Findings and Recommendations
Local Funding Barriers
- Identify any local housing successor agency funds. Follow up on residual receipts that may be due to the agency and evaluate reporting to make sure it is accurate.
- Evaluate potential for an inclusionary housing program. Determine if the program’s focus is to provide units on the ground or for sufficient in-lieu fees to leverage grants or other funding sources. Both are valid approaches and larger jurisdictions may find that a combined approach works best, especially since development of very low-income units does not occur as readily through private development activities.
- Form local trust funds in order to leverage the State’s LHTF program.
- Coordinate and seek funding from local philanthropic foundations.
- Consider partnering with other agencies to seek funding. Identify agencies that are pursuing funding, which are not, and why.
- Evaluate if taxes or bonds have community support.
- Identify what a community can afford to contribute in the way of general funds, capital improvements, staff capacity, services, fee reductions, and dedication of land.
Lack of State and Federal Housing Funding
- Leverage local funds to obtain best returns on State and Federal funding requests. Recognize that multiple funding sources may be necessary to make a project a reality.
- Seek out and support affordable housing partners to enable projects. A key best practice is to work in tandem with affordable housing builders. Understand which grants they are applying for and the milestones and deadlines they face.
- Understand what entitlements/approvals affordable housing partners need from your jurisdiction and facilitate/streamline those approvals.
- Understand what helps affordable housing partners score well for funding.
- Be flexible: If affordable housing partners aren’t successful in the first attempt at a grant or funding source they may need to try for others or try again in the next cycle. Be aware that in certain instances, reapplication requires adjustments in original approvals.
- Partner with other jurisdictions on projects of mutual interest (e.g., a city/county partnership to support farmworker or homeless housing project).
Market and Feasibility Implications for Affordable and Higher-Density Market Rate Housing
- Higher-density affordable and market-rate developments are generally considered feasible in the San Joaquin Valley but hindered by several limiting factors that are likely to change over time. In the interim, local jurisdictions can take steps to assist these developments by zoning to accommodate higher densities, streamlining permitting processes, prioritizing and supporting development in areas with existing infrastructure (infill development), and by planning for and constructing infrastructure.
- Higher-density development will likely be more feasible in urban settings (larger- and medium-sized cities) but can be feasible as mixed-use projects and/or near smaller-town centers.
- Higher densities within historically lower-density communities will take both time and a concerted effort. Residents need time to adjust to this new paradigm and to understand why things can’t continue as they have in the past.
- More rural communities may be best served by increasing densities through low-barrier efforts like reducing lot sizes; focusing and directing increased densities to areas where existing residents can also experience the benefits (e.g., a mixed-use project that supports goals of creating a more vibrant downtown); or by accommodating higher densities as part of larger planned developments where they could be incorporated with reduced opposition.
- Local jurisdictions can contribute to affordable and higher-density housing development feasibility by:
- Reducing project review times or at minimum, providing more certainty as to project review schedules.
- Streamli ning project approvals for preferred housing types, including more “by-right” housing and objective design standards
- Partnering with affordable housing builders to assist approvals and support needs associated with grant funding cycles.
- Reducing application and permit fees for preferred housing types
- Directing growth to areas with infrastructure capacity or constructing needed infrastructure
- Avoiding premature annexation or upzoning to reduce increased land values and market speculation.
- Promoting higher densities by reducing or eliminating minimum lot size standards and increasing allowable density and housing types.
- Recognize that prevailing wages are likely to remain a factor for affordable housing projects and plan for increased subsidies accordingly.
- In order to assure sufficient workforce, consider a Valleywide effort to develop the construction trade workforce, possibly through support from State and/or regional workforce development boards, trade apprenticeship programs, local colleges, and trade schools.
Capacity to Deliver Housing
- Consider a pay-for-service model (e.g., time, services, materials) in lieu of flat fees for entitlement processing to support staffing needs. Alternatively, consider updating flat fees to reflect staffing costs for various application types on a regular basis.
- Consider a general plan/zoning maintenance fee (or enhanced maintenance fee) to cover staffing costs associated with updating general plans and zoning ordinances. This is particularly important regarding requirements associated with housing elements.
- Consider a technology fee to upgrade permit tracking software and speed up collection of data needed for housing element reporting and tracking.
- Consider using outside or temporary staff to supplement permanent staff during peak activity.
- Consider staff sharing between smaller jurisdictions.
- Consider interjurisdictional (countywide) housing working groups for gathering information, best practices, examples, and other resources.
- Use grant funds (e.g., LEAP, REAP) for updates to codes, policies, and permitting process streamlining where available.
- Prioritize creation of objective design and development standards and by-right zoning to streamline entitlement reviews.
- Consider developer partnerships (or requirements) including, but not limited to:
- Maintaining sufficient land zoned to meet affordability requirements in the housing element (no net loss) should the development proposal not meet affordability expectations.
- Conserving or replacing any naturally occurring affordable housing on the development site.
- Dedicating a portion of the land for future affordable housing development, perhaps consolidating remaining overall site density onto remaining dedicated land.
- Consider inclusionary programs that have been evaluated for market feasibility.
Mello-Roos Community Facilities District (CFD)
- Determine if a Mello-Roos CFD or other infrastructure financing tool(s) are best suited to address the specific needs of the developing area.
- When adopting CFD goals and policies (required by State law) evaluate if they will further broader housing goals and objectives given that inequities may be created between existing (non CFD) communities and proposed new CFD communities, especially where service and maintenance are components of the program.
Tax Increment Financing
- When considering the formation of an EIFD, engage professional legal and financial advisors, evaluate the feasibility, and conduct outreach to build support prior to initiating the formal process of forming a district (See “How to Create an EIFD” in the Available Resources section, which provides an overview).
Community Revitalization and Investment Authority (CRIA)
- Conduct a feasibility study when considering CRIA formation to ensure eligibility of the Revitalization Area and evaluate potential tax increment revenue.
- Consider allowing the participation of other taxing agencies to increase tax increment funding available to the CRIA. The CRIA’s potential to boost long-term property tax revenues may be an effective motivator for participation of other agencies.
Housing Trust Funds
- Consider forming housing trust funds to provide a local funding source for affordable housing projects.
- Consider forming multijurisdictional or regional Housing Trust funds to expand funding sources and trust fund recipients.
- Provide assistance with forming Housing Trust funds to smaller cities and counties.
- Establish a consistent and reliable source of revenue for the housing trust fund program.
- Consider timing releases of RFPs and NOFAs in a manner that allows developers to apply for other funds.
Housing Impact and Linkage Fees
- In considering whether to pursue implementation of a commercial linkage fee or housing impact fee, evaluate the fees and exactions as a whole to ensure the cumulative impact will not make development financially infeasible. In addition to the nexus study required by the Mitigation Fee Act, a feasibility study should be undertaken to analyze the financial impact on development.
- Design the fee structure to balance other goals and priorities. For example, projects within a defined area where the jurisdiction wants to incentivize commercial development may be exempted or pay a reduced linkage fee amount. Similarly, the jurisdiction may exempt certain housing types, such as high-density housing, from a housing impact fee in order to encourage that type of development.
- Consider how implementation of new commercial linkage or housing impact fees fit into the overall affordable housing goals and programs. A new commercial linkage fee may be complementary to an inclusionary housing program with an in-lieu fee option, both of which can feed into a housing trust fund. However, in jurisdictions where an inclusionary zoning program is infeasible, a housing impact fee justified by a thorough nexus study may provide a better alternative.
- Negotiate DAs and CBAs early in the land development/annexation process.
- Be aware that development agreements are voluntary and, therefore, must be mutually beneficial to be successful.
- Carefully balance community benefits/terms with overall project feasibility.
- Evaluate the use of revenue bonds or a pay-as-you-go approach to determine which is best suited to resolving infrastructure needs for future housing development.
- Evaluate the use of housing bonds to support qualifying affordable housing projects, recognizing that some bonding sources have caps and others may be competitive.
- If feasible, approve affordable housing projects that may rely on bonds as soon as possible considering the potential for expanded bonding capacity within the state.
- Check State and Federal websites to find available grants and any changes that may be made to the requirements for funding. As with the AHSC program, some programs may change their requirements and funding to make it easier for rural communities to qualify. Some programs may also offer technical assistance with the application process to help jurisdictions better understand regulations and navigate through the application process.
- Partner with various local organizations which can assist smaller communities apply and compete for grants. Some grants such as the TCC grant may be awarded not only to local governments but also non-profit organizations, joint power authorities, community development corporations, and faith-based organizations that form a Collaborative Stakeholder Structure. For example, local leaders, residents, and business owners in Fresno came together to create the Transformative Climate Communities Collaborative, which helped fund various projects in the city of Fresno. The projects included 56 affordable homes, 2,500 trees, and new electric vehicle and bicycle-sharing programs.
- Keep in mind the growing need to improve internet and telephone infrastructure, particularly in rural communities. Local jurisdictions may pursue public-private partnerships through the NTIA Promote Broadband Expansion Grant Program.