BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SCR 6
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Lowenthal
VERSION: 1/31/11
Analysis by: Mark Stivers FISCAL: yes
Hearing date: April 12, 2011
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 for which the development is eligible.
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 6 (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 TCAC 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:
1.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 affordable housing developers to use housing
credit funding to provide broadband as an amenity in
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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 more than 19,000
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.
2.Opportunity costs . The costs of providing free internet
access to residents of affordable housing are relatively
minimal but not free. A typical one-time cost to install a
wireless network in an apartment complex is $206 per unit.
The typical costs of providing internet service and
maintaining the network run between $3 and $7 per unit per
month. At some point, these additional costs reduce the
number of affordable units that can be developed with existing
subsidies, but the units that are constructed with high speed
internet access help achieve other important public policy
goals, such as closing the digital divide and improving
educational and job opportunities for low-income residents.
3.Related resolution . Last year the author introduced a very
similar resolution, SCR 90. This committee approved that
resolution by a vote of 5-3. The Senate subsequently approved
the resolution, but due to the lateness in the session, the
Assembly Rules Committee never referred the measure to an
Assembly committee for hearing.
PREVIOUS VOTES:
Senate Energy, Utilities, and Communications Committee: 8-3
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
April 6, 2011)
SUPPORT: One Economy Corporation (sponsor)
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OPPOSED: None received.