California lawmakers are preparing new housing legislation this week, just months after Democrats in both houses pushed through the biggest legislative package on housing in decades.
As the Legislature returns for session, state Sen. Scott Wiener, a San Francisco Democrat, will unveil his 2018 proposals.
Wiener, author of a new law passed last year that allows developers to fast-track construction projects, is planning to announce a trio of bills Thursday aimed at requiring cities to build taller, denser housing near transit, boosting the supply of farmworker housing and ensuring cities and counties are planning for their fair share of housing to meet demand associated with jobs and population.
“We are desperately in need of housing – there are just too many delays,” Wiener said in an interview. “We need to do more to hold communities accountable for producing enough housing to meet the actual need.”
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Assemblyman David Chiu, D-San Francisco, who has sought to encourage low-income housing construction through tax credits for developers, is also planning legislation.
Chiu tried twice over the past three years to pass such measures, including last year when he tried to expand low-income housing tax credits by $300 million and pay for it by eliminating the mortgage interest deduction for property owners with second homes.
It stalled under intense opposition from the California Association of Realtors. Gov. Jerry Brown vetoed a similar bill in 2015, emphasizing the need to “maintain the state’s precariously balanced budget” and saying tax credits should be considered as part of annual budget deliberations.
Chiu hopes things could change this year because passage of the Republican tax plan could constrain the state’s ability to build new housing.
“Trump provided a huge tax giveaway to corporations and the wealthiest in our country, which will severely impact our ability to produce housing for California,” Chiu said. “I’m exploring all options, including changes to our low-income housing credit.
“I have not made a decision on every element of the package, but it’s fair to say we’re very likely going to continue the fight to expand a tool that has been very effective at building affordable housing in California,” he said.
Though Republicans initially sought to slash it, the federal tax bill retains a low-income housing tax credit program. But because the bill cuts corporate taxes from 35 to 21 percent, it could make the federal tax credit less valuable. The changes, therefore, could significantly reduce investor demand for the housing credit, according to the National Low Income Housing Coalition.
Matt Schwartz, president and CEO of California Housing Partnership Corporation, said his advocacy group has calculated that California could lose $540 million per year, which translates into a loss of more than 4,000 units in 2018, he said. Over 10 years, he said, projected losses in number of units could swell to nearly 50,000.
“That’s getting close to 200,000 people who otherwise have been able to live in affordable housing and won’t get to, unless the state funds that hole,” Schwartz said.
State Sen. Toni Atkins, who is replacing Kevin de León as leader of the Senate this year, said she’ll actively campaign for a ballot measure that places a $4 billion general obligation bond before voters this November.
Other housing issues that could come up this year are:
Rent control: Signature gatherers are are out across California trying to make the case for a proposed pro-rent control initiative. It would repeal a state law commonly referred to as Costa-Hawkins, which sets tight limits on the type and number of housing units covered by rent control ordinances adopted by cities and counties. The issue is highly controversial, and if it qualifies for the November ballot, expect an expensive fight and heated campaign disputes between tenants rights advocates and development interests, which generally oppose rent control. It could also be taken up in the Legislature.
Proposition 13: Competing proposals seek to change California’s 1978 law that caps the property tax rate at 1 percent for residential homeowners and commercial properties, and limits how much the assessed value can rise each year. Unless properties change hands, assessed value can’t go up more than 2 percent annually.
A Republican-backed ballot proposal from the California Association of Realtors, another influential statewide real estate lobbying organization, seeks to change the law and allow homeowners who are 55 or older, or severely disabled, to transfer their Proposition 13-assessed value to new home purchases anywhere in the state, as many times as they wish. Signature gatherers are out now. Republican gubernatorial candidate John Cox endorsed the proposal.
A separate proposal submitted to the state attorney general’s office last month would sever residential and commercial, and require annual assessments on commercial and industrial property to keep pace with market value. It would not change anything for residential property owners.
Redevelopment: Some lawmakers are discussing the idea of bringing back redevelopment agencies to fund new housing projects. Brown in 2011 pushed the Legislature to eliminate more than 400 city and county redevelopment agencies across the state that allowed local government to use a portion of their property tax growth to build affordable housing. Agencies often fell short in meeting that goal, but statewide the cut amounted to more than $1 billion per year. Atkins has expressed support for bringing them back.
Changing the California Environmental Quality Act: Housing developers and advocates expressed frustration last year at what some called widespread abuse of the state’s landmark environmental law. The California Building Industry Association, a trade group, could push for changes this year.
“It has evolved into something I don’t think anybody imagined becoming the law today,” said Jeff Pemstein, past chair for the association who sits on its board. “It is manipulated and used to stop good projects and slow stuff down. CEQA needs a good hard look.”