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Proposition 123 Affordable Housing Programs

Concerning modifications to the affordable housing programs created by the voters' approval of proposition 123.
2023 Regular Session
Bill Summary

At the general election in 2022, voters approved proposition 123, which created new affordable housing programs funded with income tax revenue that the state is permitted to retain and spend as a voter-approved revenue change. 60% of the dedicated revenue is allocated to the affordable housing financing fund (financing fund) for 3 new affordable housing programs. This money is continuously appropriated to the office of economic development (office), which is required to give the money to an administrator selected by the office to administer the programs. 40% of the dedicated revenue is allocated to the affordable housing support fund (support fund), which is continuously appropriated to the division of housing for 3 other affordable housing programs, including the land planning capacity development program.

Local governments that seek additional affordable housing funding from these programs must commit to increasing the number of affordable housing units within the local government by 3% annually and expedite development approvals for affordable housing projects (conditions for funding). The funding for the new affordable housing programs is prohibited from supplanting existing state appropriations for affordable housing programs (maintenance of effort requirement).

The bill modifies the affordable housing programs by:

  • Allowing tribal governments to participate in the programs, subject to the same conditions for funding;
  • Requiring the division of local government, rather than the division of housing, to administer the land planning capacity development program and continuously appropriating money in the support fund to the division of local government for that purpose;
  • Allowing the office to use a portion of the money in the financing fund for its administrative expenses, without increasing the total amount of money from the fund that may be used for administrative expenses;
  • Clarifying that, for the affordable housing programs administered by the administrator, the area median income and rent levels are designated for each rental unit instead of being recalculated on a monthly basis and that the average area median income calculation does not apply to the modular and factory build manufacturer debt program;
  • Clarifying the description of how money is transferred or allocated;
  • For purposes of the 3% growth obligation that is a condition for funding, specifying that all units from projects funded through certain affordable housing programs are counted towards the obligation and allowing local governments and tribal governments to enter into a written agreement to divvy up the units that result from collaborative agreements;
  • Establishing a process for rural resort communities to petition the division of housing to use different percentages of area median income than those percentages specified for eligibility for certain affordable housing programs funded through the financing fund;
  • Exempting money originally from the federal coronavirus state fiscal recovery fund from the appropriations for fiscal year 2022-23 that are used to determine the state's maintenance of effort requirement; and
  • Requiring the office and the division of housing to provide 3 annual reports to legislative committees about the affordable housing programs.
    (Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)




Bill Text

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