What are the barriers to homeownership in California?
The state’s lack of housing supply has led to home prices skyrocketing throughout California, which in 2020 featured a median home price of $659,000. So that alone creates a barrier for many people. Additionally, the biggest barriers for low-income buyers – including people of colour – are lack of education about the process and the inability to save or get from their families the lump sum needed for upfront costs.
How is CalHFA helping low- and moderate-income Californians break those barriers and achieve the dream of homeownership?
CalHFA provides resources in the form of down payment and closing assistance. Our single-family homeownership division partners with a variety of private lenders throughout California, design conforming FHA and Conventional first mortgages to provide to qualified borrowers. First-time homebuyers that use these mortgages can pair them with CalHFA’s subordinate loans for down payment and/or closing costs assistance.
As part of the transaction, CalHFA requires borrowers to take homeownership education and counselling so that homebuyers learn how to get the right mortgage and become successful homeowners. We have special programs for fire department and school employees, as well as victims of disasters and buyers of manufactured housing. Last fiscal year, CalHFA helped more than 13,000 low- and-moderate income homebuyers use $4.1 billion in first mortgages and $229 million in down payment and closing cost assistance to achieve the dream of homeownership; two-thirds of those families are people of colour.
What are the biggest issues facing California residents looking for affordable rental housing?
Lack of supply is even more of an issue when it comes to rental housing in California, which has resulted in more than half our state’s renters considered rent-burdened (spending more than 30% of their income on rent). The lack of affordable rental housing is caused by a variety of factors including, but not limited to:
- A shortage of land zoned for multifamily housing. Nearly 75% of the residentially zoned land in California is zoned for single family homes only.
- NIMBYism (Not in My Back Yard) hurts local support for affordable housing projects and uses CEQA lawsuits to block projects.
- A scarcity of resources has recently been made worse by oversubscription of California’s federal allocation of Private Activity Bonds.
With resources always stretched thin, and the needs of California so large and varied, the Newsom administration, the California State Legislature, and agencies like CalHFA are constantly searching for innovative ways to finance new housing and to make existing housing more affordable.
How does California use public-private partnerships to maximize public funding?
I already mentioned our single-family partnerships with private lenders that helped more than 13,000 first-time homebuyers access down payment and closing cost assistance. On the Multifamily side, each affordable housing development is an intricate public-private partnership that can include cities, counties, multiple state agencies, nonprofits, affordable housing developers, lawyers and more all working together to get the project to the finish line.
The reason for this is the rising costs of land, labour, materials, impact fees and everything else that goes into the building of affordable housing require the stacking of multiple financing sources. Public resources alone will never be enough to finance the amount of housing California needs, which is why it is best used to leverage private investment through public-private partnerships.
An effective version of this is when an affordable developer can use permanent debt and subordinate financing from CalHFA, and whatever private investment they can get to leverage Private Activity Bonds and Tax Credits, which are administered by the California State Treasurer’s Office but are allocated from the federal government. Gathering all of these sources together to leverage off of each other allows the state to stretch its resources to make more housing available for vulnerable residents across California.
This reminds me of the potlucks my mother used to have with her friends at the end of every month when we were growing up in public housing. My sister and I used to think the purpose was just to have a fun get together, but we found out much later that these mothers were all running out of food at the end of the month. On their own, they didn’t have enough to feed their family but when they pooled those resources, everyone had enough to eat.
But for the affordable housing deals to work, for the resources to pool together, it takes a lot of work to get all of the entities aligned with each other. Some of the heaviest lifting is done by affordable housing lawyers and general counsel for the different state and local housing agencies, poring over the regulatory agreements and financing structures to make sure it is all legal, proper and financially sustainable.
What innovative products does CalHFA offer to address the state’s housing struggles?
With resources always stretched thin, and the needs of California so large and varied, the Newsom administration, the California State Legislature, and agencies like CalHFA are constantly searching for innovative ways to finance new housing and to make existing housing more affordable.
Some examples of the work we are doing at CalHFA, some of it in collaboration with our state and local partners, include a pilot program to finance Accessory Dwelling Units, an expansion of our Conduit Bond Issuance program and a Bond Recycling program.
The Conduit program is growing quickly because some affordable housing developers can find cost and time savings from CalHFA’s position as a statewide issuer that can move fast. Meanwhile, our new Bond Recycling program is the first of its kind in California and works because of a partnership with Apple, which provides a credit facility to preserve tax-exempt bonds from one project so they can be reused as additional financing for a second project.
Another innovative program that has been very successful for CalHFA is our Mixed-Income Multifamily Loan Program. This program provides subordinate financing to developers of new construction affordable housing that serves a mix of incomes between 30% and 120% of Area Median Income. The program won an award from the National Council of State Housing Agencies for producing more housing in less time and with less public subsidy.
How is the state of California making sure it produces affordable housing that is accessible to everyone?
The state’s entire housing finance system has been collaborating over the past 18 months on revamping its procedures and a key part of that effort was to lean into California’s focus on Affirmatively Furthering Fair Housing.
Some of the guiding principles of this new framework are: pushes to create units that stretch widely across the income brackets in lower-income communities; to build more deeply affordable units in high-resources areas that include more jobs; better education opportunities; healthy food options and transit; and to remove barriers and create additional opportunities for community-based BIPOC developers who will produce housing in areas where they are best suited to know the community needs.
Tia Boatman Patterson
California Housing Finance Agency
P. 916.326.8604 F. 916.322.2345
Tia Boatman Patterson has a law degree from McGeorge School of Law and has worked as a housing policy adviser to the Speaker of the California Assembly, General Counsel for Sacramento Housing & Redevelopment Agency, a private-sector housing lawyer, Senior Housing Advisor to Governor Gavin Newsom and spent more than six years in her former role as the Executive Director of the California Housing Finance Agency (CalHFA).
A self-supported state Agency, CalHFA serves as the state’s affordable housing lender, partnering with private lenders to provide first mortgages and down payment assistance to low- and moderate-income homebuyers as well as lending directly to developers of affordable rental housing.
