Gov. Jerry Brown’s May revision to California’s spending plan would improve housing affordability by making it cheaper and easier for developers to build multifamily communities.
Released this past Friday, the governor’s May revision espouses legislative changes to lift local obstacles to residential development. It favors market-based solutions, such as streamlining the development process, over costly government subsidies that help comparatively few people.
Gov. Jerry Brown
“Hopefully, the supply is going to bring down the cost,” Brown said in this Los Angeles Times story. “Otherwise, through subsidies and through restrictions, we’re just spending more and more tax dollars and getting very, very little.”
Brown’s focus on easing the path to private residential development largely reflects recommendations from the Legislative Analyst’s Office. The nonpartisan LAO has said addressing California’s housing shortage is the most effective way to lower housing prices, a strategy supported by the California Apartment Association and reflected in a slate of pro-housing bills CAA is backing this year.
“If the status quo is maintained, there is little reason to believe local communities will depart from their past practices. The state’s housing challenges almost certainly will worsen,” the LAO writes in this response to Brown’s May budget revision. “At the same time, bringing about a meaningful increase in housing production would require a major shift in the way cities and counties plan for and approve housing. Such a change likely would be complicated and contentious.”
Brown this year returned to his mantra on frugal spending, fueled by news that state revenues would fall short of projections. While the budget is expected to remain balanced over the next two years, annual shortfalls are forecast to exceed $4 billion by 2019 — or worse with an economic slowdown or recession, his office said in a statement. Further, his office said, the May revision funds core programs while paying down debt, saving money and holding the line on new obligations.
It may be no surprise, then, that the May revise excludes money for a housing proposal unveiled last month by the Democratic Assembly Caucus. That plan includes a one-time $1.3 billion budget investment in five priority areas to meet the range of housing needs for working, lower-income families and Californians who are homeless or at risk of becoming homeless. Read more on that proposal here.
Assemblyman Richard Bloom
The revision does, however, reflect $3.2 billion in state and federal funding and award authority for various affordable housing and homelessness programs. This amount includes recently created programs that pay for affordable housing in sustainable communities and housing for veterans.
Besides issuing his May revise, Brown on May 13 endorsed a trio of bills aimed at increasing California’s housing stock, the L.A. Times reported in this article. One of the bills, AB 2299 by Assemblyman Richard Bloom, D-Santa Monica, is sponsored by CAA and would ease the path to adding second units, or granny flats, to residential lots.
Further, the revision endorses a $2 billion bond from a portion of future Proposition 63 mental health revenues, which would help craft and administer homelessness and affordable-housing programs focused particularly on chronic homelessness. It proposes first-year funding of $267 million from the bond proceeds.
Consistent with Brown’s policy-driven approach, the May update proposes legislation requiring ministerial “by right” land-use entitlements for multifamily infill housing developments that include affordable housing. This would make qualifying multifamily housing projects exempt not only from the discretionary approval process, but in general, from CEQA review. Such legislation promises to constrain development costs, improve the pace of housing production and encourage an increase in housing supply, the governor’s office says.
It also may lift developments beyond NIMBY (Not in My Backyard) objections.
Dan Walters of The Sacramento Bee wrote about this possibility in this week’s column: “It’s aimed at what housing experts say is the chief impediment to closing California’s demand-supply gap – the reluctance of local officials to approve large-scale housing projects, due to resistance among existing residents worried about traffic and crime and concerns about costs of new public services.”
While praising Brown’s plans as a good start, the Legislative Analyst’s Office suggests going further.
Assemblyman Tom Daly
For example, the LAO’s report recommends that the governor’s proposal clarify that third parties — such as CAA — to bring legal challenges when a developer is denied “by right” approval. If third parties win in court, they should be able to recover attorney’s fees, the LAO says. This recommendation aligns with a bill sponsored by CAA, AB 2584 by Assemblyman Tom Daly, D-Anaheim.
This bill expands the enforcement of the Housing Accountability Act by allowing groups that represent tenants or housing providers — such as CAA — to bring a legal action when a local government fails to comply with the act. Read more about it here.
The LAO goes on to say: “Most notably, we suggest the Legislature expand the number of housing projects eligible for streamlined approval by lowering the affordability requirements developers must meet. We also recommend changes to guard against possible actions some communities may take to hinder the use of streamlined approval.”