Cities and counties throughout the state need an adequate source of funding to address the magnitude of our affordable housing crisis. (Kevin N. Hume/S.F. Examiner)

Legislature should support sustainable funding to build affordable housing

SB 5 and AB 10 would give cities and counties new tools, funding for low-income projects

By Lisa Hershey and Cesar Diaz

Too many families and individuals in California are struggling to afford the most basic human need: a home. Digging ourselves out of this crisis that has been decades in the making will take time and a multi-pronged approach. But one of the steps the Legislature can take this year is to immediately kick-start construction of housing for lower income households, the most financially vulnerable among us.

The key to kick-starting construction of affordable homes is investment: California must use its financial strength to meet the needs of its people. Senate Bill 5 and Assembly Bill 10 are smart policies that ensure collaboration across all levels of government and the private sector when investing in long-term, permanent affordable housing development.

We urge Assembly support of SB 5 to create the Affordable Housing and Community Development Program – a state-backed program that provides cities and counties an ongoing and sustainable source of funding to subsidize affordable housing for the lowest income families.

Specifically, SB 5 provides cities and counties additional property tax in dedicated zones where they’ve developed a state-approved plan. SB 5 commits $200 million in funding annually to cities and counties beginning in 2020, eventually capping at $2 billion annually. Local governments can use the funding for the construction of affordable housing.

SB 5 is estimated to create up to 86,000 new and rehabilitated homes over the next 10 years targeting lower income families particularly vulnerable to homelessness. Local governments can also use this funding for transit-oriented development in priority locations that maximize density and transit use and contribute to a reduction in vehicle miles traveled and greenhouse gas emissions.

SB 5 will generate an estimated 329,000 prevailing wage construction jobs and $60 billion in economic activity over a ten-year period.”

We also strongly support AB 10 which increases the state Low-Income Housing Tax Credit (LIHTC) by $500 million annually and increases the set-aside for the farmworker housing tax credit from $500,000 to $25 million.

LIHTC is the most successful, most used, and most effective public-private financing tool for affordable housing construction. The state always runs out of competitive tax credit dollars before being able to award funding for all shovel-ready developments. AB 10 would provide consistency and predictability for construction, lowering construction times and costs.

Cities and counties throughout the state need an adequate source of funding to address the magnitude of our affordable housing crisis. Losing redevelopment in 2011 wiped out the main ongoing source of funding dedicated to local governments to build affordable housing. Since then, housing financing tools are not sufficient to provide local governments and their community partners with the resources necessary to result in housing actually being built at scale.

That’s a big part of the reason we have such a deficit of rental homes affordable to the lowest income Californians. In fact, more than 2.2 million extremely low-income and very low-income renter households are competing for only 664,000 affordable rental homes. More than 1.5 million of California’s lowest-income families are left without affordable rental options. Many of these families end up homeless.

Our housing crisis is an issue of statewide concern that impacts communities in every corner of the state. It makes sense that the state should partner with local governments to provide ongoing and sustainable funding to support housing for those most in need.

The legislature needs to act this year to pass laws that will provide homes to the lowest income Californians as one of the most effective ways to tackle housing affordability. Passing SB 5 and AB 10 now would bring critical additions to the state’s toolkit of solutions.

Lisa Hershey is executive director of Housing California and Cesar Diaz is legislative and political director for the State Building and Construction Trades Council of California.

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