CA Bill Would Reduce Costs For Affordable Housing Projects

CALIFORNIA — A bill introduced in the California State Senate this week would reduce costs for affordable housing projects by shifting reserve funds from individual projects to a pooled reserve operated by the state.

Senate Bill 948, introduced by state Sen. Josh Becker (D-Menlo Park), would shift responsibility for so-called “transition reserves” — which have not been used much for projects funded by the Department of Housing and Community Development — from individual projects to the state.

Currently, affordable housing developments in the state must hold a portion of total project costs — ranging from a few hundred thousand dollars to several million dollars — in a reserve fund as a backstop in case subsidies expire.

The bill would eliminate such “duplicate reserve requirements” placed on developers who build affordable housing, according to Becker.

“We must do everything in our power to address the affordable housing crisis in our communities, including coming up with creative ways to free up existing resources to build more affordable homes,” Becker said.

The bill, sponsored by the California Housing Partnership and Housing California, is expected to be heard in a Senate policy committee in the spring.

“SB 948 will immediately reduce costs while protecting tenants and ensuring long-term solvency of affordable homes,” said Matt Schwartz, president and CEO of the California Housing Partnership. “The creation of a systemwide insurance policy to replace large reserves previously locked into individual properties will effectively repurpose tens of millions of dollars a year to help create more affordable homes.”

Click here to view the full text of the bill.