California cities have millions for affordable but hard-to-spend housing

Natalie Hanson/Courthouse News

OAKLAND, Calif. (CN) — Affordable housing is a priority nationwide, but a demand crisis in California has experts wondering how cities will navigate an increasingly costly and time-consuming system to improve housing. ‘offer.

“If housing prices are high and no one comes to you with a proposal, you’re probably sending the message that you’re not adjusting to development,” says UCLA housing researcher Mike Manville. He’s one of many experts who say California cities may have heaps of money to spend building affordable housing, but need to make strategic policy changes if they’re serious about tackling their housing crises.

California is unique because cities in need of affordable housing rely heavily on competitive federal and state funds. City leaders can apply for funding from the Community Development Block Grant program — which provides housing grants each year — or allocated by the governor, depending on the projects they want to build. They also compete by demonstrating why and how they will meet the housing need in their community. The Legislature also recently freed up hundreds of millions for affordable housing projects that meet certain criteria, adding another level of competition as the housing crisis worsens.

Some cities in the San Francisco Bay Area are pursuing aggressive policies to create affordable housing, battling a growing affordability crisis and historically exclusionary policies.

The Oakland City Council has approved approximately $60 million in public funding for affordable housing projects and $15 million from annual funding sources. The council recently voted to also seek $200 million in state affordable housing grants.

Housing and Community Development Director Shola Olatoye said the city has received about $322 million from the state since 2020. In two years, the city has raised about $1.8 billion with the money from state and county, tax credit bonds and private loans. The city also discussed a ballot measure asking voters whether the city should seek $850 million to create public housing and improve city streets and facilities.

San Francisco has received at least $449 million in public funding for affordable housing since June 2021, housing department spokeswoman Anne Stanley said.

She said the city has streamlined how affordable building proposals move through the system, with requirements for developers to designate certain units as below market — or pay fees or dedicate land to housing.

Sacramento passed a housing trust fund using affordable housing funds from a budget surplus. Community development spokesperson Kelli Trapani said the city invested $31.5 million in 2020 for 644 units that began taking shape in July.

“These resources have helped projects secure the financing needed to begin construction sooner and be more competitive for state and federal resources,” Trapani said. The city has also added policies to encourage the creation of “naturally affordable” housing, where new construction drives prices down.

This is a common approach also seen in San Diego. Housing Commission Vice Chairman Scott Marshall said by email that more than 2,000 affordable homes were green-lighted for funding last year, with about $16 million identified for more affordable rentals. .

Experts say that while these are good steps, the major question will be how quickly new housing will appear with limited land available for traditional public housing.

Ryan Finnigan, senior research associate at the Turner Center in Berkeley, said research supports the creation of housing at all price points to relieve pressure by opening up older housing. Cities must combine new housing with strong tenant protections to reduce the displacement of lower-income people than those moving in.

But in the Bay Area, resistance is high from residents who want their communities to look the same as they always have.

“Wherever you are, there will be someone who doesn’t want affordable housing,” Finnigan said, adding that local affordable housing debates seem to focus on finding a single “optimal strategy” – leaving many proposals dead in the water.

Manville, the UCLA researcher, agreed that while Senate Bill 9 — which among other things allows homeowners to turn their single-family plots into multiple units — was a good start, officials need to free up land to accommodate new larger complexes with denser housing.

Berkeley speaker David Garcia said as California cities can no longer take advantage of future tax revenues for affordable housing, many are relying on passing ballot measures for subsidies.

He said the research supports new housing as a way to slow displacement due to gentrification – when wealthier people move into historically low-income neighborhoods and residents are overpriced. New homes can also help fight real estate companies buying up older buildings to raise rents, he said.

“The presence of market-priced housing actually stops displacement, as high-income people would move into these vulnerable neighborhoods whether or not there is new construction,” he said.

Garcia praised San Diego and Sacramento for their efforts to increase density, or the number of units on residential land — compared to Bay Area cities, where land is extremely expensive and building processes are labyrinthine. can leave price-restricted units “stuck in the pipeline”.

And in California, anyone can oppose projects for any reason, often crippling developments. “It’s often the loudest voices who have the money to pay lawyers, who end up blocking projects, despite the strong approval of the community as a whole,” Garcia said.

Meanwhile, he said cities’ onerous processes to get housing projects off the ground indicate a failure to remove old policies rooted in racism.

“Examining the usefulness of this policy today in the face of a staggering housing crisis, grappling with the nefarious origins, is a no-brainer for me,” he said.

Olatoye said Oakland is aware that, like other Bay Area cities, it is not producing enough units to meet demand, especially for low-income tenants. She said the city is leaning on tools like the Newsom Housing Accelerator Fund — a $1.75 billion bridge funding investment to shift projects to house the homeless and people very low income – to start projects that have been waiting for years for lack of money.

Oakland is “a city of renters” with 60% of its residents living in rental housing. It also has a much lower homeownership rate among black and Latino residents, Olatoye said, underscoring the need to build affordable housing across the city.

“It’s the legacy of segregation and everyone’s going to have their share of an economically diverse city,” Olatoye said. “East and West Oakland have been the target of decades-long segregationist housing practices. We now have the opportunity to correct these practices and distribute housing more evenly across the city. »

Kevin Burke of the nonprofit East Bay for Everyone said the many sources of state funding make it costly and time-consuming to propose affordable projects. A bill aimed at consolidating funding sources, Assembly Bill 2305, failed in the Legislative Assembly “because each agency does not want to give up its pot”.

There may be other forms of redress through the legislature.

California Housing Partnership President and CEO Matt Schwartz said the 2011 Assembly bill could streamline the movement of affordable developments into commercial and retail areas. He said a proposed amendment to the California Constitution could “fix” the state’s struggle to create ongoing sources of funding for affordable housing. The state distributes funding from budget surpluses, which means nonprofit housing providers never know how much funding is on the table.

“It would set aside 5% of general fund revenue each year to address homelessness and for permanent affordable housing,” Schwartz said of the proposed amendment. “They (developers) could move the pipeline forward, without the uncertainty and the ‘stop and start’ nature of what exists today.”

Bernard P. Love