/Money From 2017 Law to Fund Affordable Housing Is Rolling in But Slow to Roll Out

Money From 2017 Law to Fund Affordable Housing Is Rolling in But Slow to Roll Out

Senate President Pro Tem Toni Atkins speaks at a San Diego County Democratic Party event on election night. / Photo by Adriana Heldiz

Hundreds of millions of dollars are flowing to Sacramento for affordable housing efforts annually following the passage of a landmark law more than two years ago written by Senate President Pro Tem Toni Atkins. But the impact of those dollars remains to be seen as they slowly trickle out of the capital.

For the last two years, county officials up and down the state have charged a $75 filing fee on certain real estate transaction documents, with the goal of raising money for affordable housing statewide. Programs to be funded include rental assistance programs, homeless navigation centers and the construction of new permanent and transitional housing.

The fee was estimated to raise $200 million to $300 million annually, and created a new ongoing source of affordable housing revenue following the loss of redevelopment agencies and the exhaustion of state housing bonds, according to a Senate floor analysis from 2017.

The money aims to assist the homeless or those at risk of being homeless by helping to house them.

“SB 2 aims at both prongs of the crisis – it created a permanent, reliable source of funding for affordable housing, while also providing money for local communities to develop plans and programs to help Californians experiencing homelessness,” Atkins said in a statement.

Under the law, known as SB 2, fees gathered in the first year would be split 50-50 between homeless housing aid and local governments that would use the money to update planning documents and zoning to streamline housing production.

Beginning Jan. 1, 2019, the money would be divvied up differently, with the bulk going to local governments via grants for affordable housing programs and housing projects, including those for low- to moderate-income families. Local governments might also obtain SB 2 funds to provide down payment assistance, housing accessibility modifications or to acquire foreclosed or vacant homes. The money may also be used to help pay for navigation centers serving the homeless, or short- or long-term rental assistance, among other things.

Also beginning in year two, another slice – 15 percent – gets sent to the California Housing Finance Agency for use on mixed-income affordable housing projects.

Chart courtesy of the California Department of Housing and Community Development

So, what has SB 2 delivered so far?

Since the fee began in 2018, more than $590.5 million was collected by counties and submitted to the state, according to officials with the state’s Department of Housing and Community Development, which oversees the funds. That works out to an average of $295 million annually.

For its part, San Diego County sent $24 million in SB 2 fees to the state in 2018 and $30 million in 2019, said Jordan Marks, a special assistant in the county assessor-recorder-clerk’s office, or an average of about $27 million annually.

Sources: San Diego County and state department of Housing and Community Development

But what goes up to Sacramento doesn’t always come back – at least not quickly.

In fact, so far, fewer than 10 SB 2 grants have been awarded in San Diego County, though several other applications are under review by state officials.

Statewide, just $35 million has been disbursed, according to officials in the California Department of Housing and Community Development. Millions more have been awarded but not yet paid out.

 

A $3.84 million grant was set aside for Valencia Pointe, a 96-unit mixed-income affordable housing project in San Diego at the site of a Baptist church on Division Street in southeastern San Diego. A preliminary award was made by the California Housing Finance Agency, but the project, estimated to cost a total of $49 million, will only see the SB 2 grant funds if various other criteria are met.

A separate $2.5 million SB 2 grant was awarded to the county’s Health and Human Services Agency last year to provide things like rental assistance, other housing subsidies or housing relocation services and emergency housing support for the homeless.

Atkins called that award gratifying in a January 2019 release, and said the money is sorely needed to combat the region’s homelessness.

“Before this, SB 2 was merely a concept, an idea – now it’s part of a solution for many vulnerable people in San Diego and throughout the state,” she said.

Several local governments have also obtained SB 2’s planning money to help them rezone areas and streamline their processes to provide more housing, to the tune of $2.35 million so far, although it’s not clear when the money will arrive at each agency.

The largest chunk, $625,000, was awarded to the city of San Diego. Meanwhile, National City, Carlsbad and Escondido all received $310,000 each, while Del Mar, Santee and Imperial Beach received $160,000, according to an online SB 2 planning funds map. The amounts are tied to the size of the population in those cities.

San Diego city officials plan to spend the money updating the Mira Mesa Community Plan, the Hillcrest Focused Community Plan and the University Community Plan, said city spokeswoman Tara Grimes.

“The grant money will be used for technical studies and analysis.  It will not be used to pay for staff time,” she said.

Extra focus will be paid to adding housing and jobs along transit corridors.

The plans will guide a vision for future development near transit that supports pedestrian and bicycle mobility as well as the incorporation of urban greens, plazas and linear parks,” Grimes wrote in an email. “We do not receive the money until after we spend it and submit for reimbursement.”

“We have already implemented many streamlining measures to help address the housing crisis,” said Mike Hansen, the city of San Diego’s planning director, in a statement. “This grant money will allow us to continue building upon our recent successes and bring more affordable housing to the market for San Diegans.”

Applications from San Diego County and Chula Vista for $625,000 each are still under review by state officials, according to the state website. Funding applications for smaller planning amounts from the cities of Oceanside, Vista, San Marcos, Solana Beach, El Cajon, La Mesa and Lemon Grove are also under review.

If the applications currently under review are ultimately funded, local governments across San Diego County will see nearly $5.5 million from SB 2’s year-one planning money.

State officials said a total of $114 million in SB 2 planning grants will eventually go to 491 local governments statewide, which averages out to about $232,000 per city or county.

A staff report given to the San Diego County Board of Supervisors in October said the $625,000 in SB 2 planning funds sought will be used to bolster affordable opportunities for home rentals and purchases for middle-income families, calculated based on the region’s median income of $86,300. The money would also be used to create new land use policies “that link approvals for market-rate housing to the construction of affordable homes for low and moderate-income households.”

“For the planning grants, we have worked with each jurisdiction to learn their needs and award them based off those needs,” said Alicia Murillo, spokeswoman with the state’s department of housing and community development, in an email. Murillo said the pace state officials have doled out SB 2 funds in the beginning years is on track with internal schedules.

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As the state moves to allocate the second year of funds collected under SB 2, totaling $316 million, affordable housing advocates are hoping local governments use the money for more brick-and-mortar projects than temporary shelters, even though both are permitted uses of the money.

“It would be really disappointing to see it go toward bridge shelters, at least all of it,” said Laura Nunn, policy director for the San Diego Housing Federation. “The idea of SB 2 was it should be going toward building housing.”

Nunn said the legislation was “many years in the making,” as advocates worked for a decade to create a reliable source of revenue to build new affordable housing stock. She said some governments are also using SB 2 planning money to analyze accessory dwelling units.

But while SB 2 did create a new revenue for housing, it’s going to provide a small piece of what’s needed, and for small cities, the dollars just won’t go very far. Nunn supports talks about having local governments pool their SB 2 money into a regional housing trust fund.

Nunn said when you look at the $195 million in SB 2 dollars available for housing projects statewide soon, you “divide that between cities and counties and it becomes a smaller and smaller amount … It’s not nothing, but once it gets spread out, it gets very challenging for the jurisdictions to use the money for the purposes of building housing.”

Compared with the latest $900 million housing bond proposed for the city of San Diego alone, “it’s minuscule,” Nunn said.

Stephen Russell, San Diego Housing Federation’s executive director, said the city housing bond proposed “is trying to fill that hole that was left with the loss of redevelopment,” while SB 2 funds “may not be huge, but it’s annual … If we can leverage it, it is going to have an impact. I would consider it small, but potentially mighty,” especially if it is matched with state bond dollars, he said.

Russell said just creating new homes will help, but, “New housing will not reach families in need of affordable housing for a generation.” Only through subsidizing and building affordable housing will low-income people be helped now, he said.

Though the dollars provided by SB 2 annually statewide are small in comparison with the $6 billion in state housing bonds passed in 2018, the fact they are an ongoing source of housing funds is significant and will go further if governments work together, according to advocates with the California Housing Partnership.

“Given the small amount of SB 2 funding that smaller jurisdictions currently receive and the challenges in effectively using these small amounts to create new affordable homes, the partnership is supportive of efforts by jurisdictions to pool their SB 2 resources to increase efficiencies to create and preserve affordable rental homes,” said CEO Matt Schwartz in an email.

In a statement, Atkins acknowledged SB 2, “is just a piece of the equation” needed to solve the state’s housing crisis and said state officials are “making steady progress” implementing SB 2.

“Agencies such as [the Department of Housing and Community Development] are being pulled in a variety of directions at all times to address emergencies. Specifically, HCD was recently called upon to purchase and deploy trailers for homeless individuals and are now assisting in the emergency response efforts related to COVID-19,” Atkins said. “The responsibility and purview of many state agencies is ever-changing but we should always seek to improve the way we do business.”