Capitol Alert

Over 1,000 affordable homes could disappear in Sacramento County, new report says

California new housing shortage on par with ‘shrinking rust belt cities’

Brian Uhler of the non-partisan California Legislative Analyst's Office explains the origins of the Golden State's housing crisis.
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Brian Uhler of the non-partisan California Legislative Analyst's Office explains the origins of the Golden State's housing crisis.

Sacramento County could lose a significant share of its government-subsidized housing units in coming years, according to a new report that warns about an affordability crisis threatening low-income Californians.

More than 1,000 of those units in Sacramento County are “at risk” of being converted to market-rate housing, according to the report from California Housing Partnership Corporation. That represents about 4 percent of the county’s 22,952 designated affordable housing units.

About 250 of them are considered to be at “very high risk,” meaning they could be converted to market-rate housing within a year.

Advocates worry that losing even a share of those units would push low-income residents out of the county because they’d have trouble paying higher rates.

“We’re so behind on how many rental apartments we need for low income and very low income households already, and then to lose some, it’s pretty frightening” said Rachel Iskow, interim executive director of the Sacramento Housing Alliance.

According to the report, 15,044 designated affordable units in California have been lost over the past two decades, and another 34,554 are at risk of conversion across the state.

Many of the units classified as “at-risk” are financed through HUD rental-assistance contracts or state Low Income Housing Tax Credits, both of which expire after a set time period. Once they’ve expired, owners may choose not to renew them and instead convert their units to market rate-housing.

Bob Erlenbusch, executive director of the Sacramento Regional Coalition to End Homelessness, said any time affordable units are converted to market rate, it puts those tenants at high risk of becoming homeless.

“We already have a homeless crisis and we’ve got thousands of people out on the street and we cannot afford to lose any units of public housing,” he said.

Matt Schwartz, president of the group that made the report, said preserving affordable homes should be a priority in the state’s housing crisis because it’s easier to keep them than it is to build new units.

“Preserving existing affordable homes can happen in a fraction of the time it takes to build a new one,” he said. “And it costs, typically, a half to one-third less than building new.”

In order to keep affordable housing units from converting in California, he says the state needs to “aggressively enforce” the State Preservation Notice Law. It was expanded in 2017 and put additional incentives in place to convince property owners to keep their units affordable, like expanded tax credits.

Under the newly expanded law, property owners planning to convert their affordable units to market rate must first offer them to organizations that would maintain the units’ affordability. It also requires these property owners to give tenants and government agencies six and 12 months’ notice of their plans to convert.

Iskow said organizations need more funding and support from the state and federal governments to purchase the properties that might lose affordability. She points to Mutual Housing at Foothill Farms in Sacramento, a 98-unit community opened in 1994, as an example of a property Mutual Housing was able to buy because of readily available financial support from the federal government.

With the state’s shortage of 1.5 million affordable homes, though, most agree that California will have to both build new affordable homes and preserve existing ones to address the housing crisis.

Schwartz said there are several bills in the legislature that would start to help close the gap. Assembly Bill 10, introduced by Assemblyman David Chiu, D-San Francisco, would expand the state’s low income housing tax credit by $500 million.

Assembly Bill 11 and Senate Bill 5, introduced by Assemblyman Chiu and Senator Jim Beall, D-San Jose, respectively, would establish new tax increment financing tools to support the development of new affordable housing, among other things.

Schwartz acknowledged that 1,018 homes might seem like a drop in the bucket compared to the over 20,000 affordable homes that are not “at risk” in Sacramento County.

“On the one hand you say, ‘Well, that’s not huge, it’s not going to make or break the market.’ But what we all have to keep in mind is, these are homes that are priced at the bottom of the market,” he said. “Once they’re lost, it’s really hard to replace them at a similar price point . . . replacing a thousand affordable homes could take five or ten years.”

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