CHC Industry Insight

Industry Insight - April 2022

Note from the Executive Director

After years of political stalemates in the Legislature on housing policy, this week offered something entirely different.

CHC and our partners have been working since before the pandemic to find solutions to one of the biggest challenges facing California: How to build more affordable housing for millions of struggling families, seniors, workers, and veterans—while also growing the thriving middle-class construction workforce every community needs.

But while dozens of bills over the last two sessions have sought to address one part of this puzzle or the other, none have been able to earn the support of both affordable housing advocates and labor organizations.

That changed this month, with the introduction of AB 2011 by Asm. Buffy Wicks (D-Oakland), a bill endorsed by CHC and the California Conference of Carpenters that will expand affordable housing production on underutilized commercial land while creating strong labor protections that support all of the workers on these essential jobs. (Read a San Jose Mercury News oped coauthored by our two groups here.)

AB 2011 was heard for the first time on Wednesday in the Assembly Housing Committee, where our affordable housing allies and a long line of hard-hat-wearing carpenters testified about the unique opportunity this bill provides to build affordable homes and create well-paying jobs.

This is what working together looks like, and members of the committee couldn’t help but notice. Every Democrat voted in support of the bill, joining nearly a dozen legislators who have formally signed on as coauthors.

I’ll be the first to acknowledge there is still a long way to go. We should all remain clear-eyed about the very real challenges this bill still faces from powerful, organized opponents.

But for the first time in a long time, I hope we all recognize we are not alone: We are fortunate to stand behind a strong, visionary housing chair, who has demonstrated her willingness to take on entrenched interests to forge real compromise. We have the facts and sound policy on our side. And we have the backing of a growing coalition of allies from across the political spectrum—from equity and homeownership groups to environmentalists, YIMBYs, and labor organizations.

The next step, as always, is the most important: We are going to need all of your assistance to help legislators recognize this bill is an essential part of the solution to California’s housing crisis. Earning their support is the only way we can all achieve our shared goal: Building more affordable homes for struggling lower-income Californians, while growing the stable, well-paid construction workforce we all rely on.

You can take the first step today by submitting a letter of support on behalf of your organization. Details on how to do that can be found on the CHC website.

Thank you again for your support. Onward!

Sincerely,

Ray Pearl

Executive Director

In Case You Missed It

CHC is proud to be sponsoring several critical pieces of legislation this year, which have ALL passed out of policy committees in advance of the legislative deadlines:

AB 2011 (Wicks) would open new sites to affordable housing with the potential to produce millions of units, while creating strong labor protections that support all of the workers on these essential jobs. The bill passed out of Assembly Housing Committee with a vote of 7-1 on Wednesday with all Democrats voting AYE despite opposition from the Trades. AB 2011 is now headed to Assembly Rules Committee where negotiations with various stakeholders will take place before it moves to Assembly Appropriations Committee.

AB 2334 (Wicks) would expand the AB 1763 enhanced density bonus to all 100% affordable housing developments located in low vehicle travel areas. AB 2334 passed out of the Assembly Local Government Committee with a vote of 6-1 on Wednesday and is headed to the Assembly Appropriations Committee.

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. AB 2006 passed out of Assembly Housing Committee on Consent and is on the Assembly Appropriations Suspense file.

Assemblymember Buffy Wicks (D-Oakland) also introduced a new constitutional amendment that would create a permanent, ongoing source of funding for affordable housing through the state general fund. ACA 14, the Housing Opportunities for Everyone (HOPE) Act, would dedicate 5% of the state budget each year for the next decade to the state’s affordable housing and homelessness crisis—an investment of approximately $10 billion each year. CHC is a strong supporter of the measure, which will be heard in Assembly Housing Committee on May 11.

Please submit support letters for AB 2006 (Berman), AB 2011 (Wicks), AB 2334 (Wicks), and ACA 14 (Wicks) through the Legislature’s Position Letter Portal and email copies to our Policy Associate, Jennifer Armenta, at jarmenta@calhsng.org. Sample letters are available here.

The Senate announced yesterday the second phase of the Senate’s “Putting Wealth to Work” budget proposal, which would continue to prioritize a more equitable economy to benefit struggling and middle class families and build historic levels of reserves. Details on the Senate's budget proposal are available online and, among other things, includes $500 million for the Multifamily Housing Program and $500 million for the Housing Accelerator Program. The Assembly has yet to release its budget proposal and the Governor has until May 15 to release his May Revision to the January Budget. Negotiations between the “Big 3” will begin after that.

Affordable Housing in the News

Dominating the headlines this month has been the new partnership between affordable housing groups and labor in support of AB 2011 (Wicks). After years of stalled policy talks in the Capitol, Politico said the new partnership offered a “glimmer of compromise”—calling the legislation, with its streamlining provisions and unprecedented labor standards, “one of the most labor-friendly housing bills in recent memory.”

CHC’s Ray Pearl and the California Conference of Carpenters’ Danny Curtin outlined their rationale for co-sponsoring the bill in a San Jose Mercury News oped: “California desperately needs affordable homes and well-paying jobs,” wrote Pearl and Curtin: “This bill gives every community a way to produce more of both.”

A Carpenters rally on the Capitol steps was also featured on a local Sacramento TV station, with housing advocates and workers highlighting the need for urgent action to address the state’s affordability crisis. “This bill’s official name is the Affordable Housing and High Road Jobs Act,” CHC’s Ray Pearl said at the event: “And I know I speak for everyone in the affordable housing community when I say: Let’s do both. Let’s start now. And let’s do it together.”

Federal Update from David Gasson, Boston Capitol

Happy Spring to everyone at CHC.

Congress is returning to Washington after the Passover/Easter recess and hopes are high, among some, that the recess will have refreshed batteries, attitudes, and interest in pursuing a reconciliation bill.

With the shrinking legislative calendar, the industry is looking at two potential vehicles for our LIHTC agenda. The first is the aforementioned reconciliation bill and the second would be a tax extenders package. The former could come together in the next month or so while the latter would likely not see consideration until after the November mid-term elections.

If a reconciliation bill (Build Back Better lite) comes together it will likely be much smaller than the original BBBA that was passed by the House late in 2021. Senator Manchin is the key to this process (big surprise) and he is focused on inflation and deficit reduction, thus no grandiose spending programs or massive appropriations will be included. What is likely to be included is legislation reducing the cost and increasing competition in prescription drugs, green energy and fossil fuel incentives and perhaps something on childcare/wellness. It is just a guess, but the programmatic portion of the bill will likely top out at around $500 - $750 billion. The larger part of the bill will be tax increases, perhaps as high as $1 trillion, thus providing excess revenue to pay down the debt. All of this is conjecture as no substantive talks have taken place so we will see what comes together.

Our Hill advocates are working with us to advocate for the LIHTC being included in the tax title of this bill to tackle the well documented lack of affordable housing, and as a hedge against inflation. Housing as a cause of inflation has received considerable press over the last many months and was the focus of a report from the San Francisco Federal Reserve. This talking point has been presented to Senator Manchin as well and reports are he accepts that housing should be addressed as they work to tackle inflation. The road ahead is precarious, but we are working diligently to restore the 12.5% reduction in 9% allocations and pass the reduction of the 50% test as part of this package.

Other issues the industry is working on include the Pillar Two Model Rules for the proposed International 15% AMT, lumber costs and the utilization of ARPA funds.

Pillar Two: The potential for the current rules to hinder investment in General Business Credits (GBC’s) including the LIHTC are real and we have been working with Hill advocates, the tax writing committees and Treasury on a remedy to this issue.

Lumber: Following conversations with the administration and at our urging, a call was convened between the Domestic Policy Council, National Economic Council, National Security Council and Commerce with industry advocates (developers) to discuss the situation on the ground. It was a very educational exercise for the administrative staff to hear the real-world challenges, including the actual causes of high lumber costs, and how it is negatively affecting our industry’s ability to produce housing. These conversations continue and we hope to have actions of some kind taken by the administration to address the situation.

ARPA: We are working with Hill advocates to have language included in pending legislation that would allow states to allocate ARPA funds to LIHTC developments, no matter the sponsor, in the form of long-term interest free loans. A bill has been introduced in the House, HR. 7078, and we expect a companion bill in the Senate soon. This has bi-partisan support and the administration is on board as well.

So, there is much going on and we continue to push our affordable housing agenda in Washington. We so appreciate your advocacy with elected officials at all levels as this is the real key to our success. Thank you sincerely and have a wonderful Spring. If you can, join us in Washington for our Housing Advisory Group/Affordable Housing Tax Credit Coalition Affordable Housing Symposium on June 15^th.

National Housing and Rehabilitation Association Celebrates 50 Years

T ax Credit Advisor magazine’s April 2022 publication is a special commemorative issue in honor of the National Housing & Rehabilitation Association’s 50th anniversary!

In cover story, Affordable Across America, Scott Beyer, Mark Fogarty and Pamela Martineau share with readers 50 projects from 50 members over 50 years. Each added project pieces together a historical record of the affordable housing industry spanning decades and subsidy types.

Also in this issue, NH&RA President Thom Amdur’s New Developments invokes echoes of triumphs and challenges past with a guide to affordable housing through the decades. Scott Beyer’s Housing USA travels from region to region analyzing 50 years of affordable housing across America. And David Smith waxes poetic about difference-makers, like Harry Howell, Art Hessel and more, who have left their marks on the industry.

Please enjoy this commemorative edition of Tax Credit Advisor, the leading affordable housing industry magazine.

CHC Member Spotlight

CHC Member: LINC Housing

Project Name: Spark at Midtown

Location: 1900 Long Beach Blvd, Long Beach, CA 90806

Units: 95 units (47 units of standard affordable housing for individuals and families with low-income, 47 permanent supportive housing for people who have experienced homelessness, 1 manager’s unit)

Opening Date: 12/1/20

State & Federal Financing Sources:

9% LIHTC: TCAC- Raymond James Tax Credit Funds, Inc.
Federal Home Loan Bank of San Francisco: Affordable Housing Program (AHP)
California HCD: Infrastructure Infill Grant
Los Angeles County: General Funds + 4th District
Long Beach Community Investment Company: LMIAHF City Impact Fee Waiver

Spark at Midtown in Long Beach provides much-needed housing to more than 250 low-income residents, including those who have experienced homelessness. This signature Linc community integrates affordable and supportive housing with resources and services. Linc added an engaging outdoor public park and retail spaces to create a mixed-use neighborhood that connects housing with community-serving assets. Both Spark and neighborhood residents have access to healthcare through the Dignity Health St. Mary Medical Center clinic within the building. This expands available options for family and internal medicine, including preventative care and management of chronic conditions. LINC has also created a new home for the YMCA of Greater Long Beach's programs, including the Youth Institute. Finally, Spark residents coming from homelessness arrive to find their apartments furnished with household items such as bedding, dishes, and bath towels, through our Welcome Home Program.

CHC 2022 Policy Forum

Special thanks to our Title Sponsor,

Merritt Community Capital Corporation!