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.

Florin and other Sonoma County leaders said if the state officials were to allocate the tax credits according to the damage caused by recent wildfires, North Bay counties would end up getting about 30%, or $300 ?million, of the $1 ?billion in tax credits.

But an even larger share would go to Butte County, which in 2018 was hit by the Camp fire, the state’s most devastating wildfire in history.

Seana O’Shaughnessy, president and CEO of Community Housing Improvement Program in Chico, said the Camp fire destroyed roughly 14% of the housing stock in Butte County. The town of Paradise alone lost about 11,000 ?homes in the inferno.

Nearby Chico and Oroville became home to many Paradise residents displaced by the Camp fire and affordable housing is desperately needed in those communities, O’Shaughnessy said.

“We still have 420 households from the Camp fire living in FEMA trailers in Chico and Gridley,” she said. “There are nearly 850 families in active disaster case management. The biggest thing preventing them from moving out of case management is a lack of affordable housing in our region.”

O’Shaughnessy said the additional tax credits would be a big help if they were allocated according to the level of wildfire damage and the number of people hurt.

“That would make a significant dent in our ability to bring back affordable housing,” she said. O’Shaughnessy, who attended the state tax credit allocation committee meeting in Sacramento on Monday, said she thinks Blackwell and committee members are taking to heart the concerns of communities affected by wildfire.

O’Shaughnessy said it would be OK to use leftover tax credits on homeless projects, rather than have the state lose them altogether.

For Gov. Gavin Newsom, housing to alleviate homelessness and the effects wildfires are having on the state’s housing crisis are among his key priorities. A spokesman for Newsom said the governor is paying attention to the fire recovery tax credit allocation issue.

“This issue is on our radar and currently being reviewed by the administration,” Newsom spokesman Jesse Melgar said.

David Gouin, Santa Rosa’s director of housing and community services, said the city has an “active pipeline” of more than 800 ?housing units. The first round of the additional tax credits could be made available in March, he said.

That could help finance three “shovel-ready” projects in the city totaling 195 ?homes, including Roseland Village, College Avenue Supportive Housing and Burbank Avenue Apartments, Gouin said.

You can reach Staff Writer Martin Espinoza at 707-521-5213 or martin.espinoza@pressdemocrat.com.