Summary
June 17, 2024
The Honorable Assemblymember Chris Ward
Chair, Assembly Committee on Housing and Community Development
1020 N Street, Room 156
Sacramento, CA 95814
Re: SB 1032 Housing finance: portfolio restructuring: loan forgiveness – SUPPORT
Dear Assemblymember Ward,
On behalf of the Marin County Board of Supervisors, I am writing to express our support for SB 1032, which will give the Housing and Community Development Department (HCD) the authority to forgive specific legacy loans at the agency’s discretion.
Our Board is committed to protecting, preserving, and creating new affordable housing. Key to making projects possible in high-cost areas like Marin are the many state and federal financing programs, some of which have existed for decades. HCD administers a number of loan programs that were created in the 1980’s and 1990’s to preserve existing affordable housing. These programs offered loans to public housing providers (such as Marin Housing Authority) with terms that attempted to strike a balance between providing impactful funding and ensuring the rents charged on these properties would remain affordable. All of these programs are closed and no longer offer loans.
Some of the loans had terms that allowed housing agencies to forgo making payments over time but did not also include a “forgiveness” option. Meaning housing agencies were effectively trapped in an endless debt cycle with no exit path. The loans were set up to anticipate future cash flows to pay down their principal. In reality, these affordable housing units seldom experience excess cash flows due to the rent affordability restrictions required by the loan program and the cost of maintaining the units. Given the reality of how these loans currently function, it is time to provide HCD the authority to forgive these as means to provide relief to the impacted housing agencies. Without loan forgiveness, these housing agencies could default on these loans, effectively increasing the possibility that a housing agency will need to close affordable housing sites which serve the most vulnerable residents of a community, ultimately leading to more homelessness in our state.
It is important to note that SB 1032 would not require HCD to forgive any specific loans, but instead will give them the authority to choose to forgive certain legacy loans that are most at risk, per their discretion. For these reasons, Marin County is proud to support SB 1032.
Sincerely,
Dennis Rodoni, President
Marin County Board of Supervisors
CC: Marin County Board of Supervisors
Senator Mike McGuire
Assemblymember Damon Connolly
The Honorable Members, Assembly Housing & Community Development Committee
Alexis Castro, Legislative Director, Office of Senator Stephen Padilla
Mark Neuburger, Legislative Advocate, California State Association of Counties
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