Developers in California were dealt a huge blow May 31 when a bill aimed at creating a permanent funding source for affordable housing died in the state Senate.

The Housing Opportunity and Market Stabilization (HOMeS) Act fell short by two votes.

"Californians struggling to afford a place to live lost out today, and our state missed an important opportunity to invest in jobs and homes," said Shamus Roller, executive director of Housing California, one of the bill's co-sponsors, in a statement. "The HOMeS Act would have not only created homes for hardworking families, veterans, women escaping domestic violence, and people with disabilities but would have put construction workers back on the job and leveraged billions of dollars in private investment."

Supporters had high hopes that California would join 39 other states in having a dedicated revenue source for building affordable homes.

The HOMeS Act would have assessed a $75 fee on various real estate transactions, excluding the sale of homes or commercial property. Approximately $500 million per year would have been generated for affordable housing efforts.

The money would have helped make up a large gap left by the elimination of the state’s 400 local redevelopment agencies (RDAs) earlier this year. The demise of the RDAs, a move to balance the state budget deficit, wiped out California’s largest single source of funding for affordable homes. The agencies used to generate about $1 billion per year for affordable housing.

RDAs had housing funds remaining when they were eliminated, so attention now falls on saving that money for housing instead of being wiped clean for other uses.

“Our job now is to preserve the housing fund balances from redevelopment and ensure they are used for their original purpose: Creating jobs, building affordable apartments and homes, and leveraging private investment,” Roller said.