Industry Insight - December 2021 |
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Note from the Executive Director |
As always at this time of year, in between legislative sessions and the holidays, there are more questions than answers about what is in store next for affordable housing production in California. But there are certainly positive signs all around us—especially when it comes to finding the resources we’ll need to build more affordable homes.
The Legislative Analyst’s Office, even as the state fights its way through the second year of the pandemic, is projecting a $31 billion budget surplus next year—with annual operating surpluses between $3 billion to $8 billion through 2026. Governor Newsom has said he plans to use this unexpected windfall to “substantially increase our one-time investments in infrastructure” and deliver another round of stimulus checks. “How we framed that historic surplus last year,” the Governor said this month, “similarly, we will frame our approach this year.”
That would be good news for affordable housing providers, who benefited this year from the launch of a new $1.75 billion program, the California Housing Accelerator, that is already helping jumpstart production of thousands of affordable units all over the state.
CHC will be pushing for more investments on a similar scale next year—bolstered, we hope, by Congressional action in the next few weeks to expand the federal Low Income Housing Tax Credit. The House approved a historic $12 billion boost to the credit in its Build Back Better legislation this month, the most significant expansion of the program since it was created in 1986. Key provisions, including proposals to lower the bond-financing threshold from 50% to 25%, also enjoy bipartisan support in the Senate.
These much-needed reforms haven’t passed yet, nor have any final decisions been made in Sacramento about how to spend next year’s unprecedented surplus. We have work to do, on both fronts. But with your help, I know we will be heard—and after years of effort by CHC and our partners to raise awareness about the importance of affordable housing, I like our chances.
I wish all of the best to you and your families this holiday season!
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Sincerely,
Ray Pearl
Executive Director
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Have you registered for CHC's Fall Virtual Policy Forum on December 10th? See event details below.
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The IRS issued a set of rulings this week related to the effective date of the 4% minimum floor. Revenue Ruling 2021-20 “holds that a draw-down bond that is issued prior to 2021 (with draws occurring in a subsequent year), a de minimis § 42(h)(4)(A) obligation issued after December 31, 2020, or a de minimis allocation of low-income housing credit dollar amount occurring after December 31, 2020, do not cause a building to be subject to the minimum 4 percent floor under § 42(b)(3).” There's no new guidance yet on the Average Income Test rule.
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California is expected to have a $31 billion budget surplus next year, according to a fiscal outlook release last month by the Legislative Analyst’s Office. While there are some limits on how much incoming revenue can be spent, the LAO projects operating surpluses of between $3 billion to $8 billion per year through 2026.
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The $2 trillion Build Back Better Act passed out of the House of Representatives by a vote of 220-213, and the bill is now in the Senate.
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The legislation, H.R. 5376, includes more than $160 billion for affordable housing, including $63 billion for the preservation of public housing, $25 billion for rental assistance, and $15 billion for the National Housing Trust Fund.
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The bill also includes the largest expansion of the Low Income Housing Tax Credit since its inception in 1986 and lowers the bond-financing threshold from 50 percent to 25 percent for five years, which would finance an estimated 812,000 affordable rental homes over the next decade. According to the Novogradac, its $12 billion in investments in the Housing Credit are expected to create over 1.2 million jobs, $137 billion in wages and business income, and $47 billion in tax revenue.
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One of this year’s CHC-sponsored bills, AB 215 (Chiu), was highlighted as a critical part of the new state “Housing Strike Force” announced this week by Attorney General Rob Bonta. The new Strike Force, housed in the Department of Justice, will ramp up enforcement of state housing laws. The Attorney General highlighted AB 215 for providing his office with the authority it needs to establish and operate the new Strike Force. CHC called this week’s announcement “a major step forward for affordable housing in California.”
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Two new reports from the Terner Center released last month demonstrate the potential for building more affordable housing on commercial land—an idea considered in the Legislature this year during debates over AB 115 (Bloom) and SB 6 (Caballero). Learn more about these studies at CHC's Fall Policy Forum on December 10 (details below).
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Introducing: CHC’s New Policy Associate - Jennifer Armenta |
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CHC is pleased to introduce our newest staff member, Jennifer Armenta, who will be working as a policy associate in our Sacramento office. Jennifer will be assisting with bill tracking and policy research, as well as managing many of CHC’s member engagement activities and events.
“Expanding our staff in Sacramento has been a long-time goal and we are so pleased to have found someone with Jennifer’s background and passion for affordable housing.” -Ray Pearl
Prior to joining CHC, Jennifer worked as a legislative intern for Assemblymember Tim Grayson (D-Concord), serving as lead staffer on AB 447, a bill signed by the Governor in September that expands the eligibility of affordable housing projects to receive Low Income Housing Tax Credits. In 2019, Jennifer was an intern for the State Superintendent of Public Instruction Tony Thurmond. She has also worked as an intern for the City Attorney’s Office at Hayward City Hall.
Jennifer grew up in Tennyson Gardens, an Eden Housing property in Hayward, and was the first in her family to attend college. She was the recipient of two scholarships from Eden’s Howard T. Collins Memorial Scholarship program. She recently graduated from the University of California Merced and received her BA in Political Science with an emphasis in American Politics and International Relations.
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CHC Member Spotlight:
Lombard Brings New Leadership to BRIDGE
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On November 15, Kenneth T. Lombard joined BRIDGE Housing as the organization’s new President and CEO. Over a career that spans three decades, he has garnered extensive experience in business development, management, investment banking, economic development, corporate expansion and real estate investment.
“I’m inspired to work with the talented team at BRIDGE to enhance our mission to improve lives and strengthen communities through innovative solutions that start with quality affordable housing,” said Ken. “What’s clear is that BRIDGE is a mission-driven organization that can compete in any environment, nonprofit or for-profit, and I believe there are opportunities for us to make an even greater impact. I’m excited to bring all of my career and life experiences to lead BRIDGE at such an important time when the housing affordability gap has reached crisis levels.”
Ken came to BRIDGE from Seritage Growth Properties (NYSE: SRG), where he served most recently as Special Advisor; he was an original Board member when Seritage went public in 2015 and subsequently served as Seritage’s EVP and COO. Seritage is a self-administered and self-managed REIT with properties totaling approximately 39 million square feet of space across 49 states and Puerto Rico.
Earlier, he was President of MacFarlane Partners, an investment management firm that acquires, develops and manages real estate assets on behalf of pensions and institutional investors. Prior to joining MacFarlane Partners, Ken served as Vice Chairman, Partner and head of investments for Capri Capital Partners, and President of the Capri Urban Fund, which invested in more than $1 billion in commercial, residential and mixed-use development, redevelopment and repositioning projects in densely populated urban markets of the U.S.
From 2004 to 2008, he was President of Starbucks Entertainment, where he managed the collaboration with Concord Music to form a new Starbucks music label. In 1992, Ken co-founded Johnson Development Corporation and spent 12 years as the President and Partner of the firm, creating a legacy of economic improvement in underserved communities of color in 65 cities and 17 states. He holds a Bachelor of Arts in Communication from the University of Washington.
“Ken is a value-oriented, thoughtful leader who is fully committed to our mission,” said BRIDGE Board Chair Kenneth Novack, who led the CEO Search Committee. “He is a proven collaborator and innovator with a stellar track record, and it’s a privilege to have him join BRIDGE. With his depth of experience, business acumen and valuable new perspectives, Ken is someone who will take our organization to the next level.”
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Affordable Housing in the News |
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This month in affordable housing news, tensions continued to rise between the state and local governments over how to respond to the affordable housing crisis. A few months after the legislative session ended, the Los Angeles Times reports that many cities are already developing local rules to circumvent new state laws promoting denser housing development, from Los Altos Hills and Cupertino in the Bay Area to Pasadena and Redondo Beach in LA County. A group of local control advocates, supported by funding from the AIDS Healthcare Foundation, have also begun collecting signatures to put a measure on the 2022 ballot that would, according to CalMatters, “essentially bar the state from overriding local land use laws.”
The outcome of this state versus local tug of war remains difficult to predict. As Sen. Scott Wiener recently told the San Francisco Chronicle: “There’s always a bit of a game of cat and mouse when it comes to state housing laws.” But unlike years’ past, state leaders seem committed to action: “We are not asking people to do the impossible,” Attorney General Bonta said recently. “When you don’t do the very possible simply because you don’t want to do it, there’s going to be consequences.”
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Join us for our final special event of the year to hear from legislative leaders and industry experts on today’s housing issues and trends. Special thanks to our Title Sponsor, BRIDGE!
Legislative Roundtable:
Assemblymembers Buffy Wicks and Tim Grayson will share the insights learned from the Assembly Housing Working Group roundtables and their expectations for 2022.
Panel Topics:
'Commercial to Residential Conversions in California' & 'Adaptive Reuse': A Discussion on the Terner Center for Housing Innovation's Commercial Zoning Paper Series and their Practical Applications with panelists:
- David Garcia, Terner Center for Housing Innovation
- Sara Tsay, Abode Communities
- John Arnold, KFA Architecture
Federal Update: A conversation with Emily Cadik, Executive Director of Affordable Housing Tax Credit Coalition
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Registration fee: $40 for nonmembers/$25 for members
No refunds are available for this event
**CHC Members - Use 'MEMBER2021' at checkout for the discounted registration rate**
Sponsors - Contact Nancy Martin for registration instructions
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CHC 2021 Special Event Sponsors |
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California Housing Consortium
30141 Agoura Road, Suite 106
Agoura Hills, CA 91301
818-735-9551 phone
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Sacramento Office
1107 9th Street, Suite 710
Sacramento, CA 95814
916-272-2325 phone
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