Governor Brown recently signed off on numerous bills that will theoretically do four things to help the California housing affordability crisis. Cut some developers red tape, put teeth in the California “Housing Element Law” requiring local municipalities to get out of the way of housing development (when it meets planning and zoning parameters), adds new taxes that are supposed to be spent to build affordable housing, and put more bond measures on ballots adding more money to be spent on housing development.
There is a housing supply and demand imbalance in California. Too many bodies for the quantity of units. It has pushed rents and residential property prices to economically unhealthy levels. There’s grumbling about tighter rent control ordinances, but that’s only a political maneuver, and does nothing to resolve the real issue. There has been 100,000 fewer units a year for the past decade built than what’s been required to keep up with population growth.
I totally understand the “don’t build in my backyard” mentality. I’d like to have the 1970 version of the San Fernando Valley back too, but that’s not going to happen. Getting out of the way, and making it easier for responsible developers to actually construct housing would be the most productive mode of operation.
When it comes down to giving tax money to the government to be, I’m going to reference back to a Los Angeles Times article from 2010 that I previously blogged on. See below for a copy of the actual article.
Here are some of of the high (low) lights:
- At least 120 municipalities spent a combined $700 million in housing funds from 2000 to 2008 without constructing a single new unit. Nor did most of them add to the housing stock by rehabilitating existing units.
- Cities across California have skirted or ignored laws requiring them to build affordable homes and in the process mismanaged hundreds of millions in taxpayer dollars
- $87 million from 2000 to 2008 produced only 42 homes and 62 rehabilitated units.
- Officials spent millions on projects that knocked down homes, displaced low-income people and worsened blight without producing anything in its place
- $42.5 million to a politically connected developer to keep about 550 units below market rate for 99 years — even though a consultant to the city said the price was “unwarranted” and city officials were told that an appropriate price for slightly fewer units would be about $13 million.
- spending most of their affordable housing money over the decade on “planning and administration” — but never built a single unit.
- “thinking about concepts of how do we get something going … but we never did get to the point of taking those to the council with a concept that was developed.”
- State law requires municipal redevelopment agencies to spend 20% of the approximately $5 billion in property taxes they collect each year on building and preserving homes for poor and moderate-income people.
In addition to the new bills signed off by the Governor, Measure HHH was passed last November raising $1.2 Billion through bond issuance and paid through increased property taxes to build housing for the homeless, and the proposed “Linkage Fee” tax on new construction, theoretically to be used to construct affordable housing. The proposed fee would apply to new homes, office buildings, apartment towers and other construction — charging $5 per square foot for commercial development and $12 for residential. Residential projects with five or fewer units would be charged $1 per square foot.
I supports regulation, policies, or legal actions that increase the supply of housing in Los Angeles and California ,provided that the proposals do so in a responsible manner that consider existing homeowners and businesses. But add this up, and it’s a tremendous amount of money. If history is any indicator, we won’t get our tax dollars worth. It all sounds good politically. There are very few specifics, only generalities on how this money is going to be applied. Keep an eye on the dollars, and the politicians. Hold them to being productive, not wasteful (or routing the money to the general fund, to be used on other pet projects).
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me.
Ron Henderson GRI, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals
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Specialist in the Art of Real Estate Sales and Finance
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Cities often give short shrift to affordable housing
At least 120 municipalities spent a combined $700 million in housing funds from 2000 to 2008 without constructing a single new unit, a Times analysis of state data shows. Nor did most of them add to the housing stock by rehabilitating existing units.
October 03, 2010|By Jessica Garrison, Kim Christensen and Doug Smith, Los Angeles Times
Cities across California have skirted or ignored laws requiring them to build affordable homes and in the process mismanaged hundreds of millions in taxpayer dollars, a Times investigation has found.
At least 120 municipalities — nearly one in three with active redevelopment agencies — spent a combined $700 million in housing funds from 2000 to 2008 without constructing a single new unit, the newspaper’s analysis of state data shows. Nor did most of them add to the housing stock by rehabilitating existing units.
In case after case, The Times found, cities spent substantial sums for little return:
— The San Gabriel Valley city of Irwindale
spent $87 million from 2000 to 2008 but produced only 42 homes and 62 rehabilitated units. Some of the money was spent on industrial land next to an old gravel pit and warehouses, a site that officials now acknowledge was unsuitable for housing. New plans call for building a hot-sauce factory there.
— In Santa Ana and Avalon, officials spent millions on projects that knocked down homes, displaced low-income people and worsened blight without producing anything in its place. Block after block in a 94-acre area east of Santa Ana’s civic center is lined with boarded-up buildings and vacant lots. In the Santa Catalina Island city, where housing is so scarce that workers sometimes sleep in the bushes, a half-block of property where cottages were razed to make way for more homes has sat, sun-baked and undeveloped, for 15 years.
— Rancho Cucamonga paid $42.5 million to a politically connected developer to keep about 550 units below market rate for 99 years — even though a consultant to the city said the price was “unwarranted” and city officials were told that an appropriate price for slightly fewer units would be about $13 million.
— Nearly three dozen cities, including Monterey Park and Pismo Beach, reported spending most of their affordable housing money over the decade on “planning and administration” — but never built a single unit. Asked to account for the $361,000 spent by Pismo Beach, Administrative Services Director George Edes said some of it paid the salaries of staffers who were “thinking about concepts of how do we get something going … but we never did get to the point of taking those to the council with a concept that was developed.”
State law requires municipal redevelopment agencies to spend 20% of the approximately $5 billion in property taxes they collect each year on building and preserving homes for poor and moderate-income people.
But affordable housing is not politically popular, and The Times found that many projects face inexplicable delays. Others end up worsening blight and hurting the people they were supposed to help. Land ostensibly set aside for affordable housing was in some cases turned over to commercial developers, raising questions about whether cities ever intended to build the housing in the first place.
State officials do little to ensure that cities spend the money properly or report accurately on their activities. The Times found numerous discrepancies between what officials told reporters they had produced and what they told the state.
Citing limited funds, the Department of Housing and Community Development stopped auditing redevelopment agencies three years ago.
“The state has unleashed this incredibly powerful land-use and financial tool that is redevelopment with virtually no effort, no time, no resources spent to hold these agencies to account,” said Catherine Rodman, a San Diego lawyer who has sued several agencies over their use of housing funds.
Puzzling explanations
The state’s approximately 400 municipal redevelopment agencies control the largest pot of non-federal money available to build and subsidize affordable housing.
These little-understood arms of government are run by city council members and county supervisors — or, in big cities like Los Angeles, by political appointees. The agencies, which often work in concert with private developers, are funded by increases in property tax revenue from blighted areas they improve.
Nearly 35 years ago, amid concerns that agencies were razing the homes of poor people and leaving them nowhere to go, the Legislature passed the law requiring that one-fifth of redevelopment money be spent on affordable housing.
The law gives officials great flexibility in addressing the housing needs of poor and moderate-income families; in Los Angeles, that would be those with incomes of up to $75,600 a year for a family of four. The agencies can do more than build homes: They can buy and fix foreclosed homes, provide grants to homeowners to improve properties and pay to keep existing units affordable.
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