Affordable Housing’s Prospects

The first-ever countywide survey of the affordable-housing industry has been completed. It was undertaken by the Housing Trust Fund of Santa Barbara County (HTF) to gauge challenges facing community-housing sponsors in the post-housing-collapse market. We surveyed over 50 such sponsors, from the public, private, and nonprofit sectors, and released the findings in a report titled Meeting the Challenge of Affordable Housing: A Survey of the Production Capacity and Needs of Our Countywide Housing Sponsors. This report illuminates the major issues housing sponsors face in developing workforce and affordable housing.

It also provides a snapshot of the affordable-housing projects underway within the countywide housing “development pipeline.” During the 2011-2012 survey period, HTF identified 72 new affordable-housing projects in planning and production, representing 1,743 new units; as well as 27 preservation and rehabilitation affordable-housing projects underway within Santa Barbara County. If brought to fruition, these projects have the potential to create 3,540 jobs directly, plus 5,310 indirect or “induced” jobs, and to generate $637.2 million in economic output. Unfortunately, despite this seemingly robust industry, Santa Barbara County still remains the fourth least-affordable small metropolitan housing market in the nation (National Association of Homebuilders, 2012). This dubious honor reflects the chronic and overwhelming need for affordable housing throughout the county’s diverse communities.

Erica Mesker

The survey provided the first countywide portrait of Santa Barbara County’s affordable-housing industry. The industry is comprised of dedicated community sponsors who work tirelessly to produce, rehabilitate, and preserve affordable housing for local working families and individuals and our most vulnerable populations. Our affordable-housing sponsors are surprisingly well established, with an average of 32 years in business. These sponsors have been prolific, having produced or managed 4,724 units historically, including 997 units within the past three years. The nonprofit sector represents 68% of countywide affordable-housing sponsors, while the combined non-profit and public sector constitutes 82% of all affordable-housing sponsors.

Greatest Challenges: The greatest challenge articulated by housing sponsors was in securing project financing, with over half of respondents indicating that a major obstacle. There are fewer subsidies and financial resources available to make affordable projects economically feasible as federal, state, and local programs have been cut, downsized, and dismantled. The Housing Trust Fund noted that the trend of diminishing resources has continued beyond the closure of the market survey, which makes the findings all the more compelling.

Other major challenges highlighted in the survey included difficulties in obtaining local project development and environmental approval, overcoming community opposition, the need for project development staff, and development inexperience among newly emerging sponsors.

Three common and recurring issues were raised in follow-up interviews and focus groups conducted by HTF. One was the difficulty, in the current market, of competing against all-cash investors in purchasing properties. Another, which sponsors attributed to diminished federal and state funding and the dismantling of local redevelopment agencies, was increased competition for governments’ limited housing programs’ funding. Finally, sponsors said the unstable and unpredictable development approval process at the local level hinders their ability to align project funding on a timely basis.

Era of Diminished Resources: The market survey report can provide affordable and workforce housing sponsors, policy-makers, and the general population a more thorough understanding of the key challenges facing Santa Barbara County’s affordable-housing industry. In the past few years, the entire affordable-housing landscape has drastically shifted. Financing programs once considered reliable have disappeared or diminished, making it more difficult for projects in planning to be completed. It has become clear that Santa Barbara County’s affordable-housing projects need new sources of financial assistance.

In response to the era of diminished resources, HTF has adopted the goal of establishing a sustainable countywide fund for affordable and workforce housing, by creating a multi-interest partnership at the intersection of the public, private, and non-profit sectors.

The market survey results have also promoted us to adjust our current programs to better serve our countywide affordable-housing sponsors. For example, HTF has subsequently adopted a new “Tax Credit” loan product with a longer, 15-17 year term, which gives projects a competitive edge when applying to the California Tax Credit Allocation Committee for federal low-income housing tax credits.

Sustainable Communities: The importance of supporting our countywide affordable-housing industry cannot be overstated. Our ability to create sustainable communities is largely dependent on the availability and accessibility of affordable housing in the region. High housing costs mean a loss of young families and middle-income workers, as well as a growing population of urban poor, elderly, disabled, and homeless persons living in overcrowded housing conditions or on the streets. Our expensive housing markets impacts the ability of local business to attract and retain the high quality employees our community needs to provide essential community services and maintain a vital economy.

Lack of affordable housing also contributes to increased commuting, as local workers seek more affordable housing in other regional markets. This leads to more traffic congestion, more rapidly deteriorating roadways, and more greenhouse gasses released into the atmosphere. According to a 2011 California Economic Forecast study, “the number of commuters from Ventura and San Luis Obispo Counties has nearly doubled in the past 20 years,” and the amount of Los Angeles County commuters has increased 57% over the past two decades. This leads to more traffic congestion, more rapidly deteriorating roadways, and more greenhouse gasses released into the atmosphere.

Commuters do not contribute to the local economy, as the money they earn in the local workplace is spent in the community where they live. Intergenerational ties also decline as younger generations cannot afford to stay in the local community.

Erica Mesker is the Housing Trust Fund of Santa Barbara County’s development and communications assistant. The HTF is a non-profit financing initiative whose mission is to expand affordable-housing opportunities for the residents of Santa Barbara County. HTF creates private, public, and non-profit sector partnerships that increase the financial resources needed to expand affordable rental and homeownership housing opportunities for working families and for our most vulnerable populations in our diverse communities. HTF directly funds affordable housing that enhances quality of life, sense of community, and that preserves the long-term affordability of the housing as a community resource.


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