On October 10, California Governor Jerry Brown (D) disappointed affordable housing advocates by vetoing two priority bills that would have expanded the capacity of the state’s low income housing tax credit (LIHTC) program. Assembly Bill 35 (AB 35) and Senate Bill 377 (SB 377) were both rejected by the governor despite overwhelming and bipartisan support in the legislature and a broad coalition of developers, advocates, business leaders and local elected officials. Governor Brown signed 14 other affordable housing policy bills including Assembly Bill 90, which names the California Department of Housing and Community Development as the state agency that will administer the National Housing Trust Fund (NHTF).
The Non-Profit Housing Association of Northern California (NPH) and the California Housing Partnership Corporation (CHPC), both NLIHC State Coalition Partners, collaborated with legislators on the development of the two funding bills and organized advocacy efforts to support their passage through the legislature.
AB 35 was authored by Assembly Speaker Toni Atkins (D-San Diego) and Assembly Member David Chiu (D-San Francisco). The bill proposed to increase the annual state LIHTC amount by $100 million each year for five years. This significant expansion of state commitment was expected to leverage an additional $1 billion in federal tax credit funding. The expansion of California’s tax credit limit from $75 million to $175 million would have aided in the creation of affordable housing for low income and very low income renters. State tax credits supplement the federal LIHTC allocated to California. Only projects that are receiving or have once received federal tax credits are eligible for state tax credits. Income targeting for state tax credits mirrors that of federal LIHTCs. Projects receiving state credits must set aside either 40% of all units for households with income at or below 60% of area median income (AMI), or 20% of all units for households with income at or below 50% of AMI.
CHPC asserted that AB 35 would have attracted a return of $3 for every public dollar spent, led to the creation of 3,000 new homes, and produced approximately 7,000 new jobs. The California Chamber of Commerce named AB35 a “jobs creator bill” and the bill was supported by more than 250 government and non-profit organizations statewide. Support for AB 35 was so robust that it passed unanimously through the State Assembly and with only two votes opposed in the State Senate.
The second funding bill, SB 377, would have changed the state LIHTC program to increase the value of state tax credits by 40% at no additional cost to the state, while increasing the amount of affordable housing that could be financed. Introduced by Senator Jim Beall (D-San Jose), SB 377 would have made the state tax credits more valuable to investors and enabled non-profit developers to sell state credits without requiring the investor to participate in the ownership structure. Governor Brown vetoed this bill despite there being no registered opposition and despite the bill passing unanimously through both houses of the California legislature.
Governor Brown rejected AB 35 and SB 377 because their passage, he said, would have “either created or expanded an existing tax credit,” making it harder to balance an already challenging state budget. Proponents of SB 377 argued that that bill would have required no additional state expenditure.
Assembly Member Chiu joined advocates in speaking out against the vetoes, emphasizing that California has the highest poverty and homelessness rate in the nation and has an estimated 1.5 million residents who lack affordable housing. One city in the state, Los Angeles, recently declared a homelessness state of emergency. There is currently no indication that the legislature will attempt to override Governor Brown’s vetoes.
Governor Brown signed 14 other housing policy bills passed in the Assembly this session. These bills had little or no fiscal impact. To learn about these bills, see information provided by the Southern California Association for Non-Profit Housing (SCANPH), another NLIHC state coalition partner at: http://www.scanph.org/node/4266
Advocates are disappointed in Governor Brown’s vetoes of the two affordable housing funding bills but remain committed to expanding financing tools throughout the state’s low income housing tax credit. They will continue to push for passage of the vetoed legislation in next year’s session. “We are very grateful for the leadership of Speaker Atkins and Assembly Member Chiu for championing affordable housing funding in this session,” said Michael Lane, Policy Director for NPH. “Legislators are hearing from their constituents about the serious affordability crisis we are suffering in our state, and we need Governor Brown to step up and work with the legislature to address it.”
For more information about California’s recent legislative efforts to expand affordable housing through state policy, contact Michael Lane, Policy Director at NPH, at [email protected].