BILL ANALYSIS Ó SB 1413 Page 1 SENATE THIRD READING SB 1413 (Leno) As Amended June 16, 2016 Majority vote SENATE VOTE: 29-7 ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Housing |6-1 |Chiu, Steinorth, |Beth Gaines | | | |Burke, Chau, Lopez, | | | | |Mullin | | | | | | | |----------------+-----+----------------------+--------------------| |Education |6-0 |O'Donnell, Olsen, | | | | |McCarty, Santiago, | | | | |Thurmond, Weber | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: Establishes the Teacher Housing Act of 2016 to facilitate the acquisition, constriction, rehabilitation, and preservation of affordable housing restricted to teachers or school district employees. Specifically, this bill: SB 1413 Page 2 1)Includes the following legislative findings: California places a high value on our public education system, and the stability of housing for school employees is critical to the overall success and stability of each school in California. The supply of new preschool through grade 12 teachers in California has hit a 12-year low, and enrollment in educator preparation programs has dropped by more than 70% over the last decade, and this shortage most impacts schools serving more low-income and minority students. Demand for teachers and staff is projected to grow further as school districts continue to recover from the recession and seek to replace previously eliminated programs and positions. Districts are also coping with attrition, which averages about 8% of all teachers annually. This attrition includes inevitable retirements, as fully one-third of California teachers are over 50 years of age and 10% are over 60 years of age, but most attrition is due to younger teachers leaving. A growing trend driving teacher turnover is the steadily increasing cost of housing in certain markets. In addition to the negative emotional and developmental impacts teacher turnover has on students, the costs borne by school districts to recruit, hire, and train new teachers each summer is immense. In San Francisco alone, during the summer of 2015, the school district had to recruit, hire, and train 700 new teachers. Many cited housing costs as the reason why the teacher was leaving the school district. SB 1413 Page 3 Students and the community at large are benefited by teachers living in the community in which they practice their profession. It ensures stability, community involvement, and stronger ties between teachers, their students, and their families. By creating affordable housing options for teachers near or on school sites, it also reduces vehicle miles traveled and time away from teachers' homes, thereby reducing or eliminating commute time. 2)Defines "affordable rental housing" to mean a rental housing development where a majority of the rents are restricted to levels affordable to low- and moderate income residents, no more than 120% of area median income (AMI), and are not limited to projects with five or more units. 3)Defines "teacher or school district employee" to mean any person employed by a unified school district maintaining prekindergarten, transitional kindergarten, and grades one to 12, elementary school district maintaining prekindergarten, transitional kindergarten, and grades one to eight or a high school district maintaining grades nine to 12 but not limited to certified and classified staff. 4)Authorizes a school district to establish and implement programs that address the housing needs of teachers and school district employees who face challenges in securing affordable housing. 5)Allows a school district, to the extent feasible, to establish and implement programs that among other things, do the following: SB 1413 Page 4 a) Leverage federal, state, and local public, private, nonprofit and fiscal resources available to housing developers; b) Promote public and private partnerships; and c) Foster innovated financing opportunities. 1)Creates a specific state policy supporting housing for teachers and school district employees, as described in Internal Revenue Code Section 42(g)(9)(B), and further permits school districts and developers in receipt of local or state funds or tax credits designated for affordable rental housing to restrict occupancy to teachers and school district employees on land owned by school districts so loans as the housing does not violate any other applicable laws. FISCAL EFFECT: According to the Senate Appropriations Committee, to the extent this bill results in additional affordable housing projects targeting teachers and school personnel, greater demand would be placed on limited existing housing resources leading to greater competition for receiving certain financial benefits such as state low-income housing tax credits. According to the State Treasurer's Office, state credits are oversubscribed by roughly a two to one ratio. COMMENTS: Background: According to the author, at least two school districts have successfully built affordable rental housing on district owned property to house teachers employed in the district. However, the districts only provide an occupancy SB 1413 Page 5 preference to teachers and cannot limit the housing to teachers only. This bill would allow school districts to establish and implement programs to address the housing needs of teachers and school district employees. In addition the bill creates a state policy supporting housing for teachers and school employees, and permits school districts and developers who receive local or state funds or tax credits to support the construction of affordable rental housing, to restrict the occupancy to teachers and school district employees on land owned by school districts. Generally under federal Internal Revenue Service (IRS) rules, if a residential unit is provided only for a member of a social organization or provided by an employer for its employees, the unit is not for use by the general public and is not eligible for federal Low-Income Housing Tax Credit (LIHTC). However, federal IRS law also states that a qualified LIHTC project does not fail to meet the general public use requirement solely because of occupancy restrictions or preferences that favor tenants 1) with special needs, 2) who are members of a specified group under a federal program or state program or policy that supports housing for such a specified group, or 3) who are involved in artistic or literary activities. This bill creates a specific state policy that supports housing for teachers and school district employees with the intent of making it clear that those projects can receive LIHTC. Purpose of this bill: According to the author, California places a high value on its public education system, and the stability of housing for school employees is critical to the overall success and stability of each school in California. Students and the community at large are benefitted by teachers living in the community in which they practice their profession. It ensures stability, community involvement, and stronger ties between teachers, and their students and families. Lack of affordable housing creates barriers to effective teaching and teacher retention and the combination of teacher and housing SB 1413 Page 6 shortages demands innovative solutions. Twenty-five percent of teachers nationwide point to housing incentives as an important factor in their decision to return to teaching. While there are programs in many communities to help people find and attain affordable housing, middle-class earners like teachers do not always qualify for them. This bill underscores the critical role that teachers and other education professionals play in the long-term success of our state by allowing for the development of specific housing to keep these hard-working professionals in our communities and our schools. This bill provides clear authorization to school districts to develop housing on district-owned property, which will enable the districts facing the most acute teacher shortages to directly address the lack of affordable housing that is forcing teachers out of our communities and out of a vital profession. Investors require clear state law before getting on board with new and innovative projects, especially in an area as expensive as San Francisco. Unlike the higher education code, which covers faculty housing in detail, K-12's silence on this issue is a cause for great concern for financial markets when facing a decision of whether to embark upon multi-billion dollar housing projects." Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085 FN: 0003556 SB 1413 Page 7