BAHFA - Small Acronym, Big Issue

At Long Last - A Regional Bond for Affordable Housing

Increasing the amount of housing that is affordable to low-and-moderate income residents is a policy goal shared by most Bay Area communities including Palo Alto. Moreover, all Bay Area communities are asked by the state and our regional planning agency ABAG to plan for large amounts of new housing affordable to low-and-moderate income residents. Palo Alto’s goals over the next eight years are 1,556 units affordable to residents with incomes below 50% of the county median income, 896 and 1,103 units affordable to residents making between 50% and 80% and between 80% and 120% of the area median income.

This is a very difficult challenge for many reasons but probably the most difficult challenge is the lack of funding for these projects. But good news is developing to meet this challenge!

But What is BAHFA?

Plans are underway for a big step towards abundant housing for all: a nine-county bond for the November 2024 ballot. A leader of this bond effort is the Bay Area Housing Finance Authority (BAHFA). Created in 2019, it is California’s first regional housing finance authority. Its “three Ps” approach is: protection of current residents from displacement; preservation of current affordable housing; and production of new housing at all income levels, especially affordable.

This regional bond would raise billions of dollars to support tens of thousands of affordable homes. Depending on the bond’s ultimate scale ($10 to $20 billion), it will provide one to two billion dollars each for San Jose, the rest of Santa Clara County, and San Mateo County. These funds will support both construction of new affordable housing and preservation of old affordable housing. (More detail on the effort to develop a bond can be found here.)

Cities in Santa Clara County besides San Jose will be allocated funds by the county, not directly. The bond being developed will focus on and jump-start shovel-ready projects where the bond funding can make a difference. That means cities like Palo Alto should begin developing a portfolio of projects that will meet the county criteria should the bond be approved by voters in the region.

This bond should help unlock additional funds. Many affordable housing developers begin by obtaining funding commitments from state and local government. This often makes it easier to obtain a commercial mortgage from a bank, and federal Low-Income Housing Tax Credits (LIHTC).

Other bond supporters have formed Bay Area Housing For All (BAHA). This coalition already has scores of members, including non-profit, governmental, and business groups that work at the intersection of housing, racial equity, climate, and transportation.

Bonds like these are a common way to support affordable housing. For example, Santa Clara County voters in 2016 approved Measure A, a bond of nearly $1 billion for affordable housing. It has supported more than 5,000 affordable homes in nearly 50 developments located in nine cities. Six years later, Measure A funds are dwindling. The program’s success shows the need for an even more-ambitious affordable housing bond.

At the same time there is a separate effort to put a measure on the ballot to reduce the vote majority required to pass affordable housing bonds from 2/3 to 55% as we have done for local education bonds or to 50%.

Moving FORWARD Together

The region’s largest cities have already endorsed the effort to develop a bond that will help fund more low-and-moderate income housing, including Oakland, San Francisco, and San Jose. We hope the City of Palo Alto will, too. This bond is a necessary step towards building and preserving affordable housing in and around our neighborhoods.