Capitol Alert

Nearly $20 billion could help build 70,000 California affordable homes – but is it enough?

Housing advocate: ‘It’s ridiculous to ask these families to pay this much.’

Six out of the seven least affordable metropolitan areas across the U.S. are in California. They are Los Angeles, San Francisco, San Jose, San Diego, Riverside and Sacramento.
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Six out of the seven least affordable metropolitan areas across the U.S. are in California. They are Los Angeles, San Francisco, San Jose, San Diego, Riverside and Sacramento.

Democratic state lawmakers aiming to ease California’s housing shortage say they are focused on three bills they estimate would generate $20 billion for affordable housing development over the next five years and lead to 70,000 new low-income apartments.

They acknowledge it won’t be enough to solve the state’s unprecedented housing problems. But Assembly Speaker Anthony Rendon calls the package he and other lawmakers are working on “an important first step.” The Legislature begins the final month of the 2017 session today with housing atop its agenda.

“We know we’re not going to address it entirely this year,” Rendon said in an interview. “Doing streamlining and getting some funding for affordable housing would be a tremendous victory ... our efforts are going to carry into the future regardless.”

The bills are the backbone of a housing package that could include 10 or more bills in total. The idea is to generate funding for affordable housing and spur new development, especially near city centers close to jobs and transit.

The most tenuous of the three bills, Senate Bill 2 by state Sen. Toni Atkins, D-San Diego, would establish a new recording fee on real estate transactions, ranging from $75 to $225. It would provide an annual source of revenue to fund affordable housing for low-income and homeless people. But some moderate Democrats have voiced concern over voting to raise fees on taxpayers following two high-profile votes in the Legislature this year raising gas taxes and vehicle license fees on motorists.

Atkins suggested she still does not have the votes to support her bill. She said she’s “working very hard” to get Democrats on board, and is also trying to convince Republicans to support the real estate transaction fee.

“The market doesn’t build this type of housing, it builds high-end luxury and moderate (housing),” Atkins said. “If we’re serious about tackling this issue, then we have to have both bills ... if not, it sends a really ominous message to struggling Californians.”

The second funding bill is Senate Bill 3 from Sen. Jim Beall, D-San Jose. It seeks to put a $3 billion housing bond before voters next year.

Together, Atkins’ and Beall’s bills would generate $4.1 billion over the next five years, according to lawmakers’ estimates. That money would allow local developers to leverage an additional $15.6 billion in federal and local funding for low-income construction, Beall said.

“We want California to get its fair share of federal tax credits,” Beall said. “If not, they’ll go to Texas or Florida or whatever.”

Senate Bill 35 by State Sen. Scott Wiener, D-San Francisco, is the other critical component of the housing package under negotiations, according to lawmakers. It seeks to ease the permitting process for new housing development, reduce development costs and speed construction for new housing construction – core tenets that Gov. Jerry Brown has called for as part of any legislation on housing.

“Many of our state housing laws have historically not been enforced, but that’s starting to change,” Wiener said.

Discussions are underway to increase the bond, to $6 billion or $9 billion. State Treasurer John Chiang has put forward such an idea for the November 2018 ballot, but said he’d first attempt to convince the Legislature to up the $3 billion bond proposal in Beall’s bill.

Rendon said he’s pushing for as much as the Legislature can get. Brown, however, has been reluctant to agree on major borrowing that burdens the state general fund.

Assemblyman David Chiu, D-San Francisco, a key player in the housing negotiations, said he’d back increasing the bond to $9 billion.

“The need is that intense,” he said.

Other bills seek to strengthen state housing laws. One from state Sen. Nancy Skinner, D-Berkeley, would prohibit cities and counties from denying low- and moderate-income housing projects that meet local zoning and other land use designations. Another from Assemblyman Richard Bloom, D-Santa Monica, would require inclusion of affordable units in multifamily development.

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