California’s building industry is in the business of creating opportunity. So with headlines from San Diego to Sacramento screaming that housing prices are out of reach for most families, we can’t wait to get to work to build more safe and affordable places to live.
The production of 1.5 million homes needed to meet demand is a massive undertaking, and will require collaboration between private industry, and federal, state and local governments. Across the state, shovel-ready projects are poised to break ground, but construction has ground to a halt on thousands of affordable homes because state financing has dried up.
A package of bills spearheaded by Assembly Speaker Toni Atkins seeks to stitch all the components together. Assembly Bill 35 would expand the state’s annual Low Income Housing Tax Credit by $300 million, drawing twice that amount of new federal investment. AB 1335 would generate as much as $500 million in state funding, which would, in turn, leverage another $2.8 billion in federal money. The $500 million dedicated fund would come from a $75 recording fee on certain real estate documents, excluding home and commercial property sales.
According to a March report by the Legislative Analyst’s Office, the high cost of homes forces people to spend much more of their income on housing, puts homeownership out of reach for many and forces people to live in crowded housing and commute further to their jobs – all of which makes California a less desirable place to live. That in turn makes it more difficult for companies to hire and retain qualified employees, which ultimately drags down California’s economic potential.
Increasing the state’s investment in affordable housing will also create jobs, an estimated 29,000 for every $500 million. Our economy could see an immediate boost as soon as these developments get underway. Business organizations across the state – including the Silicon Valley Leadership Group, Orange County Business Council and Los Angeles Business Council – have all called for increased state investment in affordable homes.
The bills would revive the market for affordable homes that has essentially dried up since the elimination of redevelopment agencies, which were crucial to local government’s ability to support affordable construction.
California’s sophisticated public-private model provides stable, affordable places to live and creates well-paying jobs, but without state investment, this successful model won’t work.
Just as we have decided that tax deductions for mortgages and federal backing of home loans expands economic opportunity, so does state investment in affordable housing. If we make the right choices, our economy will be a huge winner.
Michael Strech is president/CEO of the North State Building Industry Association.