Sacramento’s latest effort to crack down on companies tied to immigrant detention centers is ricocheting into a place lawmakers probably did not intend: the already fragile pipeline for affordable and workforce housing in California.
Investors that typically buy state and federal low-income housing tax credits are tapping the brakes while they figure out how two new bills might affect them. That pause is leaving projects that depend on tax credit equity at risk of delay or even collapse, right as demand for income-restricted apartments in the Bay Area keeps climbing.
The ripple effect hit home in San Francisco this week when a planned $25 million tax credit equity closing for a 202-unit workforce project at 960 Howard St. in downtown failed to close, according to the San Francisco Chronicle. The paper reports that U.S. Bank and other large investors have “temporarily paused the closing of certain transactions involving California state tax credits” while they wait for clearer legislative language. Developers and syndicators told the Chronicle that some deals have “ground to a halt” as buyers revisit commitments.
How the Bills Would Clamp Down on State Perks
Assembly Bill 1675 would disallow certain corporate tax expenditures for companies that contract with the U.S. Department of Homeland Security, according to the bill text and analyses. AB 2465 would make entities that invest in or profit from private detention facilities ineligible for state grants, loans, and tax credits, according to the bill documents…