By Richard Hilton
The City of Santa Monica is proposing a new tax to fund affordable housing and public schools. The following is information about the City’s existing affordable housing funding and additional local/state/federal programs.
City Financing Sources/Programs
The Santa Monica Redevelopment Agency (RDA), the Affordable Housing Production Program (AHPP) and the Development Agreement (DA) in-lieu fees, and the City’s Commercial/Housing Linkage Fee, in combination, have generated between $15-$18 million per year in revenue for affordable housing preservation and production. The three revenue sources have created 2,941 affordable residences: New construction (59 percent) has accounted for 1,845 affordable residences, and acquisition/rehabilitation (41 percent) has produced 1,096 affordable residences.
Since 2012, the City has been without full Redevelopment Agency funding. Local Redevelopment (RDA) revenue accounted for 80-90 percent of the three City/Local Financing sources. Based on very recent State Department of Finance (DOF) approvals, Santa Monica is expected to receive more than $60.9 million in loan repayments over the next nine fiscal years. (This is less some $7.9 million already received for F.Y. 2015-16, as well as $4.0 million in DOF-approved loan repayments for F.Y. 2016-17). The recent RDA revenue, while significant, is expected to become unavailable by F.Y. 2025.
The Santa Monica City Council, recognizing the loss of the Redevelopment Agency as a steady ongoing source of affordable housing funding, has proposed at its meetings June 28 and July 12, 2016 a local tax, and has approved a funding measure for the November ballot. The measure would increase the Transactions and Use Tax (TUT) 1/2 of one cent, which will generate up to $16 million per year, split evenly between affordable housing and the public schools. The tax’s burden per person is negligible, amounting to 12 cents for each $100 in certain retail purchases.
Housing Type/Population Served:
Local financing, compared to the AHPP/DAs as a source of production, has allowed the City to use its own revenue creatively; to prioritize our lower income Resident/Workforce, serve certain underrepresented communities, and fund either production or preservation of project or other housing. Local revenue provides deeper and more permanent affordability. Following are examples of City revenue-supported programs, including recent City Council directed allocations:
ο Nonprofit Housing
Nonprofit organizations compete for City funding and leverage other funding sources to produce Family, Senior, and/or Homeless/Mental Health/Disabled housing. Approximately 2,930 affordable residences have been produced by nonprofit housing providers. The housing is Project-Based, 100 percent affordable, and prioritizes households earning 80 percent of Area Median Income (AMI) or less. The community nonprofits establish their own Application/Waiting List and determine the Rent Maximums/Qualifying Incomes for the affordable residences.
ο HUD/Section 8 Retention/Recruitment
In Santa Monica, the HUD-authorized Section 8 Voucher Payment Standard (VPS) has not kept pace with Fair Rent. The Santa Monica Housing Authority (HA) has lost between 3-4 Section 8 households per month, or 48 households per year, from housing burden-related port-outs. The City Council this year has provided budget authority of $350,000 in Redevelopment residual funds to assist in Section 8 existing and new property owner participation. A pilot program, Housing Opportunities Utilizing Subsidy Enhancements (HOUSE), offers financial incentives such as a $5,000 signing bonus when a vacant, rent-controlled apartment is leased to a voucher household; there is funding for 45 signing bonuses. HOUSE staff will outreach to property owners as part of the Section 8 retention/recruitment effort.
ο Rental Assistance to Rent-Burdened Households in Rent-Controlled Apartments
Some 200-250 Santa Monica households lose their rent-controlled residence annually from State-authorized annual rent increases. A newly-funded program, Preserving Our Diversity (POD), supported by former RDA funds of $300,000, will provide financial assistance to rent-burdened households in market rate apartments. POD prioritizes the extremely low-income household (30 percent of AMI); the severely rent burdened (paying 50 percent or more of household income toward rent); and housing longevity. Payments on behalf of the qualified tenant will go to the property owner. The POD is unique and a first; it provides financial assistance for at-risk, in-place residents, it protects the affordable residence from converting to market rate rent, and helps maintain community diversity.
1) HUD/SECTION 8
The U.S. Department of Housing and Urban Development (HUD) administers the Federal rules and funding for the Section 8 homeowner/renter subsidy program. The counties and municipalities adopt and amend local discretionary policy. HUD provides the City of Santa Monica with funding authorization for 1,142 Housing Choice Vouchers (HCV), 239 Continuum-of-Care Vouchers (CoC), and approximately 250 Project-Based Vouchers (PBV). The CoC voucher for previously homeless persons is administered by community nonprofits and has a supportive services component. The City has a “Homeless Registry,” which ensures that CoC applicants reside and receive services in Santa Monica for at least five years. On April 22, 2016, HUD approved the City’s request for an increase to its 2006 Voucher Payment Standard (VPS): 0-Bedroom: $1,009 + $503 = $1,512; 1-Bedroom: $1,352 + $578 = $1,930; 2-Bedroom: $1,843 + $797 = $2,640; and 3-Bedroom: $2,411 + $955 = $3,366.
2) HUD-Assisted Properties:
HUD provides property assistance to nine nonprofit and three for-profit properties in Santa Monica, which have a total of 1,014 affordable residences. Some of the 12 properties receive City assistance. Most of the deeded buildings have expirations which allow the affordable units to convert to market rent. In March 2015, the Santa Monica Housing Authority (SMHA) obtained and began awarding up to 200 Project-Based Vouchers (PBV) for local buildings/tenants with the greatest need. HUD Project-Based Vouchers stay with the building/unit, unlike Tenant-Based Vouchers which move with the tenant. Properties receiving initial Project Voucher funding include three properties, with a total of 40 of 80 of the residences assisted. This year, some 75 Project-Based Vouchers were awarded to needy seniors at Neilson Villas; in June, an additional 50 PVBs were provided at other site-specific properties.
Richard Hilton was a City employee in 1965, has served on the board of the Santa Monica Bay District Medical Assn. (1970-72), and on numerous city commissions for 15 years. He has been a member of the Housing Commission since 2011 and its Chair for over two years.