Redwood City is moving toward allowing the development of 375 affordable housing units downtown and the council Monday night got a lesson on how to possibly fund their construction.
The Downtown Precise Plan, adopted in 2011, allows for the construction of 2,500 housing units downtown overall. When adopted, the city’s redevelopment agency was still intact and it was expected that at least 15 percent of the units would be affordable.
But the state dissolved redevelopment agencies later that year, taking away the city’s primary tool of constructing affordable housing.
The affordable component downtown then dropped to a 10 percent requirement or the construction of 250 affordable housing units out of the 2,500 new units allowed under the precise plan.
Back in October, however, then vice mayor Rosanne Foust proposed the precise plan should be amended to require 15 percent of the units be affordable and the council unanimously agreed.
The Planning Commission, however, has recently voted to make the requirement 20 percent which the council will consider some time in May.
Monday night, the council held a study session led by Patrick O’Keefe, former city manager and community development director in Emeryville.
While the council has focused on the regulatory aspect of affordable housing, it had not until Monday night discussed how to fund the construction.
O’Keefe outlined the primary ways affordable housing developments are currently financed and discussed a report by the non-partisan California Legislative Analyst’s Office on helping individuals with low incomes to afford housing.
He discussed public financing programs such as tax credits and accessing cap-and-trade funds to develop affordable housing.
O’Keefe explained that the federal Low Income Housing Tax Credit Program allows developments financed with the proceeds of tax-exempt bonds to also apply for federal tax credits.
The credits are then sold to corporate or individual investors. The investors benefit from the tax credit by purchasing an ownership interest in one or more tax-credit housing projects.
It allows investors to claim a dollar-for-dollar credit against their tax liability over a 10-year period.
The state’s Affordable Housing and Sustainable Communities Program is funded from the Greenhouse Gas Reduction Fund, an account established to receive cap-and-trade auction proceeds.
The program invests in projects that reduce greenhouse gas emissions by supporting more compact, infill development patterns, encouraging active transportation and transit usage and protecting agricultural land from sprawl development.
The program specifically supports transit-oriented development and loans or gives grants of up to $20 million for a transit-oriented development if the project is within a half mile of a transit stop.
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In the packet to council for Monday night’s meeting, O’Keefe also discusses multi-family bonds as a means to build affordable housing.
The city can issue tax-exempt housing revenue bonds to assist developers of multi-family rental housing units to acquire land and construct new units or purchase and rehabilitate existing units.
The tax-exempt bonds lower the interest rate paid by developers, who in turn produce market rate and affordable housing units for low- and very low-income households.
The Legislative Analyst’s Office report estimates that extending housing assistance to low-income Californians who do not currently receive it would be an annual commitment of tens of billions of dollars.
The report also details how a scarcity of housing undermines Section 8 housing vouchers. In competitive housing markets, landlords are often reluctant to rent to housing voucher recipients, according to the LAO report.
The LAO report also explains how a shortage of housing creates problems for rent control policies since they do not increase the housing supply and likely discourage new construction.
“Since the elimination of redevelopment, the affordable housing funding process is more competitive and complicated than ever and cities must be extremely thoughtful when aligning their regulatory policies with financing options that currently exist related to affordable housing,” Aknin wrote in the report council heard Monday night.
Two public speakers urged the council to act swiftly when it comes to addressing the region’s housing crisis.
Affordable housing advocate Diana Reddy said the city was perhaps six decades behind in building the affordable housing needed to keep the working poor from being displaced.
“We have some catching up to do,” said Redwood City resident Kris Johnson.
According to the city’s Housing Element and its Regional Fair Share Housing Allocation, it needs to build 2,789 units of housing to meet the region’s needs.
The city needs to build 706 units of very low-income housing but has only built 12 units so far. It needs to build another 931 units for low- and- moderate-income households but has only built 13 units. When it comes to building market-rate housing, however, the city has built more units than it needs, according to the Housing Element.
The city’s housing need allocation for above-moderate units is 1,152 but it has built 1,322 of those units, according to the Housing Element.
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