In summary
Key provisions of the state housing package have been in effect for about nine months now. That’s far too soon for a definitive judgement, but long enough to discern some early trends. Here’s what we know so far.
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One year ago this month, Gov. Jerry Brown signed 15 bills aimed at easing the state’s crippling housing crisis. While state lawmakers repeatedly cautioned not to expect rents or home prices to drop overnight, the package was heralded as the state’s most ambitious attempt in decades to alleviate housing woes.
Key provisions of the package have been in effect for about nine months now. That’s far too soon for a definitive judgement, but long enough to discern some early trends.
Here’s what we know so far.
Not a single unit of new housing has been built or funded. But that’s not really the right metric to judge this—yet.
Experts agree that California has not built enough housing to keep up with its population growth, which is part of why rents and home prices are so high. After a recent uptick, the state is on pace to greenlight more than 130,000 new housing units this year.
That’s still 50,000 short of where experts say we need to be to keep prices from getting worse, and way less than what either candidate for governor says we need.
In the long run, the best metrics of judging the housing package will be the most intuitive ones: Is California building more housing, especially for low-income Californians? Are prices declining or at least stabilizing?
Because of the way housing construction and affordable housing finance work, housing takes awhile to develop even in ideal circumstances, so it’s too soon for state officials to be able to point to any new homes built as a direct result of last year’s legislation. The impact now is more in the revenue pouring into state coffers for publicly subsidized housing, and in new programs to reduce regulatory barriers to development.
“Absolutely, yes [the package is] working,” Ben Metcalf, director of the state’s Housing and Community Development Department, told CALmatters’ Gimme Shelter podcast. “But can you go find that house that the housing package built and go kick the tires today? Maybe not.”
But cities are finally complying with state law and coughing up housing data
For decades, many local governments basically ignored state requirements to report how much housing they’re producing. Without those numbers, the state can’t hold local governments accountable for not meeting legally-required housing production goals.
The housing package put some teeth, at last, into those requirements. Cities and counties that fail to provide accurate and timely housing data now face myriad penalties, including the loss of control over local housing approvals.
Metcalf says that upwards of 70 percent of localities are now reporting their data, and that the data’s quality has improved markedly. That’s not just a success for housing wonks—it’s instrumental to making sure cities and counties are building their fair share of market-rate and low-income housing.
Money is being raised, but not spent yet
Among the 15 bills in last year’s housing package, the toughest political lifts were bills that required California to pour more money into affordable housing. These were also the bills that advocates for the homeless and low-income housing were most excited about after years of watching state funding wither.
Lawmakers placed a $4 billion bond on the ballot this fall, $3 billion of which will go toward the financing of below-market-rate housing and other forms of housing assistance for low-income Californians (the other $1 billion will go towards home loans for veterans). Californians will have a chance to vote on Prop. 1 in November. There is no organized opposition to the bond.
Affordable housing advocates are also eagerly awaiting new funding from SB 2, which imposed a $75 fee on some real estate transactions to create the state’s first ongoing source of affordable housing revenue in years. Housing officials say the state is on track to raise $250 million from the new tax, meeting initial projections. That’s good news.
No money is out the door yet, however. Local governments can receive their first taste of new funds as early as November.
One early barometer? The fate of a mall in Cupertino
Perhaps the most controversial part of last year’s housing package was SB 35, a bill from Sen. Scott Wiener of San Francisco that allowed developers to bypass votes on their projects from elected officials if a city was not meeting its housing goals.
Supporters of the legislation hoped it would circumvent a common obstacle to new housing—local officials who block or delay projects because of constituent concerns over growth. Developers who invoked SB 35 on their projects could get special consideration if they devoted a certain percentage of units to lower-income residents.
A handful of Bay Area developers have tried to use SB 35 to speed their projects’ approval. A 100 percent affordable development in San Francisco’s Mission District successfully utilized the law this spring. A larger, more controversial development in Berkeley that attempted to invoke SB 35 has stalled.
The highest profile test case, though, is in Silicon Valley’s Cupertino, a typically expensive Bay Area city and the home of the Apple campus. There, a developer has been trying for years to replace the dormant Vallco mall with a mixed-used housing, retail and office complex.
Locals have fought the project, fearing crowds of new residents and traffic. But SB 35 created an opening for the developer, Sand Hill Property Co, to dramatically accelerate the project by agreeing to reserve half of the proposed 2,400 new homes for lower-income residents.
After city staff (not elected officials) certified that the project complied with basic zoning requirements, it was essentially green lit. The Cupertino city council approved its own version of a redevelopment project earlier this week, which it hopes Sand Hill will opt for instead of the SB 35 plan, but that’s up to the developer.
Though slow-growth groups could still delay the project with litigation, SB 35 unquestionably provided the developer with enormous leverage over reticent local elected officials. Critics say the project has too much office space, which could inadvertently exacerbate the housing crisis in Cupertino. The Vallco project will offer a valuable gauge of at least one tool to make affordable housing work.