Middle Income HousingProgram Update
July 18, 2023
January 2021 Strategic Planning Session
< 30% AMI
< 60% AMI
< 80% AMI
≥ 80% AMI < 120% AMI
What is the Middle Income Housing Program?
Public Benefit Valuation
COST:
Lost
Property
Tax
Revenue
BENEFIT:
Preservation of Workforce “Middle Income”
Housing Stock
Opportunity to Create Public Equity
Partners
CMFA
(Joint Powers Authority)
Catalyst
(Asset Manager)
Orrick
(Bond Counsel)
Ben Barker
Financial Advisor
Jordan Moss
Founder
Allison Arnold
Partnerships
Justin Cooper
Partner
ELAN
BREAKWATER
California represents >25% of the nation’s total housing shortfall
SUPPLY CRISIS
Source: Up For Growth – Housing Underproduction in the US (2022)
Rents have outpaced incomes by 2.5x over the past 60+ years
INCOME GAP
Median Monthly Rent Growth
Median Household Income Growth
Sources: Urban Institute, Brookings
California has been exporting essential workers to other states for decades
MASS EXODUS
Sources: Public Policy Institute of California
74%
Californians who say housing affordability is a big problem 34%
Californians currently considering moving to another state 24 Consecutive years California has experienced negative net interstate migration
Fully functioning communities require housing our middle-income workforce “MISSING MIDDLE”
Capital “A” affordable housing, serving ELI/VLI households, financed with numerous federal, state, and local subsidies, grants, and loans (LIHTC, PABs, HCVs)
0-60% AMI
Governmentally-owned Essential Housing, serving our middle-income workforce, who is increasingly unable to afford housing within the communities they serve 60-120% AMI
Privately-owned market-rate housing, serving high-income households, financed with high-cost institutional capital with fiduciary obligations to maximize rental increases >120% AMI
Housing our essential workforce while creating significant public benefits
ESSENTIAL HOUSING
Governmental Ownership
Advantaged
Financing
Property Tax Exemptions
Essential Housing
Scaling governmental ownership of middle-income affordable housing
IMMEDIATE IMPACT
*Estimate
50 Essential Housing communities preserved throughout California 14,000
Governmentally-owned income- and rent-restricted Essential Housing units $25B*
Public benefit creation for host municipalities throughout California
Preserving existing rental communities while avoiding displacement by traditional “value-add” investors CASE STUDY – BREAKWATER
DEVELOPED
1972
ACQUIRED
2021
PRICE
$185 million ($462,500/unit)
MIX
360 2BRs + 40 3BRs (400 units)
AFFORDABILITY
60-120% AMI
INVESTED
$23.5 million capital budget ($58,750/unit)
Proving the impact of governmentally-owned Essential Housing rental communities CASE STUDY – BREAKWATER
9.9x
Affordability Multiple
Current Rent Subsidies
Current HB Tax Subsidy
36.3x
Public Benefit Multiple
Future HB Proceeds*
Total HB Tax Subsidy
24%
Rent Discounts
Qualified Rents
Market Rents
*Estimate
Preserving existing rental communities while avoiding displacement by traditional “value-add” investors CASE STUDY – ELAN
DEVELOPED
2015
ACQUIRED
2021
PRICE
$134 million ($489,000/unit)
MIX
26 studios + 130 1BRs + 118 2BRs (274 units)
AFFORDABILITY
60-120% AMI
INVESTED
$5 million capital budget ($18,250/unit)
Proving the impact of governmentally-owned Essential Housing rental communities CASE STUDY – ELAN
*Estimate
7x
Affordability Multiple
Current Rent Subsidies
Current HB Tax Subsidy
26.7x
Public Benefit Multiple
Future HB Proceeds*
Total HB Tax Subsidy
23%
Rent Discounts
Qualified Rents
Market Rents
QUESTIONS?