CHC Industry Insight

Industry Insight - May 2021

Note from the Executive Director

The year of housing production? Not so much.

California housing starts dropped almost 9% in 2020, according to numbers released this week by the California Homebuilding Foundation—with multifamily housing units falling 17% to hit their lowest production numbers in the last decade.

All told, the state produced only 100,550 units of housing last year, well below the 180,000 homes a year the Department of Housing and Community Development says need to be built (for the next 10 years!) to keep pace with population growth. Over the last five years, the state has produced an average of only 109,000 units per year.

For those of us working every day to build affordable housing, these numbers come as no big surprise. California is facing a shortage of 1.2 million affordable homes, and we know the state is not on track to close that gap anytime soon.

But housing production actually going backwards? This should be a serious wakeup call for state legislators, who keep proposing new housing “packages” that are immediately dwarfed by the scale of California’s affordable housing challenges—while at the same time taking steps that make it harder and costlier to get desperately needed housing built.

Case in point: Last week one of CHC’s sponsored bills, AB 115 (Bloom), legislation that sought to expand the number of sites available to affordable development, couldn’t even get a hearing unless new provisions were added that would limit who is eligible to build those homes.

This is just not right.

All Californians deserve a safe, affordable place to call home.

All workers deserve a fair, livable wage.

We should all be able to work together toward these simple goals. It's time for California's legislative leaders to recognize this.

Sincerely,

Ray Pearl

Executive Director

In Case You Missed It

One of CHC’s sponsored bills, AB 115 (Bloom), was pulled last week from consideration by the Assembly Committee on Local Government and will not advance this session. The bill, which sought to allow affordable housing development on some commercial property, was supported by a large coalition of housing and equity advocates committed to building affordable homes for millions of rent-burdened Californians. The bill was opposed by labor unions seeking to add strict new hiring rules on these projects. CHC shared this Twitter thread after the bill was killed highlighting affordable housing groups’ ongoing efforts to promote “win-win” solutions that will get more housing built *and* and provide stable, high-wage jobs for construction workers.
AB 215 (Chiu), another CHC-sponsored bill, passed out of Assembly policy committees last month. The bill would create a new checkpoint partway through the eight-year RHNA cycle for the state to assess how close cities are to meeting their housing production targets—and intervene if needed.
AB 71, Asm. Luz Rivas’s ambitious $2.4 billion funding proposal to combat homelessness passed the Assembly Revenue and Taxation and Housing and Community Development Committees last month. The bill is one of the few meaningful bills to address housing and homelessness that is still moving and would direct billions of dollars in new funding each year to housing and homelessness programs.
The California Debt Limit Allocation Committee changed its allocation formulas in future rounds of funding to factor in the high cost of construction in the Bay Area—bumping the region’s allocation from 17% to 21% at its recent committee meeting.
In Los Angeles, Judge David O. Carter ordered the city and county to offer some form of shelter or housing to the entire 4,600-person homeless population of Skid Row by October. His 110-page brief also called on the city to put $1 billion into an escrow account to support housing programs.
Registration is now open for CHC's Policy Forum on May 20. Read more and register below!

Federal Update with David Gasson, Housing Advisory Group

While this will be news to no one reading this update, the Affordable Housing Credit Improvement Act (AHCIA) of 2021 has been introduced. While not the first housing bill out of the blocks it is the most comprehensive and if enacted as proposed, could result in the financing of an additional 2 million units of affordable housing over the next 10 years. We are currently building bipartisan support for H.R. 2573 and S. 1136 and ask that you reach out to the California delegation and ask them to cosponsor the AHCIA. All the resources you need are on the ACTION Campaign’s Advocacy Tools website. In addition to your own elected officials, don’t forget to touch base with those where you have offices, properties, or other connections.

As we previously discussed, the new version of the AHCIA includes a 50% increase in the 9% allocation over two years and a reduction of the 50% test to 25%. There are also a number of basis boost provisions including for 4% LIHTC transactions, DDA’s and tribal lands. You may view a Section by Section summary of the bill here. With so much activity around what could be the most significant investment in infrastructure since the Eisenhower administration, it is imperative we demonstrate support for our affordable housing agenda so please put on your advocacy hats and let’s get the CA delegation signed onto HR. 2573 and S. 1136.

In the coming days we expect Senator Wyden to introduce the Decent Affordable Safe Housing (DASH) Act. We expect this legislation to include the Middle-Income Housing Tax Credit, potentially an increase in the PAB volume cap, a tax credit and/or basis boost focused on services at LIHTC properties and much more. Over the next month or so we expect more housing legislation covering homeownership, rental housing, homelessness and more to be introduced by Members on both sides of the Hill and from both Party’s. As I previously stated this could be a landmark year for housing legislation.

We await word from the IRS on whether they will alter their interpretation of the Average Income Test but are also working with legislative leaders on clarifying language in case the IRS either does not alter their interpretation or come out with guidance in a timely manner. This is very much on the front burner for housing advocates in DC. We also continue conversations with the Administration on more housing legislation from the Domestic Policy Council, HUD appropriations and fixes to programs at HUD. There is a lot going on.

Thank you for all your efforts and stay tuned for much more news on the housing front.

CHC Member Spotlight

CHC Member: LA Family Housing

Project Name: The Willows

Location: Canoga Park, CA

Units: 75 beds (28 beds for women, 41 beds for men, 6 beds for couples)

Opening Date: February 2021

State & Federal Financing Sources: Homeless Emergency Aid Program funds were used in acquisition of site

The Willows was designed using several trauma-informed principles - skylights for natural sunlight to help residents with mental health issues and depression, acoustic panels to reduce noise, biophilia (incorporating natural design elements like wood), soothing color schemes, indoor plants, and beautiful outdoor spaces. Residents are also able to bring emotional support and service animals with them to the facility, which has a cat and dog room outfitted with kennels and hammocks.

Affordable Housing in the News

The Wall Street Journal published a detailed exposé this month on ongoing debates in the Legislature over applying strict new labor standards to affordable housing projects. The story highlights efforts by the Building Trades to apply stringent hiring rules to all new housing legislation—and features affordable housing advocates’ ongoing efforts to achieve a compromise that supports workers, while also allowing much-needed affordable housing development to continue, especially in rural and inland areas already facing labor shortages. With new labor standards likely to “slow or halt construction of affordable homes” in many regions, as the Journal put it, the story also featured affordable housing groups’ proposed alternative, which would allow developers to be exempted from strict hiring requirements when no union bids are received on a project—or if those bids are significantly higher (10% or more) than the lowest alternative. “Until we come to a resolution, it’s going to make housing policy very hard in California,” Senator Scott Wiener (D-San Francisco) told the Journal.

Join us to hear experts from across the state on their new approaches and innovative ideas on where affordable housing is heading. Registration is now open!

We welcome our featured speaker Tomiquia Moss, All Home founder and CEO, who joins us to discuss the key role affordable housing plays in preventing and ending homelessness.

We will host two panels of hot topics the affordable housing industry faces today:

Innovation Approaches to Building Permanent Supportive Housing. Panelists will share examples of innovative financing and building methods they’ve used to construct permanent supportive housing projects.

Moderator: Sean Spear, Community HousingWorks

Panelists:

Rebecca Foster, San Francisco Housing Accelerator Fund

Greg Comanor, Daylight Community Development

Deborah La Franchi, SDS Capital Group

Making Modular Construction Work in Affordable Housing. Panelists will discuss how to make modular construction scalable and workable in California.

Moderator: Doug Shoemaker, Mercy Housing

Panelists:

Carol Galante, Terner Center for Housing Innovation

Caleb Roope, The Pacific Companies

Registration fee: $50 for nonmembers/$40 for members

No refund are available for this event.