"This is the least affordable big city in America," the mayor said at a press conference Monday. "I'll go to Washington and New York. I'll go to the Middle East, to China. We'll knock on every door that we have to."
Villaraigosa said he has already lined up the first investor, Enterprise Community Partners, a nonprofit financier of affordable housing that has pledged $700 million. That will be on top of $1 billion - $200 million a year from federal grants, state housing bonds and local taxes - that had already been earmarked for housing and will be used to leverage more investment.
The rest of the funds will come from a combination of philanthropists, private lenders and government grants, the mayor said.
He noted that while bank loans are drying up because of the credit squeeze, other sources are available. The city last Friday received an unexpected federal grant of $33 million to buy foreclosed homes and turn them into affordable housing, he noted.
"Other doors will open that will offset that closure," Villaraigosa said.
Others weren't so optimistic.
Carol Schatz, president and chief executive of the Central City Association, a 450-member business group that includes many of the city's major builders, said although the plan's goal is laudable, real estate development has almost halted during the economic downturn.
"We just hope some of these projects can be funded," she said. "There is no housing market at this time."
Pricey housing is one of Los Angeles' biggest drawbacks. Employers have often complained that housing costs make it difficult to lure job recruits and many workers have to commute long distances from their homes in less expensive, outlying suburbs.
The foreclosure crisis has added urgency to the problem. In 2007, more than 5,200 LA families lost their homes to foreclosure - and that number is expected to rise to 10,000 by the end of 2008.
The city also has the country's biggest homeless population - some 44,000 people.
One of the plan's more controversial elements is likely to be a requirement that developers set aside 12.5 percent to 22.5 percent of projects with more than 20 units for low- or moderate-income residents.
The City Council is expected to introduce an ordinance to that effect on Wednesday.
Schatz said developers want the city to provide incentives to help them defray the costs of subsidizing those units. Incentives could include permission to build taller buildings - height is restricted to six stories in most of the city, greater density of units, and a reduction in the number of parking spaces and open spaces developers must provide per unit.
"Right now, the plan does not work," she said.
Other parts of the mayor's plan include creating 20 housing developments near mass transit or transit corridors that would include business and residential components; building 2,200 permanent homes for the homeless; and ensuring that 14,000 homes remain rent-controlled or in the federal Section 8 housing assistance program.
Housing advocates applauded the plan. Paul Zimmerman, executive director of the Southern California Association of Nonprofit Housing, said at the very least, it would provide a benchmark to judge the city's commitment to affordable housing.
"It's a major move forward," he said. "The plan is probably the best we can hope for in today's environment."