CA must act fast on Trump’s affordable housing silver lining

Capitol Weekly welcomes Opinions on California public policy or politics. Click here for more information about submitting an Op-Ed.

OPINION – There is no shortage of things for Californians to be concerned about in the federal reconciliation legislation passed by Congress this summer. The bill included some of the largest cuts to the safety net in history—and will result in millions of Californians losing their healthcare and critical aid to keep food on the table.

Tucked away in this mammoth legislation, however, is a small silver lining: A historic boost to federal housing tax credits that can help double California’s affordable housing production—and offset some of the pain this legislation will cause.

First, state leaders must act, by passing one of the $10 billion housing bond bills now in the state Senate so voters can approve the funding needed to leverage all of these new federal resources.

With rising rents continuing to outpace wages, Californians have made it clear that the cost of living—and the lack of affordable housing in particular—needs to be at the very top of the state’s agenda. There are more than 40,000 shovel-ready affordable housing units across the state ready to move into construction, but they need a reliable source of funding before they can be given the greenlight.

The federal reconciliation bill could help bridge this gap, through a series of changes to the Low Income Housing Tax Credit program that will widen the pool of credits available to housing providers, while reducing financing bottlenecks that slow affordable production. These changes will make roughly $4 billion in additional tax credits available in California—enough to produce more than 200,000 affordable homes over the next decade, on top of the 20,000 homes per year being built today.

Here’s the catch, though: These resources can only be put to use if there are enough state and local funds available to pair with them.

Facing a downturn in state revenues, the Governor and Legislature did what they could for housing in this year’s budget, allocating funding to the state’s housing tax credit and directing $120 million to the Multifamily Housing Program. Over the past few years, state policymakers have cleared a regulatory path for housing on an unprecedented scale, giving affordable housing providers across California more certainty about the cost and timeline of their projects than they’ve had in decades.

This won’t be enough, however, to leverage all of the new federal credits. The best, and only, way to do that is by passing a housing bond—establishing a stable, ongoing source of funding that will be available over the span of multi-year projects. After resources from the 2018 state housing bond expired last year, two bond bills were introduced this session: AB 736 (Wicks) and SB 417 (Cabaldon). They share the same name and the same goal: Authorizing a $10 billion bond that would go before voters on the 2026 ballot.

These funds would support a range of successful programs, including $5 billion for the Multifamily Housing Program to build affordable homes for lower-income families, along with new resources to expand homeownership and reduce homelessness. The proposals would produce more than 40,000 affordable homes and preserve another 5,000 more. The Governor endorsed these ideas in May, saying “we need to support a bond to address issues of housing,” while suggesting adding money for infrastructure as well.

Since then, though, there has been no movement. Even after federal tax credit changes were approved in July, the bills spent the summer in the Senate Rules committee, without a vote or any public discussion, while they await a decision from leadership about their future.

We can’t wait much longer. With the end of session only weeks away, the Senate needs to act now to put a bond on the 2026 ballot, to send a signal to voters that the state is serious about solving the housing crisis—and to take advantage of a rare opportunity to build more of the affordable homes Californians need.

Ray Pearl is Executive Director of the California Housing Consortium. Chione Flegal is Executive Director of Housing California.