JFI and Berggruen Institute Report: Public Bank Could Finance Over 17,000 Affordable Homes in Los Angeles
New York, NY and Los Angeles, CA — May 5, 2023 — JFI and the Berggruen Institute have released their second publication on public banking in Los Angeles, focused on affordable housing. The new briefing explores how a municipally-owned financial institution could help the city dramatically increase its affordable housing stock.
The briefing notes that under current policy, Los Angeles is projected to add only 51,000 affordable housing units by 2029, just 20 percent of its self-assessed needs. Using the latest research, the briefing brings to light the unique challenges to building affordable housing and shows the ways in which viable projects fall through the cracks of the existing financial system. The briefing goes on to explore how a publicly-owned bank could deploy five new low-risk lending programs tailored to the unique requirements of affordable housing finance.
According to the authors’ analysis, these programs could build or preserve over 17,000 affordable units in Los Angeles over its first ten years of operation, or more than 1,700 units per year, while turning a profit for taxpayers.
The five new lending programs described in the briefing are:
- A rapid acquisition fund to quickly acquire existing affordable housing stock and prevent its redevelopment into high-end units;
- new construction loans to fill gaps in existing affordable project finance;
- recapitalization and repair of existing multifamily affordable housing stock;
- mortgage assistance to low and moderate income homebuyers; and
- assistance for the creation of homeowner accessory dwelling units.
This briefing is the second publication in JFI and the Berggruen Institute’s joint series on public banking in Los Angeles initially announced on April 20, 2023. Forthcoming publications will explore how a public bank in Los Angeles could empower worker ownership of small business; pioneer strategies for democratic governance of financial institutions; and accelerate the green energy transition.
“A public bank in Los Angeles could turbocharge affordable housing production and preservation in the city,” said Jack Landry, Research Associate at the Jain Family Institute.
“Along with other reforms, public finance is necessary to create housing abundance,” said Yakov Feygin, Associate Director of the Future of Capitalism at the Berggruen Institute. “These are relatively easy and low-risk things that cities can do to reduce bottlenecks for affordable housing projects.”