California’s Mixed-Income Program (MIP) is helping create more housing in less time with fewer public subsidies.

Tia Boatman Patterson
Tia Boatman Patterson

An internal analysis highlighted the speed and cost efficiency of MIP projects when compared with similar new construction affordable housing projects that received state resources at the same time. The findings showed MIP projects will cost $119,000 less per unit on average and will begin construction almost a year quicker, according to the California Housing Finance Agency (CalHFA).

The National Council of State Housing Agencies (NCSHA) recently recognized MIP with one of its annual awards for program excellence in the encouraging new rental housing category. Here is a full list of this year’s NCSHA award winners.

“I’m proud of our team at the California Housing Finance Agency, and this award is a testament to their hard work to make the Mixed-Income Program a success,” said Gov. Gavin Newsom. “The Mixed-Income Program, which has been operational for just over a year, is supporting the production of 3,468 units of housing, creating inclusive communities, and helping to address the affordability crisis throughout the state.”

The multifamily subordinate loan program made commitments to 20 new construction projects from May 1, 2019, to May 1, 2020. These first projects are expected to create 3,229 units.

The program’s streamlined financing guidelines—no additional public subsidy besides bonds, 4% low-income housing tax credits, and the CalHFA subordinate loan—result in MIP projects that cost an estimated $119,000 per unit less in total development cost than other projects that received bonds and tax credits in the same funding rounds, according to a CalHFA analysis.

Officials also found that the first four MIP projects all moved from application approval to construction start in less than 12 months when most projects take closer to two years or longer, according to the NCSHA award application. Because the projects do not rely on other subordinate debt or rental subsidy, they are able to start construction quickly.

The MIP is also notable because it’s the only state rental housing program that provides subsidy for people making above 60% of the area median income but still struggling with housing costs, a group often referred to as the “missing middle.”

The program comes at a time when many are struggling with the state’s high housing costs. California has a shortage of nearly 1 million affordable and available rental homes for extremely low-income households, according to the National Low Income Housing Coalition.

Over the past few years, several state government actions set the stage for the design and implementation of MIP. Senate President pro Tempore Toni Atkins provided the initial vision and support—around $40 million annually—for a mixed-income program as part of 2017’s Senate Bill 2: The Building Homes and Jobs Act.

Newsom and the state Legislature then passed a 2019-20 state budget that expanded the state low-income housing tax credit and reserved up to $200 million of those new tax credits to be paired with MIP. It also provided a one-time allocation to CalHFA of $500 million in funds for low-and moderate-income development, a large portion of which went to expand MIP.

The additional funds and crucial tax credit reservation allowed the program to take off, according to state officials.

“When you see alignment of priorities from the administration, the Legislature and the Treasurer’s Office, and a partnership between California’s housing finance delivery systems which efficiently addresses those priorities, you have a model for others to follow,” said CalHFA executive director Tia Boatman Patterson. “And the end result is more of the right kinds of housing in the right places for Californians who need it.”

A partnership with state treasurer Fiona Ma, who oversees California’s Tax Credit Allocation Committee, made MIP a streamlined one-stop shop for private affordable housing producers to make use of these public resources.

“Working with CalHFA to make our state’s affordable housing finance delivery system more efficient has already paid big dividends,” said Ma. “By increasing overall production at all income levels, this partnership has truly made a meaningful impact on California’s housing crisis.”