Sonoma County leaders want $1 billion of tax credits used for intended purpose: wildfire recovery
Sonoma County leaders raised concerns over a state proposal that would allow federal tax credits worth about $1 billion over 10 years intended for counties devastated by recent wildfires to be used for homeless housing projects.
For their part, California officials say most of the federal tax credits would be directed as intended — to help 13 counties affected by fires in 2017, including the Tubbs fire that burned through a big section of Santa Rosa, and 2018. Only unused tax credits, they say, would be available for homeless housing.
Local officials here, however, insist all of the tax credits should be used for housing in fire-affected areas, especially in communities like Butte County and the North Bay, which lost roughly 28,000 homes in two of the most destructive wildfires in state history.
Sonoma County Supervisor Lynda Hopkins last week said that, while she understands the urgent need for housing for the homeless, these federal tax credits only should be used for wildfire disaster recovery. The county lost 5,300 homes in the Tubbs inferno.
U.S. Rep Mike Thompson, D-St. Helena, agreed. Last year, Thompson wrote federal legislation that directed additional tax credits for the 13 counties affected by wildfire.
“The state of California thought they could use it for other things,” Thompson, who chairs the House revenue subcommittee, said this week. “The language (of the bill) is unequivocal. The money is to be spent in the areas that were devastated by natural disasters.”
Last week, after the state treasurer’s office released proposed guidelines for allocating the additional federal low-income housing tax credits, Thompson expressed his concerns in a letter to California Treasurer Fiona Ma.
Ma is chairwoman of the California Tax Credit Allocation Committee, which is tasked with awarding and distributing the federal tax credits. The committee has been conducting hearings this week in Sacramento, Oakland, Los Angeles and San Diego, to get public input on its proposed guidelines.
Judith Blackwell, the committee’s executive director, acknowledged this week the concerns raised by Sonoma County officials and affordable housing builders in communities hurt by wildfires.
Blackwell said the tax credits made available through Thompson’s legislation are to be used this year and in 2021. The proposed guidelines would allow other projects to use any tax credits left over and not used by wildfire counties during that two-year period.
“We only go to homeless and (single-room occupancy) housing if the disaster counties have not used the money,” Blackwell said in an interview.
Blackwell said the tax credit allocation committee likely will make changes that address concerns raised during the hearings this week.
“The feedback we’ve gotten has already told us we need to adjust that proposal,” for distributing the tax credits, she said.
Federal low-income housing tax credits are the single most important tool used to finance and build affordable housing, said Larry Florin, executive director of nonprofit Burbank Housing based in Santa Rosa.
Developers like Burbank who receive federal tax credits can sell the credits to investors such as banks. In this case, the purchased credit can be used as a tax break over 10 years.
“So the $100 million in tax credits becomes $1 billion over that period,” Florin said.