SB-196 is one of many new housing bills that Governor Newsom has signed into law to encourage affordable and low-income housing development. The bill provides a property tax exemption for community land trusts building affordable housing—a huge benefit—but that could be just the beginning. In some cases, these projects could also line-up with opportunity zone benefits, particularly because there is such a widespread need for affordable units.
"In some cases, there may be some overlap between affordable housing development and Opportunity Zone deals; however, there is a need for affordable housing in virtually every market, whether or not it is deemed an Opportunity Zone," Richard Lara, president and CEO of RAAM Construction, tells GlobeSt.com.
While there is definitely potential to line-up benefits, Lara says that in some cases more expensive markets—and therefore not an opportunity zone—are the most in need of affordable housing. "One might argue that it is in the most affluent areas where affordable housing is most needed because lower-income residents can't afford to buy or rent in those markets," says Lara. "There isn't an obvious need for budget-friendly housing in those areas because we may not see crime or blight there, but a large percentage of the workforce—including teachers, first responders, nurses—are priced out of these markets and must resort to long commutes in order to get to their jobs in the higher-priced areas."
New legislation, both at the state level, like SB 196, and at he federal level, like the opportunity zone benefit, both have the same goal in mind, to generate more housing for moderate and low-income residents. "Hopefully, the new legislation will help to eliminate this problem by helping to make affordable housing more feasible to build in these markets," adds Lara.
Developers looking to take advantage of these benefits should work with an experienced builder that can navigate the requirements and nuances of the affordable housing bills. "Seasoned contractors like RAAM tend to have long-standing business relationships with material suppliers who can help them value-engineer construction materials—often by purchasing materials in bulk and/or at favorable prices," says Lara. "We also have an expanded network of reliable and experienced workers we can call upon for affordable projects. These two factors alone make a good contractor an invaluable asset for affordable housing developers."
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Kelsi Maree Borland
