ABCs of Affordable Housing Development

Josh Mukhopadhyay

Background:

By new we’ve had two group discussion sessions focused on topic development. Several groups mentioned the need to make sure the DAP has a more concrete affordable housing generation component, either explicitly or as tied into a related topic like the homelessness/public safety/civil liberties morass. So here is a quick primer on affordable housing development and finance. I’ll focus on the unique aspects of the issue, ignoring blanket provisions like CEQA. I should note that even general environmental statues make certain nods to affordable housing; CEQA for instance has a (narrowly tailored) infill housing exemption into which low-income projects can be made to fit.

Summary:

California cities are required to periodically adopt general plans to lay out land use development guidelines. The general plan must include several elements, including a housing element (HE). The HE requirement is designed to ensure that a jurisdiction is working to meet its ‘fair share’ of current and projected regional housing need, with particular attention to housing for moderate, low, and very low income persons. Though rarely enforced, there is the potential for stiff penalties should a city’s HE be inadequate. Their entire general plan may be declared deemed inadequate and the city would in that case lose its ability to make land use decisions, essentially causing all development to stop.

Berkeley’s HE was last updated in 2003 and as of 2006 the city was considered to be in compliance by the State Department of Housing and Community Development (HCD). A compliant HE is one that has followed all the statutory requirements for measuring need and identifying potential affordable sites – the law is mostly procedural much like CEQA. Whether that construction actually materializes is part of the HE review process, which for Berkeley comes due in 2008 and 2009. Outside interest groups can oversee and influence the review process and also challenge HEs they consider inadequate despite HCD’s endorsement. Cities are given their ‘fair share’ requirements based on population growth projections made by the State Department of Finance (DOF). DOF then hands the projection to the regional governmental body, in our case the Association of Bay Area Governments (ABAG). ABAG then comes up with a Regional Housing Needs Allocation (RHNA) for its constituent cities and unincorporated county areas. For Berkeley the RHNA is as follows: 328 Very Low, 424 Low, 549 Moderate, 1130 Above Moderate, for a total of 2431 new units. The timeline for meeting this requirement is unclear.

When the time comes to actually build affordable housing, ideally on those sites already designated by the municipality’s general plan HE, federal, state, and local financing levers must be pulled. There are nine main types of funding available for affordable housing:

(1) Fee Waivers

(2) Housing Trusts

(3) Land Donation/Landbanking

(4) Local Tax Revenues

(5) Mortgage Credit Certificates

(6) Municipal Bonds

(7) Private Financing

(8) Redevelopment Financing

(9) Low-Income Housing Tax Credits

If we choose to further pursue this topic for our class report, there are plenty of development plans freely available from various non-profit developers.

Sources:

Blueprint 2001, Housing Element Ideas and Solutions for a Sustainable and Affordable Future, Association of Bay Area Governments (2001).

Revised Technical Documentation for Regional Housing Needs Allocation Method, Association of Bay Area Governments (Aug. 2007), available at http://www.abag.ca.gov/planning/housingneeds/pdfs/RHNA_Allocations_and_Technical_Document.pdf.

State of Housing Elements in California, California Department of Housing and Community Development (2006), available at http://www.hcd.ca.gov/hpd/hrc/plan/he/2006hestatus.pdf.