AB 3190 will undo California’s progress on affordable housing

OPINION – When asked what issues Californians are most worried about, you will almost always hear about the cost of housing. Research from 2022 showed that California has failed to build enough housing to meet the demand, and with the statewide median price for a single-family home in 2021 at $800,000, it should be no surprise that Californians are concerned. That’s exactly why AB 3190 should not become law.

It’s only recently that California has started to see progress to make housing more affordable, largely because Governor Newsom has arguably done more than any governor in history to put real resources into addressing California’s affordable housing crisis.

He dedicated $567 million to bring more housing units online through a variety of grant programs and just last year, and signed 56 bills to reduce affordable housing barriers.

During his administration, the California State Budget has included a baseline allocation to support the Low-Income Housing Tax Credit (LIHTC) program each year, which has provided a reliable and sustainable funding source that has helped California’s affordable home builders produce more than 25,000 additional affordable homes.

Additionally, LIHTC and the affordable builders who rely on it, have leveraged an additional $5.3 billion in federal resources that would have otherwise been left on the table to create shelter for Californians.

That’s the good news.

The bad news is that Assembly Bill 3190 threatens to put all the progress we’ve made at risk and largely undoes the recent forward momentum.

AB 3190 would require prevailing wages, defined as the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, a classification of type of work within the locality and in the nearest labor market area, on nearly all LIHTC projects. A recent report by the Terner Center for Housing Innovation , a nonpartisan independent research thinktank out of UC Berkley, found that a prevailing wage requirement adds a staggering average of $94,000 per door to the cost of affordable housing developments.  The report states, in part, “requiring prevailing wages as a condition of additional funding sources, such as state tax credits, will likely increase the costs of construction and may reduce how many units can be built with existing resources.”

Another study, this one by Rand, placed the added cost from adding a project labor agreement at $92,000 per door. That means project with 100 desperately needed affordable units could see a cost increase of $9,200,000 to $9,400,000 in construction alone.

This money won’t just appear out of thin air. The passage of AB 3190 would require more local, state, and federal resources to pay for these increased costs and that diverts money away from actually building the affordable units California so desperately needs. Piling more cost on top of high interest rates and an ever-increasing cost of building materials will almost certainly mean less housing at a time when California desperately needs more.

The even harder reality is that the Californians facing the toughest time finding affordable housing are some of the most valuable contributors to who we are as a state. It’s the teachers who show up for our kids every day, the health care workers who keep hospitals, health centers and provider offices running, and it’s the city and county workers who make sure our buses run on time and keep our parks clean.

These hard-working Californians are forced to live sometimes hours from where they work, an unsustainable model that puts us at risk of losing these essential workers to other states with more housing options.

The bottom-line is that we face a fundamental disconnect between the cost of housing and the average annual income in California, which leaves safe, affordable housing increasingly out of reach for too many.

Simply put, AB 3190 may have been crafted with the right intentions, but the unintended consequences will send shock waves through the state and will hinder or altogether halt affordable housing projects across the state.

That’s why such a broad and diverse group of housing advocates, developers, lenders, builders, housing management experts and non-profit organizations have joined together in opposition to AB 3190. Our collective mission is to help continue the incredible work that has been to date to address California’s affordable housing crisis, and that includes putting a stop to AB 3190.

We urge Governor Newsom to veto this bill and continue doing the work he has championed for decades to make housing more affordable for everyone.

Jenna Abbott is the Executive Director of the California Council for Affordable Housing