November 21, 2017

West Coast Real Estate Update: Nov. 21, 2017

Holland & Knight Update
Susan Jennifer Booth | Stacie Andra Goeddel | Robert M. Haight Jr. | Karl J. Lott | Douglas A. Praw | Andrew J. Starrels | Chris Gregores

Absence of Private Activity Bonds from House Tax Proposal Could Hurt Affordable Housing

While a lot of people are discussing the ways in which the tax proposals coming out of Congress will impact personal and corporate income taxes, the provision to eliminate private activity bonds found in the proposal from the U.S. House of Representatives is not receiving as much attention. However, the elimination of private activity bonds could have a deleterious effect on affordable housing.

Private activity bonds are used in connection with the 4 percent tax credit for low-income housing that often make the acquisition, construction and renovation of affordable housing economically feasible. According to Jeffrey Jaeger of Standard Communities, which specializes in affordable housing, the elimination of private activity bonds could result in as much as a 50 percent reduction in affordable housing development.

Long Beach Says "No Thanks" to High-Density Development

Long Beach officials have announced that the city's forthcoming update to its Land Use Element ordinance will not allow for the high-density development proposed in a draft earlier this year. Citing a need to allow higher-density projects to accommodate the city's growing population, city officials had proposed rewriting the Land Use Element to allow for taller buildings — as high as 10 stories — in certain parts of the city. However, residents expressed concerns about increased traffic congestion and crime if high-density developments were allowed.

The final version of the updated Land Use Element will restrict the majority of new development to low-density projects, such as townhomes, three-story apartment buildings and small mixed-use buildings. However, this will make it more difficult for Long Beach to address its ongoing affordable housing problem. The city already consistently fails to meet California's goal of adding 783 units of housing on an annual basis.

Move Over, San Francisco: Los Angeles Now the Least Affordable Housing Market in U.S.

According to the National Association of Home Builders-Wells Fargo Housing Opportunity Index, Los Angeles supplanted San Francisco as the least affordable housing market in the U.S. in the third quarter of 2017. The report specifies that 58.3 percent of new and existing homes sold in the Los Angeles-Long Beach-Glendale area between July 1, 2017, and Sept. 30, 2017, were affordable to families earning the national median income of $68,000. That is a drop from the 59.4 percent of homes considered affordable that were sold in the second quarter of 2017.

The San Francisco-Redwood City-South San Francisco area, which held the title of the nation's least affordable major housing market for the previous 19 quarters, is now second on the list. Other large and small housing markets among the least affordable in the nation included several California locations, such as Anaheim-Santa Ana-Irvine, San Jose-Sunnyvale-Santa Clara, Santa Rosa, Salinas, Santa Cruz-Watsonville, San Luis Obispo-Paso Robles-Arroyo Grande, Napa and San Rafael.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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