March 26, 2007
Affordable Housing Budget
Affordable Housing Budget, wll there be sunshine after the rain?
On February 18th in Sacramento, the Pooled Money Investment Board (PMIB) comprised of State Treasurer Bill Lockyer, State Controller John Chiang, and Director of Finance Michael Genest met to discuss the State’s Cash Management Requirements; approve staff’s recommendations to continue the freeze on AB 55 loan disbursements except for the previously authorized $650 million approved on January 16, 2009; postpone consideration of three new loan requests from the California Resources Board, which includes California Housing Finance Agency; and agree to convene a special meeting as soon as possible following the enactment of a State budget solution.
Thanks to the twenty-six (26) for-profit and nonprofit housing developers, banks, and housing organizations from around the State that testified before the Board outlining the impacts of not having critical State housing programs funded as well as emphasizing the need for confidence, predictability, and certainty of continued State housing program funding. While the Board was very receptive and understanding of the plight of affordable housing, the best they could offer at this time was to say that the State has not issued General Obligation (GO) bonds since July 2008 and that there is at least a $7 Billion backlog of State funding needs. Treasurer Lockyer stated that the State would not go to market all at once on a $7 Billion GO bond offering and that there were many factors (e.g., market receptiveness to a GO bond sale) the Board would need to consider before the State started issuing bonds again. This is very sobering news for the affordable housing industry. One action that the Board did take was to approve a resolution consenting to the purchase of State GO bonds in private placements on the condition that proceeds from the sale of such bonds directly finance certain projects. The funds received from the sale of these bonds would be placed in accounts to directly fund projects instead of being used to pay down outstanding AB 55 loans (i.e., other general obligations of the State). What this means is that if you can privately place GO bonds for a group of housing developments, the PMIB will consent to the sale proceeds from the sale of the GO bonds to be used specifically for that target group of developments. As mentioned above, the PMIB will be scheduling a meeting now that the State budget has been fully adopted and signed.
We will keep you posted as to the Board’s next meeting as well as any timetable that the Board is likely to outline in the coming weeks but as we know when it rains it pours.