South Los Angeles, known for urban blight, high unemployment, and poverty, has a new bird’s-eye view of affordable housing. Adams and Central, a mixed-use project, has been built by developer Meta Housing Corporation at the intersection of East Adams Boulevard and Central Avenue, a major traffic hub in a former ghost town of run-down buildings, incompatible land uses, and underused lots.
The single-building project opened in June 2010 with more than 160,000 square feet (15,000 sq m) of residential and commercial space. It includes 80 units, all of which are rental units and income restricted to residents earning 60 percent or less of the area median income (AMI); a rooftop playground with expansive views of downtown Los Angeles; and a 15,000-square-foot (1,400-sq-m) full-service Fresh & Easy grocery as the ground-floor retail anchor.
The need is great for affordable housing and retail space, especially full-service grocery stores, in low-income Los Angeles neighborhoods. Meta has a long history of successfully developing and operating affordable communities, though it has little interest in developing mixed-use affordable communities. But in order to secure city support and additional financing from the Community Redevelopment Agency of Los Angeles (CRA/LA), Meta needed to include a retail/commercial component to satisfy the city’s need to revitalize south Los Angeles’s Central Avenue, which was once a bustling arterial road linking single-family homes and businesses in a vibrant community. Over the past 50 years, much of Central Avenue and the surrounding neighborhoods have become victims of blight.
Many national retailers have avoided lower-income neighborhoods because of concerns about security, employee turnover, delivery complications, inventory loss to theft, local government regulations that do not accommodate mixed-use projects, and economic viability. To address security, distribution, and insurance needs, Fresh & Easy stores maintain a smaller on-site inventory and have extra staff to monitor aisles and provide service support.
With the inclusion of the Fresh & Easy store, Adams and Central produces numerous benefits to the community—economic revitalization through private investment, high-quality urban design for an improved quality of life, jobs with good wages, and the elimination of blight. The Fresh & Easy store—the first major supermarket to enter the neighborhood in more than 50 years—is just one example of U.K. grocer Tesco’s growing market niche in inner-city neighborhoods, which national food chains have largely avoided. In south Los Angeles, Fresh & Easy has staked a sizable claim, occupying 80 percent of the retail space at Adams and Central.
The company’s biggest internal obstacle, says Fresh & Easy spokesman Brendan Wonnacott, was understanding and getting comfortable with the time required to put together an affordable housing deal, which takes three to five years. It took Meta a little over four years to move from site acquisition to a certificate of occupancy, says Chris Maffris, Meta’s project manager.
Any local market or neighborhood concerns Fresh & Easy may have had about the south Los Angeles site were put to rest when chief executive Tim Mason made the effort to get off the bus while touring the neighborhood. He spoke directly with local merchants who emphasized the need for and community benefits of having a major grocery nearby providing a variety of fresh foods at affordable prices.
“We are looking forward to doing more of these types of deals. We see a huge opportunity in these underserved neighborhoods,” says Wonnacott. “These types of deals can be successful and are worth it.” Fresh & Easy has identified new sites for development of urban stores in Sacramento, San Francisco, and Fresno.
The risk has paid off for the community. Jobs at Fresh & Easy stores in California come with wages starting at $10 per hour—well above the state’s $8-per-hour minimum wage and just shy of the Los Angeles’s $10.30 living wage rate with health benefits. All Fresh & Easy employees, who are hired from the neighborhood, can qualify for health insurance by working at least 20 hours per week. All employees are also offered 401(k) plans with matching funds.
Since it opened its doors at Adams and Central, Fresh & Easy has served as a catalyst for additional commercial interest. Bank of America, which helped fund the project, may also stake a claim at the Adams and Central site.
Meta Housing, led by president John Huskey, led the $40.6 million redevelopment of the former Jon’s Market site as the Adams and Central project. Huskey, a 15-year veteran of affordable housing, has developed more than 3,000 such units. Completed on budget and ahead of schedule with general partner Western Community Housing, Adams and Central was the result of extensive planning. Through ingenuity, the project incorporates mixed-use, transit-oriented, and energy-efficient design principles, including a white roof and a rainwater capture and filtration system.
The housing units—14 one-bedroom, 36 two-bedroom, and 30 three-bedroom units—located on three floors over a two-story on-grade parking structure, reached 100 percent occupancy within a month of completion, constituting a clear indicator of need. The units, which range in size from 554 to 1,103 square feet (51 to 102 sq m), are divided between households earning 35 percent or less of AMI and those earning 45 percent or less. Current rents range from $497 to $887 per month, depending on household income.
In a departure from the typical affordable housing, especially in south Los Angeles, the units at Adams and Central provide a variety of market-rate-quality amenities, including energy-efficient kitchen appliances, ceiling fans, walk-in closets, cable television/internet access, and, in some units, balconies. The project also provides an array of free supportive, on-site social services to residents.
Many affordable housing deals have been delayed or have died on the vine due to a lack of investor interest, problems with construction financing, an unwillingness of the local government to step up to the plate, or a combination of these elements. However, high-quality affordable housing can be accomplished when all stakeholders are working together to achieve the same goals.
The project received strong support from Los Angeles City Council member Jan Perry and a variety of city agencies, as shown by the fact funding was provided through 11 different sources. The $31 million residential portion was funded from the following sources: tax-exempt private activity bonds, $2.35 million; California multifamily housing bond program, $7.22 million; Los Angeles Housing Department, $5.79 million; Community Development Block Grant, $2.5 million; CRA/LA, $11 million; and the developer, $203,645. The $9.6 million commercial portion of the building was also funded via a combination of debt and equity as follow: Bank of America permanent loan, $3.4 million; CRA/LA, $2.5 million; New Market Tax Credits, $2.42 million; and developer equity, $1.34 million.
The Adams and Central project represents a clear way forward for future affordable housing.