Legislation may relieve state housing crunch
AFFORDABLE HOUSING
California voters could approve affordable housing development if state representatives pass any one of pending pieces of legislation.
AA first order of business as lawmakers returned to Sacramento recently was a $3 billion low-income housing development bond, Senate Bill 3, sponsored by state Sen. Jim Beall (D-San Jose). Approximately 1.5 million Californians need access to affordable housing, according to the Associated Press.
Another bill working its way through the legislature is Senate Bill 2, sponsored by Sen. Toni Atkins (D-San Diego). Atkin’s SB 2 would impose a $75 fee on real estate transaction documents such as deeds, notices and mortgage refinancing with a cap of $225 per transaction, but it will exempt home and commercial property sales. It is estimated to raise about $250 million annually.
The bill passed the Senate 27-12 with all Democratic votes and now heads to the Assembly. “When you use this money to build housing you generate more income tax, more jobs and it helps spur the economy,” said Atkins.
Orlando Johnson, representative of 2-1-1 Imperial, a nonprofit providing housing referrals, transitional housing and shelter, remains skeptical about the Atkins bill. Johnson maintained the real estate industry will view SB 2 as a confrontation and may discourage refinancing attempts.
“Banking, credit unions and mortgage companies will challenge SB 2 because faced with an extra $75 charge, something is going to give and they’ll have to come up with a strategy pass it on to the customer rather than absorb it themselves,” said Johnson.
Yet, voters have historically backed bond financing that allows the state to spend more money than it has, then pay back debt with interest spread over time. During the prior 40 years, state voters approved $164 billion in bond spending while refusing $18 billion, noted the Legislative Analyst’s Office.
Beall’s SB 3 won senate approval 30-9 on June 1, sending it to the Assembly for consideration. Beall noted SB 3 can leverage $11 billion in federal funding to build 70,000 new homes and apartments. “We’ll get chronically homeless people into housing, reduce taxpayer spending on shelters, jails and emergency room costs,” he said.
Frank Salazar, moderator of Imperial Valley Continuum of Care Council, remarked it is refreshing that local Assemblyman Eduardo Garcia (D-Coachella) is making housing policy a priority topic jointly with state leadership and advocating for this region.
“He sends a clear message in these housing discussions that resources be distributed equitably, especially to economically disadvantaged areas of the state,” said Salazar. “For our region to be economically successful, that means setting priorities within our regional housing needs and help address the homelessness issue.”
The housing shortage is growing by 60,000 units per year, noted Adam Gutteridge, director of development at Chelsea Investment Corporation. Chelsea is an affordable housing developer in San Diego. It has 21 properties with 1,500 units throughout Imperial County and is one of the largest local affordable housing developers. More than one in three Californians pay more than half of their income for housing.
“State and local government need to look for solutions to reduce both timing and expense of building affordable housing,” said Gutteridge. “The crisis is not just an urban issue, but impacts Imperial County residents as well.”
Johnson said he is prone to support SB 3, but he does not think it is adequate. He would prefer a proposal by state Treasurer John Chiang, a candidate in the 2018 gubernatorial campaign, who supports a $9 billion affordable housing bond. If the $3 billion proposal is a “one-time fix” it has a good chance to pass. But Johnson would like to see a priority on job creation that stabilizes the economy, and once that happens, there would be a substantial pool of prospective buyers.
“SB 3 may set up buyers for failure since you can’t maintain the cost of housing with a retail job,” said Johnson. “High tech or industrial jobs could support it. We all know jobs are leaving California. Less regulation and lower taxes might reverse the trend, but that would cut into state revenue.”
Johnson also noted affordability in Imperial County is quite different than in neighboring counties. A median priced home in Imperial County is $237,000, according to the Zillow Home Value Index. Meanwhile, in San Diego County the median price home is $625,000. For Los Angeles County it is $629,000, while for Riverside County it is $380,000.
A number of Republican lawmakers said the bills would harm middle class earners, especially first-time homebuyers. Democrats contend dealing with the housing shortage will require a combination of measures, including funding for subsidized units and streamlining construction.