Monday, October 25, 2021

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

California’s cities and counties will soon be able to count middle-income apartment conversions for their affordable housing quotas, under a bill that Gov. Gavin Newsom signed Tuesday, Sept. 28.

The “workforce housing” law was one of 28 housing bills that were signed on Tuesday, the governor’s office said.

The measure, Assembly Bill 787, is expected to encourage local governments to adopt an innovative “missing middle” program that converts market-rate complexes into middle-income housing in exchange for a property tax break.

“Many communities in California have become unbearable for ordinary people,” Assembly member Jesse Gabriel, D-Woodland Hills, the bill’s author, said in a statement. “This law will help ensure that people working – including nurses, teachers, firefighters and grocery workers who have helped us through the pandemic – can afford to live in the communities where they work. and serve.”

While most affordable housing programs are aimed at poor and extremely poor households, middle-income workers such as office workers, restaurant, theme park and retail workers are often forced to commute long distances because they are closer to their place of work. Can’t afford accommodation. .

Under the newly developed program, a quasi-public entity called a Joint Powers Authority issues tax-free bonds to purchase apartment buildings, then limits future tenants to middle- and low-income residents and He charges rent on the basis of his income.

In most programs, two-thirds of the units are limited to tenants who make up 80-120% of the median income, or $94,600 to $96,000 per year for a family of four in Los Angeles County and $107,550 to $107,550 for a four-person 128,050 per annum. Home in Orange County. The remaining third is reserved for residents who earn less than 80% of the median income.

On average, the rent amount is 35% of the tenant’s gross income.

Buildings are exempt from paying all property taxes for the life of the bond, making it possible for operators to reduce rents. The city or county becomes the owner of the building once the debt is repaid.

The event has been wildly popular in some cities in the Bay Area and in Los Angeles and Orange counties. So far, 30 relatively new apartment buildings have been converted into workforce housing. Twenty-six of those conversions took place during the last 10 months.

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Affordable housing advocates, city housing staff and at least one consultant have criticized the program as risky, questioning whether the rent will cover management fees and maintenance costs and whether the city will run-down at the end of the program. will acquire buildings. Some critics also questioned whether the rent cut is enough to justify the cost to taxpayers.

But allowing cities to claim conversions in their annual housing reports to the state can be a strong incentive to adopt such programs. Faced with housing shortage, homelessness and rising housing costs, the state housing authorities significantly increased the housing quota for the coming eight-year cycle.

Under the half-century-old Regional Housing Needs Assessment Program, or RHNA, local jurisdictions are required to plan for adequate housing at all income levels. RHNA quotas for the six-county Southern California area tripled to 1.3 million new homes. About 224,000 of them should be affordable for middle-income families.

Local leaders have opposed the new RHNA quota, and in June, a coalition of Orange County cities sued the state over its state-mandated housing goals.

Under current law, only conversion to low- and very low-income housing can be counted against a community’s RHNA quota.

AB 787 allows middle-income conversions to be calculated for up to 25% of the middle-income housing quota. The measure takes effect in January.

Ben Metcalf, former state housing director and currently managing director of UC Berkeley, said, “Finding ways to convert existing multi-family properties that are affordable to low- and middle-income families for the long term is critical. ” Turner Center for Housing Innovation. “I am happy to see Assembly Bill 787 signed into law.”

Caesar Covarrubias, executive director of the Kennedy Commission, an Orange County affordable housing advocate, questioned whether workforce housing programs are sufficient to provide affordable rents for most families.

“In general, I think these are good programs,” Kovrubias said. “But I don’t think it addresses the most important need, which is the low and very low income group.”

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