ACTION ALERT
Play your part in California’s Roadmap Home 2030! Policymakers and housing providers have been looking for ways to reduce the cost of developing affordable homes in order to stretch scarce resources further. One of the few costs the state can affect directly is the cost of borrowing funds from private banks. Sponsored by the California Housing Partnership, AB 1423 (Daly) will significantly lower the cost of developing new affordable homes by allowing the use of lower-cost state funds during the construction period. The Governor must act on this bill by October 10th. You can help reduce the cost of development by sending the attached sample letter to Leg.Unit@gov.ca.gov ASAP.
BACKGROUND
Currently, the California Department of Housing and Community Development (HCD) only provides funds after construction is complete to pay off construction loans from private banks, which require payment of market-rate interest on a monthly basis. These private loans are much larger than they would otherwise be if HCD funds were made available during the construction period. The additional interest on a large construction loan can add hundreds of thousands of dollars – roughly 5% of the HCD loan amount – to the cost of each affordable rental housing development.
AB 1423 significantly reduces construction period interest expenses by directing HCD to fund loans during the construction period, in partnership with the private banks who will continue to monitor construction progress and disburse funding.
By reducing these development costs, AB 1423 will stretch precious state resources to create more affordable homes for California’s low-income families without jeopardizing the high quality of their construction. Please help make AB 1423 a reality by requesting the Governor's signature today.
