On March 9th, 2016, the day before the Senate Committee on Transportation and Housing held a hearing on “Innovative Solutions to Build Affordable Housing” (view recording, agenda, and handouts here), Assembly Budget Subcommittee #4 held a “Discussion of Affordable Housing in California.” While the first part of the hearing covers HCD’s budget, the discussion begins at about 70 minutes into the recording.

At that point, you will hear Brian Uhler, the author of the Legislative Analyst’s Office’s recent controversial report entitled Perspectives on Helping Low-Income Californians Afford Housing, talk through his findings. Mr. Uhler makes several points we can all agree with:

California has a severe shortage of housing and has not been meeting its housing need for many years. This shortage is particularly acute in the State’s coastal communities, where starting in the 1970s, home prices and rental rates began to increase significantly in comparison with other parts of the State and nation.

• This has impacted housing affordability, with 1.5 million rent burdened households who spend more than 50% of their income on housing costs.
• The solutions aren’t easy. The State needs to address policies and laws that reward cities for promoting commercial and industrial uses over housing and that allow those opposed to housing to stop positive housing developments to move forward.
• The State needs to have a serious conversation about the role it needs to play in affordable housing.

We also can agree that it would take considerable resources to address the needs of all 1.5 million households. However, we disagree that it is not important to do all that we can to respond both to increase production overall, which we concur will moderate price increases, and to subsidize housing for those that the market will never reach.

Matt Schwartz, President & CEO of the California Housing Partnership Corporation, spoke to the solutions, focusing on the need to leverage federal dollars. According to Mr. Schwartz, $3-4 billion in federal Tax Exempt Tax Exempt bond authority is going unused each year. The State needs to provide gap funding to leverage these dollars: $67K in State funds will leverage $120-150K in federal funds.

Mr. Schwartz also made the following points:

• California’s housing profile is changing– from 2005 to 2014, the State gained 875K renter households and lost 214K owner households.
• The State’s affordable housing funding has declined 66.5% since 2008 over $1.7 billion dollars.
• While supply will help moderate, or even slightly decrease prices, it isn’t the answer to the rent burden faced by lower income—or even for many moderate income-households.
• The short-term solution is to: fund the State’s Multi-Family Housing Program– $1 billion, which would create 12K new homes, expand the State Low Income Housing Tax Credit, and make the Tax Credit more effective.
• The long-term solution is a permanent source of funding for affordable housing.

Photo: LW Yang via Flickr