Homekey Program Provides Additional Subsidy for Affordable Housing Development Across California
In a time when affordable rental housing is as needed as ever, during the COVID-19 pandemic, there is a new subsidy available for low-income housing tax credit developments in California: the Homekey program.
The Homekey program is a new housing initiative announced July 16 by the California Department of Housing and Community Development. It expands housing opportunities for households experiencing homelessness and those impacted by the COVID-19 pandemic.
In the initial legislation, $600 million in funding was available for Homekey grants in two pools:
- $550 million from the state's direct allocation of the federal Coronavirus Relief Fund, which must be expended by Dec. 30, 2020, and
- $50 million from the state General Fund, which must be expended by June 30, 2022.
On Oct. 19, 2020, Gov. Gavin Newsom announced a partnership with Enterprise Community Partners to distribute an additional $45 million in funding for Homekey developments. Furthermore, on Oct. 23, Gov. Newsom announced the approval of $200 million in additional Coronavirus Relief Funds for the Homekey program, making the total funding for the Homekey program $845 million.
As of Oct. 29, $835.6 million (of the $845 million) in Homekey funds were awarded to 93 developments, totaling 6,055 affordable rental homes. This demonstrates the Homekey program’s immediate impact during the COVID-19 pandemic.
Under the Homekey program, developers receive state subsidies to acquire and rehabilitate a variety of housing types, including (but not limited to) hotels, motels, vacant apartment buildings and residential care facilities.
Eligible tenants are actively homeless or at risk of homelessness. Residents must earn at or below 30 percent of the area median income. To be considered in the first scoring tier, the development must be 50 percent occupied within 90 days of acquisition. Lease-up can begin upon the acquisition of the development. Furthermore, construction of permanent supportive housing amenities can occur with tenants in-place and can be planned concurrently with lease-up.
Homekey developments will receive assistance for site selection. The California state legislature passed a bill that broadens developers’ site selection options for Homekey developments. California Assembly Bill 83 Section 21 allows for any property that receives funding from the Coronavirus Relief Fund to provide housing for individuals and families who are experiencing homelessness or who are at risk of homelessness are deemed to be allowed under local land use laws. This allows for developers to acquire and convert properties in zones that do not permit residential uses.
The Homekey program is empowering developers to quickly expand the affordable housing supply for homeless households across California during the COVID-19 pandemic.
For questions regarding the Homekey program, contact H. Blair Kincer.