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 because “time is money.” The longer it takes to build anything, the more it costs.
So, what would be my proposal for solving this homelessness crisis? I would use the best business solutions from the right, and the best social solutions from the left. To start, we should employ the “Triple Net Lease” concept to encourage private investment. What this means is that the tenant, in this case the government, would assume responsibility for all taxes, insurance and maintenance for the period of the lease, let’s say that term is 20-years. The public would be surprised to learn how many businesses are actually triple net leases, and in fact, many government offices are actually under triple net leases. The risk of getting a project built would be minimized for the developer, with an assurance that the project would be fully leased upon completion. The government would have no risk as they would only expend funds for completed projects.
Many of the frontend and construction costs, land, engineering, labor, and some materials could be tax deductible, if the project went through the State Tax Credit Allocation Committee. Since they already grant tax credits, special consideration could be given to these homeless projects, therefore, reducing the time to get the credits. This option would only be an option on permanent housing projects.
On the state side, a simple filing with the Franchise Tax Board should be all that is needed to get tax benefits. Some developers may desire to go without receiving the tax credits because of too much red tape. Yet another possibility could be “Social Impact Funds.” These are funds that invest in social projects
and require a lower return. Social Impact Funds could literally be rolled over as they become investors in the projects.
Because this could easily be a profitable endeavor, many investors would likely be interested because these projects make great business sense. Each of these options would lower the costs of construction significantly. But more importantly they would reduce a developer’s and government’s risk by encouraging private sector participation. Developers could also solicit investors and distribute the credits and benefits as well as equity positions in the project. The project would still have depreciation and interest deductions like any other construction project. Lost tax revenues from the credits and other incentives would be offset by profits earned by developers and resulting income and property taxes.
For transitional housing, (where the resident would live until a permanent unit was available and they were stable) these would be built as dormitory (co-living) or motel-like structures. Some engineering design and zoning analysis would need to be done in advance to determine the appropriate height and density that would be allowed per lot. Keeping the development projects moderately sized will nullify some “NIMBY” (Not In My Backyard) opposition.
There should also be an exemption from the California Environmental Quality Act (CEQA). In many cases, CEQA lawsuits can take years to adjudicate over what are often trivial issues. Because this population would not have many cars, there could be a modification for off-street parking requirements. Staff and visitors would have to be
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