+1-415-742-9597
gabrielle@riches-in-niches.com

What Ails Affordable Housing?

What Ails Affordable Housing?

Affordable housing policy

What Ails Affordable Housing?

Affordable housing is the buzzword of our times. Affordable housing extends to a growing number of people who lack the means to live in decent houses and apartments. Anybody making less than $100,000 a year has this issue. The issue therefore is a big deal for  California and for the United States as a whole.

The world of affordable housing or the lack thereof is a political, economic, and social issue. Although affordable housing is a huge hurdle for many states, let’s focus here on California and provide a little historical perspective.

Once upon a time California had local redevelopment agencies. These agencies’ main task consisted in using a portion of property tax money to develop blighted areas. However, Governor Jerry Brown advocated to eliminate the agencies to avert California’s then fiscal crisis. The California Supreme Court ruled in 2011 to do just that. Both the governor’s position and the Supreme Court’s position were short-sighted.

California might have been better off reforming the redevelopment agencies. Instead, some 435 redevelopment agencies were eliminated in 2012 with no other, better kind of vision for housing in California.  According to John Stewart, a San Francisco-based affordable housing developer, the Bay Area alone lost $250 million in annual affordable housing funding at the stroke of a pen. For all of California that number hovers at $1 billion.

The situation worsened since then and with the Trump administration in the White House, and Ben Carson directing HUD the toll is now extending the Low Income Housing Tax Credit. Developers depended on that credit but it is as good as gone. Trump’s promises to lower the corporate tax rate have eroded the value of the Low-Income Housing Tax Credit by some 25%.

Affordable housing either won’t get built or it will be on hiatus. Rising construction costs and no available tax increment financing contribute as well. With tax increment financing and redevelopment agencies gone, California’s housing crisis continues to surge. Homelessness of many more Californians is imminent.

Communities in California have no viable affordable housing plan, although Governor Newsom unveiled an ambitious plan for affordable housing in California. His plan includes a proposed $750 million budget to stimulate affordable housing in California. Whether the plan both succeed is a different matter because their other political forces at play and it is a plan that’s happening after the fact. Affordable housing is already scarce and in decline.

Although San Francisco signed HOME-SF into law in May 2017, a program that aims to create some 16,000 housing units, 30% of which must be affordable, affordable housing is vanishing in San Francisco. (Note that the planning departments page for home SF appears to be defunct. It is unclear whether the program is still functioning.) – Since then San Francisco mayor London Breed has proposed support for affordable housing. However, all of this is in process versus creating affordable housing.

The wheels of government grind slowly in the housing affordability crisis continues. This affects all Californians, whether rich or poor or somewhere in the middle, as it creates various other economic and social issues. We have little time and must address this looming problem now.