Affordable Housing Bills

Point-Counterpoint!

And now let’s join RSG Principals Tara Matthews and Jim Simon do their impression of Jane Curtin and Dan Aykroyd debating the changes they’d like to see to help California communities, moderated by Suzy Kim, Senior Associate. 


Suzy:  So, we know the new “gigamajority” of Democratic control in the California State Legislature and a new governor have got people buzzing about more tax increment financing tools to bring capital back to local communities.  With EIFDs, CRIAs, NIFTI’s and other tools, does California really need “Redevelopment 2.0” and “Affordable Housing and Infrastructure Agencies” proposed by Assembly Bill 11 (Chiu), or Local-State Sustainable Investment Incentive Program proposed by Senate Bill 5 (Beall)?  We’ve asked two of our Principals to debate these questions.  First off is Tara Matthews, Principal from our Vista office.  Tara’s work tends to focus around the areas of affordable housing.  Tara is also a member of the San Diego Housing Federation.  Tara will be debating with Jim Simon, Principal from our Irvine office who is also an Advisory Boardmember and technical committee co-chair of the California Association for Economic Development (CALED).

Starting with you Tara, how do you feel the current tools available to communities meet the needs for affordable housing and economic developers?

Tara: What tools? Just kidding, there have been efforts to generate a permanent source of funding, but I honestly don’t think they are very effective which is why we haven’t seen them utilized by many communities.  Many of the tools double or even triple dip on revenue generated in communities, meaning that the “bucket of money” everyone is fighting for is very limited. This coupled with the costly process to get your hands on the bucket of money makes the tools very inefficient.
Jim: Like Tara, I’d agree that the current tools offer limited financial incentives to communities unless other agencies participate. 

Suzy: And why are these issues in your opinion?

Jim: Because we are asking a single taxing agency to bear the risk for stimulating economic growth that benefits all taxing agencies, as well as the state itself.  This is particularly true in the case of economic development investments that can expand the economic base, provide living wage jobs, and fund needed infrastructure investment.  As it stands now, communities with the greatest needs aren’t afforded any advantage over those that simply have the fortune of having a larger share of the property tax base.
Tara: Plainly stated, there is no great incentive to use these tools to address economic and housing issues. After you run the numbers and look at various legal requirements and restrictions, the drawbacks often outweigh the benefits.  Many of the other taxing agencies that have a greater share of the revenue just don’t want to part with it.

Suzy: What kinds of changes do you feel are needed to make these tools better?

Tara: Finding a way to make these tools benefit more of the taxing agencies and thus enticing more participation to reach common goals. One idea is to more clearly define a pass-through payment formula and removing “opt-in” provisions.  Thus, making it easier to create a permanent financing source for capital projects.
Jim: I think AB 11 needs to establish some formula for any pass-through negotiations, with either a fixed formula or a maximum share. 

Suzy: Ok, let’s talk about SB 5 and AB 11.  Do you feel that either of these bills is going the help communities with affordable housing or economic development?

Jim: I’m not sure yet.  I like the idea of the State finally getting involved in supporting community development again, but there are a lot of unknowns here.  
Tara: TBD. SB 5 is very intriguing since it’s the most different from existing tools and provides a clearer path to funding. But I agree with Jim that it is exciting to see the focus on community development again coming from the State Legislature.

Suzy: What would you like to see changed in SB 5 or AB 11 to improve the situation?

Tara: Lessen reporting requirements if the entities illustrate collaborative solutions or meet specific goals, such as creating affordable housing in proportion to RHNA requirements working in collaboration with County or State entities, while improving surrounding infrastructure.  I guess an easy way to say this is – reward good behavior.  Some of the administrative burdens placed on communities makes it difficult to administer and takes away funding that could be used towards completing projects.
Jim: First, it feels like the amount of oversight the State needs to play is a bit heavy to me.  I also think they need to give local communities an opportunity to make a program work by requiring some basic level of participation from at least a few taxing agencies. And, maintenance should be an allowable use of expenditures.

Suzy: Finally, how much should be set aside for affordable housing in your opinion?

Jim: I personally feel that anything more than 50% is too much.  There is very little funding available for local communities to create a sustainable economic development program to combat issues like gentrification, stagnant wages, and limited wealth building in communities. 
Tara: Well affordable housing is my passion and I would love to see as large of a set-aside as possible.  But I also recognize that the communities must balance multiple issues and failing infrastructure is a major issue. Additionally, once housing is built those residents need a thriving community to live in, meaning that economic development is also a critical need. So, I think I would be willing to say that a 50/50 split would be fair, though I’d like to see the 50% that isn’t set-aside for housing spent in or around areas that are serving affordable housing projects and housing development.

Suzy: So are you saying that affordable housing funding is a bigger priority than economic development?

Tara: Since you are putting me on the spot, I have to stay true to my passion…yes.  But I feel that a thriving community is at the intersection affordable housing, a strong business community, and workforce training options.  When it comes to economic development, everything is interlinked.
Jim: I believe affordable housing is a key aspect of a successful economic development program, but not the only one.

Housing Propositions That Passed on November 6, 2018

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Proposition 1 – Veterans and Affordable Housing Bonds

What it Does

Provides a total of $4 billion in funding for housing - $3 billion for existing state affordable housing programs and $1 billion for veterans’ home purchase program.

What Does the Funding Go Toward?

  • Cal-Vet Farm & Home Loan Program

  • Multifamily Housing Program

  • Infill Infrastructure Grant

  • Transit Oriented Development

  • Joe Serna Farmworker Program

  • Local Housing Trust Match Program

  • CalHome

  • CalHFA Home Purchase Assistance

When will the Funding be Available?

A Notice of Funding Availability (NOFA) is expected to be released in Spring 2019.

Link To a Summary and Full Text:

https://ballotpedia.org/California_Proposition_1,_Housing_Programs_and_Veterans%27_Loans_Bond_(2018)

Proposition 2 – No Place Like Home

What it Does

Provides $2 billion of funding Statewide for permanent supportive housing for persons who are

  1. Experiencing homelessness, chronic homelessness or who are at risk of chronic homelessness;

  2. Are in need of mental health services.

Who Can Get this Funding?

Applicants can only be counties (with or without a housing development sponsor). Available funding will be allocated by the State on both a competitive and non-competitive basis. The Competitive funding available makes up the majority at $1.8 billion, and total Non-Competitive funding is estimated at $190 million.

When will the Funding be Available?

The State issued a Notice of Funding Availability (NOFA) in October of this year for the first round of competitive funding. Applications will be due on January 19, 2019. No Place Like Home Program Guidelines are available at http://www.hcd.ca.gov/grants-funding/active-funding/docs/NPLHGuidelines082519-v1.pdf.

Link To a Summary:

https://ballotpedia.org/California_Proposition_2,_Use_Millionaire%27s_Tax_Revenue_for_Homelessness_Prevention_Housing_Bonds_Measure_(2018)

CALIFORNIA LEGISLATURE PASSES BILLS DESIGNED TO COMBAT AFFORDABLE HOUSING CRISIS

More than a dozen bills designed to help communities in California combat an affordable housing crisis were approved by the California Legislature on Friday, September 15, 2017 and sent to the Governor for his approval.  This past year marks the Legislature’s “Year of Housing,” wherein more than one hundred housing proposals were introduced and debated in order to provide for assistance in funding for affordable housing development, streamlining local government approval of housing projects, restoring authority to impose inclusionary housing requirements on private housing developers, and creating more state-wide Anti-NIMBY laws.  Governor Brown is expected to sign at least three major bills in the package:  SB 2, SB 3 and SB 35.

SB 2, by Sen. Toni Atkins, D-San Diego, would provide for a “permanent source” of funds for affordable housing development through the creation of a $75 fee on most recorded documents (except for home sales).  This fee is expected to generate $200-300 million per year that can be used for affordable housing development.  Half of the funds generated in 2018 would be made available to local governments for updating planning documents and zoning ordinances in order to streamline housing production, and the other half would go to the state for homeless assistance programs.  Beginning in 2019, 70% of the funds would be directly allocated to local governments for a variety of affordable housing programs, and the other 30% would be used by the state for mixed income multifamily housing, farmworker housing and other programs.

SB 3, by Sen. Jim Beall, D-Campbell, would place a $4 billion statewide housing bond on the November 2018 state ballot, with bond proceeds to be used to fund a number of existing housing programs:  $1.5 billion of the funds would go to the state’s Multifamily Housing Program for affordable housing development loans, $1 billion of the funds would go to the state’s CalVet veteran’s home loan program, with the remainder of the funds allocated for the CalHome down payment, farmworker housing, transit-oriented development, mortgage assistance programs and infrastructure supporting infill housing. 

SB 35, by Sen. Scott Wiener, D-San Francisco, creates a streamlined approval process for housing developments in communities that have not approved enough housing to keep up with regional fair share housing goals.  Eligible projects do not need to obtain conditional use permits and can take advantage of lower state-mandated parking standards.  To take advantage of this process, the proposed development must be on an urban infill site, the development must not be in the coastal zone, agricultural land or other sensitive areas.  Furthermore, the developer taking advantage of this streamlined process (an optional right for the developer) must pay prevailing wages and, in some cases, certify that it will use a “skilled and trained workforce” to complete the project.  Critics of SB 35 believe that it will impose extraordinary costs on affordable housing construction, thus hindering the legislature’s ultimate goal.

Governor Jerry Brown has until October 15, 2017 to sign or veto these bills.  Do you think these bills will adequately fix housing issues in your local community?  What are your local communities doing to address these issues, and how do these actions align or conflict with these proposed bills?  We would love to hear your thoughts.  Please share them with tmatthews@webrsg.com.

This blog was Co-Authored by Millay Kogan, RSG Analyst and Tara Matthews, RSG Partner

Proposed Affordable Housing Bills

The affordable housing crisis in California is a well-known fact and over 130 bills have been proposed by State lawmakers to address and hopefully improve one of the State’s most urgent needs.  The link below to a recent Los Angeles Times article provides a brief and basic summary of all proposed bills:
http://www.latimes.com/politics/la-pol-sac-housing-bills-taxes-affordable-20170319-story.html