CalHFA’s innovative bond recycling program gathers momentum
SACRAMENTO, Calif .– (COMMERCIAL THREAD) – Following its launch last year, the California Housing Finance Agency’s bond recycling program has continued to garner interest from local government partners as well as affordable housing developers, leading to the he announced today two groundbreaking local partnerships that truly represent a milestone in the housing finance world.
These partnerships, with the cities of San Diego and San Francisco, combined with the recent use of nearly $ 50 million in recycled bonds to fund a pair of affordable housing developments, are a big acceleration in recycling activities at obligations of CalHFA. This one-of-a-kind program in California offers an additional funding option to address the affordable housing crisis in the state.
The partnership with these two cities will make it easier for CalHFA to work with them to fund affordable housing developments in two of the state’s most important markets.
“CalHFA’s Bond Recycling Program is an innovative approach to provide critical funding to support the creation and preservation of affordable housing in the City of San Diego and across the state,” said Richard C. Gentry, President and CEO of the San Diego Housing Commission. “The San Diego Housing Commission is pleased to be among the first agencies in the state to work with CalHFA on this important program.
The partnerships were approved last month at the San Francisco Board of Directors meeting and the San Diego City Council meeting.
“Access to low-cost capital is a critical part of the Mayor’s Office for Housing and Community Development (MOHCD) strategy to build new affordable housing and preserve existing housing,” said Eric Shaw. , director of MOHCD. “We are delighted that the state is making additional resources available to invest in promoting housing opportunities in San Francisco. ”
Earlier this fall, CalHFA used recycled bonds to help fund two affordable housing developments that preserved a total of 206 housing units in Los Angeles and Chico, which saw their surrounding areas decimated in 2018 by Camp Fire, the deadliest and the most destructive in California. the story.
Shermanaire apartments in Los Angeles’ Winnetka neighborhood were understandably affordable – but unrestricted on rent – before a financial package including $ 26.5 million in recycled bonds through the CalHFA program allowed for rehabilitation. Shermanaire will also drop from 82 to 90 units and rents will now be limited to between 50% and 80% of the area’s median income for the next 55 years.
The Cedar Village development in Chico uses $ 20 million of recycled bonds under the CalHFA program for rehabilitation and extends accessibility for 55 years for elderly residents in the hard-hit region of the state. The project consists of 116 units, which are made affordable through a combination of rent restrictions from CalHFA and project-based vouchers.
“These two projects are perfect examples of how recycled bonds can be used to fund projects that preserve vital housing units in California without using the state’s oversubscribed annual volume cap or any other resource from the state. State, ”said CalHFA Executive Director Tiena Johnson Hall.
Rather than using additional public resources, this affordable housing is made possible through Apple’s $ 2.5 billion affordable housing initiative to tackle the California housing crisis, announced in partnership with Governor Gavin Newsom and state and local partners. Apple has already deployed more than $ 1 billion of its pledge, supporting housing opportunities across the state. As part of this commitment, Apple is providing a credit facility that is essential for the proper functioning of Bond Recycling. This facility allows CalHFA to retain and reuse tax-exempt bonds that would otherwise have been withdrawn to provide low-cost financing for affordable housing projects.
CalHFA’s bond recycling program will be even more relevant if the bond funding threshold is reduced from 50% to 25% in the Build Back Better legislation that the US Senate will pass soon. While less volume cap is needed for affordable housing projects to access tax credits in the future, this will allow California to further stretch its resources to finance more affordable housing and bond recycling is a step forward. key option for bridging the gap in tax-exempt debt financing.
The California Housing Finance Agency was established in 1975 to help more Californians find a place to call home. CalHFA has helped over 201,000 low and moderate income homebuyers with $ 32.6 billion in first mortgage loans and used $ 6.1 billion in financing to build and preserve over 70,000 homes affordable rentals statewide. CalHFA is a self-funded state agency that does not depend on taxpayer dollars for its operating costs. For more information on CalHFA programs and how we are creating progressive financing solutions for affordable housing in California, visit www.calhfa.ca.gov or call toll-free at 877.9.CalHFA (877.922.5432).