Changes to the Higher Education Student Housing Grant Program

The final 2022 Budget Act included significant updates and changes to the Higher Education Student Housing Grant Program, which was created by SB 169 as part of the 2021 Budget Act. The changes are included in AB 183, the higher education budget trailer bill that was signed into law by the Governor on June 30. CCFC is providing an update on some of the details as program implementation commences.

Student Housing Funding in the 2022 Budget

The budget includes a commitment to provide an additional $2 billion for higher education student housing between now and 2024-25, bringing the total state commitment for student housing to $4 billion. 

Grant Funding: The 2022 Budget Act includes $1.43 billion to fund construction grants for all projects deemed eligible by the Department of Finance from the first application cycle for the Higher Education Student Housing Grant Program. This includes $542.1 million to fund 12 community college projects, including one intersegmental project. The Budget also includes $17.9 million for 70 community college planning grants. The law still includes a commitment to provide 50% of the total construction grant funds to community colleges.

We are still waiting to find out the process and timeline for distribution of the 2022 construction and planning grant funds to colleges. The Chancellor’s Office is working with the State Controller’s Office and the Department of Finance on the process. Stay tuned as we learn more!

Revolving Loan Program: AB 178, a key 2022 budget bill, includes intent language to provide $1.8 billion over a two-year period ($900 million in 2023-24 and $900 million in 2024-25) to establish a student housing revolving loan program for the three higher education segments, including community colleges. Additional details are contingent upon future legislation. This is included in the total $4 billion commitment identified above.

Changes to the Higher Education Student Housing Grant Program

AB 183 includes revisions to the Higher Education Student Housing Grant Program, including but not limited to:

Administering Agency: The Chancellor’s Office is the program’s administering agency for community colleges. Applications for future funding cycles will be submitted to the Chancellor’s Office, who will review and rank proposals and submit information on the proposals to the Joint Legislative Budget Committee for consideration in the state budget process.

Future Application Rounds: AB 183 sets forth a timeline for subsequent funding rounds. However, the language is somewhat unclear, and the Legislature is examining whether there is clean-up needed to clarify the future application rounds. The intent appears to be to provide the planning grant funds authorized in the 2022 Budget Act and allow districts to spend a year planning, with applications for new projects to be submitted in the 2023 funding cycle. The Legislature would need to pass a bill by August 31, 2022, if they plan to address this in the current legislative session.

• 2022 – Ineligible projects – Community colleges may resubmit applications previously deemed ineligible to the Chancellor’s Office by October 31, 2022, and they may receive priority consideration in the budget process.
• 2023 – New grant applications – These may be submitted to the Chancellor’s Office by October 31, 2023. Community colleges may also resubmit updated applications previously deemed ineligible.
  

Rent Cap: Rent for state-funded units is capped at 30 percent of 50 percent of the area median income for a single-room occupancy type. Annual rents may be adjusted each year based on the lesser of the area median income calculation for a given year or the percentage change in the annual average value of the California Consumer Price Index for all urban consumers for the most recent calendar year of actual data. The latter option is new under AB 183.

Project Contingency Plans: Future applications shall include a project contingency plan. The amount for project contingency shall be 10 percent of construction costs for community college projects. Grant funds may be used to cover these project contingency amounts. AB 183 indicates that applicants shall cover costs above those identified in their state application using specified funding sources, other than the state construction grant (i.e. increased costs are the responsibility of colleges, not the state).

Ranking Methodology: The administering agency shall rank eligible applications using a composite score of all the following measures:

1 – State funding per bed for low-income students, with a lower ratio receiving a higher ranking.
2 – Projected rents for low-income student units relative to the rent limit established based on area median income, with a lower measure receiving a higher ranking.
3 – Project timeline, with an earlier construction start date receiving a higher ranking.
4 – Geographic region of the project. The Legislature states their intent that projects selected for a grant are fairly representative of various geographical regions of the state and campuses of the three higher education segments. 
5 – Unmet demand for housing, with a higher ranking given to projects with either of the following:

• Higher proportions of students waitlisted for on-campus housing when compared to total enrollment.
• Lower rental vacancy rates for housing in the project’s county.
  

Note that there is no longer a priority for projects that convert commercial space into student housing, however, those types of projects are still eligible.

Additional Application Requirements:

• Reimbursement – A campus shall not apply for a grant to reimburse costs it has already incurred.
• Minimum Number of Beds – Projects must deliver the number of beds for low-income students specified in the application when it was approved by the state. Rents may not exceed the rates assumed in the project’s application. A project may deliver more beds or charge lower rents if financially feasible.
• Timing of Applications – A community college applying for a planning grant shall not apply for a construction grant for the same project in the same application cycle.
• Reporting Requirements – AB 183 creates additional annual reporting requirements for projects that receive a construction grant. Additionally, all colleges must conduct a survey on housing insecurity (not just grant applicants or recipients. 
  
  

Next Steps

The program is moving into its implementation phase, and there will be many questions that arise in the coming weeks and months. CCFC will continue to engage with the Chancellor’s Office, the Legislature, and other policymakers and stakeholders in the development of the program. 

Rebekah Cearley
CCFC Legislative Advocate