The California Housing Partnership and the nonprofit and local government housing agencies we work with are among the biggest users of the state’s affordable housing finance programs and know all too well the delays, costs, and inefficiencies of the current fractured system. New research by the Partnership has now put a price tag to those inefficiencies.
Using a comprehensive multiple regression model analysis of cost data from 2015 through 2024, we found that each additional state funding entity involved in the financing of a new affordable rental home adds roughly $17,659 per unit in cost on average.[i],[ii] Since most developments must apply to two or three state entities to assemble the debt, equity and subsidy needed, the current fractured funding system adds as much as $50,000 in cost per door or more than $463 million a year in unnecessary costs.[iii]
The time has come to create a true “one-stop-shop” approach that will allow affordable housing developers to access all needed state financing at one place and one time through a single, unified competition. Such a system necessarily must include all needed state soft financing sources, including those administered by the Department of Housing and Community Development (HCD), the California Housing Finance Agency (CalHFA), the Tax Credit Allocation Committee (TCAC) and the Debt Limit Allocation Committee (CDLAC).
The Governor’s recent housing agency reorganization proposal, which we support, takes a necessary first step towards this goal. But we cannot stop there. The Governor and Treasurer must work together to integrate their resources into a true one stop shop funding portal for affordable rental housing.
California must invest in the construction of additional affordable housing but should also be laser-focused on reducing costs. A true one stop shop will make a significant impact in that regard.
ABOUT THE AUTHORS
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Matt Schwartz leads the Partnership’s work to shape state and federal legislation and regulations to expand the resources for affordable housing. He has worked in the sector for more than 30 years in various capacities with partners such as MidPen Housing and San Francisco Redevelopment Agency, Housing California and Non-Profit Housing (NPH) Association of Northern California. Matt has served as CEO of the Partnership since 2002. |
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Mark Stivers leads the Partnership’s legislative and regulatory advocacy efforts. He was previously acting Deputy Director for the Division of Financial Assistance at the California Department of Housing and Community Development (HCD) where he oversaw more than 20 loan and grant programs. Prior to HCD, he was the Executive Director of the California Tax Credit Allocation Committee (CTCAC), responsible for the administration of the California’s Low-Income Housing Tax Credit Program. |
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Dr. Anthony Vega leads the Partnership’s research, policy analysis, and program evaluation efforts. He previously worked in research and program evaluation focusing on housing stability, access and crime prevention through environmental design at The Community Builders in Boston and the John Jay Research and Evaluation Center in New York. He has taught 15 courses in Criminology and Sociology at Washington State University and John Jay College. |
Endnotes:
[i] To estimate the potential cost savings of consolidating the administration of state affordable housing funding, the California Housing Partnership developed a multivariate regression model to evaluate the relationship between the number of state housing finance agencies involved in project funding and total per-unit development costs. The state housing finance agencies include TCAC, CDLAC, HCD, and CalHFA. The analysis uses data from the Partnership’s LIHTC Cost Database, which includes detailed sources and uses information from Low Income Housing Tax Credit (LIHTC) applications submitted to the California Tax Credit Allocation Committee (TCAC) from 2012 through 2024. The regression model controls for a range of project characteristics that influence development costs, including whether the development is new construction, the number of total units, and building height (as measured by the number of stories). It also includes indicators for targeted population types (seniors, large families, and special needs residents), two time-period indicators capturing cost changes from 2015-2019 and 2020-2024, and a set of regional fixed effects across the state with the Bay Area regions omitted and serving as the reference group.
[ii] In their recent analysis of 2020–2023 LIHTC application data, the Terner Center estimated that each additional state funding source adds about $16,810 to per-unit development costs. This aligns closely with our own findings, which use a similar regression framework but focus specifically on the number of distinct state agencies involved in financing.
[iii] This estimate is based on the number of affordable homes financed in 2024 as reported by the Treasurer on the TCAC website.
For more information on this analysis, please contact Anthony Vega, Managing Director of Research (avega@chpc.net)