Over the past RHNA cycle, State and Federal funds have been limited. Funding opportunities have expanded at the State level and there are also possibilities at the Federal level as well, especially related to pending legislation that could support infrastructure needs.
At the Federal level, Community Development Block Grants (CDBG) and Home Investment Partnerships Program (HOME) funds have been the mainstay for funding affordable housing projects. Both sources are allocated on a formula basis with the majority going to large cities and consortia. The State also gets a share and distributes these funds to smaller communities. Additionally, HUD funds the Housing Choice Voucher Program, which assists low-income households with rental subsidies in the private sector, primarily through Section 8 certificates and vouchers. Under the Section 8 certificate program, rent subsidies are used to pay owners the difference between what tenants can pay and contract rents.
Because CDBG funds can be used to renovate housing; construct or improve public facilities, such as water, sewer, streets, and neighborhood centers; purchase real property, and; assist private businesses in economic development activities, the amount allocated to affordable housing is based on often-competing community needs. HUD also provides homeless assistance through local communities and faith-based and other nonprofit organizations.
State funding options are improving, and recently passed legislation (AB 434) will focus on streamlining HCD’s rental housing programs to align eligibility criteria, scoring and fund releases, allowing for a coordinated and concurrent single application and award process. Homeless funding and resources have also been expanded. Additionally, many of the funds target populations (e.g., farmworkers, veterans, homeless, etc.) or have specific uses (infill infrastructure, transit-oriented development, etc.).
Finally, the Building Homes and Jobs Trust Fund (SB 2, 2017) established the Permanent Local Housing Allocation (PLHA) to provide ongoing funding for affordable housing within communities. There are two types of assistance under PLHA:
- Formula grants to entitlement and non-entitlement jurisdictions based on the formula prescribed under federal law for the Community Development Block Grant.
- Competitive grants to non-entitlement jurisdictions. Funding amounts will vary based on annual revenues to the Building Homes and Jobs Trust Fund.
Relevance to Housing in the San Joaquin Valley
Funding is key to affordable housing and addressing homelessness. While there are multiple opportunities to gain funding, the capacity and expertise required to be successful remains challenging. On a positive note, San Joaquin Valley communities were successful in securing 37 percent of Permanent Local Housing Allocation in the latest round of funding. While the majority went to a larger jurisdiction, four smaller jurisdictions were also successful in accessing funds.
Relevant State Law
AB 434 Streamlined Multifamily Housing Application Implementation.
SB 2 Building Homes and Jobs Act.
Survey Results
Survey respondents identified “Lack of funding” (56.25 percent) followed by “Inadequate infrastructure” and “Lack of affordable rental housing” (37.5 percent each) as the three most critical housing issues facing their jurisdiction. Homelessness ranked fourth with 31.25 percent. Stakeholders also identified a variety of funding concerns and observations, including:
Increase public funding. There needs to be a significant increase in public funds available for constructing affordable housing. Subsidize prevailing wage requirements to bring down project costs (discussed in a subsequent section).
Chaotic State funding system. Respondents cited no uniform State application process as the top impediment. There are currently too many agencies with differing missions and focus. The application process is too cumbersome, and agencies often change rules and guidelines from year to year. HCD and HUD’s application processes were cited as being particularly difficult.
Complex funding systems. Respondents believe cities and counties [and the State] often don’t understand low-income tax credit programs and that funding cycles don’t align appropriately.
Funding increasingly tied to increased density. Many State funding programs prioritize density thresholds and rolling back greenfield development. Because higher-density infill housing can be more expensive to build, local jurisdictions must provide incentives for higher-density development.
Prioritize funding for infill sites: Respondents recommending finding ways to incentivize infill plans and programs. One example cited was Fresno COG’s plan that enables developers to request funding for infrastructure improvements for high-density projects. If a priority infill site has been identified, find ways to encourage development. There should be a focus on transit station area planning around both bus and rail locations, either with conditional funding or incentives for both market-rate and affordable housing. The key is infrastructure planning and funding. Priority infill areas should be regionally identified and ranked for funding opportunities.
Funding set asides. When housing funding is population based, sometimes small jurisdictions with the greatest need get short-changed, which leads to questions of equality versus equity. If an area is historically disadvantaged, more funding and resources are needed. Geographic set-asides for smaller jurisdictions or regions are needed.
Location-based funding. Interviewees mentioned difficulty in developing housing projects that qualify for State funding due to less-developed transportation systems in the Valley, as well as different needs for unit size/density in Valley communities compared to denser urban areas with public transportation. This is especially true for rural and smaller jurisdictions. Because of program requirements, Valley jurisdictions often can’t compete with larger, more urban cities and counties.
Funding Resources
HCD information on the grants and loans available for affordable housing and addressing homeless: https://www.hcd.ca.gov/grants-funding/active-funding/index.shtml
California Grants Portal: https://www.grants.ca.gov
Permanent Local Housing Allocation: https://www.hcd.ca.gov/grants-funding/active-funding/plha.shtml
AB 434 streamlines HCD’s rental housing programs to align eligibility criteria, scoring, and fund releases allowing for coordinated and concurrent single application and award process:
https://www.hcd.ca.gov/grants-funding/ab434.shtml
Programs include:
- Multifamily Housing Program (MHP)
- Veteran Housing and Homeless Prevention Program (VHHP)
- Joe Serna Jr. Farmworker Housing Grant Program (Serna)
- Transit-Oriented Development Program (TOD)
- Infill Infrastructure Grant Program (IIG)
- Housing for Healthy California Program (HHC)
Housing and Urban Development (HUD) Grants:
HUD grants on Grants.gov. Search for discretionary HUD grants, eligibility, and category. You will also find a forecast for upcoming HUD grants.
HUD Funding Opportunities Page. HUD’s funding opportunities page covers competitive applicants and existing recipients.
Resources
Office of Governor Gavin Newson, Homeless Funding Package.
Termer Center For Housing Innovation, UC Berkeley, The Complexity of Financing Low-Income Housing Tax Credit Housing.