Better Neighborhoods, Same Neighbors

The Future in the Present

A Three Horizons Approach to Affordable Housing Preservation

In last month’s update, we talked about the Preservation Paradox and its three interacting components – decarbonization, rehabilitation, and stabilization.

 We concluded that decarb is a logical starting point, since the pathway to funding is less uncertain than the pathways to funding rehabilitation or stabilization, and because – if the intention is to leverage decarbonization towards the shared priority of Preservation -- making decarbonization upgrades sets in motion a cascade of interactions that move stakeholders toward that shared vision.

 This is an example of how we can apply a framework called Three Horizons, which was developed by Bill Sharpe on behalf of the International Futures Forum to help people engage more effectively with these types of complex challenges.

The first horizon (H1) describes the system as it currently operates, the status quo. There is much in H1 to be grateful for – and lots of things in H1 must stay the same for daily life to go on – but we’re seeing signs that our H1 ways of doing things are out of step with emerging conditions, not producing the outcomes we want to see.

 The third horizon (H3) is the future system – the new ways of living, working, and investing that fit better with emerging needs and opportunities.

The second horizon (H2) is the bridge — the messy middle – where new ways of doing things emerge through a combination of deliberate action and opportunistic adaptation. This is where Retrofit LA operates.

 The way we live now was once the third horizon – partly imagined, partly intended, largely unknown – brought about by choices we collectively made, consciously or unconsciously.

 “Until you make the unconscious conscious, it will direct your life and you will call it fate.” – Carl Jung

 Whether we realize it or not, the status quo (H1) is a choice – it is not our fate.

 And, while there are parts worth conserving, H1 approaches are not going to deliver on our vision: better neighborhoods, same neighbors.

 “If we are to get anywhere, we have to choose our direction and set off, unsure of what we will find, guided by a blend of knowledge, imagination, and our values,” says Bill Sharpe, inventor of the Three Horizons framework. “All three horizons are always present, and each horizon is a way of acting in the present moment with a future-oriented intent,”

 Acting, in the present moment, with future-oriented intent, to build a system where everyone has access to affordable, safe, healthy housing.

 This is our conscious choice.

May Updates

 This month, our focus has shifted from demonstrating what's possible to building the financial and institutional infrastructure to do it at scale. With Tranche 1 complete, we are actively working to close an estimated $5–10M preservation funding gap — convening cohort partners around a collective fundraising strategy, initiating long-term cash flow analysis with Enterprise Community Partners, and engaging LAHD and LADWP on the policy and program alignment that will make future deals easier and faster. The "Deal" as a Systems Event is no longer just a concept we are testing; it is a strategy we are now building around.

Shared Priorities

• Better Neighborhoods, Same Neighbors

• Everyone should have access to affordable, secure, healthy housing

• By 2028, our cohort partners will:

  • Retrofit 55 properties (almost 2,000 units) in East LA, DTLA, Little Tokyo, and South LA

  • Strengthen organizational capacity & resident engagement

  • Share generated data as a catalyst to reform the enabling environment

Pipeline

• The cohort kicked off onboarding to the Measurabl platform, integrating utility data across all 77 properties to support portfolio-level performance tracking and grant compliance reporting

• LTSC -  Gas appliance removal is largely complete, with a small number of gas stoves retained at JCI (senior resident safety), Angelina, and Menlo. Eight remaining properties are in the scoping queue, pending an LIWP funding decision expected soon.

• ELACC - Completed HVAC, heat pump water heater, lighting, and aerator retrofits across Las Margaritas Apartments, now in closeout. Solar PV bids are under review for the next tranche. EV charger installation (36 chargers) at Sol y Luna is fully permitted and construction is expected to begin soon.

• Esperanza - Secured TECH funding reservations at Budlong and Senderos, and received contractor bids for La Estrella and Amistad. Active work is advancing across four properties.

Enabling Environment

• Alignment – Submitted recommendations to LAHD to better align department programs with LADWP electrification incentives, reducing friction for future projects across the cohort pipeline

• Fundraising – Convened a cohort-wide fundraising strategy session with ELACC, LTSC, and Esperanza to close an estimated $5–10M preservation funding gap; identified 3–6 priority funders to engage by Q3, with an initial focus on philanthropic sources

• Health Co-Benefits – UCLA Fielding School of Public Health has scoped an indoor air quality study measuring VOC emissions from gas appliances across 10 apartment units in cohort properties, funded by the California Air Resources Board, with fieldwork planned for late July and early August

• USGBC-CA California Green Building Conference - Christianne Schrobilgen presented Retrofit.LA as a case study, connecting with peers and partners working on building decarbonization and affordable housing across the state.

• LACAHSA Innovation in Action Award - Retrofit.LA was recognized for its work advancing affordable housing preservation and decarbonization in Los Angeles during LACAHSA's Housing Solutions Summit.

Better Neighborhoods, Same Neighbors

"Which came first, the chicken or the egg?" - Plutarch

Most of us dismiss this ancient (!!!) paradox without fully engaging with it. We tell ourselves it’s just a silly riddle, it’s not important – but the truth is, it’s too uncomfortable to face the fact that we don’t know. So, we toss it aside and move on to something easier, something “more important.”

The same thing happens when we look at affordable housing preservation. It's too hard. The system is too broken. Move on to something we can wrap our heads around.

But we can no longer afford to look away – “the chickens are coming home to roost.”

The Preservation Paradox 

Our existing affordable housing stock is on a dangerous financial trajectory, but it’s hard to justify rent increases without making the repairs and upgrades that residents expect. Likewise, it’s hard to fund repairs and upgrades if buildings are losing money, which also means you can’t easily refinance.

So, which comes first? Rehab? Stabilization? Decarbonization?

The Path of Least Resistance

When we stay with the paradox and zoom out to a systems perspective, a counterintuitive pathway begins to emerge. 

What we call “decarbonization” – a.k.a. mechanical, electrical and plumbing systems upgrades – typically represent ~30 - 50% of a property’s total physical needs. In LA, incentives for decarbonization come with no-cost Technical Assistance and are awarded on a first-come-first-served basis – they're not competitive in the same way as tax credits or other traditional funding sources. And when you combine all the incentives, you can get 50% - 100% of your decarbonization costs reimbursed when the project is complete.

Well, what about the upfront cost? CDFIs can provide bridge financing; philanthropic dollars can fill gaps; and, going back to the Venn Diagram, making these upgrades delivers huge co-benefits for residents, like access to cooling, better indoor air quality, and maybe most important – a sense that they are being invested in.

April Updates

We remain focused on our primary objective: to fund the full Preservation of our Cohort pipeline, starting with a batch of 9 properties – treating the “Deal” as a Systems Event – with a goal to demonstrate what’s possible today while catalyzing shifts in the enabling environment to make future deals easier.

Shared Priorities

• Better Neighborhoods, Same Neighbors

• Everyone should have access to affordable, secure, healthy housing 

• By 2028, our cohort partners will: 

  • Retrofit 55 properties (almost 2,000 units) in East LA, DTLA, Little Tokyo, and South LA

  • Strengthen organizational capacity & resident engagement

  • Share generated data as a catalyst to reform the enabling environment 

Pipeline

• We are segmenting the pipeline into tranches, running on parallel tracks, based on the properties’ physical and financial needs, decarbonization incentive coverage, lead time / stage of development, viability of related funding sources for rehab and stabilization, and other relevant factors.

• TRANCHE 1 - Completed – $10.8M Decarb Retrofits 

  • Retrofit LA Cohort Members have completed Phase 1 Decarbonization retrofits across 9 properties encompassing 365 units, leveraging ~$10.8M in decarbonization incentives to cover ~100% of project costs

  • Phase 2 Decarbonization will include solar PV and new roofs, at an estimated investment of $3.6M, bidding in process now

  • Remaining gaps for Rehab & Stabilization depend on ULA and LACAHSA awards

• TRANCHE 2 - In Development –  ~$37.6M Decarb Retrofits

  • 25 properties — 764 units

  • Decarbonization interest forms submitted, scoping underway

  • Will seek funding for decarb, rehab, and stabilization, including grants and PRI to sustain and scale the work

  • 6 – 18 months estimated lead time
    

• TRANCHE 3 - In Queue – ~$38.4M Decarb Retrofits 

  • 21 properties — 829 units

  • Decarbonization interest forms submitted, scoping not started

  • Will seek funding for decarb, rehab, and stabilization, including grants and PRI to sustain and scale the work

  • 12 – 24 months estimated lead time

Enabling Environment

• Insurability – Continued collaborations with CA FWD, Enterprise Community Partners, and Milken Institute working groups on resilience, risk mitigation, and insurability

• Alignment – Working with Enterprise Community Partners, continued work with LADWP and LAHD to improve alignment and coordination of policies, programs, and resources

• Health Co-Benefits – Advanced research with UCLA Fielding School of Public Health, Lawrence Berkeley National Lab, and National Lab of the Rockies (formerly NREL) to translate data on thermal comfort and indoor air quality co-benefits into investable metrics to mobilize health-focused capital.

Resolving the Preservation Paradox

In the words of Alan Watts, "[a] chicken is just one egg's way of becoming other eggs." Which I think is a poetic (and funny) way of telling us there must be an answer, but we will never know for sure – so all that’s left is to dance with the not knowing, and do our best to move toward what is true and good.

Decarbonization offers a logical starting point to resolving the Preservation Paradox, inviting residents into conversation, addressing a good chunk of a building’s needs, activating the enabling environment, and building trust – which is the foundation for progress.

Moving together in this way, we create space for the emergence of novel community investment models that will carry us into the future we choose.

Better Neighborhoods, Same Neighbors

Our immediate objective is to fund the full Preservation of a “Batch” of 10 properties – treating the “Deal” as a Systems Event – with a goal to demonstrate what’s possible today while catalyzing shifts in the enabling environment to make future deals easier. 

Shared Priorities 

• RLA SCIA Cohort Convening (March 19 & 20) - The Cohort came together in-person for two days of deep working sessions, hosting in partnership with the Center for Community Investment (CCI). We refined our shared priority to read:

“We believe everyone should have access to affordable, secure, healthy housing. Through Retrofit LA, we seek to Preserve LA’s existing affordable housing stock while protecting affordability, controlling utility expenses, reducing GHGs, improving habitability, enhancing the health and well-being of LA’s most vulnerable communities, and ensuring the stability of the local affordable housing industry itself.  To do so, we will retrofit 1,000 units across East LA, South LA, and Little Tokyo, strengthen organizational capacity, resident engagement, and share the data we generate to influence the enabling environment." 

• Community Education & Outreach - Kicked off implementation of the TECH Clean California grant, launching heat pump technology education across Boyle Heights, Little Tokyo, and South LA, including training for Esperanza's Promotoras to incorporate decarbonization into their community health engagement work

• Fostering Relationships – Broadened and deepened relationships with industry leaders, including Enterprise Community Partners, the Milken Institute, SCANPH, UCLA Ziman Center’s Housing as Healthcare Initiative, and the ULI Randall Lewis Center for Sustainability in Real Estate

Pipeline   

• Crafting the Deal - Advanced financial modeling of the initial 10-property batch and began mapping out funding pathways based on ULA Awards, upcoming LACAHSA applications, and potential LITHC applications   

• Building Shared Infrastructure – Finalized build-out of the Project Intake Planning & Execution (PIPE) Tool to manage our project pipeline and support funder / lender engagement

• Benchmarking & Impact Measurement - Implemented Measurabl impact measurement platform to build the data layer needed for funder engagement and enabling environment work      

Enabling Environment 

• Policy Advocacy - The Cohort aligned around a focused near-term advocacy agenda, and began building its strategy

• Health Co-Benefits – Advanced work with Stanford Doerr School of Sustainability, UCLA Fielding School of Public Health, Lawrence Berkeley National Lab, and National Lab of the Rockies (formerly NREL) to translate data on thermal comfort and indoor air quality co-benefits into investable metrics that enable capital formation & deployment

• Launched Research Collaboration with National Lab of the Rockies -"Enabling Catalytic Investments At The Intersection Of Housing And Health"
  

The system is working as designed – and it’s not delivering the results we want. It’s nobody’s fault – but the responsibility falls to all of us to change it. 

“Do not be satisfied with the stories that come before you. Unfold your own myth.” – Rumi 

Better Neighborhoods, Same Neighbors

Preservation of existing affordable housing is faster, greener, and less expensive than new construction. Yet we’re losing existing affordable housing ~10x faster than we’re building new. Now is the moment to come together, to address the underlying factors driving this trend and redesign the system to stabilize our communities.

Preservation = (Rehab + Decarb) + Stabilization 

Our initial objective is to fund the Preservation of a “Batch” of 10 properties from within the Retrofit LA Pipeline – treating this “Deal” as a Systems Event, with a goal to push the edge of the possible, show what the system needs, and shift industry and institutional practices to move the system forward.   

February Updates

Shared Priorities

• Narrative & Storytelling – With support from LADWP, we hosted our second public webinar, focused on best practices in project financing and lessons learned through the development of ELACC’s innovative Revolving Energy Transition Fund (RETR-Fund)

• Case Studies – Advanced development of case studies on completed decarbonization projects, which illustrate how decarbonization fits within the broader context of sources and uses for Preservation

• Fostering Relationships – Broadened and deepened relationships with industry leaders, including SCANPH, UCLA Ziman Center’s Housing as Healthcare Initiative, and the ULI Randall Lewis Center for Sustainability in Real Estate

Pipeline  

• Crafting the Deal - Engaged California Housing Partnership to model “the Gap” on our initial “Batch” of 10 properties, which will support engagement with potential capital providers in Q3

• Building Shared Infrastructure – In collaboration with Retrofit LA Cohort members and the Center for Community Investment, Sustento is revamping its project and pipeline management system to streamline engagement with potential funders and support future scalability of the initiative

• Funding & Capital Structure – In collaboration with the Milken Institute and LADWP, Sustento is engaged with leading CDFIs to co-develop a decarbonization financing pilot program, while engaging money-center banks and philanthropic funders to facilitate the emergence of an ecosystem that can efficiently deliver low-cost blended capital solutions at scale   

Enabling Environment

• Insurability – Launched collaborations with CA FWD, Enterprise Community Partners, and Milken Institute working groups on resilience, risk mitigation, and insurability

• Alignment – Working with Enterprise Community Partners, opened conversations with LADWP and LAHD to improve alignment and coordination of policies, programs, and resources

• Health Co-Benefits – Formalized partnerships with UCLA Fielding School of Public Health, Lawrence Berkeley National Lab, and National Lab of the Rockies (formerly NREL) to translate data on thermal comfort and indoor air quality co-benefits into investable metrics

The system is working as designed – and it’s not delivering the results we want. It’s nobody’s fault – but the responsibility falls to all of us to change it.   

“Out past ideas of rightdoing and wrongdoing, there is a field.  I will meet you there.” – Rumi  

Onwards!   

David Hodgins
Founder & Chief Executive Officer 

Better Neighborhoods, Same Neighbors

Since announcing Retrofit LA's selection for the Sustainable Communities Investment Accelerator (SCIA) in July 2025, we've been testing assumptions, listening closely, and refining our approach. This is the first in a monthly series sharing what we're learning as frameworks meet real buildings, real balance sheets, and real communities.

Redefining Affordable Housing Preservation

Preservation is often framed narrowly as preventing demolition or market-rate conversion. In practice, it means much more: 

• Stabilizing existing affordable multifamily assets within nonprofit portfolios 

• Ensuring long-term affordability, not just short-term compliance 

• Retrofitting buildings to extend useful life, control costs, improve resilience and insurability, and protect residents from extreme heat and poor air quality 

• Protecting local, nonprofit ownership 

• Buying time for the production of new units 

• Preserving our most important asset: community 

Our guiding principle: Better neighborhoods, same neighbors.

A Deal as a System Event

Deals are more than transactions:

• They are units of progress towards the shared priority

• They are shaped by the context in which they take place. By looking at a deal, we can understand the dynamics at work in the enabling environment

• They can be interventions in the enabling environment, in which we test or change new ways of working

If deals are implemented as system events that allow for testing, developing, and strengthening elements of the enabling environment, they make future deals more doable and generate new opportunities.

The enabling environment is strengthened through:

• Advancing needed policies and regulations

• Retooling practices and processes

• Applying or combining resources or funding in new ways

• Fostering formal and informal relationships that last beyond the deal

• Creating forums and platforms for ongoing collaboration

• Shifting narratives

Our near-term objective is to preserve a “Batch” of 10 properties totaling 380 units housing more than 1,000 residents. We’re intentionally treating this batch as a system-learning opportunity.

Despite completing significant decarbonization upgrades, all properties are losing money monthly, have limited ability to raise rents, and lack sufficient reserves for urgent non-energy rehabilitation needs. 

We're exploring blended capital solutions, including 4% Low-Income Housing Tax Credits, CRA-aligned grants and debt, CDFI financing, program-related investments, and philanthropic capital. Through this first "Deal," we aim to surface barriers embedded in policy, underwriting, and capital stacks—and make future preservation deals easier. 

What We Will Produce in 2026

Retrofit LA will generate practical outputs through core collaborative efforts and strategic participation in aligned initiatives: 

• Case studies quantifying how energy upgrades, operating costs, capital structure, policy, and insurance interact in preservation deals 

• A Retrofit LA Field Guide distilling three years of partner experience into a streamlined, replicable process 

• Cross-sector advocacy focused on policy alignment, regulatory reform, and gap-filling capital 

Our priority focus areas:

• Funding & Capital Structure – developing a dedicated, blended-capital preservation fund 

• Health & Social Co-benefits – advancing shared metrics connecting preservation with resident health outcomes 

• Insurability – mapping how upgrades affect insurance availability and cost 

• Narrative & Storytelling – building communications to grow the network and sustain this work 

Building Shared Infrastructure

Our ambition extends beyond a single "Deal." We envision Retrofit LA evolving into durable shared infrastructure that supports affordable housing providers across Los Angeles as they stabilize, decarbonize, and futureproof existing portfolios.

By grounding systems change in real transactions and real communities, Retrofit LA is demonstrating what it takes to preserve affordability at scale—not by displacing residents, but by ensuring they can stay.

More to come next month as this work continues. 

David Hodgins
Founder & Chief Executive Officer