Affordable Student Housing Solution Introduced

We have good news regarding affordable student housing! The Legislature is poised to adopt 2023-24 budget clean-up provisions, including a solution for the Higher Education Student Housing Grant Program (HESHGP). The 2023 Budget Act shifted the funding mechanism for the HESHGP from General Fund grants to lease revenue bonds issued by community colleges. CCFC opposed this last-minute change, and suggested an alternative to shift to state-issued lease revenue bonds and allowing 12 projects to retain their cash. Click here for more details on CCFC’s position and advocacy.

The end-of-session higher education budget trailer bill will be AB/SB 142, and the new “budget bill junior” will be AB/SB 104. These bills reflect the following solution:

• Intent language to develop a state lease revenue bond or other statewide financing/fiscal approach to support the previously-authorized affordable student housing projects from both Round 1 (2022) and Round 2 (2023). This will be developed no later than the enactment of the 2024 Budget Act. [AB/SB 142]
• Specify that a community college project that has already received its cash (i.e. Round 1 projects) shall not revert the cash until June 29, 2024, or the enactment of the 2024 Budget Act, whichever is later. CCFC hopes that colleges will not need to revert cash at all, and that the new financing source can be a note in the college ledger. [AB/SB 142]
• For three intersegmental projects authorized in 2023, shift the issuance of local lease revenue bonds from community colleges to the University of California. This affects projects at Cabrillo College, Riverside City College, and Merced College. [AB/SB 142]
• Amend the appropriation to support community college student housing projects in FY 2023-24 [AB/SB 104]:
  • Reduce from $78.5 million to $61.5 million, to reflect the intersegmental project shift described above. The UC appropriation will be increased to reflect this change.
  • Specify that the funds may be used to support “annual rental subsidies for the provision of affordable student housing rental rates” and that the funds shall be provided annually for a period of 30 years. The funds may also be used to support the approved projects. DOF may authorize an augmentation from the Special Fund for Economic Uncertainties to support the projects and the ability of community colleges to provide affordable rents.

While the solution retains the option to use local financing with state support for debt service, it also establishes a framework to shift to state-issued lease revenue bonds. This ensures that the state will continue to be a partner on these important projects, and that affordable rents can be preserved.

This shift took significant advocacy. Last week, CCFC Chair Willy Duncan (Sierra College) and Board Member Christine Miktarian (State Center CCD) participated alongside other college executives in a pivotal meeting with Joe Stephenshaw, the Director of the Department of Finance. They expertly explained the detrimental effects of shifting to local lease revenue bonds. We received word shortly after this key meeting that the Department of Finance was willing to adopt a state lease revenue bond model.

Next Steps

The Assembly and Senate are both scheduled to hold hearings in their respective Budget Committees tomorrow (August 30). The Legislature is anticipated to pass a package of budget clean-up bills, including AB/SB 104 and AB/SB 142, for the Governor’s signature. Only one version of each bill will pass.

There is not enough time to develop the statutory details of the state lease revenue bond program before the Legislature adjourns for the year on September 14, 2023. This issue will be taken back up when the Legislature returns next year. There is some precedent for other public buildings, including community college facilities that were funded using state lease revenue bonds before the routine use of voter-approved General Obligation bonds. CCFC will actively engage in the development of this program.

CCFC is very thankful that the Legislature and Administration plan to resolve the unintended consequences of the prior budget action, ensuring that students and communities will benefit from affordable housing. We will provide additional information as the solution moves through the legislative process.

Rebekah Kalleen
CCFC Executive Director