From the Field: By-Right Development Proposal Dies in California Legislature, Governor Withholds $400 Million for Affordable Housing

California lawmakers spent much of 2016 working on solutions to the state’s escalating affordability problems, but the final days of the legislative session concluded with many significant proposals stalled. Most significantly, Governor Jerry Brown’s (D) proposal to increase production of rental housing by streamlining approval timelines failed to get through the legislature due to strong opposition from tenants’ organizations, environmental protection groups, and labor unions (see Memo, 6/13/2016).

Mr. Brown had previously struck a deal with legislative leaders to allocate $400 million for affordable housing in the state budget if the “Streamlining Affordable Housing Approvals" – also called “by-right” development - passed. While the Democratic caucus initially supported the deal, Assembly Speaker Anthony Rendon (D) declared the “by-right” development proposal dead on August 18. The $400 million for affordable housing still sits in the state budget signed by Mr. Brown on June 27, but the funds needed to be allocated by the governor to specific housing programs. Housing California, an NLIHC state partner, joined with other housing development organizations to advocate for the release of the $400 million without the Streamlining Affordable Housing Approvals legislation. Organizers were using #freethe400 in their advocacy efforts. The legislature adjourned with no further action taken on this funding measure.

Streamlining Affordable Housing Approvals met opposition from various fronts after it was proposed in May. Many organizations promoting affordable housing development were willing to support the initiative if it were expanded to include more affordable housing for all “by-right” approvals. Under the proposal, 20% of units developed through the streamlined approval process would be required to be affordable to low income households, those with incomes at 80% or less of area median income (AMI). For developments in Transit Priority Areas (TPA), either 10% of housing units would be required to be affordable to low income households or 5% would be required to be affordable to very low income (VLI) households with incomes at 50% or less of AMI. A “support if amended” letter from affordable housing groups earned significant changes to Mr. Brown’s proposal, but some key changes, such as extending the required affordability period for all new affordable housing, were not included.

Among the opponents to Streamlining Affordable Housing Approvals were organizations working on behalf of renters and communities of color. These groups argued that “by-right” development would severely reduce the public input processes that are often the only means by which neighborhood advocates can forestall developments that rapidly increase property values, drive up rents, and lead to displacement. These groups, more than 60 grassroots organizations throughout the state, came together to form Californians for Affordable Housing. The coalition contended that “by-right” development would overwhelmingly lead to the expansion of primarily market-rate or luxury rental housing and would not provide an acceptable proportion of deeply affordable rental homes.

The most effective opponents to Mr. Brown’s proposal were politically powerful labor unions who expressed concerns that expedited development approvals would provide little opportunity to negotiate higher wages for members of the building trades. Environmental organizations also fought against the streamlining initiative because of the ways it would limit challenges to developments under the “California Environmental Quality Act.”

Opponents to Streamlining Affordable Housing Approvals succeeded in draining support among Democratic legislators from the May agreement. Leaders and advocates throughout state who recognize the desperate need for the additional $400 million for affordable housing and for expanded market-rate housing to ease inflationary pressures in the rental housing market are frustrated by the delay in getting the funds allocated.

Among the programs threatened by the withholding of the $400 million is the “Housing for a Healthy California” program created by Assembly Bill 2821, under which Medi-Cal revenue would be used to link supportive housing programs to Medi-Cal beneficiaries experiencing homelessness. The supportive housing is expected to reduce state spending on Medi-Cal overall. Advocates are concerned that Mr. Brown may not sign AB 2821 because of the failure of the “by-right” development agreement.

The legislative session closed with several positive achievements, including the creation of the “No Place Like Home” initiative to build new housing serving homeless persons with mental illness. The program will be funded by borrowing against revenue raised through the “Mental Health Services Act,” approved by voters in 2004, which imposes a statewide tax on millionaires. Also heading to the governor’s desk for signature will be the “Teacher Housing Act of 2016” (SB 1413), which will allow school districts to use their property for the development of housing for teachers and other school staff.

Many advocates lament the unfinished business from the 2016 legislative session. Housing California Executive Director Shamus Roller stated, “A year that started with new hope ended with the most vulnerable being held hostage to political gamesmanship of powerful interests.”

For more information about housing advocacy related to the 2016 California legislative session, contact Joe Boniwell, policy director for homelessness at Housing California, at [email protected].