CHC Industry Insight

Industry Insight - September 2021

Note from the Executive Director

The Legislature wrapped up its second session of the COVID-19 pandemic last week—and for those of us fighting to provide affordable housing to struggling Californians, the year has been a mix of unparalleled victories and, unfortunately, some equally significant opportunities lost.

We’ve also learned a lot that we’ll need to be prepared for next year—especially once the recall election has come and gone.

Governor Newsom and the Legislature clearly understand the desperate need in California for more affordable housing, and they showed their willingness this year to use the state’s unprecedented budget surplus to invest billions of dollars to take on this issue. After years of advocacy by CHC and our partners, the final budget includes more than $10 billion for affordable housing programs—a historic influx of support that will help tens of thousands of lower-income households access safe, affordable homes.

It’s not just the size of these figures that is so meaningful, though. The budget also aimed these resources right where they’re needed most—in particular, the $1.75 billion targeted at accelerating development of thousands of affordable units awaiting allocations from the backlogged housing financing system. With the tax credit program grossly oversubscribed, these resources will have an immediate impact on shovel-ready projects all over the state. And because these funds don’t include any new hiring restrictions—another important precedent—they will ensure lower-income residents in every community move more quickly into high-quality homes.

There were several other noteworthy wins for affordable housing this year, including CHC’s sponsored bill AB 215 which increases the enforcement powers of the state and ensures cities are achieving their housing goals, a major new infusion of funds for high-speed broadband access, the extension of the Housing Crisis Act through 2030. On several occasions through the pandemic, the Legislature has also extended of some of the nation’s strongest eviction protections for lower-income households—and committed to helping affordable housing providers and our residents access 100% of back-rent owed during the pandemic.

In spite of these wins, though, the Legislature did not do everything it could this year to close the state’s shortfall of 1.3 million affordable homes. Since 2020, more than a dozen critical housing bills have died in committees that could have helped slowed California’s alarming growth in homelessness—and helped accelerate the production of affordable homes.

We can’t let this political stalemate extend further into next year.

Affordable housing groups have done as much as we can to craft legitimate proposals aimed at promoting affordable development and creating steady, well-paying construction jobs in every community. We are prepared to do the same in the months to come.

Lastly, please remember to vote in the recall election tomorrow! You can find your polling place here.

Sincerely,

Ray Pearl

Executive Director

In Case You Missed It

Late Friday, the House Ways and Means Committee released its draft of the Infrastructure Financing and Community Development portion of the Build Back Better reconciliation legislation (see bill text and section-by-section), which proposes the most significant expansion of the Housing Credit since the program’s inception, including a 60 percent allocation increase and reduction of the bond-financing threshold from 50 percent to 25 percent for seven years. Read more about this historic housing credit expansion proposal.

The CA legislature adjourned for their fall recess on Friday night. Here' a round-up of a few critical housing bills that CHC worked on this year:
AB 215 (Chiu) SPONSOR - Builds on the efforts of AB 72, to help ensure every region is making progress toward meeting their housing goals by expanding the authority of HCD and Attorney General to enforce state housing laws
AB 680 (Burke) - Exempts 100% affordable developments from new prevailing wage and PLA requirements for the Affordable Housing and Sustainable Communities Program
AB 721 (Bloom) - Removes existing restrictive covenants on property that would prohibit affordable housing development
AB 1304 (Santiago) - Requires that sites included in a local government's housing element affirmatively further fair housing
AB 1423 (Daly) - Authorize the MHP program to provide construction financing
SB 8 (Skinner) - extends the provisions of the Housing Crisis Act of 2019 until 2030 and streamlines the creation of more housing throughout the state

California eviction protections will expire on September 30. While the state has received applications for about $1.9 billion in rental aid, it has distributed only about $491 million. Tenants who applied for assistance will still review eviction protections until March 2022.

On Wednesday, September 15th, the USC Price Center for Social Innovation, the Homelessness Policy Research Institute, the Lusk Center for Real Estate, and DUPSA & Urban Growth Seminar Series will host a Virtual Research Seminar presenting results from the recent RAND Report “The Effects of Project Labor Agreements on the Production of Affordable Housing: Evidence from Proposition HHH.” This new report presents evidence that the presence of PLA and its unusual threshold significantly affected both the size of projects built—by inducing developers to propose smaller projects to avoid the agreement—and the construction costs of larger projects that were covered.

Affordable Housing in the News

The biggest newspapers across California have published editorials in the last few weeks opposing the recall of Governor Newsom—and urging people to vote no. “There is absolutely no justification for removing Gavin Newsom,” says the San Francisco Chronicle. “Recalling Newsom would be a ridiculous response to a pandemic that has plagued every state and governor in the nation,” says the San Diego Union-Tribune. “There are plenty of reasons to be frustrated with Newsom,” says the Sacramento Bee, “but replacing him through this egregious recall process is wrong and dangerous. It poses a serious threat to our state.” “Recalls should be reserved for serious, willful misconduct or gross incompetence, neither of which is remotely present,” concludes the San Jose Mercury News. “It’s imperative that California send a clear message discouraging future recalls.” “No matter how you feel about Newsom’s performance, voting yes will unleash months of political chaos that will be bad for the state,” says the Los Angeles Times. “Newsom does not deserve to be unceremoniously dumped from office before his term is up. He’s been a strong, decent leader of this complicated, high-maintenance state during a really tough time in history.”

CHC Member Spotlight

CHC Member: Standard Communities

Project Name: Foothill Villas

Location: San Bernardino

Units: 239

Opening Date: Built in 1966; Undergoing a $20.4 million renovation that includes the installation of a 750-kW solar photovoltaic system providing electricity to all apartments and common areas. Individual units and common areas will be renovated, and amenity spaces upgraded.

State & Federal Funding Sources:

Financed with Tax-Exempt bonds through CDLAC and federal Low-Income Housing Tax Credits provided by TCAC.

“In addition to saving the residents an average of $1,050 annually in electricity costs, the 1.368 million kWh of electricity generated each year by the new solar photovoltaic system will provide significant environmental benefits. This system will offset the equivalent of 968 metric tons of carbon, which is the equivalent of cars driven 2.4 million miles annually or consuming 109,000 gallons of gasoline.”

-Jeffrey Jaeger, Principal and Co-Founder of Standard Communities

CHC 2021 Special Event Sponsors