Toni Atkins
State Sen. Toni Atkins / Photo by Adriana Heldiz

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In 2017, the state passed SB 2, a law its sponsors said would alleviate the cost of shelter in California by providing an ongoing source of affordable housing funds in an industry that mostly relies on single-use money.

Since then, the state has collected more than $1.6 billion in fees levied on real estate transactions. Yet by the end of 2021, the state had spent less than a quarter of that total on housing and homelessness. 

Five years ago, Senate President Pro Tem Toni Atkins said she authored SB 2, or the Build Homes and Jobs Act, to “provide desperately needed funding for permanent housing with supportive services.” With it, the state collected revenue from fees imposed on certain real estate transactions, such as mortgage refinances.  

Atkins acknowledged the money would not solve the crisis overnight, but said it would bring housing stability and benefit thousands of California families each year. 

SB 2 would not only help produce more housing, but also help local agencies update their community plans and help lower housing costs overall.  

“After today’s vote, I am increasingly hopeful that relief is coming soon for many hard-working people,” Atkins previously said. 

Because of that law, every real estate document required to be recorded by law now carries a fee of $75 each, with the total amount of fees being capped at $225 for each transaction. The state was then to distribute the money to local programs and affordable housing projects across the state.   

Voice of San Diego found that the state collected more than $1.6 billion by the end of 2021. Only 17.7 percent has been disbursed statewide as of June 30 of this year. It has gone to two major programs: $144.7 million has been committed to housing projects across the state through the state’s Mixed Income Multi-Family Loan Program, and about $139 million has been disbursed in local assistance programs.  

People were supposed to feel the impact.  

“When you see results with the dollars that you pay into services, when you can pay into something that changes our state, that improves the quality of people’s lives … they will be thankful for our efforts to provide more affordable housing,” Senator Ben Hueso said after the passage of SB 2 in 2017. 

Yet housing affordability in San Diego has reached crisis levels, and homelessness is a top concern for San Diegans in opinion polls. In the past 10 years, the number of residents who can afford the median priced home in the county has been cut in half. Now, the typical home is only affordable for 19 percent of residents, according to the California Association of Realtors’ Housing Affordability Index. And since 2017, the asking rent for an apartment in San Diego has increased by about 29 percent.  

Voice repeatedly tried to set up an interview with Atkins. After sending spokesperson Doug Case the dollar amounts of SB 2 money collected and disbursed, requested to get Atkins “appropriately briefed” on the interview, her office said she would not be available due to the busy start of the California State Legislature session. 

Instead she emailed a statement that SB 2 “remains one of the few reliable, permanent sources of funding for affordable housing,” and gives flexibility to local agencies when planning how to use the money. 

In San Diego County, more than $154 million in real estate fees had been collected by the end of 2021. About 5.3 percent of these funds collected from real estate transactions in San Diego have funded local assistance programs.  

Agencies can access funding over the course of three years, and some may wait until there’s a larger sum available in the pot to draw from. This means that while most money has yet to be spent, its availability can allow local governments to plan for future projects.   

The state set aside about 15 percent of SB 2 revenue for the Mixed Income Multi-Family Loan Program, which is meant to address the “missing middle” of the housing industry. These loans are committed to housing projects across the state, including four developments in San Diego County, but the money doesn’t get used until after construction is completed.  

Valencia Pointe Apartments is the only project completed in the county so far. Atkins said in an email that this 102-unit development of affordable and extremely low-income housing was a good example of the progress SB 2 has helped make.  

In total, $20.4 million in Mixed Income Program loans have been committed to the four San Diego projects, but this can be a mix of SB 2 funds and other money sources, according to Chris Saur, the spokesperson of the state’s Housing Finance Agency. Until the loans are disbursed post-construction, Saur said they don’t know if the projects will use SB 2 money or another funding source. 

“Even though we don’t technically send the money until later, that commitment is what allows these units to get built,” Saur said in an email. 

The majority of SB 2 funds set aside for local assistance went to Permanent Local Housing Allocations (PLHA). According to the state’s Department of Housing and Community Development, these awards support “housing-related projects and programs that assist in addressing the unmet housing needs of their local communities.”  

SB 2 helped fund the second round of PLHA awards, where more than $9.6 million had been awarded to agencies in the county. Only about $6.4 million of that has been disbursed, according to the state’s Housing and Community Development Department.  

Stephen Russell, CEO of the San Diego Housing Federation, said it was “a long-term dream to get a permanent source” of funding, but cities can only base their plans off the funding they are awarded. If instead the state disbursed funding all at once and municipalities could create bolder plans, there’s a greater chance of preventing homelessness — “one of the most critical humanitarian issues of our time,” Russell said.  

“It’s very hard to plan, especially in a sector that relies on doing five to seven years as the lifespan of a project, from site acquisition to ribbon cutting,” Russell said. 

Cities are required to present a five-year plan for their use of the funds, and the awards are given out based on an area’s population size and the level of need for low-income residents. Russell gave the example of National City, which was awarded $611,141 in Permanent Local Housing Allocations in 2020.  

“If instead of 600,000, National City is owed three years of that, then that could actually be a very different, meaningful amount of money that could be used differently,” Russell said. “If you know you’re getting money year after year after year, you can plan for it differently.”  

Ginger Hitzke, an affordable housing developer and San Diego County Planning Commissioner, said it’s “not always bad” for an agency to let some money pile up if it allows the state to give the proper amount to bigger projects later.  

What Real Estate Fees Helped Fund So Far 

Only 45 local agencies in the state did not apply for SB2 grant funding. The other 494 places have either already received funds or have applications under review, according to the state’s Planning Grants and Local Housing Strategies Map. 

A big chunk of SB 2 funds went to the Planning Grant Program, largely used to update land use plans to meet an area’s needs. The program provides funding and technical assistance to help agencies “prepare, adopt, and implement plans and process improvements that streamline housing approvals and accelerate housing production.”  

In SB 2’s first round, half of the funding was set aside to “target homelessness” and the other half for local planning and technical assistance to “streamline development.” 

Hitzke said one of the ways SB 2 can help streamline housing development is by cutting out public reviews of planning permits.  

According to Russell, the city of San Diego has done what most municipalities in the county and the county itself have not: updated its land use codes to meet the criteria for projects that can skip the public decision step and build housing “with far fewer hoops.” Russell says local departments are often “strained,” and SB 2 funding for planning and technical assistance could help cities work efficiently amid ever-changing housing laws.  

SB 2 also funded a second round of the California Emergency Solutions Housing (CESH) program. From July 2020 to June 2021, this program reported serving 142 people at risk of homelessness, 39 people who were already unhoused and 11 seniors, as well as providing housing to 73 minors.  

In SB 2’s second round, 10 percent of funds were designated specifically for farmworker housing. 

Now, the Mixed Income Multi-Family Loan Program is expecting to put about $65 million toward projects statewide with the help of SB 2 funds for 2022. According to the county’s assessor taxpayer advocate, Jordan Marks, San Diego will likely be collecting less fees in 2022 due to a rise in interest rates and a lower amount of refinances being recorded.  

Local governments will have until the end of this year to apply for the state’s third round of funding.   

Russell says that moving forward, he’d want to see “every dollar” of SB 2 going to permanent, affordable housing.  

“As a citizen, I mean, [the homelessness crisis] is just fucking heartbreaking,” Russell said. “From a professional standpoint, my sector is building permanent supportive housing. That is, we believe the answer to homelessness, the only solution to homelessness, is a home.” 

This story has been updated to clarify a quote from Stephen Russell, CEO of the San Diego Housing Federation, about the homeless crisis.

Catherine Allen

Catherine Allen is an intern at Voice of San Diego.

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4 Comments

  1. Who believes that government programs are efficient, effective and help the people?

    This shouldn’t be a surprise to anyone.

  2. Toni Atkins has been in office for too long to care. Sorry local publication, I don’t have time for you, I’m busy rubbing elbows at the capital where the little button on my lapel gets me treated like a queen by the 20 year olds who work there for peanuts.

  3. It’s amazing. She raised taxes. And didn’t have anything to spend it on. This woman is insane. She just goes around making new taxes because… why?

  4. Anybody who has followed San Diego politics since Atkins being Chief of Staff for Kehoe and sidekick Case who I have seen walk on water knows these people are beyond reproach. They make the Sixties sitcom; The Untouchables look pale in comparison. These politicians only laugh at you folks tilting at some obscure windmill casting aspersions while they can get away with impunity at anything they so desire. The voters will always vote LGBT the most powerful and influential special group in California.

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