Affordable housing projects in California are in jeopardy of being delayed or halted after key state financing has been put on hold.
Developers were slapped with the news when the obscure Pooled Money Investment Board (PMIB) voted in December to defer all bond expenditures from the Pooled Money Investment Account (PMIA) until the state’s budget deficit is resolved.
Road and school construction projects are also threatened.
For affordable housing developers, the action means possible delays in funding from the state Department of Housing and Community Development (HCD).
HCD officials said in a Dec. 23 memo that they are delaying the release of new notices of funding availability (NOFA) and not issuing new awards until the issue is resolved. The department is continuing to accept and review new applications under existing open NOFAs for several bond-funded programs.
HCD said it does not expect that prior commitments and awards that have been made will be in jeopardy.
California voters approved Proposition 1C, a $2.85 billion housing bond in 2006, which helps fund several key state housing programs, including the multifamily housing and transit-oriented development programs.
While closings in 2008 appeared likely to move forward, closings this year may be more precarious, says Housing California, a statewide affordable housing group, which was assessing the situation.
The PMIA provides loans to bond-funded infrastructures projects and to the state general fund to help meet cash-flow needs. State budget problems have placed unprecedented demands on the account to loan the general fund money, according to state Treasurer Bill Lockyer, who chairs the PMIB.
“Normally, the money the PMIA lends to infrastructure projects gets replenished when the state sells bonds,” said Lockyer’s office. “Unfortunately, the credit crunch and the state budget woes have combined to close the bond market to California.”
Lockyer says the state will not be able to sell bonds until the state comes up with a budget resolution.