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Financing Challenges in the Post Redevelopment Era

May 17, 2012 | Charlie Castro

The California Supreme Court’s decision to eliminate Redevelopment Agencies on February 1, 2012 has had a profound impact on affordable housing. Redevelopment Agencies were required by law to allocate 20% of their funds on affordable housing and the requirement for some Agencies was as high as 50% (San Francisco). The Redevelopment funding source created nearly $1 billion annually to affordable housing production in 400 jurisdictions throughout the State.

The lack of Redevelopment funding has created numerous challenges for affordable housing developers and without this funding source far fewer affordable housing units will be delivered. The promising news is that various movements and initiatives are in place or being created at the State and local levels to replace lost Redevelopment affordable housing funding. For example, in San Francisco, the Mayor’s office created a Housing Trust Fund Work Group (HTFWG) to informally discuss protected-revenue streams to fund affordable housing. The intent of the discussions is to create ballot measures that specifically fund affordable housing. No formal ballot measures have been created through the HTFWG, although a new bill has been introduced, SB 1220 or the Housing Opportunity and Market Stabilization (HOMeS) Act, which will establish a permanent source of funding specifically dedicated for affordable housing. SB 1220 was introduced by Senior Mark DeSaulnier and is estimated to create $500 million annually to support the development and rehabilitation of affordable housing in the State by imposing a fee on property transaction documents such as grant deeds or notices of default. SB 1220 has already overcome the first two hurdles, passing out of the Senate Transportation and Housing Committee, and the Senate Governance and Finance Committee. It is expected next to go before the Senate Appropriations Committee by the end of May 2012, to be able to reach the Senate floor for a full vote, and passage.

All advocates of affordable housing remain hopeful in the passage of SB 1220 and the creation of other funding sources that will help alleviate the State’s affordable housing shortage.