Capitol Alert

$4,500 to rent a San Francisco apartment. What are California leaders doing?

Her rent jumped from $610 to $895, and Brianna Reynolds was out on the street.

The increase last September wasn’t particularly high compared with other rental horror stories that have become commonplace across California, but the 37-year-old mother of two was already barely hanging on financially. There was no way she and her husband could afford the nearly 47 percent rent increase for their one-bedroom apartment in the Oak Park neighborhood of Sacramento, Reynolds said.

“It used to be the working poor could survive with the rent prices, but even now people who have full-time jobs are not able to afford the rent,” Reynolds said on an afternoon this week before starting her night shift at Sacramento Natural Foods Co-op, where she works as a custodian. “I have a good job, but all the rents are getting pushed up, even in neighborhoods where you can usually find affordable housing. It’s leaving people, including me, with no options. It’s overwhelming. It’s frustrating. It’s scary.”

Reynolds’ challenges are similar to those of many low- and middle-income families across California. Her family is now separated, staying with relatives or in a motel. The housing crisis is driving more people into poverty than ever before, a phenomenon state housing experts and advocates attribute to a shortage of homes and skyrocketing demand.

California consistently ranks No. 1 in the U.S. for poverty when factoring in the high cost of housing. Home ownership has fallen to its lowest rate since the 1940s, forcing a greater share of Californians into the state’s tightening rental market, which itself has reached historic highs. Rents average more than $2,000 per month – more than double the national average. Median rents range from a low of $1,100 in parts of the Central Valley to a high of $4,500 in San Francisco. Eighty-four percent of renter households are considered “burdened,” spending 30 percent to 50 percent or more of annual income on rent, according to a new assessment of California’s housing crisis from the state’s Department of Housing and Community Development.

Yet a solution has for years confounded Gov. Jerry Brown and the state Legislature.

Billions are allocated in the state budget to assist homeless people and those who are mentally ill, veterans and first-time homebuyers, but the governor’s proposed 2017-18 budget includes no new funding for affordable housing construction.

“I’ve been through it. So many people have been through it – trying and trying to pay the rent that you can’t afford,” said Emilia Concepcion, 75, who was priced out of Silicon Valley and moved to Sacramento when her name came up on the waiting list for an open affordable housing unit. “I’m doing a little better here, at least I got in. But I feel bad sometimes. If you can’t afford to pay, they tell you to set up a tent. You wait so long on the list. I waited three years and just lived with friends and relatives.”

Brown and state lawmakers have long understood that rising population and job growth, especially in major economic powerhouse regions such as San Francisco and Silicon Valley, will worsen the state’s housing shortage, thus deepening the crisis.

“We’ve seen a great comeback from the recession – people are getting back to work and wages are coming back up – but the one major piece missing is the housing,” said Sarah Bohn, a research fellow with the Public Policy Institute of California specializing in the economy, poverty and income distribution. “The crisis is getting worse and worse, and pushing hardest on the lowest income earners, making it the single biggest driving factor when it comes to poverty and income inequality.”

Brown’s pick to lead the state housing department, Ben Metcalf, said last year that “the state of California is facing a housing crisis of historic proportions,” a point that served as the backdrop for Brown’s disputed proposal last year aimed at making it easier to build affordable housing. He proposed to overhaul the regulatory process for housing construction, significantly reduce the per-unit cost of about $330,000 and fast-track new affordable housing development from San Diego to Santa Rosa.

Brown’s plan included a rare pot of general fund money – $400 million – to sweeten the deal. The idea was to allow affordable-housing developers to bypass public hearings in areas already zoned for affordable projects that have undergone extensive review. Community pressures and interest groups often stall or defeat local housing projects, he said last year.

But a coalition of environmental groups and construction trades unions killed the proposal before it ever came close to reality. Representatives from the Sierra Club and the State Building and Construction Trades Council of California said it would have undercut local land use regulations, environmental protections and fair wage provisions for unionized workers. Out with the deal went the $400 million set aside to help spur affordable housing construction.

“I think everyone is concerned that because housing didn’t get done last year, another year is going to go by without something happening,” said Cesar Diaz, legislative and political director for the state Building and Construction Trades Council. “But we think the Legislature can find the right solution that isn’t a one-size-fits-all approach that also helps those construction workers – the ones who are building these projects – earn a living wage.”

Brown this year backed off of the proposal. His budget is more cautious as he warns that the state should prepare for a downturn in the economy.

“We don’t want to be throwing good money after a bad or flawed system,” Department of Finance spokesman H.D. Palmer said, “and we think we’ve identified a number of flaws in the system that are barriers to the construction of affordable housing throughout this state.”

Bartering between Brown and Democratic lawmakers over how to address the housing crisis is now set to resume. Democratic lawmakers have put forward an ambitious set of bills aimed at generating billions for new affordable construction. Proposals include establishing a fee on real estate transactions, creating a program to fund rental assistance, authorizing $3 billion in bonds to help fund existing affordable housing projects and eliminating state mortgage interest deductions for vacation homes and diverting revenue to low-income housing projects.

“We should put a roof over everyone’s head before we provide tax breaks for wealthier Californians who are lucky enough to have two roofs,” said Assemblyman David Chiu, D-San Francisco.

As part of any action, the governor wants broad reforms, including streamlining permitting and lowering per-unit costs.

This year, however, could prove just as difficult to get something done.

“I don’t see how housing fits in, given the uncertainty of the general fund and the hostility we’re seeing from the Trump administration,” said Senate President Pro Tem Kevin de León, citing potential financial risk California faces from changes in federal policy. “These are unanswered questions, yet sooner or later they must be answered because this problem is not going away.”

In addition to Chiu, state Sens. Toni Atkins, D-San Diego, and Jim Beall, D-San Jose, are among the lawmakers calling for greater urgency to get something passed this year. The state is lagging severely behind in housing production – California has averaged less than 80,000 new homes annually over the past 10 years, according to state figures, compared with a projected need of 180,000.

“It’s near impossible for people to find a place to live,” Atkins said. “People are losing their homes, and it’s hitting poor and middle-income people the hardest. We’re not building enough affordable housing anywhere.”

Brown’s proposed budget includes $3.2 billion for some low-income housing programs, including those that assist those in the greatest need.

But that, too, could be in jeopardy given the uncertainty surrounding Trump and his new administration. His pick for secretary of Housing and Urban Development, Ben Carson, has suggested that states may not need as much money for federally subsidized housing programs.

Nevertheless, housing advocates and Democrats in the Legislature say Brown should not lose sight of the importance this year of taking action.

“People in the lower income strata are spending more than half of their income on rent,” said Lisa Hershey, executive director of Housing California, an advocacy nonprofit. “This is a crisis we can’t ignore.”

Angela Hart: 916-326-5528, @ahartreports

Housing bills in the works

Senate Bill 2, by Sen. Toni Atkins, D-San Diego. Would put a new fee on real estate transactions to give the state a new pot of affordable housing money.

SB 3, by Sen. Jim Beall, D-San Jose. Would to help fund existing affordable housing programs.

Assembly Bill 71, by Assemblyman David Chiu, D-San Francisco. Would eliminate a state mortgage interest deduction for second homes to provide about $300 million a year for affordable housing programs.

AB 74, by Chiu. Would use state funding to boost local rental assistance and homelessness programs.

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