San Diego homes / Photo by Sam Hodgson
California Democrats and affordable-housing advocates are in panic mode over House Republicans’ tax reform bill.
The current version would end separate bond and tax credit programs that helped fund nearly 20,000 affordable units for homeless people, seniors and low-income families statewide last year.
In California, the state has both 9 percent and 4 percent tax credits to allocate through the Low-Income Housing Tax Credit Program. A Voice of San Diego analysis found that the 4 percent credits have helped finance more than 20,000 units in San Diego County over the last two decades.
The program allows low-income housing projects to apply for tax credits and look for investors to buy them. Investors, usually banks, then bid for those credits, thus investing in the affordable housing developments and helping to finance them.
State Treasurer John Chiang, Assemblywoman Lorena Gonzalez Fletcher and many advocates fear the proposal ending the 4 percent tax credit would be a devastating blow to recently passed state measures meant to address California’s housing crisis.
Measures including a $4 billion state housing bond, a law meant to help house thousandsof Californians with serious mental illnesses and San Diego Sen. Toni Atkins’ hard-fought legislation to bankroll housing with a new real estate document fee all count on the tax credit’s existence.
House Republicans’ tax proposal would dash those plans.
The California Housing Finance Agency projects the number of units produced by the state bond alone could be more than halved if the tax bill passes – from a projected 50,000 new affordable units to as few as 15,000.
And Chiang estimated Thursday that California could produce 300,000 fewer affordable housing units over the next decade than initially projected if the bill passes.
Gonzalez Fletcher acknowledged state lawmakers have far more work to do to address the state’s housing crisis but said the tax proposal could cripple efforts already in play.
“It’s devastating to think that all of that political heavy lifting could be for nothing and that we’d be back to square one on how do we inject necessary resources into this issue,” Gonzalez Fletcher said.
Countless homeless-serving nonprofits have also factored the tax credit into their plans for projects meant to house the homeless.
Father Joe’s Villages, San Diego’s largest homeless serving nonprofit, has said its $531 million plan to produce 2,000 new units counts on the tax credit.
“This isn’t just some complicated tax idea that they don’t understand works,” Chiang said after a press conference in San Diego Thursday. “No, this is real. This has local community implications, real-life implications.”
– Lisa Halverstadt
