Gov. Gavin Newsom has vowed to come up with a plan to boost homebuilding this year.
“The status quo is simply unacceptable — we aren’t building enough housing,” he said during his State of the State address Feb. 19. “ … It’s time for California to say yes to housing. We cannot wait.”
But it turns out Californians will have to wait for details on how the governor will accomplish these goals. The plan is still being drafted.
“I don’t think we have an etched-in-stone, here’s how we’d like to see that happen (plan),” Anthony Williams, the governor’s legislative secretary, told business leaders in mid-February.
And one central measure to increase housing production, Senate Bill 50, failed to survive the first month of the 2020 legislative session.
Nonetheless, housing remains one of lawmakers’ top priorities for a fourth straight year.
At least 200 bills touching on housing and homelessness already have been introduced this year, according to Housing California, an affordable housing advocacy group. More are expected before the March 18 deadline to amend existing placeholder legislation.
Among the measures are plans to boost affordable housing construction by eliminating environmental reviews and slashing development fees.
Lawmakers also propose creating a permanent source of funding for affordable housing and homeless programs. One bill would require the state to spend $2 billion every year on homeless programs. Tax breaks for vacation homes also would be eliminated, generating hundreds of millions of dollars for homeless programs each year.
“Increasing supply, making it easier to build affordable housing and funding it in an ongoing way (are key themes),” said David Zisser, Housing California’s associate director. “Overarching all of this is a focus on homelessness.”
Matt Schwartz, president and CEO of the California Housing Partnership Corp., is skeptical a major housing package will pass this year.
“There are good things that are happening, but we just can’t expect miracles in this timeframe for a new governor,” Schwartz said.
Schwartz said, however, he is encouraged by this year’s emphasis on increasing homebuilding for low-income and homeless residents — efforts that won’t have an immediate impact.
“We are going to start seeing some big changes in the next couple of years,“ he said.
“We need to create housing for all income levels,” added Erin Riches, chief consultant to the Senate Housing Committee, speaking to business leaders a couple weeks ago. “We need to focus state resources on low-income housing, and let the market take care of all other housing.”
Here’s a look at some of the key bills before the legislature this year.
HOMELESSNESS
AB 3300: Would require the state to appropriate $2 billion for homeless programs and construction of low-income housing every year starting in July.
The revenue would come from the state’s general fund, with more than half of the money going to counties and regional or local homeless planning agencies. Another $800 million would go to cities of 300,000 or more, and $100 million would go to nonprofit housing developers.
AB 1905: Seeks to create a permanent source of funding for homeless programs by eliminating the state’s mortgage interest tax deduction for second homes. It also would cap state deductions for primary homes to loans of $750,000 or less. The measure wouldn’t affect federal mortgage interest tax deductions.
The bill would affect fewer than 400,000 taxpayers and generate about $500 million a year for homeless programs, the bill’s author, David Chiu, D-San Francisco, said in a statement.
AFFORDABLE HOUSING
AB 1907: Seeks to spur construction of homeless shelters and affordable housing by exempting them from the California Environmental Quality Act (CEQA).
The law would apply to emergency shelters, supportive housing and affordable housing developments statewide through 2028.
The bill would expand a pilot program lawmakers approved last year for Los Angeles. During the program’s first two months, Los Angeles approved a 154-bed shelter in Venice, nine permanent supportive housing projects and three homeless shelters, the bill”s authors said.
IMPACT FEES
A package of bills announced Monday, Feb. 24, seeks to reduce the cost of building low-income housing and homeless shelters by slashing development fees, which municipalities charge homebuilders to offset the impacts of new construction on local infrastructure.
Such measures are controversial, however, because cities and counties rely heavily on those fees to compensate for anemic property tax collections under California’s Proposition 13.
The 1970’s tax-limiting proposition is part of the reason why California cities have some of the highest development fees in the nation.
A 2018 study by UC Berkeley’s Terner Center found fees as high as $157,000 for a new house in the Bay Area city of Fremont, $140,000 in the Orange County city of Irvine and about $30,000 in Los Angeles. Fees per unit for an apartment or condo exceed $60,000 in Fremont and Irvine and were about $15,000 in L.A.
“Impact fees, while well-intentioned, have been an incredible impediment to development,” said Chiu, who chairs the Assembly Housing and Community Development Committee.
City and county associations said the fees are vital to their ability to pay for infrastructure in new developments. So, the state should reimburse cities and counties that are forced to cut development fees, their representatives say.
“Any successful strategies will require a sustainable, long-term funding commitment from the state,” League of California Cities spokeswoman Jill Oviatt said in a statement.
The new package includes cuts and some reimbursement.
AB 3148: Would reduce development fees for affordable housing by 25-75%: 75% for “very low-income” housing, 50% for “low-income” housing and 25% for “moderate-income” housing.
AB 3144: Would provide state funding to reimburse local governments that waive impact fees on affordable projects.
AB 1924: Would require local governments to assess development fees per square foot, resulting in lower fees for smaller, more affordable housing units.
The Associated Press contributed to this report.
