TEFRA Time. A Lose-Lose for Fullerton

On Tuesday’s jam-packed agenda (more on that later) one item stands out: consideration of approving TEFRA bonds. It’s been continued from the June 16th meeting.

TEFRA stands for Tax Equity and Fiscal Responsibility Act, and authorization permits a little-known statewide housing agency to issue bonds that will provide $180,000,000 for an unknown non-profit entity to buy and remodel two huge apartment complexes over by Cal State Fullerton. The projects will subsequently be partially restricted to low and medium income renters.

The staff report goes to great pains to explain that the City is in no way responsible for the debt incurred; see, it’s more of a procedural formality that the municipality puts its stamp of approval on the debt issuance.

Anyhow, questions were asked by the Council in June about the impact to property tax revenue, and as usual that inquiry was met with blather:

Since the County Assessor is the guy who grants tax-exempt status on 501(c) “affordable housing” the City itself has no part in that, and so staff explains that this action, per se, won’t lower tax revenue. But that’s a distinction without a difference, for clearly one purpose for investors in these acquisitions is to harvesting the benefit of lowered property tax. It’s gotta be in their development pro forma. The staff report says a little about possible lowered revenue, later on:

In other words two huge apartment projects will inevitably generate less of the property tax than they generate now, but still require all of the city services, from infrastructure to police and “fire fighters.”

And that’s not all, Friends. The units thus restricted will not count towards Fullerton Regional Housing Needs Assessment (RHNA) quota – the idiotic number coughed up behind closed doors by the unaccountable bunglers at the Southern California Association of Governments. Here’s how the staff report explains it.

Well, that’s a kick in the head. So we still need another 13,000 units, per the SCAG quota. I have no idea what the City’s “affordable housing goals”are and I don’t see a reference to a supporting document that substantiates any of this.

To me this is a lose-lose situation unless your mission in life is to support the Affordable Housing Industrial Complex by subsidizing a tax reduction. It isn’t just about providing “affordable” housing. It’s about taxpayers ultimately paying more for municipal services to satisfy some hazy “goal” somewhere.

Fullerton’s Observer boohoo brigade will no doubt rejoice at this endeavor because, ya know, a housing “crisis” requires public subsidy and taxes really will fix everything. And doing something, even if it makes no sense, is still doing good.