By Peter Villegas
Californians have twice expressed their support of funding for affordable housing.
First was with the approval of Proposition 46, which generated $2.1 billion. More recently, voters passed Proposition 1C, which will provide $2.8 billion.
Although these propositions have, and will, provide significant funding for more affordable housing statewide, they have specific dollar amounts. When the funding is gone, it’s gone.
Gov. Arnold Schwarz-enegger has turned his administration’s attention to establishing a permanent source of funding that will preclude the necessity of going back to voters every several years. Propositions are always expensive crap shoots. And, at some point, voters might reject the idea of paying for affordable housing.
If that happens, the state along with counties and cities will be in a difficult situation. Quality, affordable housing is a cornerstone of our economy and our society.
Florida Program
Permanent financing for affordable housing is not a new idea. One state that has recognized the need for a permanent source is Florida, which established its State Housing Initiatives Partnership. The program is the first,and only,permanently funded, state housing program in the nation to provide money directly to local governments to increase affordable housing.
The program channels nearly 70% of funds generated by a real state transfer tax directly to counties and entitlement cities in Florida on a non-competitive basis. Designed as an incentive for the formation of public-private partnerships for building, rehabilitating and preserving affordable housing, the program provides a financial means to develop and implement housing programs that are locally designed and controlled.
States that have utilized a real estate transfer tax to create permanent sources of funding include: Hawaii, Illinois, Nebraska, Nevada, Maine, New Jersey, South Carolina, Vermont and the District of Columbia. The state of Washington has designated 15% of its biannual infrastructure revenue bonds for affordable housing; New Mexico uses a portion of a corporate franchise tax fee of $50 per company per year to fund affordable housing; and Delaware, Massachusetts, Missouri and Ohio utilize a document recording fee on real estate to raise money.
Several California cities including San Diego, Santa Monica and San Francisco have enacted commercial linkage fees that require non-residential projects to contribute to affordable housing trust funds.
A permanent source of funding for affordable workforce housing has been successfully implemented elsewhere and there is no reason why our state can’t figure out a way to do it without creating blaring inequities or hardships.
But why is this important to Orange County?
Regardless of the current housing situation, OC will continue to face the issue of housing affordability, which some experts believe will only get worse when the housing market recovers from the downturn. No significant numbers of housing are being added and apartment rents will undoubtedly increase due to growing demand.
Under current circumstances, finding money for affordable housing will only get more difficult. There is no single source of funding for affordable housing that assures the county and its 34 cities that if they need money for housing, it will be there. Funding from both Proposition 46 and Proposition 1C is based primarily on competition in which the “winner” gets money and the “loser” doesn’t. Due to this selection process, OC received little funding from Proposition 46 and it remains to be seen how much money will come here from Proposition 1C.
A permanent source of funding similar to Florida’s program would go a long way toward bolstering affordable workforce housing by assuring the county and cities that if they take the time and effort to establish substantive housing programs, funding will be available for implementation. Not only would this give local governments a sense of certainty that their hard work would see light of day, but it would also bolster the confidence of affordable housing developers that financing will be available to assist them with their projects if needed.
Making the Case
While California has a long list of priorities that require ongoing funding, housing must be towards the top of the list. An adequate supply of quality, affordable housing can solve many of our state’s problems: more housing near employment centers could reduce freeway congestion and its affect on global warming; good housing creates good neighborhoods that can result in improved socio-economic conditions and less crime; better housing at all economic levels leads to better health, education and welfare for residents and especially children; and quality affordable housing in urban areas hems in suburban sprawl and promotes urban development and downtown economies.
Lynn Jacobs, director of the Department of Housing and Community Development, recently held a hearing in OC to promote the funding program. Now it’s our responsibility,local government, companies, housing advocates, financial institutions,to carry the message to start building awareness and support here.
Jacobs plans to have a final draft for review by the governor’s office by Sept. 30. The successful enactment of a permanent financing program whatever form it takes is key to the future economic, environmental and social well-being of our state and its diverse population.
Villegas is chairman of the board of governors of the Orange County Housing Trust.
