Like earthquakes, droughts, and surfing, inadequate and overpriced housing seems to be a permanent part of life in California. It has been blamed for all sorts of maladies, from an epidemic of homelessness to growing emigration by businesses and individuals seeking a more affordable environment. And blame for the housing crisis itself has been attributed broadly to all sorts of causes; conservatives tend to complain about environmental and building regulations, and progressives blast greedy landlords and developers and a state tax code that tends to freeze property ownership. Everyone agrees NIMBYism (“Not In My Back Yard”) and its influence on local governments is a problem.
But proposed solutions tend to generate more opponents than supporters, as occurred last year when a bill designed to provide a powerful push for the construction of high-density housing near transportation hubs died a quick death in the California legislature. So when Gavin Newsom set very high goals for new affordable housing during his 2018 gubernatorial campaign, most political observers weren’t very impressed.
The new Democratic governor did, however, turn some heads during his initial budget presentation this week, indicating he was serious about affordable housing as a top priority, as CALmatters reported:
We got the first glimpses of his plans today, as Newsom unveiled his first governor’s budget. And yeah, it’s a big deal….
It takes a lot of money to build housing reserved for lower-income Californians — roughly $330,000 per unit, by one estimate. Affordable housing and homelessness advocates have been complaining for years that they are receiving nowhere near the level of financial support they need from the state.
Newsom’s budget proposals include a major infusion of more than $1.7 billion in one-time and ongoing affordable housing cash….
“I have never seen this kind of attention paid in the budget to homelessness and affordable housing issues,” said Anya Lawler, a housing policy advocate for the Western Center on Law and Poverty. “Just the page count alone is a little unprecedented.”
Newsom also announced plans to appoint a homelessness “czar” and expedite construction of homeless shelters. And on the supply side of the housing equation, his budget includes a half-billion-dollars in grants to local government to meet short-term affordable housing goals.
Those are the carrots Newsom is offering NIMBY-dominated cities and counties where housing construction often lags. But there’s a big stick he is threatening to wield as well, as the Los Angeles Times reports:
The governor said his administration would develop new homebuilding targets for every region and, for the first time, hold local governments to meeting those goals with financial penalties.
State transportation revenue would be withheld from cities and counties that did not perform, he said.
“If you’re not hitting your goals, I don’t know why you get the money,” Newsom said.
He’s clearly referring to the new, critically-needed road and bridge construction dollars enabled by a 2017 state gas tax increase, but hinted that other transportation funds could be withheld as well.
Local government lobbyists began squawking immediately, but Los Angeles mayor Eric Garcetti and San Francisco mayor London Breed (who is in the job Newsom previously held for seven years) were positive about the overall plan.
Whether he gets the money he wants or implements his threats of funding cutoffs, Newsom will almost certainly raise the already-high profile of housing issues in Sacramento. On a separate front, the above-mentioned bill to force high-density housing construction near train and bus facilities has been revamped to reduce opposition, particularly from low-income housing advocates worried about gentrification. Getting behind that legislation is another option for Newsom.
In 2020, the issue of how the California tax system treats different kinds of buildings will be front and center, with a ballot initiative scheduled that would strip Proposition 13 limits on property taxes from commercial real estate. This “split-roll” proposal, which is the first major effort since the 1970s to challenge the basic structure of Prop 13 (which strictly limits tax increases on existing property-holders), which in turn has had a profound effect not only on housing in California but on the tax burden and even the economy. That will be a battle for the ages. But while progressives have been agitating for partial or full repeal of Prop 13 for generations, it’s unclear whether Newsom will fully get behind the initiative. But short of an overall revolution in how Californians build and tax housing, he’s already shown he’s more serious about the subject than his distinguished predecessor Jerry Brown, whose two gubernatorial tenures, beginning in 1975 and ending in 2019, were accompanied by the full flowering of the state’s housing crisis.