CHC Industry Insight

Industry Insight - June 2022

Note from the Executive Director

It’s fair to say we have not seen a more momentous month for progress on affordable housing in Sacramento in a long, long time. And I couldn’t be more excited about what this means for the future.

After two years of political gridlock in the Capitol, this past week the Assembly voted 48-11 to approve our CHC-sponsored bill, AB 2011, as the legislation continues to attract a growing coalition of housing advocates, equity groups, local electeds, and labor unions—including two strong new allies, the California Conference of Carpenters and Service Employees International Union (SEIU), who actively, fiercely pushed legislators for their support.

Labor icon Dolores Huerta sent a letter to members before this week’s vote saying the housing “status quo is simply unacceptable”—and called our proposal “good public policy.” Mayors from Los Angeles and Fresno to Oakland and Berkeley threw their support behind the bill, echoing Sacramento Mayor Darrell Steinberg, who said “I am in favor of all strategies which both make it easier to build desperately needed housing in California, and pay working men and women higher wages and benefits.”

On the Assembly floor, the bill’s coauthors stood up one after another to highlight how important it was for this legislation to advance—and for everyone in the Legislature to push through the rhetoric from the opposition and consider how much this bill could do for hardworking, lower-income Californians.

In the end, we got the bill passed—along with two other CHC-sponsored bills, AB 2006 (Berman) and AB 2334 (Wicks)—and we are still very much in this fight.

As I look back at the last momentous month, there are two things I’m sure of: We couldn’t have achieved this result without all of our new supporters—or without the work of every CHC member and partner organization who helped us get here. There is also no doubt in my mind that we would not have been able to get over this hurdle without the leadership of Asm. Buffy Wicks (D-Oakland), who put her own reputation on the line, fearlessly shepherded this bill through some of the most complex politics our state has to offer, and convinced her colleagues this was a win for affordable housing and a win for workers.

We are lucky to have a champion like Asm. Wicks in our corner. It gives me hope.

We all recognize, of course, that we’re not all the way there yet. There is a tough road ahead in the Senate, where we’ll need to redouble our efforts.

But that’s for the coming weeks. Right now we should acknowledge it has been a big month for affordable housing in California.

Thank you all for your continued support.

Sincerely,

Ray Pearl

Executive Director

In Case You Missed It

All three of CHC’s sponsored bills are moving to the Senate after passing out of the Assembly in advance of the floor deadline.

AB 2011 (Wicks) would open new sites to affordable housing and create strong labor protections that support all of the workers on these essential jobs. The bill passed out of the Assembly on Monday with a vote of 48-11.

AB 2334 (Wicks) would expand the AB 1763 enhanced density bonus to all 100% affordable housing developments located in low vehicle travel areas. The bill passed out of the Assembly on Thursday with a vote of 41-18.

AB 2006 (Berman) would require HCD, TCAC, and CalHFA develop a process to prevent duplicative compliance monitoring for projects that have regulatory agreements with more than one of these entities. The bill passed out of the Assembly on a substitute roll call vote on Wednesday with a vote of 73-0.

Last Wednesday, CDLAC met and discussed whether and how to assist developments struggling to meet June closing deadlines due to market volatility. The Committee made approved the following: 1) Blanket extension of 90 days for 2021 Round 3 deals with June closing requirements and authorization for the Executive Director to further extend issuance deadlines to accommodate supplemental requests; 2) Return deposit and waive negative points for projects who return allocation prior by May 30 at midnight; and 3) Waive negative points for projects that return allocation prior to extension deadline.

Earlier this month, Governor Newsom unveiled his revised May budget proposal, which projects a $97.5 billion surplus, maintains support for his January budget’s affordable housing and homelessness investments, and includes new proposals for adaptive reuse ($500 million) and rental assistance ($2.7 billion). The proposal now goes before the Legislature, which must approve a final 2022-2023 state budget by June 15.

Affordable Housing in the News

With budget talks stalled and rising inflation making it harder for millions of Americans to pay the rent, the Biden Administration outlined a new “Housing Supply Action Plan” this month it says will produce more housing at all income levels—including “hundreds of thousands of affordable housing units over the next three years.” President Biden said in May that with the cost of food, housing, and gas climbing rapidly—and becoming one of the biggest issues going into this fall’s elections—he is making addressing inflation his “top domestic priority.”

The White House housing plan includes a number of major reforms to the Low Income Housing Tax Credit sought by affordable housing advocates (all of which were also in the House-passed version of Build Back Better). Novogradac has estimated that these provisions would boost affordable housing production by more than 800,000 units. They include lowering the bond-financing threshold from 50% to 25% through 2026, increasing the annual housing credit allocation by 10% per year plus inflation through 2024, and providing a 50% basis boost for properties serving extremely low-income households. The White House housing plan notes that all of these ideas have “received bipartisan support.”

Federal Update from David Gasson, Boston Capital

Summer has arrived and there are around two months left before Congress departs Washington for the August recess. In a normal cycle this might be a relatively benign period with elections a few months away and partisan sniping at its peak. Partisan sniping is reaching a plateau and national events are adding fuel to the rancor. That said, legislating is ongoing, and the affordable housing industry is working to notch a few wins before the policy making ends and politics consume the District and the country.

For some time, we have been engaged in an effort to adjust the legislative language of the American Rescue Plan Act (ARPA) to allow those resources to be utilized for affordable housing production using the LIHTC. We have successfully worked to have the bipartisan LIFELINE Act (S.4181 & HR.7078) introduced in the House and Senate, allowing State and Local Fiscal Recovery Funds (SLFRF) to be awarded as long-term interest free loans to LIHTC developments, without a reduction of basis. We are gathering support for the legislation in Congress and hope to include the proposal in legislation that will be voted on before the August recess.

Regarding our larger LIHTC agenda, conversations are again taking place that could result in a reconciliation package being drafted by Hill Democrats. The clock is ticking as they only have until September 30 for the President to sign a FY 2022 reconciliation bill. Early chatter has the conversations focused on prescription drugs and energy proposals, but we have been and continue to emphasize the significance of including our LIHTC priorities; reinstatement of the 12.5% LIHTC allocation lost on 12/31/2021 and a reduction of the 50% test for bonds. Reports consistently focus on housing costs, and specifically rents, as a driver of inflation and thus our key talking point is you cannot address the stress on the economy if you do not increase the supply of affordable housing. We will be pressing our champions in Congress to include our LIHTC priorities in any reconciliation discussions and ask you to reach out to the CA delegation, especially Senator Padilla and Reps. Gomez, Panetta, Sanchez, Thompson and Chu who all sit on the Ways & Means Committee.

Other issues to mention are our continued push to have the regulatory review of the Average Income Test (AIT) released by Treasury. President Biden recently released his plans to ease the burdens of high housing costs and lack of supply, among them an announcement that the reviewed AIT regulation would be released by late September. This is later than we had previously be told the regulation would be announced and a disappointment to the entire industry. A bipartisan group of Senators sent a letter to Treasury Secretary Yellen and IRS Commissioner Rettig urging them to expedite the release of the final rule. We will continue to join our congressional supporters in pushing for release of the final rule expeditiously.

As you can see there is much going on as we work our way into summer. It is likely we will continue to work on LIHTC agenda issues right up until the end of the year and your participation in those efforts will be vital to our success. Thank you for your engagement and continue support of our efforts in Washington.

Thank You Ken Sauder for 40 Years of Service

As June 10^th approaches, we wanted to make note of the retirement of a long-time CHC supporter, Ken Sauder. He has spent the past 23 years as President & CEO of Wakeland Housing, many of those years serving on our Board of Governors and Board of Directors. But his impact on CHC is just the beginning of his impact on the lives of thousands of people who now have a quality place to live along with opportunities for them to empower themselves through Wakeland’s Resident Services programs.

Ken brought an upbeat personality and an easy-going nature that was greatly appreciated and will certainly be missed. Thank you, Ken, for your dedication to affordable housing and all the work you’ve done in your career and at Wakeland. Congratulations, Ken!

CHC 2022 Policy Forum