LA.
2. The finishes are of market rate quality, so this building has much nicer apartments and amenities, including a full rooftop open space. It's a Class A building in a Class A location, with all the neighborhood amenities and transportation options.
3. LAHSA holds the master lease and will manage all individual tenants, providing property and asset management services, as well as wrap-around homeless services on-site.
4. Master lease is a 5-year term + 5-year option. This is an Opportunity Zone development, so the 10-year initial lease term is ideal since the investors have to hold for 10 years to take advantage of the OZ benefits. I was told a 10-year lease term concept is under consideration by LAHSA for the future.
5. Option to purchase - this property can be purchased in the future by the agency to keep this building as affordable housing in perpetuity.
This project was built with ZERO public subsidies. To the owner of the building, master leasing the whole building means guaranteed rent payment, regardless of the actual vacancy rate. For the governmental agency, this is advantageous because it can instantly house people, and rental subsidies can be allocated immediately instead of waiting for a few years for construction to finish, which is the case with Project-Based Vouchers. The risk of development and construction with public money is completely eliminated. This system provides the best of both worlds: allowing private developers to produce housing efficiently while focusing subsidies to provide more rental assistance to help more people in need. In the US, federal rent subsidies are only able to assist 1 out of 4 people in need, trending towards 1 out of 5, according to a HUD executive.
I think we have something here that can solve the high cost of affordable housing production and lack of rental subsidies.
Matthew Haas André F. Bueno Thomas Wong, MSW Michael Shilstone
#affordablehousing #innovativehousing
Principal at JETT Landscape Architecture + Design, Inc.
3moAnother great PYATOK project comes to fruition! Congratulations!