New law counts ‘workforce’ apartments as meeting middle-income housing quotas

California cities and counties soon volition beryllium capable to number middle-income flat conversions toward their affordable lodging quotas nether a measure Gov. Gavin Newsom signed Tuesday, Sept. 28.

The “workforce housing” authorities was 1 of 28 lodging bills Newsom signed Tuesday, the governor’s bureau said.

The measure, Assembly Bill 787, is expected to incentivize section governments to follow an innovative “missing middle” program that converts market-rate complexes into middle-income lodging successful speech for spot taxation breaks.

“Too galore communities crossed California person go unaffordable for mean folks,” the bill’s author, Assembly subordinate Jesse Gabriel, D-Woodland Hills, said successful a statement. “This authorities volition assistance to guarantee that moving radical — including the nurses, teachers, firefighters and market workers who’ve helped america done the pandemic — tin spend to unrecorded successful the communities wherever they enactment and serve.”

While the bulk of affordable lodging programs are aimed astatine mediocre and highly mediocre households, middle-income workers similar bureau staff, restaurant, taxable parkland and retail employees often are forced to commute agelong distances due to the fact that they can’t spend lodging person to wherever they work.

Under the recently developed program, a quasi-public entity called a associated powers authorization issues tax-free bonds to bargain flat buildings, past limits aboriginal tenants to middle- and low-income residents and charges rent based connected their income.

In astir programs, two-thirds of the units are constricted to tenants earning 80-120% of the median income, oregon $94,600 to $96,000 a twelvemonth for a household of 4 successful Los Angeles County and $107,550 to $128,050 a twelvemonth for a four-person household successful Orange County. The remaining 3rd is reserved to residents earning little than 80% of the median income.

On average, the rent amounts to 35% of the tenant’s gross income.

The buildings are freed from paying each spot taxes for the beingness of the bonds, making it imaginable for operators to little the rents. The metropolis oregon region ends up owning the gathering erstwhile the indebtedness is paid off.

The programme has been wildly fashionable with immoderate cities successful the Bay Area and successful Los Angeles and Orange counties. So far, 30 comparatively caller flat buildings person been converted into workforce housing. Twenty-six of those conversions occurred during the past 10 months.

Affordable lodging advocates, metropolis lodging unit and astatine slightest 1 advisor person criticized the programme arsenic risky, questioning whether rent volition screen absorption fees and attraction costs and whether cities volition get run-down buildings astatine the extremity of the program. Some critics besides questioned whether rent reductions are capable to warrant the outgo to taxpayers.

But allowing cities to assertion conversions successful their yearly lodging reports to the authorities could beryllium a beardown inducement to follow specified programs. Faced with a lodging shortage, homelessness and rampaging lodging costs, authorities lodging officials greatly accrued lodging quotas for the coming eight-year cycle.

Under the half-century-old Regional Housing Needs Assessment program, oregon RHNA, section jurisdictions are required to program for capable lodging astatine each income levels. The RHNA quota for the six-county Southern California portion tripled to 1.3 cardinal caller homes. Of those, astir 224,000 indispensable beryllium affordable to middle-income households.

Only conversions to low- and precise low-income lodging tin beryllium counted toward a community’s RHNA quota nether existent law.

AB 787 allows middle-income conversions to beryllium counted for up to 25% of moderate-income lodging quotas. The measurement takes effect successful January.

“Finding ways to person existing multifamily properties to alteration semipermanent rents that are affordable to low- and moderate-income households for the semipermanent is critical,” said Ben Metcalf, a erstwhile authorities lodging manager and presently managing manager of UC Berkeley’s Terner Center for Housing Innovation. “I’m gladsome to spot Assembly Bill 787 signed into law.”

Cesar Covarrubias, enforcement manager of the Kennedy Commission, an Orange County affordable lodging advocate, questioned whether workforce lodging programs spell acold capable to supply rents that are affordable to astir families, portion wondering if the programme was utilized to bail retired immoderate flat buildings with precocious vacancy rates.

“In general, I deliberation these are bully programs,” Covarrubias said. “But I don’t deliberation it addresses the astir captious need, which is the low- and precise low-income categories.”