To: Board of Supervisors
From: John Kopchik, Director, Conservation and Development
Report Title: Proposed Options for Bay Area Housing Finance Authority (BAHFA) 2024 Regional Affordable Housing Bond Outreach
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
Consider the following actions recommended by the Department of Conservation and Development (DCD):
1. ACCEPT a report from DCD staff on the proposed approach for engagement and outreach on the Bay Area Housing Finance Authority (BAHFA) 2024 Regional Affordable Housing Bond.
2. PROVIDE staff direction on the proposed engagement and outreach approach to DCD staff.
3. AUTHORIZE staff to initiate the engagement and outreach process for the BAHFA 2024 Regional Affordable Housing Bond with the approach outlined in the report/presentation and reflecting any further direction provided by the Board.
FISCAL IMPACT:
No General Fund Impact. Staff outreach costs would be covered by existing departmental funds dedicated to housing.
BACKGROUND:
Input Requested from Board of Supervisors
The following report provides the Board of Supervisors with information on the proposed engagement and outreach process to solicit input for the BAHFA bond measure scheduled for November 2024 general election ballot. As part of this report, staff anticipates receiving the following from the Board of Supervisors:
• Direction on consulting with cities/towns, stakeholders, and public agencies on the required BAHFA Expenditure Plan.
• Direction to align BAHFA outreach and engagement with the Consolidated Plan schedule for housing and community development federal funds (Community Development Block Grant and HOME Investment Partnerships Act programs (“CDBG/HOME”)).
Brief History of BAHFA Governance
The San Francisco Bay Area Regional Housing Finance Act (California Government Code § 64500, et seq.) (the “Act”) created the Bay Area Housing Finance Authority (BAHFA) in 2019. BAHFA’s purpose is to raise, administer and allocate funding and provide technical assistance at a regional level for new affordable housing production, affordable housing preservation, and tenant protections, commonly referred to as the “3Ps.” BAHFA’s jurisdiction is the entire area within the boundaries of the counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano and Sonoma, and the city and county of San Francisco (“San Francisco Bay Area”).
BAHFA is a joint effort of the Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG). BAHFA is governed by the same board as MTC. Some actions related to placement of a measure on the ballot and approval of a regional expenditure plan require action by both the BAHFA Board and the ABAG Executive Board in its role as required by the Act.
The 2024 Regional Housing Bond
In the summer of 2022, the BAHFA Board and the ABAG Executive Board began the process to consider placing a $10-20 billion general obligation bond on the November 2024 ballot. Both the ABAG Executive Board and the BAHFA Board must authorize the regional housing bond to be submitted to Bay Area voters; if they do so, counties are required to place the measure upon the ballot. General obligation bonds are issued by the government, purchased by investors, and repaid by property tax owners for the purpose of providing essential public needs, like affordable housing. Property owners in the nine-county Bay Area would pay for the bond with an increase in the annual property tax, based on assessed value.
The current threshold for passing the regional housing bond is a 2/3 supermajority of all Bay Area voters (not county-by-county). However, the State Legislature recently approved, and the Governor signed, California Assembly Constitutional Amendment 1 (ACA 1), which will place a statewide constitutional amendment on the November 2024 ballot that, if approved by California voters, would reduce the threshold to 55 percent. If ACA 1 is approved by the voters, the reduced threshold would apply to bond measures on the same ballot, including the BAHFA Regional Affordable Housing Bond measure.
If the BAHFA bond measure is approved by the voters of the San Francisco Bay Area, 20 percent of the bond revenue would be retained by BAHFA to directly administer and allocate to eligible affordable housing activities throughout the region, and 80 percent of the bond revenue would be directly returned to the Bay Area counties and specified large cities. The amount that would be directly allocated to Contra Costa County (the County) is estimated to be $925 million to $1.85 billion.
The County will be required to work with each city and town in the County to develop and submit to BAHFA an expenditure plan. Within the expenditure plan, the County will need to demonstrate compliance with consulting with each city/town in the County. The Act established minimum investment targets or percentages for the “3Ps”, which are: 52 percent for production, 15 percent for preservation, and five percent for tenant protections, with the remaining 28 percent designed as “flexible” funding that may be used for housing or housing-related uses as defined in the ballot measure (for example, infrastructure necessary to support housing development). The required expenditure plan must comply with these minimum investment requirements. Given that the Act established minimums for the “3Ps”, the outreach and engagement process to cities/towns, various stakeholders, and members of the public would assist the County to primarily determine how to prioritize the “flexible” 28 percent, how to prioritize to specific low-income households for new housing production utilizing BAHFA financing, and to determine if an additional allocation process to cities within the County is desired and beneficial.
Proposed Outline of General Outreach and Engagement
The required expenditure plan cannot be approved sooner than 90 days after the passage of the bond measure, which means the County cannot approve the expenditure plan prior to February 2025. However, BAHFA expects jurisdictions to start their engagement and outreach activities as soon as possible. Therefore, with the Board of Supervisors direction, DCD staff intends to start their engagement and outreach activities in January 2024 and conclude in December 2024. This would allow for staff to prepare the recommendations for the BAHFA expenditure plan and present those recommendations at a scheduled Board of Supervisors meeting for approval in February or March 2025.
DCD proposes to utilize and align the general engagement and outreach process for the BAHFA expenditure plan with the Consolidated Plan process for CDBG/HOME funds. The Consolidated Plan process includes the following:
• Conduct five in-person public meetings, one in each Supervisorial District. Conduct two additional virtual meetings.
• Conduct stakeholder meetings with city/town staff, affordable housing developers, and other public agencies.
• Invite city/town staff to have individual meetings with DCD staff.
• Assist city/town staff with presentations to their respective city councils, if requested, to provide information and to receive any comments related to local priorities.
• Distribute a survey to members of the public, stakeholders, and staff of local government.
CONSEQUENCE OF NEGATIVE ACTION:
If the initiation of the engagement and outreach process is not authorized, then the process for gathering input from the various cities/towns, stakeholders, and residents within the County will be delayed, which could impact the ability to complete and submit the required BAHFA expenditure plan in a timely manner.