California’s $500 Million Affordable Housing Plan Fails to Deliver, Leaving Residents in Limbo

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California's ambitious $500 million program to help tenants and community land trusts preserve affordable housing has failed to deliver any funds, leaving residents like Luke Johnson in limbo. The initiative, established in 2021, was intended to offer grants and loans to acquire distressed properties, preventing displacement. However, three years later, not a single dollar has been distributed, and the program has been scrapped amid budget cuts. This failure underscores the state’s struggle with efficiently implementing affordable housing solutions and has sparked criticism from housing advocates and lawmakers alike.

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Luke Johnson, 85, and his husband have lived in their rent-controlled two-bedroom apartment in Silver Lake, Los Angeles, for decades. When their landlord announced plans to sell the building, they saw hope in California’s new $500 million program designed to help community land trusts buy buildings at risk of foreclosure. A community land trust pledged to keep rents low, and Johnson and his neighbors persuaded their landlord to sell to the trust.

But six months later, the state program evaporated. Without funding, the deal with the landlord fell apart, leaving Johnson and his neighbors uncertain if they can remain in the home they’ve cherished for nearly half a century. This scenario is not unique; the collapse of the Foreclosure Intervention Housing Preservation Program has left thousands of Californians facing similar threats of displacement.

The program, established in 2021 by state lawmakers, aimed to provide loans and grants to community land trusts, nonprofits that buy and preserve properties as affordable housing. With community land trusts tripling in number across California over the past decade, the program was seen as a crucial tool to combat the state’s housing crisis. It offered a way for cities like San Francisco to support the preservation of existing affordable housing instead of building costly new units from scratch.

Dean Preston, a San Francisco supervisor, highlighted the potential of community land trusts as “a very effective, quick, and permanent way of creating truly affordable housing with resident control.” Yet, despite the promise, the Department of Housing and Community Development (HCD), tasked with managing the program, failed to distribute any funds in the program's three-year existence. With a ballooning $56 billion state budget deficit looming, lawmakers scrapped the initiative in June 2024, citing its lack of progress.

A Slow Rollout and Mounting Frustrations

The HCD faced significant hurdles in launching the program. According to Alicia Murillo, a department spokesperson, the program’s unprecedented approach—focusing on small-scale acquisitions and using external nonprofit lenders—created a steep learning curve. The department took over a year to draft guidelines, and by the time a fund manager was selected in July 2023, California's financial landscape had shifted drastically.

Despite the challenges, other housing initiatives launched around the same time had already distributed their funds. For instance, the California Dream for All program, a downpayment assistance initiative, provided $288 million to first-time homebuyers within two years and received additional funding despite the state’s budget cuts. This stark contrast has fueled criticism from lawmakers like Assemblymember Jesse Gabriel, who called the delays “totally unacceptable.”

Community land trust advocates argue that the state’s slow rollout doomed the program from the start. Leo Goldberg, co-director of policy at the California Community Land Trust Network, expressed frustration: “If the program had been rolled out, there would have been successes to point to that would have made it easier to defend.”

Impacts on the Ground

For Johnson and his neighbors, the fallout has been profound. When their landlord agreed to sell to the Beverly-Vermont Community Land Trust, they launched a campaign to raise the $1.5 million needed to buy the building. Crowdfunding efforts, backyard fundraisers, and appeals to small banks were not enough without the state’s financial support. Now, the tenants face the possibility of rent increases that could double their current payments, pushing their finances to the limit.

Kasey Ventura, an organizer with the Beverly-Vermont Community Land Trust, described the loss of the program as a “huge setback.” She added that many other land trusts across Los Angeles face similar struggles, with “dozens, if not hundreds of units” now in a precarious position.

Other affordable housing groups have also felt the impact. In Oakland, the Warriors House, a local landmark, was lost when the Oakland Community Land Trust failed to secure state funding to purchase and preserve the property. The home, which had been owned by a local family for over 50 years, was sold to a private buyer, displacing the resident, Lloyd Canamore, who later passed away.

Lessons from the Failure

The slow rollout and ultimate failure of the Foreclosure Intervention Housing Preservation Program highlight deep flaws in California’s approach to affordable housing preservation. Ben Metcalf, a former director of the HCD and managing director of UC Berkeley’s Terner Center for Housing Innovation, noted that while two years is a common timeline for launching new programs, it can be expedited when funds are already appropriated. “When an agency or director is motivated, or you have the right staff to implement it,” Metcalf said, things can move much faster.

Despite the failure, some advocates remain hopeful that future programs will learn from these mistakes. Elizabeth Wampler, executive director of the Local Initiatives Support Corporation (LISC) Bay Area, the nonprofit chosen to manage the fund, emphasized that there is a proven track record of community land trusts effectively preserving affordable housing, particularly for communities of color. Wampler’s survey identified 162 buildings statewide that could have benefited from the funds, preserving crucial affordable housing units and preventing displacement.

For now, the state’s existing affordable housing preservation efforts, like the Manufactured Housing Opportunity and Revitalization Program, offer some hope. But even there, the record is mixed: the program has only recently started approving significant funding after a decade of underperformance. The recent overhaul, awarding $100 million to support housing cooperatives and indigenous tribes, suggests that better program design and implementation are possible.

As California’s housing crisis continues to escalate, advocates and lawmakers stress the importance of preserving affordable units. While new construction is essential, the relentless loss of existing affordable housing—often converted to luxury developments—undermines these efforts.

Moving Forward: The Need for Swift and Effective Action

Preston and other officials emphasize that preserving affordable housing must be a priority for California if it is to tackle its housing crisis effectively. Without robust state support, many residents will continue to face uncertainty and displacement.

Johnson and his neighbors still hold onto hope as they explore alternative solutions, but they are running out of time. For advocates and policymakers, the message is clear: delays and bureaucracy must not stand in the way of housing solutions that work for those who need them most.