Interest fee

Real estate charges were supposed to provide housing assistance soon. Five years later, the impact is sparse

In 2017, the state passed SB 2, a law that its sponsors said would reduce the cost of housing in California by providing a continued source of funds for affordable housing in an industry that relies primarily on cash for use. unique.

Since then, the state has collected more than $1.6 billion in fees levied on real estate transactions. Yet by the end of 2021, the state had spent less than a quarter of that total on housing and homelessness.

Five years ago, Senate Speaker Pro Tem Toni Atkins said she authored SB 2, or the Build Homes and Jobs Act, to “provide desperately needed funding to permanent housing with supportive services”. With it, the state collected revenue from fees imposed on certain real estate transactions, such as mortgage refinancings.

Atkins acknowledged the money would not solve the crisis overnight, but said it would bring housing stability and benefit thousands of California families each year.

SB 2 would not only help produce more housing, but would also help local agencies update their community plans and help reduce overall housing costs.

“After today’s vote, I have growing hope that relief will come soon for many hard-working people,” Atkins previously said.

As a result of this law, each real estate document required to be registered by law now incurs a fee of $75 each, with the total fee amount capped at $225 for each transaction. The state was then to distribute the money to local programs and affordable housing projects throughout the state.

Voice of San Diego found that the state had raised more than $1.6 billion by the end of 2021. Only 17.7% had been disbursed statewide as of June 30 of this year. It went to two major programs: $144.7 million was committed to housing projects across the state through the state’s mixed-income multifamily loan program, and about $139 million was been disbursed into local aid programs.

People were supposed to feel the impact.

“When you see results with the dollars you put into services, when you can pay for something that changes our condition, that improves people’s quality of life…they will be grateful for our efforts to provide more housing affordable,” said Senator Ben Hueso. said after the passage of SB 2 in 2017.

Still, housing affordability in San Diego has reached crisis levels, and homelessness is a top concern for San Diego residents in public opinion polls. Over the past 10 years, the number of residents who can afford the median price of a home in the county has been cut in half. Now, the typical home is only affordable for 19% of residents, according to the California Association of Realtors’ Housing Affordability Index. And since 2017, the asking rent for an apartment in San Diego has increased by about 29%.

Voice made several attempts to arrange an interview with Atkins. After sending spokesperson Doug Case the dollar amounts of SB 2 money collected and disbursed, asking Atkins to be “properly briefed” on the interview, her office said she would not be available in because of the busy start to the session of the California State Legislature.

Instead, she emailed a statement that SB 2 “remains one of the few reliable and permanent sources of funding for affordable housing” and gives flexibility to local agencies when planning the use of money.

In San Diego County, more than $154 million in real estate fees had been collected by the end of 2021. About 5.3% of those funds raised from real estate transactions in San Diego funded local assistance programs.

Agencies can access funding over a three-year period, and some can wait until there is more money available in the pot. This means that even if most of the funds have not yet been spent, their availability can allow local governments to plan future projects.

The state has earmarked about 15% of SB 2’s revenue for the Mixed-Income Multi-Family Loan Program, which aims to address the “missing middle” in the housing industry. These loans are committed to housing projects across the state, including four developments in San Diego County, but the money is not used until construction is complete.

Valencia Pointe Apartments is the only completed project in the county so far. Atkins said in an email that this 102-unit affordable and ultra-low-income housing development was a good example of the progress SB 2 has helped make.

A total of $20.4 million in Mixed Income Program loans have been committed to the four San Diego projects, but that may be a mix of SB 2 funds and other funding sources, according to Chris Saur, spokesman for the state’s Housing Finance Agency. Until the loans are disbursed after construction, Saur said he does not know whether the projects will use SB 2 money or another source of funding.

“Even though we don’t technically send the money until later, that commitment is what allows these units to be built,” Saur said in an email.

The majority of SB 2 funds earmarked for local assistance went to Permanent Local Housing Allowances (PLHA). According to the state’s Department of Housing and Community Development, these awards support “housing-related projects and programs that help address the unmet housing needs of their local communities.”

SB 2 helped fund the second round of PLHA awards, where more than $9.6 million was awarded to county agencies. Only about $6.4 million has been disbursed, according to the state Department of Housing and Community Development.

Stephen Russell, CEO of the San Diego Housing Federation, said it’s “a long-term dream to get a permanent source” of funding, but cities can only base their plans on the funding they get. If instead the state disbursed the funds all at once and municipalities could create bolder plans, there would be a better chance of preventing homelessness – “one of the most serious humanitarian problems critics of our time,” Russell said.

“It’s very difficult to plan, especially in an industry that relies on five to seven years as the lifespan of a project, from site acquisition to ribbon cutting,” Russell said.

Cities are required to submit a five-year plan for using the funds, and awards are given based on the size of an area’s population and the level of need of low-income residents. Russell gave the example of National City, which received $611,141 in permanent local housing benefits in 2020.

“If instead of 600,000, National City owes three years of that, that could actually be a very different and significant amount of money that could be used differently,” Russell said. “If you know you get money year after year, you can plan it differently.”

Ginger Hitzke, affordable housing developer and San Diego County planning commissioner, said it’s “not always bad” for an agency to let money accumulate if it allows the state to donate the appropriate amount to larger projects later.

What Real Estate Fees Have Helped Fund So Far

Only 45 local agencies in the state did not apply for SB2 grant funding. The other 494 spaces have either already received funding or have applications under review, according to the state’s local housing strategies and planning grants map.

Much of the SB 2 funds went to the planning grants program, widely used to update land use plans to meet the needs of an area. The program provides funding and technical assistance to help agencies “prepare, adopt, and implement plans and process improvements that streamline housing approvals and accelerate housing production.”

In the first round of SB 2, half of the funding was earmarked for ‘targeting homelessness’ and the other half for local planning and technical assistance to ‘streamline development’.

Hitzke said one of the ways SB 2 can help streamline housing development is by removing public reviews of planning permission.

According to Russell, the City of San Diego has done what most municipalities in the county and the county itself haven’t: updated its land use codes to meet criteria for projects that can skip l public decision-making stage and build housing “with far fewer obstacles”. .” Russell says local services are often “overstretched” and that SB 2 funding for planning and technical assistance could help cities work effectively in the face of ever-changing housing laws.

SB 2 also funded a second round of the California Emergency Solutions Housing (CESH) program. From July 2020 to June 2021, this program reported serving 142 people at risk of homelessness, 39 people already homeless and 11 seniors, as well as providing housing for 73 minors.

In the second round of SB 2, 10% of funds were specifically earmarked for farmworker housing.

Now, the Mixed-Income Multi-Family Loan Program plans to invest about $65 million in statewide projects with the help of SB 2 funds for 2022. According to the County Taxpayer’s Advocate, Jordan Marks, San Diego will likely collect lower fees in 2022 due to higher interest rates and fewer refinances recorded.

Local governments will have until the end of this year to apply for the third round of state funding.

Russell says that in the future, he would like to see “every dollar” of SB 2 go into permanent, affordable housing.

“As a citizen, I mean, it’s just heartbreaking,” Russell said. “From a professional point of view, my sector is the construction of permanent supportive housing. That is, we believe that the answer to homelessness, the only solution to homelessness, is a home. »