California Battles To Preserve Affordable Housing With Friendly Incentives
Preserving existing affordable housing stock has been a pressing issue in the nation — and this is no different in California.
Overall, the US. faces an estimated multi-million-unit housing shortfall and new development is constrained by rising construction costs, labor shortages and regulatory hurdles. While finding ways to accelerate development is at the forefront of many concerns in the housing sector, preserving existing affordable communities has become a critical public policy priority and an attractive long-term investment opportunity.
"To say that California has 'done a good job' at preserving its affordable housing is difficult simply because the demand for affordable housing is so deep that it is challenging for the state or local governments to do enough to meet that demand," Russ Ginise, executive managing director and portfolio manager for affordable housing at LaSalle, told GlobeSt.com.
To satisfy the overwhelming demand for affordable or attainable quality housing and the high cost of doing so requires an "all of the above" approach, according to Ginise.
"This includes building substantially more housing, at lower costs, as well as preserving, maintaining, and periodically refreshing the state's existing affordable housing stock," he said.
"Many officials and agencies in California have been collaborative and creative in working to preserve affordable housing."
Beneficially, California has some effective programs and incentives that support the preservation and/or enhancement of existing affordable housing properties.
This includes California's Welfare Tax Exemption, which provides a useful and important tool to lessen the burden of local property taxes for eligible owners of affordable housing properties and to extend the low price point of many properties beyond the initial tax credit compliance period, Ginise said.
The California Department of Housing and Community Development (HCD) offers attractive, low-cost financing options to support the preservation of affordable properties, as well as a notice to qualified entities of potential opportunities to purchase at-risk properties nearing the end of their affordability restrictions.
Similarly, local governments in the Golden State offer collaboration and some exclusive financial tools or incentives to those seeking to preserve existing affordable housing.
Source: GlobeSt/ALM