The Hollister City Council on May 15 granted CHISPA (Community Housing Improvement Systems and Planning Association, Inc.) an additional $300,000 from the city’s Housing Successor Low and Moderate Income Housing Asset Fund for a proposed 48-unit Line Street senior housing project. The money is designed to help the project provide the California Tax Credit Allocation Committee with as competitive an application as possible for tax credits. The vote was 4-0, with Mayor Ignacio Velazquez recusing himself because he has a working relationship with CHISPA.
On March 20, CHISPA was selected for the use of $700,000 from the city’s housing asset fund for its 48-unit apartment project. Additionally, CHISPA’s funding plan identified Section 8 vouchers end cap credits as other sources of funds in order to complete the project. On April 11, the Santa Cruz Housing Authority granted CHISPA 48 Section 8 vouchers. The association will apply for tax credits by June.
The award of tax credits from the California Tax Credit Allocation Committee (CTCAC) is a highly competitive application with the strongest applications winning the credits, according to city officials. To win, the applicant must prove the strongest community funding as possible. CHISPA’s request for $300,000 in additional funding was a move to ensure its application was viewed by the tax credit allocation committee in as positive light. The $300,000 is conditional upon receipt of the tax credits.
Councilman Karson Klauer asked how much money remained in the city's housing asset fund after the $700,000 was allocated. He was told there was $2.358 million, and then as money that has been budgeted is spent, by fiscal year 2018-19, there will be a little over $500,000 left in the fund. Mary Paxton, program manager of Hollister’s Development Services Department, told the council that 2019 is critical.
“We can’t have a fund balance of more than $1 million or there will be penalties on expenditures,” she said. “We have to spend at least 30 percent of our funds on extremely low-income rental housing. One of the reasons we issued an RFP (request for proposals) earlier this year for $700,000 was to be sure we met that target.”
Paxton said the state legislature added strings to the city's former Redevelopment Agency housing funds to discourage the city from not spending it and to continue to build extremely low-income housing.
Councilwoman Mickie Luna asked if there was a possibility of a portion of the $300,000 being returned to Hollister. She was told that if CHISPA does not receive the tax credit, the $300,000 will not be granted and will remain in the housing fund. Paxton commented that the loan would be spread out over 55 years at 3 percent interest. Klauer wondered what would happen once the money is paid back in 55 years.
“If there is such a thing as a housing fund and the legislature requires it be reinvested in affordable housing, that will be the most likely outcome,” Paxton said.
