Student Housing: Budget Hearing, Project Rankings & New CalHFA Program
Tuesday, March 14, 2023
There are numerous developments on student housing. This update provides highlights on a selection of issues.
Assembly Budget Subcommittee No. 2 Student Housing Hearing
Today the Assembly Budget Subcommittee No. 2 on Education Finance held a hearing to review the Governor’s budget proposal for student housing. Prior budgets committed the final planned investment of $750 million in FY 2023-24 for student housing construction grants at the three higher education segments. The Governor proposes to delay $250 million of this planned investment to FY 2024-25. CCFC opposes this delay and is encouraging the Legislature to maintain its commitment to fully fund student housing in FY 2023-24. See below for information on the 21 projects submitted by community colleges for consideration in FY 2023-24.
The Governor’s budget also proposes to delay funding for the zero-interest Revolving Loan Fund (RLF) for student and workforce housing. Prior budgets committed to provide $900 million in both FY 23-24 and FY 2024-25, for a total of $1.8 billion for the RLF. The Governor’s budget proposes to modify that funding schedule by providing no funds in FY 2023-24, $650 million in FY 2024-25, and $1.15 billion in FY 2025-26. CCFC is neutral on the RLF.
Assembly Member McCarty, chair of the subcommittee, indicated that he does not support the Governor’s proposed delays, but that the Legislature is reviewing options to support student housing. He identified one option to prioritize the Revolving Loan Fund (RLF) over the construction grants, as the RLF can be replenished and ultimately fund more projects. Assembly Member McCarty also suggested the option of prioritizing projects at UC and CSU over those at community colleges, which he said are less likely to be shovel-ready.
Jennifer Pacella at the Legislative Analyst’s Office (LAO) stated that the student housing project proposals are in the early planning stages, and delay would not create an immediate impact to students. She suggested that the Legislature could find $2.6 billion in solutions if both the construction grants and RLF are cut rather than delayed. Additionally, she cautioned that we don’t have data on the outcomes of the first $1.4 billion in state investment provided to 25 projects in the 2022 Budget Act, making it difficult to evaluate policy decisions. The LAO recently issued a report expanding on these themes and evaluating options for student housing – click here to view the report.
The subcommittee discussed various issues related to the construction grants and RLF, including how quickly proposed projects could begin and complete construction. Both Assembly Member McCarty and Assembly Member Ting (Chair, Assembly Budget Committee) focused on how to prioritize shovel-ready projects. Assembly Member Alvarez asked if there have been delays for the projects funded in the 2022 Budget Act, and the three segments spoke about how they are addressing construction cost increases. The subcommittee discussed the difference between the grants and RLF and whether the RLF would allow a project to move more quickly. Lizette Navarette (California Community Colleges Chancellor’s Office) specified that the RLF would not provide the same rent affordability as the grant program. Assembly Member McCarty asked about what resources are available to community colleges embarking upon housing for the first time.
This item will be held open until after the Governor releases his May Revision budget update.
Community College Student Housing Project Rankings
Community colleges were required to submit their project applications by January 25, 2023 for consideration in the FY 2023-24 budget. Community colleges submitted 21 projects requesting $1.4 billion in state funds, including four intersegmental projects. The three higher education segments submitted 30 total projects worth about $2.1 billion. The Chancellor’s Office released its rankings of the community college projects in advance of the Assembly budget subcommittee hearing.
Click here and see page 5 of the subcommittee agenda for a list of the projects in their ranking order as evaluated by the Chancellor’s Office.
CalHFA Multifamily Housing Production Pilot Program
The California Housing Finance Agency (CalHFA) is creating a new Multifamily Housing Production Pilot Program. It is intended to provide investment, financing, development, and property management in partnership with local public agencies to construct multifamily housing. While the program is still under development, CalHFA has indicated that they would own, construct, and manage the facility, allowing for the use of tax-exempt financing that would lower capital costs. The local public agency would provide a low-cost, long-term land lease, and would be able to prioritize affordable units for their employees. CalHFA plans to release a Request for Indications of Interest (RFI) for local public agencies in April 2023, with responses due in July 2023 and a report to the CalHFA Board on RFI findings in September 2023.
Click here for additional information from CalHFA.
Rebekah Kalleen
CCFC Executive Director
|
|
Email to a Friend