Capitol Alert

Housing still costs a fortune in California. Will Gavin Newsom’s plan fix that?

Earlier this month Gov. Gavin Newsom unveiled a sweeping proposal to tackle California’s affordable housing crisis. We asked housing experts what his plan could mean for Californians and how long it might take to have some effect.

What does Newsom want to do?

Newsom has said California’s housing crisis – driving up rent and home prices – is essentially a problem of supply and demand. He wants to spend state money to create more supply.

He proposes a $1.75 billion increase in funding for housing initiatives. Of that, he’d like to devote $1.25 billion in one-time spending for building new housing, which includes $750 million in grants to help local governments plan for increased housing production and $500 million to expand the mixed income loan program.

An additional $500 million would be devoted to tax credits, with $300 million going to the state’s program for low-income housing developers, and $200 million going to a new tax credit program to help develop housing for higher income households.

Newsom says he wants the Department of Housing and Community Development to “establish statewide goals that break down by region so that they’re more realistic and more nuanced.” They plan to initially allocate $250 million of the $750 million to local governments to help them start reaching those goals, and then dole out the extra $500 million as the local governments hit certain benchmarks.

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He has also issued a threat: If the local governments don’t reach these goals, the Democratic governor says he’d seek to take away their transportation funds. The transportation funds he’s referring to are revenues set aside from the gas tax increase that took effect in November 2017.

How did housing advocates react?

Many say that this is the first time in a long time that a California governor has made a demonstrable commitment to addressing the housing crisis.

“We are really excited to see a governor who is willing to take the housing crisis seriously and seems to think it’s actually a problem that the state can move policy and invest in,” said Tyrone Buckley, Policy Director at Housing California. One aspect of the budget that Buckley says Housing California was especially happy to see was the expansion of the low income tax credit.

Some groups, however, worry about some of the specifics of Newsom’s proposals. On a city and county level, advocates are concerned about the “new statewide goals” Newsom mentioned, in part because they don’t know if they can reach them.

Darby Kernan, deputy executive director for legislative services at the California State Association of Counties, said that they worry the proposal is a “bait-and-switch,” for voters, who voted in 2017 to maintain the gas tax and put the money toward transportation.

Cities and counties ultimately don’t control construction, she said.

“For counties, we plan for it, and we zone for it, and we do all of the things that we can do to get it all ready to have housing built, but we don’t build the housing. Those are the developers that do it,” Kernan said.

What did Gov. Jerry Brown do about housing and how is this different?

Brown was often accused of not treating housing as a big priority during his eight years in office. Buckley, of Housing California, said that it seemed that Brown “did not believe that investment in affordable housing could help solve the affordable housing crisis in California.”

He said Brown began to turn things around in the last two years at the Capitol. In 2017, for example, the Democratic governor signed a package of 15 housing bills which will, among other things, generate more funds for affordable housing, streamline some of the permitting and approval processes developers have to go through, and impose more requirements on cities and counties to accommodate affordable housing.

One of the most notable bills in that package is SB 3, which eventually became known as Proposition 1 on the November 2018 ballot. The bill authorizes the state to borrow $4 billion dollars to finance low income and veteran housing. It was passed by voters 56.2% to 43.8% last year.

Newsom’s budget, however, demonstrates a higher level of commitment to addressing the housing crisis, those in the field say.

Jason Rhine, Assistant Legislative Director for the California League of Cities, said that Newsom’s housing proposal offers “unprecedented levels of funding.”

How long will all this take?

During his campaign for governor, Newsom said he wanted to see 3.5 million new housing units built in California by 2025. That goal has since been criticized by experts as unrealistic, and Newsom said in a recent roundtable with San Jose mayor Sam Liccardo that it’s a tall order.

“The reason it’s out there? It’s a stretch goal. Because I want to create a sense of urgency around this. We’ve been averaging 100,000 housing units on an annual basis. That’s deplorable,” Newsom said.

One of the more immediate steps Newsom has taken is signing an executive order on January 15 that directs the Department of General Services to inventory all excess state lands and publish the inventory online by April 30. Once the inventory is complete, the administration plans to seek proposals from affordable housing developers interested in entering into low-cost long-term leases.

Will these efforts make it cheaper to live in California?

“There is not an easy yes or no answer,” said David Garcia, policy director at UC Berkeley’s Terner Center for Housing Innovation.

“I think, in some respects, yes, because the governor’s made a significant commitment to making more funding available to get affordable housing built.”

At the same time, though, he said Californians will have to wait for some of the details of Newsom’s plans to emerge, including specific goals for cities and counties, in order to understand how they might affect housing production.

“It’s still hard to tell because we don’t know exactly how these will be designed,” he said.

What else is being proposed to help deal with the housing crisis?

A variety of new housing-related proposals have been introduced in the state Legislature. These are among the most notable:

  • AB 53, by Assemblymen Reginald Jones-Sawyer (D-Los Angeles) and Rob Bonta (D-Alameda). The bill would prevent landlords from discriminating against formerly incarcerated housing applicants.

  • ACA 1, by Assemblywoman Cecilia Aguiar Curry (D-Winters). This constitutional amendment would lower the voter threshold for the approval of bond and special tax measures, potentially allowing local governments easier access to funds for infrastructure projects like affordable housing projects.

  • AB 68 and 69, by Assemblyman Phil Ting (D-San Francisco). These bills would expedite approval of and require cities to relax some of the restrictions for around Accessory Dwelling Units (sometimes known as “granny” flats or accessory apartments.

  • SB 50, by Sen. Scott Wiener (D-San Francisco). A modified version of a measure that died in committee last year, the new bill would let developers bypass certain zoning restrictions when building multi-family housing in “job-rich” and “transit-rich” areas.

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