Affordable housing projects in the downtown area gained a significant boost in resources this week, as the U.S. Treasury awarded the Housing Trust Fund of Santa Barbara a $600,000 grant designed to provide low-interest loans to developers.
The new grant, which brings the Housing Trust Fund’s (HTF) total revolving loan fund up to over $5 million, targets seven projects in downtown Santa Barbara in need of funding to remain affordable over the next two to five years. U.S. Treasury Community Development Financial Institutions funds are awarded annually through a competitive application process.
This year, the U.S. Treasury awarded over $186.8 million in nationwide grants to 210 organizations like the HTF. The HTF is a nonprofit organization that helps connect the private, public, and nonprofit sectors on local housing projects through loans and other funding, and HTF resources are typically used to provide loans that help developers like the City Housing Authority, Habitat for Humanity, and People’s Self-Help Housing cover start-up costs for various housing projects.
This service is particularly valuable in the Santa Barbara area, as HTF President and CEO Jennifer McGovern explained that, when it comes to the availability of affordable housing, Santa Barbara ranks quite low compared to other metropolitan areas. “Even though we may not have as concentrated poverty as some of the larger cities, we have housing poverty,” McGovern said. “We have a critical shortage of affordable housing.”
In order to receive funding from the HTF, McGovern said developers or businesses must prove they have a viable business plan and know how to use the funding responsibly. After an application process, the funds can be used for anything from site acquisition to predevelopment and refurbishment costs. When the loans are repaid, the money returns to the HTF’s revolving loan fund and is recycled for future projects.
In the past, Santa Barbara’s Redevelopment Agency (RDA) helped affordable housing developers find funding for projects in the area. However, after the February dissolution of all state RDAs, HTF loans became one of the primary sources for financial support to affordable housing projects.
Rob Pearson, CEO of the Housing Authority of Santa Barbara (HASB), said the loss of the RDAs made HTF contributions “even more important,” although its $5 million pool of money can only go so far. The Housing Authority is in the final stretch of a $14 million project — begun before the RDA dissolution — to install 54 new affordable studio apartments on lower Bath Street. Pearson also serves on the HTF’s volunteer Board of Directors.
Still, McGovern said the HTF wants to step up and keep helping new housing projects get on their feet, “hoping to pick up a little of the slack.” While the HTF does not have the ability to make its initial loans “roll over” into permanent financing like the former RDA, McGovern said new HTF tax credit loans can stand for 15 to 17 years. Because they count as a “government source,” HTF funds can add “bonus points” to a developer’s application for state tax credits, which directly reduce some of the financial burden on new projects, if received.
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