SACRAMENTO — Assemblymember Jesse Gabriel (D – San Fernando Valley), backed by a bipartisan coalition of 18 legislators from across California, introduced Assembly Bill 2058 to create a new $500 million Affordable Housing Preservation Tax Credit.
This credit will enable California to preserve approximately 25,000 units of subsidized affordable housing that otherwise would be free to convert to market rate rents over the next five years.
“In the midst of our current crisis, California cannot allow tens of thousands of affordable units to disappear overnight,” stated Assemblymember Jesse Gabriel. “Even as we work to increase our affordable housing stock, it is essential that we preserve existing units. A smart front-end investment by the state will help keep tens of thousands of vulnerable Californians housed, all at a small fraction of the cost that otherwise would be required to build new units from scratch.”
According to the California Housing Partnership, nearly 35,000 subsidized affordable rental units in California are at risk of converting to market rate units as state and federal subsidies and deed restrictions expire over the next five years. This figure represents 8% of the state’s subsidized affordable housing stock, and includes properties financed or assisted by the U.S. Department of Housing and Urban Development, the U.S. Department of Agriculture, and the Low-Incoming Housing Tax Credit, which is administered by the California Tax Credit Allocation Committee. Between 1997 and 2018, California lost over 15,000 affordable rental units as subsidies and affordability restrictions expired.
AB 2058 would incentivize owners of affordable housing to keep units affordable, rather than converting them to market rate rents when current subsidies or deed restrictions expire. This legislation would enable California to preserve roughly 25,000 affordable units over the next five years, at the cost of approximately $20,000 per unit. For comparison, construction of a new affordable unit in California costs an average of $425,000, and in some urban areas can exceed $600,000.
California Housing Partnership President Matt Schwartz stated, “The Affordable Housing Preservation Tax Credit provides a creative and innovative tool that will significantly slow the loss of existing affordable housing in California and make it possible for thousands of lower income households to remain in their homes and avoid displacement.”
Assemblymember Gabriel added, “Last year, the State Legislature passed historic tenant protection bills, but these new laws did not address the imminent loss of tens of thousands of affordable units. It is now time for California to step up and confront this threat, especially since we know that keeping vulnerable families housed is essential to solving our homelessness crisis. I look forward to working with Governor Newsom and my colleagues on both sides of the aisle to address this critical and urgent need.”
AB 2058 is expected to be heard in Assembly committees in the coming weeks.
