Housing

CA Governor Newsom is set to sign the 2019-20 budget any day now!

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With California’s new fiscal year set to begin July 1st, Governor Newsom is expected to sign into effect the $214.8-billion state budget by the end of the week.  Highlights of the budget include the following:

  • Putting safeguards in place for the next recession – The budget will set aside $15 billion to build reserves and pay off unfunded liabilities, with $1.2 billion of this being placed in the Rainy-Day Fund.

  •  Addressing the cost of living in California – The housing crisis will be addressed through a $1.75 billion allocation used to help stimulate housing development via planning and production grants for local governments, expand state’s housing tax credit program and loan program for mixed-income housing, and help provide opportunities for innovative housing projects on excess state property.  $500 million of the $1.75 billion will be directed at eliminating impediments to mixed-income housing development

    The budget addresses healthcare costs by expanding subsidies for middle-income earners to aid in the cost of obtaining healthcare through Covered California; and expanding Medi-Cal coverage eligibility to young adults ages 19-25. The budget will also look to extend paid family leave, increasing it to 4- month of leave for parents after the birth of a child.

    Education is addressed via a larger investment in K-12 schools, expanding the Earned Income Tax credit, providing funding to cover 2 -year community college tuition for first time full time college students, and providing additional funding to Cal State and UC schools to prevent future tuition hikes. 

  •  The fight against homelessness – The budget will allocate $1 billion in funds to provide additional aid, services, advocacy and programs to the homeless population.  This also includes a $400 million increase in grant for families enrolled in the CalWORKS program.

  •  Emergency preparation – The budget will allocate $769.6 million, providing funding for California Office of Emergency Services, California Department of Forestry and Fire Protection, California Conservation Corps, and the General fund for various updates and improvements. The budget will also provide $39.9 million to disaster preparedness, response and recovery efforts.

This budget seeks to enhance the quality of life for all Californians by preparing for the possibility of a recession repeat from the past, resolving the current problems that exist, and strategically investing to ensure a better future.

RSG’s Legislative Bill Spotlight!

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In this installment of RSG’s legislative bill spotlight, we take a look at the current state of three important bills:  SB 50, AB 11 & SB 5.

SB 50 (Wiener; Planning and Zoning: Housing Development Incentives) – The bill that seeks to allow for more housing development near jobs and transit rich areas, has become a two-year bill and will not come up for vote again until at least January 2020.  The proposed reduction in local zoning standards has created a clear division between supporters who feel overruling local zoning ordinances is a necessity to address the housing crisis and opponents, who feel neighborhoods would suffer at the increased density, mitigating any benefit more housing might have.  Recognizing the complexity of the matter and the division of support, the Senate Appropriations Committee decided in late May to place the proposal on hold.  The bill’s author, Senator Scott Weiner (D-San Francisco), has asserted his plan to continue drumming up support for the bill to help move it forward.

AB 11 (Chiu; Community Redevelopment Law of 2019) – This bill would result in more funding for various programs acquired through tax increment financing obtained from city and county created agencies.  While AB 11 is reminiscent of the approach to use of tax increment financing before the dissolution of redevelopment agencies, it places a present-day emphasis on balanced growth, including affordable housing.  In late April of this year the bill was passed through the Assembly Committee on local government but re-referred to the Assembly Committee on Appropriations, resulting in it becoming a two-year bill.

SB 5 (Beall/McGuire; Affordable Housing and Community Development Investment Program) – This bill would create an Affordable Housing and Community Development Investment Committee for cities, counties and joint power authorities to apply to receive funding to be used for projects in which they are financially committed to.  As of June 17th, the bill has been re-referred to the Assembly Committee on Housing and Community Development.  With AB 11 and SB 5 focusing on the allocation of funds specifically to build affordable housing, the cessation of AB 11 has left SB 5 the crowd favorite of those in support of securing ongoing funding for affordable housing efforts.

AB2162 - What are your thoughts?

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AB2162 (Chiu; Planning and zoning: housing development: supportive housing), requires that proposed permanent and supportive housing developments meeting certain criteria, be granted approval by local governments within a specified time frame and be considered a “use by right” in zones used for multifamily and mixed uses as well as non-residential zones that allow for multifamily use.  Developers are required to provide the planning agency with details of a plan for on-site supportive services for residents.  In addition to this, local government is prohibited from placing any minimum parking requirements on developments whose units are occupied by supportive housing residents and located within 1/2 mile of a public transit stop.

It may be worth noting that the bill also specifies that its stipulations do not impede the ability of a developer to pursue a density bonus from the local government or alter the authority of a local government to accept or modify land use policies or regulations that promote the development of supportive housing.

The Housing and Community Development Department is interested in learning the level of understanding on the part of local governments regarding AB2162 – By Right Permanent Supportive Housing.  By taking this short survey, you can play a part in helping them learn how to best assist with implementation of this new legislation.  To take the survey, click here.

The Depot at Santiago: A Great Example of Affordable Housing

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By Joseph Pangalinan, Analyst, and Dima Galkin, Associate

June 14 marked the grand opening of The Depot at Santiago, a 70-unit affordable housing complex with 15 one-bedroom units, 24 two-bedroom units, and 31 three-bedroom units, with 10 units reserved to house formerly homeless families. The project, three-and-a-half years in the making and developed by long-time, well-renowned affordable housing developer C&C Development, is located across the street from the Santa Ana Transportation Center. The Kennedy Commission, a group advocating for families in need of affordable housing, helped secure community approval for the project. The complex holds a community room, a laundromat open to the broader community, an outdoor play area for children, and a dance studio programmed by The Wooden Floor.

We attended the grand opening with Greg. The momentous occasion featured speeches from Santa Ana council members and award presentations with state and national legislators. The Depot at Santiago houses families who make 30% and 60% of the area median income (AMI). The exterior seems indistinguishable from newer market-rate housing in the area. The model unit that was made available for tours during the event showed that the families occupying these units will be able to reside in spacious, dignified housing that provides the same amenities as market-rate housing.

With 70 units and more than 1,800 applicants, the project represents a step in the right direction in addressing Southern California’s affordable housing shortage, but also highlights the long road ahead in providing an affordable place to live for those who need it. If you know of other great examples of new affordable housing developments, share them with us!

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Thinking Ahead: Housing Successor Needs

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California has an increasing need for affordable housing but not enough public dollars to fund that need.  In response to a growing affordability crisis, the State Legislature is paying closer attention to existing funding sources and housing assets.  This means housing successors are under increased scrutiny to maximize their assets on a local level.  Even agencies caught up with local reporting need to think ahead to leverage assets and remain in compliance. 

Are you sure your housing successor complies with the law?  Are there outstanding items you need to address?  RSG will be sending each of our housing successor clients a Housing Diagnostic that evaluates your agency’s needs and identifies steps to maximize assets, assist low income households, and ensure future compliance.  Meeting income and age targets, taking action to dispose of or develop properties, spending funds to avoid an excess surplus, and SB 35 streamlining are a sample of the topics covered.  Producing results is more important than ever as HCD and State legislators take a closer look at existing housing funds.  If RSG does not consult your housing successor but you are interested in a diagnostic, contact Suzy Kim, Senior Associate, at skim@webrsg.com or (714) 316-2116.

Don't Miss out on Funding Opportunities - Complete your Housing Element Annual Progress Reports!

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With the passage of the 2017 Legislative Housing Package, the State has placed more importance on local government compliance with Housing Element regulations and the submission of Housing Element Annual Progress Reports (Annual Reports). Senate Bill (SB) 35 states that non-compliance with Annual Reports will now require cities and counties to use a streamlined and ministerial process for approving multi-family housing developments that satisfy the jurisdiction’s planning standards and requirements. Non-compliance occurs when either the jurisdiction has not issued enough building permits by income category to satisfy its regional housing need, or because it has failed to submit two consecutive Annual Reports.  Additionally, the California Department of Housing and Community Development (HCD) has indicated that non-compliant jurisdictions may not be eligible to apply and receive funding for affordable housing through State administered programs, such as the funding generated from SB 2: Building Homes and Jobs Act.

 

As of February 25, 2018, HCD has determined that ALL but 12 cities and counties are subject to SB35 streamlining provision. HCD updates this information at least quarterly to incorporate new or corrected data provided by jurisdictions.

 

Annual Reports are due to HCD by April 1st each year.  Although this deadline has passed, it is not too late to get into compliance.  Some cities are retroactively filing reports for 2015 through 2017.

 

Charter cities should note that even though charter cities were not required to complete Annual Reports until 2018, HCD believes that SB 35 streamlining requirement applies if a charter city has not completed an Annual Report for the last two years (2016 and 2017 ).  We recommend that if you have not met this requirement that you do so now.

Contact Suzy Kim, Senior Associate, at skim@webrsg.com or (714)316-2116, if you have questions or need assistance preparing your Annual Report to retain local control over housing development and avoid court sanctions.

 

New Consequences for Housing Element Annual Reports

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The 2017 Legislative Housing Package passed 15 bills that enact new housing regulations in California.  Assembly Bill (AB) 879 and Senate Bill (SB) 35 placed increased importance on Housing Element Annual Progress Reports (Annual Reports) that are due to HCD by April 1 each year.  New consequences for failing to complete Annual Reports include court sanctions and losing local control over affordable multifamily housing development entitlements to a new streamlined approval process.   If your jurisdiction is behind on its Annual Reports, it could lose local control over affordable multifamily housing development entitlements as early as this year.

Charter Cities Must Complete Report

·         Charter cities used to be exempt from submitting an Annual Report.  They must now submit an Annual Report beginning with the 2017 report due April 1, 2018. 

Failure to Submit Annual Reports

·         Failure to submit an Annual Report within 60 days of the due date could result in court orders to compel compliance, and court sanctions if not completed as ordered.

·         Failure to submit the Annual Report for two or more consecutive years triggers SB 35 provisions streamlining affordable multifamily housing development approvals, losing significant local control over the entitlement process. 

New Annual Reporting Requirements

Local jurisdictions need to track new housing production data in 2018 to include in the Annual Report due April 2019, and ongoing years.  This includes data on:

·         Housing Development Applications and Approvals

·         Housing Production in progress (via entitlement, building permit, or certificate of occupancy)

·         Sites Identified or Rezoned to Accommodate RHNA Need (related to “No Net Loss” provisions passed by AB 166)

HCD will use new Annual Report data to determine if a locality has not issued enough building permits to satisfy its RHNA allocation by income category for a reporting period, subjecting it to SB 35 streamlining provisions until the next reporting period. 

Annual Reports due by April 1 must continue to include the Housing Successor Annual Report for redevelopment housing successors that are not Housing Authorities (Housing Authority reports are due by October 1 and December 31).

Contact Suzy Kim, Senior Associate, at skim@webrsg.com or 714.316.2116, if you have questions or need assistance preparing your Annual Report to retain local control over housing development and avoid court sanctions.

Written by Suzy Kim, a Senior Associate at RSG

California Housing Bills Cheat Sheet

An unprecedented number of housing bills were passed during the recent legislative session.  The review of all of these bills can be daunting with everyone’s busy schedule.  Here’s a breakdown of what you need to know about each major bill with a link to the legislative summary for more detailed information.  Enjoy!

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RSG Principal Hitta Mosesman Featured Speaker at Housing CA Conference (Sacramento) - March 2017

Housing California is the State’s leading housing organization with a mission to educate lawmakers and others on stabilizing housing, creating more housing opportunities, and implementing proven solutions that reduce the number of homeless men, women, and children in communities. The focus of Housing California is Land Use, Budget and Funding, and Homelessness.  The annual 2017 Housing CA conference, with over 1,400 in attendance, was “Block by Block – Improving Neighborhood Health.”   Workshops focused on all aspects of housing and homelessness, including financing, funding sources, policy, advocacy and new and emerging affordable housing solutions.

Hitta Mosesman, partner and principal with nearly 20 years of consulting experience in affordable housing, finance, real estate and community development, was a featured panel speaker on Community Land Trusts (CLTs) as an innovative method of ensuring affordable housing for generations.  The panel included Mark Asturias, Executive Director of the Irvine Community Land Trust (and City of Irvine’s Housing Manager), Jean Diaz, Executive Director of the San Diego Land Trust and Stephen King, Executive Director of the Oakland Land Trust.  The panel’s joint presentation focused on explaining CLT structures and benefits, as well as the different CLT models (home ownership, rental and co-op).  A link to the presentation is provided below.

https://media.wix.com/ugd/209952_d643b5c0976d49508c0e70fc98150613.pdf

 

Boomerang Funds and Affordable Housing – What does it mean?

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Assembly Bill 2031 allows “Boomerang Funds” to be used as a revenue source to finance affordable housing development through bond issuance, as loan collateral, or on a cash basis. Boomerang Funds include ALL property tax revenue, both pass-through payments and residual RPTTF, received by a City or County as a result of redevelopment dissolution. Boomerang Funds are diverted from the general fund into a separate fund for affordable housing purposes.

The good news is that there is a new way to issue bonds for affordable housing development! Here are the main takeaways from this new tool as it’s currently written:

1.    Creation is Easy - A City or a County that has a Successor Agency who received its Finding of Completion may create an affordable housing special beneficiary district by adopting a resolution or an ordinance. No large reports are required, the district is co-terminus with the jurisdiction’s boundaries, and formation of a board is composed of three members of the city council/board of supervisors, the treasurer, and a community member.

2.    Largest Beneficiary – Counties will likely be the largest beneficiary since they receive not only their share from their redevelopment project area, but also pass-through and residual revenue from other project areas throughout the County. Cities that have a high tax rate or collect a large portion of residual revenue may also benefit from this tool.

3.    Not Many Expenditure Requirements – Monies must be spent on promoting affordable housing development for moderate income families and below. There are no proportionality or expenditure requirements as long as the board deems that the use promotes financing development of affordable housing within its boundaries.

4.    Ability to Issue Bonds – The beneficiary district may issue bonds for affordable housing purposes without voter approval or an asset as collateral. The term of the bonds may not exceed 20 years from the date of the Finding of Completion or 90 days from the dissolution of the successor agency. Typically, an agency would want at least 10 years remaining to be able to fully amortize the costs of issuing the bonds but a shorter period may still be advantageous depending on available revenues. And a general rule of thumb is that for every dollar of debt financed the issuer will need a dollar and twenty-five cents of available revenue (a 1.25 coverage factor).

This tool may prove useful for those Cities and Counties that receive a large portion of residual revenue and pass-through revenue. A major policy decision will center around a jurisdiction’s desire to divert general fund revenue for affordable housing purposes.

Written by Tara Matthews, a Principal at RSG