BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SCR 90
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Lowenthal
VERSION: 5/24/10
Analysis by: Mark Stivers FISCAL: yes
Hearing date: June 15, 2010
SUBJECT:
Internet service accessibility in affordable housing
DESCRIPTION:
This resolution encourages state and local multifamily housing
lending agencies to align their policies on the provision of
free Internet access with those of the Tax Credit Allocation
Committee.
ANALYSIS:
Current law establishes the Tax Credit Allocation Committee
(TCAC) to administer the federal and state Low-Income Housing
Tax Credit Programs. Through a highly competitive application
process, TCAC awards tax credits to the developers of affordable
rental housing. In turn, these developers take on investors as
limited liability partners, who in exchange for the tax credits
provide funds in the form of equity for building the affordable
housing.
In 2003, TCAC amended its scoring regulations to encourage
affordable housing developers to provide broadband Internet
access as a service amenity to their tenants. The current
regulations provide two points within the site amenity category
for providing high-speed Internet service to each unit for a
minimum of 10 years, free of charge to the tenants. As a
practical matter, TCAC considers the infrastructure design and
installation costs associated with the Internet network as
eligible development costs that can be included when calculating
the amount of tax credits the development is eligible for. The
on-going costs of network maintenance and the internet service
itself are also eligible operating costs.
The Department of Housing and Community Development (HCD)
administers a number of programs that finance the development of
affordable rental housing, including the Multifamily Housing
SCR 90 (LOWENTHAL) Page 2
Program, the Joe Serna, Jr. Farmworker Housing Grant Program,
and others. HCD's regulations are not specific to the issue of
internet-related costs, but its practice is to allow the costs
of the design and installation as eligible development costs but
not to allow the on-going costs of maintaining a high-speed
internet network and providing free internet service to
residents as an eligible operating cost.
Many counties and cities also provide financing for the
development of affordable rental housing. Counties and cities
primarily use redevelopment resources from the 20% low- and
moderate-income housing fund and federal funds from the HOME
Program and the Community Development Block Grant Program for
these purposes. Counties and cities establish their own
policies with respect to allowing internet hardware and soft
costs as eligible expenditures, and these policies vary widely.
This resolution :
Encourages all state and local affordable housing lenders who
administer competitive multifamily housing programs to follow
the California Tax Credit Allocation Committee policy on
high-speed Internet access by providing competitive points for
developments that will provide high-speed Internet service to
each unit for a minimum of 10 years, free of charge to the
tenants.
Encourages all state and local affordable housing lenders to
recognize both the costs for installing high-speed Internet
network infrastructure as an eligible development cost and the
costs of ongoing Internet service and network maintenance
costs as eligible operating costs.
COMMENTS:
Purpose of the resolution . According to the author, persons
without Internet access and training will find it difficult to
compete in the increasingly technology-driven, knowledge-based
economy. Low-income households are significantly less likely to
have a computer, Internet access, or home broadband service and
are therefore at risk of falling further behind.
Since 2003, California has recognized the importance of Internet
service for low-income residents of affordable housing. Through
its Low Income Housing Tax Credit program, TCAC encourages
SCR 90 (LOWENTHAL) Page 3
affordable housing developers to use housing credit funding to
provide broadband as an amenity in affordable housing units. As
a result of this policy, the nonprofit One Economy Corporation
has assisted 283 affordable housing developments in California
design and install data network infrastructure, and the
residents of 16,949 affordable housing units in California enjoy
free, in-home Internet service as a basic service amenity.
Other state and many local public lenders do not encourage the
provision of free Internet access in the same way, if at all.
In order to enhance the educational and economic opportunities
of low-income households, this resolution seeks to encourage
state and local multifamily housing lending agencies to align
their Internet policies with TCAC's policies.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 9, 2010)
SUPPORT: One Economy Corporation (sponsor)
California Rural Legal Assistance Foundation
Western Center on Law and Poverty
OPPOSED: None received.