From the Field: California Legislature Significantly Expands Housing Funding

Victory! After a long campaign over the past several years, California’s advocacy groups focused on expanding affordable homes have much to celebrate in Sacramento. On the last day of the 2017 session, the state legislature passed a package of bills that will include an ongoing source of revenue for the production and preservation of affordable, accessible, and safe homes for low income renters. In total, the package of bills could provide $4.2 billion over the next several years, according to Housing California. A large and diverse coalition of organizations, including The California Housing Consortium, The Western Center on Law and Poverty, California Rural Legal Assistance Foundation, and NLIHC state partners Housing California, California Housing Partnership, California Rural Housing Coalition, Non-Profit Housing Association of Northern California (NPH), and Southern California Association of Non-Profit Housing (SCANPH), were actively involved in securing this impressive win.

Prior to the summer recess of the legislature in July, Governor Jerry Brown (D) and legislative leadership agreed to pass a package of housing bills upon their return. At the close of this year’s session, final agreement was made on the package of bills that will now head to Mr. Brown’s desk for his signature, with advocates confident based on his earlier promise of support. Even after Mr. Brown indicated he would sign housing investment legislation for the first time in nearly a decade, the two-thirds majority needed in both the Assembly and the Senate proved difficult to achieve. Passage of the funding bills went down to the last minute, with Assemblymembers David Chiu (D-San Francisco), Evan Low (D-Campbell), and Richard Bloom (D-Santa Monica) working in conjunction with advocates to secure the final votes needed. After being two votes shy of passage as recently as Thursday, September 14, the housing funding bills passed with the exact 54 votes needed. They passed with the support of every Democratic member except for Assemblymember Sabrina Cervantes (Riverside), while one Republican, Assemblymember Brian Maienschein (San Diego), voted for the package.    

One of the most significant measures to pass within this package of bills is Senate Bill 2 (SB 2), the “Building Homes and Jobs Act,” introduced by Sen. Toni Atkins (D-San Diego), that creates a $75 fee on all mortgage refinances and other non-sale real estate documents. The new recording fee is charged on a maximum of five documents pertaining to any transaction, limiting fees at a total of $225. This new revenue source will provide an estimated $250 million annually. During the first year of funding, half of all revenue will be distributed to cities and counties to expand capacity for housing development planning while the other half will be specifically devoted to homeless services and prevention. After 2018, the ongoing revenue from recording fees will be divided with 70% allocated to local jurisdictions through the Community Development Block Grant (CDBG) formula while 30% will expand farmworker housing, support affordable development incentive programs, and establish a new program for building moderate income housing.

Once SB 2 gained the support it needed to pass, votes fell into place for other initiatives. The bills passed include the following:

  • Senate Bill 3: Authored by Sen. Jim Beall (D-San Jose), SB 3 will authorize the issuance of bonds in the amount of $4 billion. Passage of SB 3 will put the question of an affordable housing bond before California voters in November of 2018.
  • Assembly Bill 74: The “Housing for a Healthy California Act,” authored by Mr. Chiu, creates a Rental Assistance Program that will link services to housing and provide an immediate solution to chronic homelessness in the state. AB 74 received unanimous support in the legislature.
  • Assembly Bill 1505: Authored by Mr. Bloom, AB 1505 will allow cities and counties to proceed with versions of inclusionary zoning policies that require a certain portion of any new development to be set at rents affordable to low and middle income people. A previous state Supreme Court decision stipulated that such local inclusionary policies were only legal if they pertained to just homeownership (see Memo, 6/29/15). This legislation ensures that rental housing will also be covered under inclusionary zoning policies.
  • Assembly Bill 1521: Authored by Mr. Bloom, AB 1521 changes the Preservation Notice Law to require owners of subsidized rental properties to accept market-rate offers from qualified preservation groups that are committed to maintaining the building’s affordability.
  • Assembly Bill 571: Authored by Assemblyman Eduardo Garcia (D-Coachella), AB 571 will provide more low income housing tax credits to increase the number of affordable homes for farmworkers.
  • Senate Bill 166: Authored by Sen. Nancy Skinner (D-Oakland), SB 166 amends the No Net Loss Zoning law to better ensure that local communities do not lose housing development opportunities by building homes at high incomes or by using land zoned as residential for other purposes.
  • Assembly Bill 1397: Authored by Mr. Low, AB 1397 strengthens the Housing Element Law by limiting cities and counties seeking to meet their obligations under the Regional Housing Needs Assessment (RHNA) from counting locations with no realistic capacity for new housing.
  • Senate Bill 35: This bill eases local regulations that can stand as a barrier to housing production. SB 35 is often referred to as a “by-right” proposal that allows developments to proceed with reduced community review process. Mr. Brown has stated that these changes are necessary in order for California’s communities to meet their goals laid out in the state’s RHNA. Anti-displacement advocates concerned about neighborhood gentrification and environmental groups committed to the California Environmental Quality Act’s standards have voiced their opposition to SB 35.

“The state has taken a significant first step toward housing solutions, which have been years in the making through hard work from advocates, residents, multisector allies and our legislative champions," said Housing California Executive Director Lisa Hershey. "We thank our lawmakers on both sides of the aisle who refused to ignore the 1.7 million rent-burdened California households any longer and voted for affordable housing investment, enforcement of planning obligations, and tools for local governments to build and preserve inclusive communities.”

“After decades of pushing for a permanent source in California, we finally made it across the goal line this year by a hair,” said Rob Wiener, executive director of the California Rural Housing Coalition. “Together with a $4 billion housing bond, restoration of rental inclusionary housing programs, and land use reforms that will expedite affordable housing projects, it’s a great time to be an affordable housing advocate in California.”

For more information about the legislative victory in California, contact Tyrone Buckley, policy director at Housing California at: tbuckley@housingca.org, or Rob Wiener, executive director for the California Coalition for Rural Housing at: rob@calruralhousing.org

Learn more about the bills on Housing California’s website at: www.housingca.org