Bills would barely dent hous­ing af­ford­abil­ity

Pack­age won’t come close to meet­ing need for new con­struc­tion, an­a­lysts ar­gue.

Los Angeles Times - - CALIFORNIA - By Liam Dil­lon

Last month, Gov. Jerry Brown and leg­isla­tive lead­ers promised in a joint state­ment to pass a pack­age of bills that “will help en­sure Cal­i­for­ni­ans won’t have to pay an arm and a leg to have a roof over their head.”

But the mea­sures now con­tem­plated to alle­vi­ate the state’s af­ford­abil­ity cri­sis will not make much of a dent in Cal­i­for­nia’s hous­ing needs, ac­cord­ing to analy­ses from state of­fi­cials and hous­ing groups. Even if high-profile hous­ing bills pass, the state would need to find at least an ad­di­tional $10 bil­lion ev­ery year for new con­struc­tion just to help Cal­i­for­ni­ans most bur­dened by high rents.

The three mar­quee mea­sures un­der con­sid­er­a­tion — Se­nate Bills 2, 3 and 35 — aim to in­crease fund­ing for low-in­come hous­ing projects and ease de­vel­op­ment reg­u­la­tions. The mea­sures are un­likely to help spur enough home build­ing in gen­eral.

De­vel­op­ment would still fall short by tens of thousands of new homes needed an­nu­ally just to keep pace with pro­jected pop­u­la­tion growth.

“If [law­mak­ers] get a pack­age that in­cludes SB 2, SB 3 and some ver­sion of SB 35, it is rea­son to cel­e­brate,”

said Jim Mayer, the pres­i­dent and CEO of Cal­i­for­nia For­ward, a non­profit that has urged the state to act more ag­gres­sively on hous­ing. “But it won’t have solved the prob­lem, and nobody in their com­mu­ni­ties is go­ing to think it’s solved the prob­lem.”

About 1.7 mil­lion low-in­come Cal­i­for­nia renters spend more than half their in­come on hous­ing. Help­ing to fi­nance new homes for those res­i­dents alone would cost the state at least $15 bil­lion a year, ac­cord­ing to an es­ti­mate from the non­par­ti­san Leg­isla­tive An­a­lyst’s Of­fice, an amount roughly equiv­a­lent to state spend­ing on Medi-Cal.

Se­nate Bill 2 would add a $75 fee on mort­gage re­fi­nanc­ings and most other real es­tate trans­ac­tions, ex­cept for home and com­mer­cial prop­erty sales, and fun­nel the money to­ward low­in­come hous­ing fi­nanc­ing. Se­nate Bill 3 would place a $3-bil­lion bond on the 2018 statewide bal­lot, also to help build low-in­come projects.

Nei­ther bill is a sure thing — they re­quire two-thirds votes in both houses of the Leg­is­la­ture. Some in­flu­en­tial Democrats likely needed to vote in fa­vor of SB 2 are al­ready balk­ing at rais­ing fees. And vot­ers will ul­ti­mately de­cide the bond’s fate.

If both mea­sures pass and their fund­ing is com­bined with pri­vate in­vest­ment and fed­eral and lo­cal dol­lars, they could raise about $3.9 bil­lion a year, ac­cord­ing to an anal­y­sis by the Cal­i­for­nia Hous­ing Part­ner­ship Corp., a non­profit low­in­come hous­ing ad­vo­cate. But cur­rent fed­eral and state fund­ing for low-in­come de­vel­op­ment re­mains low, leav­ing the over­all $10-bil­lion gap in spend­ing needs.

A sim­i­lar short­fall ex­ists in home build­ing. De­vel­op­ers need to con­struct 180,000 new homes an­nu­ally just to ac­com­mo­date Cal­i­for­nia’s pro­jected pop­u­la­tion growth, ac­cord­ing to the state Depart­ment of Hous­ing and Com­mu­nity De­vel­op­ment.

De­vel­op­ers in the state have built more than 180,000 homes a year in just three years since 1989, ac­cord­ing to permit data from the con­struc­tion in­dus­try. The low amount of build­ing has con­trib­uted to a long­stand­ing hous­ing short­age that’s led to sky-high prices. Roughly 101,000 new homes were built last year.

The rev­enue gen­er­ated from Se­nate Bill 2’s real es­tate fee and Se­nate Bill 3’s bond fund­ing could help fi­nance the de­vel­op­ment of about 14,000 homes a year, ac­cord­ing to the Cal­i­for­nia Hous­ing Part­ner­ship Corp. es­ti­mate, leav­ing a gap of 65,000 houses. Even more home build­ing would be needed to ac­count for prior short­falls, which would help re­duce hous­ing costs.

More­over, the bond money au­tho­rized by Se­nate Bill 3 could be spent in as lit­tle as five years, and the fund­ing and home build­ing gaps would get larger af­ter that.

The goal of Se­nate Bill 35 is to make it eas­ier to build homes. It would re­quire cities and coun­ties to limit en­vi­ron­men­tal, plan­ning and other re­views on land al­ready zoned for a de­vel­oper’s pro­posed amount of hous­ing. The ef­fort aims to give de­vel­op­ers more cer­tainty that their projects will get built, sav­ing them time and money and in­creas­ing the hous­ing stock. A 2014 state study of low-in­come hous­ing de­vel­op­ment found projects that needed ap­proval at mul­ti­ple lo­cal boards cost at least 5% more to build.

But the bill’s au­thor, Sen. Scott Wiener (D-San Fran­cisco), said he’s not sure how many new homes the mea­sure would help pro­duce.

“The state is too big and di­verse to ac­cu­rately pre­dict a num­ber,” Wiener said.

Last year, Brown pro­posed a sim­i­lar mea­sure, and a UC Berke­ley es­ti­mate found it could have cre­ated up to 2,350 homes to­tal in San Fran­cisco, for in­stance.

Brown’s ef­fort failed, and Wiener’s ap­proach is nar­rower. Brown’s plan would have af­fected ev­ery city and county in the state, but Wiener’s ap­plies only to lo­cal gov­ern­ments that have fallen be­hind on state goals for home build­ing in their com­mu­ni­ties. Wiener also would re­quire de­vel­op­ers who want speed­ier lo­cal re­views for their projects to pay con­struc­tion work­ers higher wages and ac­cept union-level hiring stan­dards, which some busi­ness in­ter­ests have crit­i­cized as be­ing too costly.

Wiener said re­duc­ing lo­cal gov­ern­ment reg­u­la­tions and adding new fund­ing for low-in­come de­vel­op­ments are sig­nif­i­cant in ad­dress­ing hous­ing prob­lems.

But the state, he said, ul­ti­mately will have to look at big­ger-ticket items, such as mak­ing it more fi­nan­cially ben­e­fi­cial for cities to ap­prove hous­ing de­vel­op­ments and giv­ing state and re­gional gov­ern­ments a larger role in ap­prov­ing large, tran­sit-friendly projects when lo­cal gov­ern­ments are op­posed to them.

“We need to be very clear that pass­ing this pack­age doesn’t mean that the Leg­is­la­ture is done with hous­ing,” Wiener said. “We can’t check that box. It’s go­ing to take years.”

Law­mak­ers are ex­pected to vote on the hous­ing bills when they re­turn from their summer re­cess later this month. The dead­line for pas­sage is Sept. 15, when the leg­isla­tive year ends.

Rich Pe­dron­celli As­so­ci­ated Press

GOV. BROWN, flanked by Se­nate Pres­i­dent Pro Tem Kevin de León, left, and Assem­bly Speaker Anthony Ren­don, sup­ports a pack­age of hous­ing bills.

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