55C - RESO OC HOUSING FINANCE JOINT POWERS

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secure additional competitive public and private funds to build supportive housing units, as one large region. AB 448 would allow Orange County to complete alongside the City of Los Angeles or the City of San Diego to secure state bond funds, grants, and private contributions to leverage other local or Federal funds in order to construct supportive housing. AB 448 defined a Joint Powers Agreement (1PA) mechanism for the County and local cities to form the Orange County Housing Finance Trust (OCHFT). AB 448 is shown as Attachment B to this staff report. How is a Supportive Housing Project Funded? A supportive housing project is funded similar to an affordable housing project. But with the additional costs of on -site or adjacent service provision, a supportive housing project can be even more costly. Basically, the below sources of funds can be accessed to build and operate a project. A developer will typically build financing like filling a cup, starting with the most straightfoward funding first: 1. Seeking a lender to provide a mortgage, with the mortgage.backed by anticipated rental income. Because the rental income from an affordable project is -lower than that of a market -rate project, the mortgage amount is too low to construct a full project on its own. 2. Some owner's equity. Whereby an initial dollar amount is allocated to the project by a landowner or developer. In a municipality's case, this can sometimes be providing "free" land,for the project. 3. Project -based Section 8 Vouchers. A local housing authority (there are four in'Orange County: the County of Orange and the cities of Santa Ana, Anaheim, and Garden Grove) may assign a number of rental assistance vouchers to a specific,project. In other words, the Authority will say that 20-25 persons in the future housing project will always have Section 8•housing vouchers and the developer can use those in the developer's financing., Rental assistance vouchers for veterans (VASH Vouchers) can also be used in this manner, for projects which house veterans. 4. Low Income Housing Tax Credits (LIHTC). This Federal program, begun in 1986 and made permanent in 1993, allows an investor to receive a dollar -for -dollar reduction in their tax obligation in exchange for providing financing to develop affordable rental housing. There is a 9% LIHTC program and a 4% LIHTC program. In California, the State Treasurer's Office administers the Federal (and some State) Tax credit program. 5. State General Fund or Bond Fund Revenues. California has recently added to its resources available to address affordable and supportive housing, including November 2018's: a. Proposition 1($4BN for affordable housing, with $36N of that for projects and programs and $1BN to improve access to home loans for veterans). Proposition 1 includes a specific amount ($300M) just for qualified housing trusts; and b. Proposition 2: Prop 2 clarified that existing "Millionaire's Tax" money —also referred to as Mental Health Services Act or MHSA funds — can be used to develop housing when the persons housed have mental illnesses. 6. SB 2 Funds (2017's Documentary Transfer Tax). A newer documentary transfer tax (collected each time a home sells) provides for competitive and per capita city -by -city allocations of housing dollars, provided that the receiving city has a valid housing element. Cities can use these funds for housing for extremely low, very low, low and moderate income households, including capitalizing the funds for providing services at supportive housing sites. 7. Community Development Block Grant (CDBG) Funds. These federal funds come to cities for various projects and programs relating to persons with disabilities or improvements in designated disadvantaged areas. 8. Developer fees paid to a City for affordable housing. 55C-39