A new source of funding is helping create affordable housing across California.
Twenty-six developments, which will feature more than 2,000 housing units, are the first to be funded under the state’s Affordable Housing and Sustainable Communities Program. It’s part of the state’s innovative “cap-and-trade” carbon emissions auction program.
The Strategic Growth Council (SGC) recently approved $122 million in grants and loans to the housing proposals plus two transit-friendly infrastructure projects that seek to reduce greenhouse gas emissions.
The first to break ground is the 77-unit West Gateway Place in West Sacramento, which received $2.6 million in cap-and-trade funds. Developers Jamboree Housing and the West Sacramento Housing Development Corp. began construction on the apartments, which will serve families earning 30% to 60% of the area median income, in June.
“The funds were critical,” says Vicky Ramirez, senior project manager at Jamboree. “The $2.6 million represents about 10% of the overall total development cost for the project.”
The apartments will be part of a mixed-use, family-centered development that integrates bicycle and pedestrian paths that will make connecting to the surrounding community much easier without having to drive. The development will feature about 4,000 square feet of retail space, 12,000 square feet of common area, and parking. West Gateway Place is designed to achieve a LEED for Homes Silver rating.
Overall, the program received 147 concept applications, and 56 were invited to complete full applications.
The Tenderloin Neighborhood Development Corp. received funding for two projects in San Francisco, including $10 million for its 103-unit Eddy & Taylor Family Housing Project. It was the single-largest award.
The new funding comes at a critical time for developers, who lost a major source of funding with the elimination of local redevelopment agencies (RDAs) in 2012. The RDAs generated roughly $1 billion each year for affordable housing.
The cap-and-trade program doesn’t fill the hole, but it helps. Under the program, large companies in the state that emit greenhouse gas are given a limit on their emissions. Those that exceed their cap must reduce their emissions or buy allowances to pollute through a state auction. Companies that produce less than their assigned emissions can trade their allowances to other companies. Revenues from the auctions flow to the state to use for various projects that help reduce carbon emissions. State leaders expect to have about $2.2 billion in the current fiscal year, with 20% of that amount going to affordable housing.
Jamboree is reviewing a handful of other projects to determine their eligibility for future cap-and-trade funds, according to Welton Smith, Jamboree’s vice president of housing development. “That will be a critical piece of the capital stack,” he says, noting that the program is very important in the absence of redevelopment funds.
While the Affordable Housing and Sustainable Communities Program is important to affordable housing developers, it is also a key part of the state’s long-term strategy for reducing greenhouse gas emissions, says Randall Winston, SGC acting executive director.
The grants and loans help reduce emissions by supporting more compact, infill development patterns and encouraging the use of public transportation. Seventy-seven percent of this year’s grants benefit disadvantaged communities.
He expects draft guidelines for the next round to be released this fall, with the council approving the new guidelines in the winter. A notice of funding would then be available in early 2016.