For years, cities have sought the right to trade their responsibilities to
build low-income housing. But last Friday, the League of California Cities
asked Assemblywoman Noreen Evans, D-Santa Rosa, to withdraw a bill that
would have done just that.
AB 3042 made it off Assembly floor last month, after extensive negotiations
with groups that opposed the bill. If it had become law, it essentially
would have allowed cities to pay other cities to take over some of their
responsibilities to build low-income housing. But the bill that emerged
after negotiations placed so many limits on cities that wanted to trade that
the League withdrew its support. These included limits on who could trade,
limits on how far the transfers could go and severe penalties on cities that
didn’t live up to their transfer agreements.
“I reluctantly put the brakes on this bill for now,” says Evans. “My goal is
to give cities flexibility. … But the amendments which enabled this bill
to pass to the Senate may make it too restrictive for cities to benefit as
intended. So we are taking a step back and looking at options to pursue this
in the future.”
On a rolling five-year schedule, the state Department of Finance sets a
growth estimate for each region, which is then translated to
regional-housing-needs assessments (RHNA). Cities long have sought the
ability to trade these RHNA responsibilities in order to build housing where
it makes the most sense. While cities have some ability to do this under
existing law, the statutes are so limiting that it rarely happens, Evans
Many groups have opposed trading schemes, saying they lead to
“ghetto-ization.” Marc Brown, a staff attorney for the California Rural
Legal Assistance Foundation, points to New Jersey, the state where RHNA
trading is most common. The result, he said, is that rich suburbs pay the
city of Newark or a small number of other municipalities $40,000 to $50,000
a unit to take over their responsibilities–then no one makes sure the
housing is actually built.
“Those units effectively evaporate,” Brown said. “You’re playing a shell
Several groups lined up against AB 3042, including the Western Center on Law
and Poverty, the California Building Industry Association (CBIA), and the
California Association of Realtors (CAR). Alex Creel, senior vice president
of government affairs at CAR, said that his group opposed laws that “look
great on paper” but result in no new housing being built.
Cities need greater flexibility for affordable housing, said Dan Carrigg,
legislative director of the League, which sponsored the bill. He said the
federal government used to be the main funding source for affordable housing
nationwide. But over the last quarter century, the federal government has
“backed out” of this role, replacing hard cash with a patchwork of tax
credits. This has left cities and counties trying to meet their
responsibilities using a variety of state, local and private funds.
The transfer laws already on the books are so restrictive that they were
never used, Carrigg said. As the bill was heading into the Senate
Transportation and Housing Committee, he said it appeared likely that the
bill would have gotten even more watered down.
“We didn’t think it was worth it to get a bill that was so loaded up with
restrictions that it didn’t match reality,” Carrigg said.
Carrigg added that what affordable housing really needs is a dependable
funding source to make up the difference between cities’ responsibilities
and what the market will provide on its own. But the chances of that funding
stream coming out of the state’s massive bond package seem iffy.
The $2.85 billion housing bond is the only one of the four voters will see
in November that lacks a plurality of support, according to a June 5 Field
Poll. The majority of Republicans are lined up in opposition, while
conservative groups like the California Taxpayers Association are
campaigning against it. Even Gov. Schwarzenegger has conspicuously left any
mention of the housing bond out of recent speeches.
Meanwhile, the Housing and Emergency Shelter Trust Fund Act of 2002, a $2.1
billion bond passed by California voters four years ago, is set to dry up by
the end of this year.
Even if the housing bond does pass this fall, the money would be divided up
between buying assistance for homeowners, parks, infill, and housing
assistance for farm workers, foster youth, and the homeless. Only $345
million would be earmarked specifically for low-income rental-housing
According to a February background paper produced by Senate Transportation
and Housing Committee, the low-income housing situation in the state has
become critical. Twenty-one of the 25 most expensive housing markets are in
California. Only 14 percent of households can afford the median home price,
and the homeownership rate is 10 percent below the national average. These
factors push people onto the rental market, where over half pay more than
the recommended 30 percent of their income on rent.
Two other housing bills by Evans still will be heard by the Senate
Transportation and Housing Committee in the coming weeks. AB 2378 would
require affordability covenants on moderate-income houses that benefit from
the state’s density bonus law. AB 2158 requires greater coordination between
Councils of Government (COGs) and the Local Agency Formation Commission