By Diana Elrod, Principal, and Nadine Hassoun, Associate
As was the case in 2017, this year is a banner year for housing bills introduced in the State legislature, with over 200 bills seeking to address a broad range of housing issues, including increased funding for affordable housing, supportive and veterans housing, and greater housing density.
Although many of these bills take steps in that direction, additional solutions will be critical to end the housing affordability and homelessness crisis, which continues to deepen, as was evidenced at the 40th Annual Housing California Conference last month in Sacramento. During a session entitled “Closing California’s Affordable Housing Gap – What Comes Next?,” Matt Schwartz, President and CEO of the California Housing Partnership Corporation (CHPC), framed the discussion with the following key findings from CHPC’s 2019 Statewide Housing Need Report:
- Low Income Housing Tax Credits housing production declined statewide by 23% overall from 2016 due to federal tax reform.
- Renters need to earn 3.6 times the State minimum wage to afford the median asking rent of $2,225, an increase from 3.5 times in 2018.
- Despite the passage of the 2017 Housing Package, State funding remains well below 2012 levels, undermining progress in addressing homelessness.
Proposed solutions include:
- State leadership needs to replace Redevelopment funding with at least $1 billion annually for affordable housing.
- California needs a capital gains tax credit to preserve existing affordable housing at risk of conversion in Opportunity Zones.
The Governor’s May Budget Revision may help address some of the above challenges when it is released. Budget revisions are based on updates of General Fund revenues, expenditures, and reserve estimates determined from the latest economic forecast.
The May Budget Revision is critical because it immediately follows households’ final annual income tax payments, which are the state’s largest source of revenue. The Governor will use data on April’s tax revenues to revise his spending plan, a prelude to legislative approval of a fiscal spending plan in June.
Although State tax revenues fell short of projections in the early months of 2019, tax revenues collected through the first three weeks of April have been strong. As of April 23, current total tax revenue collections are close to $4 billion ahead of January’ projections. Based on these figures, Governor Newsom should have sufficient funding to enact his budget proposals and move the needle on some of the most important issues that Californian’s face—preventing and managing wildfire disasters, tackling the housing crisis and homelessness, improving health care access and affordability, and more.
Diana Elrod has over 30 years of experience and is a highly respected housing and community development leader with a broad range of experience, including designing residential developments for the New York Public Development Corporation, establishing “reasonable return” standards for variances at the Board of Standards and Appeals, and co‐authoring the City of San José Department of Housing certified Housing Element and award‐winning Consolidated Plan.
Nadine Hassoun is an Associate at LeSar Development Consultants, providing research, analysis, and project support to staff and clients on housing policy, real estate development and finance, and solutions to homelessness.