California lays first planks in strategy to build homes for low-income tenants
In the Golden State, median home prices are about double the US average rate, while rents are 50 per cent higher than the norm
On Friday, governor Jerry Brown put his signature to bills aimed at tackling the lack of affordable housing in California, which needs an estimated 1.5 million more homes to satisfy demand from those priced out of the market.
Brown signed the 15 bills in San Francisco, where an average one-bedroom flat rents for more than US$3,000 a month and the median home price is about $1.5 million.
The legislative package would funnel new money from a ballot initiative and a property transaction fee toward subsidising housing projects for low-income dwellers and roll back regulations that have slowed construction.
Brown acknowledged the bills only begin to tackle the problem, a sentiment echoed by many.
“We cannot move past today and just check the box, say we’ve done housing and move onto something else,” said senator Scott Wiener, a San Francisco Democrat who sponsored one of the bills. “When you spend 50 years driving your car into a ditch that means it’s a really deep ditch.” The contrast in home and rental prices between California and the rest of the US is stark. Median home prices are about double the national mark, and rents are 50 per cent higher.
California needs to build 100,000 additional affordable units annually to keep up with demand, according to a legislative analyst’s office report.
State estimates predict the laws will build up to 90,000 units in the next 10 years.
And there’s still one more step to finalise the main source of cash: The $4 billion housing bond authorised in one of the bills needs approval from voters in 2018.
“We just celebrated putting it on the ballot, not that it’s there,” said Eric Garcetti, the Democrat mayor of Los Angeles. “They better get back to work as soon as they get back to Sacramento because Californians don’t think signing any of these pieces of paper is much relief for them today.”
If approved, the bond will set aside $1bn for veterans housing and spend much of the rest to subsidise the building of units for low-income tenants. It costs about $300,000 to build one affordable unit, and the state can contribute about $60,000 through housing programmes, said Matt Schwartz, president of the California Housing Partnership.
“There are dozens of affordable housing developments waiting in a queue for state funding that hasn’t existed,” he said, referring to San Francisco.
The second funding source, a $75 fee on property transaction documents, is expected to generate between $200m and $300m annually. In the first year, that money will go to helping homeless people and to help communities update their zoning, planning and other housing-related laws to prepare for more building. After that, communities can use it to aid building projects.
That’s far less than the $1 billion the state used to spend on housing through a redevelopment programme Brown ended in 2012 to help balance the state budget.
San Francisco approved its own $310m bond for affordable housing in 2015, showing just how expensive it is to tackle the housing crisis.
“We need to get to a scale that meets the challenge that we’re facing,” said Amie Fishman, executive director of the Non-Profit Housing Association of Northern California. “Housing is fundamentally what makes people be able to live and go to work and feed their children.”
Fishman said 74 per cent of San Francisco voters backed that bond, but building under that bond is still in the planning stages. The city issued $75m in those bonds in October 2016, with the money split among public, low-income and middle-income housing.
Democratic senator Nancy Skinner of Berkeley said several bills aim to put a stop to the “not in my backyard,” culture that keeps some cities from building more housing that low-income people can afford.
“Getting a permit to build housing should not be a shell game,” Ms Skinner said. “It should happen if you meet the rules.”