California Expands Affordable Housing Finance Incentives
The new program aims to incentivize affordable housing development for residents with a mix of incomes.
Multifamily developers interested in building affordable housing for moderate- and low-income residents can apply for a new California Housing Finance Agency funding program created to address California’s housing crisis.
The Multifamily Mixed-Income Program is the state’s first to incentivize affordable housing developments to serve those in what the state calls the ‘missing middle.’ It will provide competitive, long-term gap financing to developments aimed at residents with a mix of incomes between 30 and 120 percent of the Area Median Income (AMI). Initial projections suggest the program would help create between 750 and 1,125 new affordable homes each year.
“California’s housing affordability crisis is a burden on middle-class families and a barrier to those striving to reach the middle class,” state Senate President pro Tempore Toni Atkins said, in a prepared statement. “This program is an important first step to give families in the vast ‘missing middle’ housing options that they can afford, and it will work in concert with our efforts to house our lowest-income families.”
The program will use funds from Senate Bill 2, the Building Homes and Jobs Act, which was authored by Atkins and signed into law by former Governor Edmund G. Brown as part of the 2017 housing package. Beginning this year, 15 percent of the funds in the Building Homes and Jobs Trust Fund will be allocated to CalHFA for this purpose. Newly elected Governor Gavin Newsom proposed in his Fiscal Year 2019-20 budget proposal making a one-time investment of $500 million to expand housing programs. CalHFA is currently making $40 million available for the new program this year.
“While it is vital for California to continue to subsidize housing for those at the lowest income levels, California lawmakers, when they passed 2017’s historic passage of housing bills, saw the importance of financing housing for those with moderate incomes, who are struggling to find safe, affordable homes,” Tia Boatman Patterson, CalHFA executive director, said in a prepared statement. “Mixed-income developments provide better quality of life for both low- and moderate-income Californians, and financing more of these types of projects is crucial to the economic prosperity of our state.”
Applications from developers will be accepted until April 30 and awards will be announced during the summer. Priority will be given to projects with the lowest per unit subsidy request and preference will be given to projects that restrict at least 10 percent of the units for the ‘missing middle,’ defined as 81 to 120 percent AMI.
The program can be used in conjunction with CalHFA’s Permanent Loan program or paired with a loan offered by one of the Mixed-Income Program’s Preferred Lenders.
CalHFA conducted more than a year of intensive market research to create the program, including engaging with nonprofit and for-profit developers, local housing agencies and state lawmakers, and determine the most efficient ways to use the funds.
Affordable Housing Lawsuit
The CalHFA program comes just weeks after Newsom directed Attorney General Xavier Becerra to file the first-of-its-kind lawsuit against the city of Huntington Beach, Calif., accusing it of blocking affordable housing and willfully refusing to comply with state housing law AB 72, which took effect Jan. 1, 2018. By law, cities and counties must adopt a housing plan that meets the needs of the region, including providing zoning to encourage housing across all income levels. The city attorney denies Huntington Beach is not in compliance with the housing law.
Newsom has made new housing production a priority in his first budget. In addition to the $500 million for housing incentives, the governor also included in his proposal $250 million to provide technical assistance for cities to responsibly ramp up zoning and permitting processes and $1 billion in other funding for housing construction.
Images courtesy of California Housing Finance Agency