JBC authorizes drafting of legislation to support new middle‑income housing authority; staff to explore Prop 123 funding

Mitch Burmeister, JBC staff analyst, presented a request from the Middle Income Housing Authority (MEHA) for an additional $500,000 to cover administrative costs while the authority attempts to become self-sustaining.

Burmeister explained MEHA was created in Senate Bill 22-232 and initially received a $1,000,000 one-time start-up appropriation in statute. The authority has expended or committed much of the start-up funding and, per Burmeister, expects remaining reserves to be insufficient to support ongoing administration without additional revenue from fees, bond proceeds, or other sources. Burmeister recommended denying the general‑fund supplemental on process grounds but noted options for state support and said committee consideration could include non‑general‑fund sources such as Proposition 123 proceeds.

Committee members discussed trade-offs. Supporters said middle‑income housing fills a gap for workers who do not qualify for low‑income tax credits but cannot afford unsubsidized market rents; they said an infusion of start‑up or gap funding could enable MEHA to close initial deals and begin recurring fee revenue from bond issuance. Other members expressed skepticism about committing general fund dollars to an entity still ramping up and asked for clarity about how much of the authority’s existing funds were contracted versus uncommitted; staff noted roughly $1.1 million of contracts were in place and about $400,000 remained unencumbered pending invoice processing.

Burmeister and committee members discussed alternatives: a larger start‑up in other jurisdictions (for example, Rhode Island and Atlanta used larger initial allocations), using Prop 123 funds if the committee desired, or waiting until legislative session to consider a regular‑session bill. OEDIT staff had told JBC staff they did not support using Prop 123 for this purpose, but committee members asked staff counsel and drafters to explore statutory mechanics if the committee wanted to pursue Prop 123 funding.

Representative Serota moved for permission to begin drafting legislation to fund MEHA, including exploration of Prop 123 as a funding source; the motion carried 6–0. Members said drafting should proceed quickly so that the committee could consider the question and, if desired, include funding in the regular bill process or a supplemental depending on timing and legislative strategy.