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Creating Affordable Workforce Housing Through Intergovernmental Partnerships in Livermore

Tax Increment Financing Provided the Foundation for Success

April 12, 2013
Note: With job creation and affordable housing on the minds of public officials across California, the power of state-local partnerships in creating good paying construction and other private sector jobs merits attention. This is part of a series of special papers on some successful partnerships.
At the easternmost edge of the San Francisco Bay Area sits Livermore, a city of 83,000 residents that holds the unique distinction of having two national laboratories. Although Livermore has more people with PhDs than any other U.S. city, that doesn’t mean everyone who lives there can afford the median home prices or the market’s rental rates. The city has made affordable housing such a large priority that its efforts have been recognized by both state and national housing groups. There are a wide range of programs designed to help people buy affordable homes and rent affordable apartments. These efforts are showcased in Livermore’s Strong Cities | Strong State profile.Savannah Terrace

The city’s Inclusionary Housing Ordinance is one of its most important tools. Developers are required to set aside 15 percent of the units it builds as affordable. The units must be comparable to the rest being built and randomly distributed throughout the development. Developers also have an option to pay the city the value in lieu of building the units. The city’s policies give preference to its teachers, police officers and service workers. “The idea is that people who work in Livermore should live here,” says Eric Uranga, Livermore’s assistant community development director.
Between 2002 and 2010, 105 inclusionary units were built for Livermore’s moderate-, low-, or very-low income residents. When one of these units goes up for sale, the city requires that it’s sold to another person who meets the qualification of Livermore’s inclusionary housing policy. The city gives also priority to people renting one of Livermore’s subsidized housing units who want to purchase one of these homes. Organizers of the National Inclusionary Housing Conference invited representatives from Livermore to speak in 2008 and 2010. The city has also presented at Housing California’s events.
The city has spent approximately $9.6 million on housing from the 20 percent affordable housing set-aside through revenues, generated through tax increment financing in the past decade. The funds were invested in two senior rental projects that produced 380 units of housing, two family housing projects that produced 140 units of housing and some smaller projects in Livermore’s downtown. Livermore has actually helped create five senior complexes in which residents pay 30 percent of their income for rent and utilities no matter how much they make.
Working together, the five cities, in what is known as the Tri-Valley area (Livermore, Danville, Dublin, Pleasanton and San Ramon), created the Tri-Valley Housing Opportunity Center. It’s a one-stop shop where residents can access information for all the affordable housing programs in the area. The program has been an important cost-saving venture for the participating cities because by sharing resources, and each city’s administrative costs are reduced. Heritage Estates
Uranga, is especially proud of the city’s Housing Scholarship Program, providing rental assistance to people who are homeless or at risk of becoming homeless. During the two year program, participants not only receive financial assistance, but they’re also given case management services, job training and other education. The assistance declines over the course of the two years, because over time participants need less and less subsidization. The Housing Scholarship Program helped 140 families between 2001–2012 and is now being replicated in the city of Pleasanton.  
The phrase “it takes a village” has become cliché, but it accurately characterizes why Livermore has historically been extremely successful in meeting the housing needs of residents at every income level. The “village” in this case is the combination of local, state and federal resources that the city leverages to fund, build and support housing. For example, the Housing Scholarship Program relies on federal Community Block Development Grants, state of California HOME Investment Partnership Program funds and revenues created by the city’s inclusionary housing in-lieu policy.
However, Uranga is concerned that the loss of tax increment financing will make it more difficult for the city to achieve the goals of its housing policies. “The reality is that when you apply for state or federal money to create affordable housing and don’t have local funds invested, it’s not very competitive. But it is powerful when your city can say in its application that it will leverage local funds with other revenues.”
Until last year, state revenues generated through the state-local tax increment financing program provided the second largest source of funding for affordable housing in California (federal programs are the largest). According to Housing California; former tax increment financing agencies supported the development or preservation of more than 98,000 units of low- and moderate-income housing from 1993 until 2011.
These revenues were an important part of Livermore’s strategy to create more much-needed housing for the city’s teachers, police officers, firefighters, retail clerks, restaurant employees and more. The demise of this historic funding source worries Assistant City Manager, Troy Brown. “The loss of tax increment financing is going to hurt our ability to expand our workforce housing inventory. We won’t be able to do some of the creative things we used to be able to do.”
Brown says that Livermore routinely used tax increment financing to address infrastructure in the city’s blighted areas. It helped fund gutters, sewers, utility upgrades and street curbs to make the parcels marketable. “How do we improve infrastructure, acquire and put together parcels that are sellable in today’s market? Tax increment financing was our single tool to accomplish this.”
Livermore won’t be able to continue its long-standing emphasis on housing without new partnerships between cities and the state. Brown hopes that the state comes up with new ways to help cities like his build workforce and low and very-low income housing. “Identifying funding for affordable and workforce housing is critical. Sen. DeSaulnier’s bill, SB 391, if approved, would be a step in the right direction in making funding available. Still, the demand for affordable housing in California will far exceed the $500 million annually that is estimated will be generated by the bill.”
While the future of these funding sources is uncertain at these times, these state and locally funded programs offer a model for other cities. The state-local tax increment financing partnership was the foundation of the city of Livermore’s successful investment in affordable housing.

Please also see the Livermore legislative drop piece.

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