The California Housing Partnership Corporation (CHPC), an NLIHC State Partner, and TransForm released Why Creating and Preserving Affordable Homes Near Transit is a Highly Effective Climate Protection Strategy. The report’s authors estimate the potential benefits of investing California cap-and-trade auction proceeds into affordable housing development and preservation. The report utilizes data from a 2013 California Household Travel Survey (CHTS) conducted by the California Department of Transportation and analyzed by the Center for Neighborhood Technology. According to the study, investing 10% of cap-and-trade proceeds into affordable housing would result in 15,000 new units of affordable housing over three years, and contribute to significant greenhouse gas (GHG) reductions.
Cap and trade is a market-based policy tool for controlling GHG emissions from large-scale emitters such as utilities and other companies. The approach sets an overall cap, or maximum amount of emissions, and then allocates emission allowances, including through auctions. Each GHG emitter can sell or buy allowances, install pollution controls, and implement efficiency measures in order to keep within its cap.
In 2006, California passed AB 32, the California Global Warming Solutions Act. This act enables the California Air Resources Board (ARB) to use market mechanisms, such as a cap-and-trade auction, to reduce GHG. In May 2013, ARB released a Cap-and-Trade Auction Proceeds Investment Plan, suggesting California’s existing Transit-Oriented Development Housing program as one means for achieving GHG reduction goals. The CHPC report recommends using proceeds from cap-and-trade auctions to fund California’s Transit-Oriented Development Housing Program, establishing a new 10% set-aside for extremely low income (ELI) households, those with income at or below 30% of area median income (AMI), and creating additional preferences for developers serving more ELI households.
The study utilizes one-day travel data collected from 40,000 California households between February 2012 and January 2013. The household-level data was analyzed according to proximity to transit and HUD income categories. The data indicate that ELI households living within one quarter mile of transit log 60% fewer vehicle miles traveled (VMT) per day compared to households with income above 120% of AMI living within one quarter mile of transit. Further, ELI households living within one quarter mile of transit use transit 50% more than higher income households with the same access to transit. The researchers conclude that investments in housing affordable to ELI households near transit would result in greater GHG reductions than investments in market rate housing.
According to the analysis, if 10% of cap-and-trade funds are invested in an affordable housing transit-oriented development program, approximately $250 million per year could be available for affordable housing development in the three-year period between FY15-16 and FY17-18. This funding could support up to 15,000 new units of affordable housing, while also removing 105 million miles of vehicle travel per year from California roads. Over the 55-year presumed affordability period, this would amount to more than 1.58 million metric tons of GHG reductions.
The report, Why Creating and Preserving Affordable Homes Near Transit is a Highly Effective Climate Protection Strategy, is available from CHPC at: http://www.chpc.net/dnld/AffordableTODResearch051514.pdf