Becker Bill Steering Money Away From Bureaucratic Requirements & Into Building Homes Signed Into Law Today
SACRAMENTO – Letting affordable housing developers spend more money building houses instead of holding dollars back to fund a rarely used reserve account is the goal of SB 948 by Senator Josh Becker (D-Peninsula), which was signed into law today by Governor Gavin Newsom.
“We must do everything in our power to address the affordable housing crisis in our communities, including coming up with creative ways to free up existing dollars to build more affordable homes,” said Becker. “SB 948 eliminates duplicative reserve requirements placed on affordable housing developers, freeing up money to go to more pressing needs, like making the homes that are built more affordable, building more affordable homes, or hopefully both.”
California Housing Partnership and Housing California sponsored SB 948 and estimate it could unlock as much as $40 million in affordable housing funds. Generally speaking, the bill eliminates the requirement that each project maintain its own “transition reserve fund,” replacing it with a requirement for the state’s Department of Housing and Community Development (HCD) to maintain one pooled reserve account to assist any project that may need bridge funding.
More specifically, affordable housing developments that receive specific types of rental or operating subsidies have to hold a certain percentage of total project costs in a transition reserve fund designed to serve as a backstop in case an operating subsidy or voucher program expires. Transition reserves can range from as little as few hundred thousand dollars in a small project or a project with a small percentage of affordable units, to over $3 million in a 100% affordable subsidized project. According to an HCD report issued in 2020, these transition reserve funds are used less than 0.01% of the time.
SB 948 passed the Assembly and Senate on unanimous, bi-partisan 77-0 and 40-0 votes, respectively, and will take effect on January 1, 2023.
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PRESS CONTACT: Evan Goldberg at evan.goldberg@sen.ca.gov or (916) 616-9811