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The appeal for proposals to develop surplus subway property at the corner of Wilshire and Crenshaw Boulevards has drawn bids from seven heavyweights in the world of homeless housing.
Large nonprofits like Abode, Path and Bridge Housing, the eighth bidder (which hasn’t produced a single apartment yet) presented bold plans to do things no one else can.
The Better Angels, a nonprofit founded by billionaire tech entrepreneurs who pay attention to the homeless, said it would build a clinic building in addition to 212 affordable units on the property without the need for taxpayer money.
Unlike other bidders whose proposals rely on tax credits and other government grants, Better Angeles says it can supply 30% of its capital as fair and supply the rest on traditional loans, and build it faster and at much less cost than a typical affordable project.
Among several homeless initiatives launched by founder Adam Miller, the Better Angels embarked on an ambitious mission to expose the traditional wisdom that affordable housing cannot be produced without taxpayer subsidies.
“The goal is to show you how to make money to make affordable housing… The only way you’re trying to solve the affordable housing crisis is to make capitalism work,” Miller said.
With a $300 million investment fund, Miller is trying to move for-profit developers away from the luxury market and create opportunities for small developers to think beyond duplexes and ADUs.
At the same time as Metro’s proposal, Better Angels is bidding on a project to redevelop the former Kaiser Permanente facility in Pasadena. It proposes a housing and mental health hub with a market rate of 300, a mix of affordable and supportive units for former homeless people.
They also bid in a competition in the Los Angeles Community College district for proposals to create student housing. If selected, we will build a 54-unit apartment near Sunset Junction in Silver Lake, as Los Angeles City College students prefer foster parents or have left their foster parents.
Better Angels hopes to build a 54-unit apartment near Sunset Junction in Silver Lake for students at Los Angeles City College.
(Onyx Architects, Inc.)
Metro and LACCD have announced that the winners will be named this summer. Bids for the Pasadena Project will close in May and are expected to be decided within this year.
If you win or lose these bids, Better Angels is supporting two small projects that are on track to complete. Later this summer, something groundbreaking will be held for a 51-unit apartment to replace abandoned detached homes in South Los Angeles. It is expected that later this year a permit will be issued for the block’s eight-storey 72-unit building from Manchester Avenue in Westchester.
Miller promotes the housing model as an alternative to a decades-old system of double subsidies, which uses tax credits to support continued operations to continue construction and rental subsidies using tax credits supplemented by other government grants.
Tax development is slow and expensive as tax development requires rental subsidies to be secured before raising capital and can be a long-standing process involving competitive applications for multiple institutions. Meanwhile, developers, mostly non-profit homeless service providers, are gaining the cost of the land.
By providing capital in advance with pen strokes, better angels can be reduced for years from the process.
“It’s a very simple structure,” says Anthony Goode, lead developer of the Westchester Project. “There’s no need to use public subsidies. This makes Capital Stack easier and more reliable.”
Gude said the 72-unit project would cost $15.5 million. At $215,000 per unit, this is about a third of the current construction costs raised through tax credits.
Artist rendering of the Better Angels’ planned 72-unit building blocking blocks from Manchester Avenue in Westchester.
(Demaria Design)
However, there is a trade-off between time and cost savings. Although classified as affordable, the project is not part of the homeless housing system. To make a profit, that rent is beyond the very low level necessary to drive people out of the streets directly. As part of the approval process, Gude has pledged to limit rents for 55 low-income units (for people who make up 80% of the median region) and 15 units at moderate income levels. On average, it would be around $2,000 for low-income units, he said. It’s about 40% lower than rent for other new high-rise buildings rising in the bustling area just north of LAX, but far exceeds the extremely low income levels required for tax projects.
The difference is evident in the application of Metro’s Wilshire/Crenshaw project. Better Angels’ Metro Proposal offers 170 units at 80% of the region’s median and 42 units at 110% of the median, the latter commonly known as workforce housing.
Seven competing proposals using all tax funding have a sharp, low-income unit available for only 30% of the median people, with most people under 60% of the median.
Andre F. Bueno, director of Housing and Chief Investment Officer at Better Angels, said the goal is to create a new home that can guarantee direct service to homeless people, if not master leases, through master leases to nonprofit agencies or by indirectly renting to people who have a federal Section 8 voucher but cannot be used in a competitive rental market.
Miller described it as a homeless home with “downside protection.”
Software developer Adam Miller is experimenting with new ways to prevent homelessness and giving people facing imminent evictions through his 1P foundation in Los Angeles with uninterested microloans.
(Gary Coronado/Los Angeles Times)
“We have the flexibility to enable our limited partners to get returns,” he said. “We are trying to prove that there is another better way to do this and that it is more costly for the government and is effective in creating housing.”
Miller, who built Cornerstone Ondemand in a global training and development company, focused on philanthropy after the sale in 2021.
After forming an organization to support research seeking solutions to gun control, Miller and his wife Stasi Miller focused attention on the homeless as their primary local mission and founded the Step Fund. I gave me a 700 loan with a 65% return rate.
In 2023, Millers incorporated Better Angels United Inc. as an umbrella for several initiatives. A resource day will be held across the county to help homeless people connect with services. It also employs a technical team working to create mobile phone apps and centralized shelter databases for outreach workers.
After Los Angeles fired, the Better Angels built a resource navigator app and established a relief fund.
Affordable Housing Fund is a subsidiary of a better angel profit organization created to attract capital to develop affordable housing.
“We expect revenue from these projects to be at market rates (double-digit internal rate of return), and we think it will encourage many others to reach this space and build new, affordable homes on the net,” Miller said.
Miller plans to promote three types of housing. Approximately 45% of the fund will be sent to standard new home construction. An additional 20% will be invested in Good River Partners, whose founder Daniel Himpel aims to build homes for young people who are transitioning from foster care.
For the rest, Miller hopes to partner with home developers and modular maker Sora Impact to help longtime South Los Angeles homeowners turn their properties into multi-family apartments.
“The idea is to not only create new affordable housing, but also provide opportunities for wealth across the neighborhood and generations,” Miller said.
Market rate developer Andrew Slocum is buying this abandoned building to build an affordable multi-family apartment in South Los Angeles.
(Dania Maxwell/Los Angeles Times)
Gude and Andrew Slocum, who lead the project in South Los Angeles, said their plans are only possible due to state and local incentives for affordable housing, including Mayor Karen Bass 1, who streamlined approval.
Among other bonuses, the five-storey building in South Los Angeles and the eight-storey building in Westchester only require a minimal retreat from the streets and parking.
“We needed every lever that was pulled,” Gude said.
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