Strategies and Tools for Meeting California’s Affordable Housing Needs
An alarming trend is appearing in California’s communities: We are losing our young adults (age 20 to 34). It’s not surprising that when young couples decide to start a family and create a home, they look outside the state for an affordable place to live and work. This is happening throughout the nation in areas where home prices and rents have far out paced take-home pay. Not coincidentally, these same communities have not allowed much in the way of new home production in the past 20 years. Meanwhile, young adults are finding them selves priced out of their hometowns and are forced to move farther away from their families.
Put simply, not enough homes are being built to meet the various needs of all Californians. Nearly every segment of California’s society struggles to find homes that are decent, safe and afford able. No community is untouched. Even the most desirable communities find it difficult to provide affordable options for recent college grads, older people needing to downsize their households, and new families wanting to raise young children near grandparents without assuming risky loans or paying more than 50 percent of their income toward the rent or mortgage.
Many inland communities face the flip side of this issue. Relatively lower home prices and costs of living have attracted families who can’t afford to live near their jobs. With more and more commuters traveling great distances, we have no hope of meeting our global, climate change- driven goal of reducing energy consumption (see “The Road Less Traveled: Why Fewer Miles Are Better,” page 23). Fur thermore, the quality of life in a com munity suffers when most of its residents work out of town and are gone from sun- rise to sunset.
Better Communities Mean a Better Bottom Line
Communities that foster job creation must permit a variety of affordable homes for that workforce. Major employers in large cities cite the lack of affordable homes as a major barrier to recruiting top talent. Ultimately, the economic machine slows and creates fewer jobs as workers cannot find a place to live nearby.
What can local officials do to meet their community’s home affordability needs? Society pays a lot of attention to the entrepreneur who creates jobs and wealth as his or her business expands. Yet scant credit goes to the forward-thinking city council that creates the positive environment for economic growth. It turns out that what’s good for the long-term bottom line of the community is also positive for the city’s short-term economic good. Incentives for providing affordable homes are available, and more cities need to recognize the fiscal connection between increasing the supply of affordable homes and the increased tax revenue that accompanies it.
Meeting Community Needs: Strategies for Local Officials
Working families look for solutions to the housing affordability crisis in the mar ketplace, but the market can’t perform without assistance from local govern ments. For example, without adequately zoned land, the solution will always be out of reach. Local governments can start by reducing some of the barriers that prevent the private market from increasing the supply.
City councils and boards of supervisors can zone for all types of homes, includ ing apartments, condos and small for-sale homes. This would allow regular-wage earners (retail and service workers, teachers, government employees, police officers and firefighters) to live near their jobs and become part of their communities. It would allow employers to find and retain skilled workers, not lose them to the exhaustion inevitably caused by long commutes (see “Driving Ourselves Sick,” August 2005, Western City, online at www.westerncity.com). By zoning for all types of homes, local governments allow the private market to create everything from one-bedroom apartments for young college grads to single-family homes that can accommodate large families.
There will always be some workers who cannot afford to rent at the market rate. For community members such as home health care workers, preschool teachers and beauticians, state programs finance the development of rental homes.
Below-market-rate home development in California is one of the best examples of a public-private partnership. Compared to the rest of the country, California has a highly sophisticated model. The state invests money that developers (for-profit and nonprofit) combine with private bank or individual investments to build permanently affordable places to live. These are beautiful, well-managed homes and assets to our communities.
What’s Needed Now
While significant amounts of private investment exist, what’s needed now is steady public investment. Voters approved two statewide bonds (Proposition 46 in 2002 and Prop. 1C in 2006), but bonds inevitably run out of funds, and the is suance of future bonds is uncertain. The state needs to create a permanent source of financing for affordable homes.
Making Affordability a Priority
The home development process is ongoing, and a steady stream of funding is required in order for developers to plan and commit to a project. A reliable stream of state investment will ensure the housing market continually provides the variety and choices Californians need.
The League of California Cities recently joined Housing California (www.housing ca.org ), a coalition of stakeholders who are working together on the California Communications Campaign for Afford able Homes to make home affordability a top priority in the state Legislature. The hope is that this effort will ultimately lead to reliable funding for the state Housing Trust Fund.
City officials need to adopt the mantra: “Build and preserve affordable homes.” More than 170 communities are already embracing mixed-income neighborhoods through inclusionary (mixed-income) zoning. Between 1999 and mid-2005, these policies created approximately 30,000 new homes for people at below-market rates. For more information on inclusionary housing, visit the California Coalition for Rural Housing at www. calruralhousing.org .
City officials also need to preserve existing homes and protect residents from rent gouging, condo conversions and demolition of affordable homes. Cities need to strongly enforce codes and regulations that hold landlords accountable for keeping their rental homes from falling into disrepair. At-risk properties with federal investment and affordability guarantees that are about to expire can be found in almost every community. Learn more about protecting these homes by visiting the California Housing Partnership Corporation (CHPC) website at www.chpc.net.
Local housing trust funds are also important tools for meeting the needs of constituents. Many communities have dedicated local sources of revenue to their housing trust funds, helping to meet the needs of their community members. Housing California is working with a coalition of local housing trusts to increase the amount of state funding available.
Your city can help by lobbying Congress for the federal funds needed to reduce home affordability gaps. Each year, the federal government spends more than three times as much on tax breaks for homeowners as it spends on low-income housing assistance, with a large share of the resulting tax benefits going to upper-income households. Because of funding limitations, federal low-income housing programs reach only a fraction of those who are poor enough to qualify for them, but they do enable roughly 5 million low-income households to secure decent, affordable homes. For more information on federal low-income housing programs, visit the Center on Budget and Policy Priorities website at www.cbpp.org.
Support Needed for National Programs
The National League of Cities has been a leader in preserving the Community Development Block Grant (CDBG) Program, which is used by many California cities to fund affordable homes in their communities. Here are four other programs that need your support at the national level:
- The Housing Choice Voucher Program (also known as Section 8) provides families with vouchers to help pay for rental homes in the private market. About 300,000 families in California communities benefit directly from this program.
- Project-Based Section 8 Rental Assistance helps cover the operating costs of privately owned homes to make them affordable for low-income families. This program is also vital to nonprofit developers who develop new affordable homes.
- Public housing provides affordable homes to 44,000 of California’s poorest families. Many California cities have public housing and some have been able to benefit from the HOPE VI program, which revitalizes public housing and provides social and community services to residents.
- The USDA’s Section 515 Rural Rental Housing Program. Usually combined with rental assistance from the Section 521 Rental Assistance Program, this program is essential in many parts of California. There are 10,000 Section 515 homes in California, primarily serving extremely low- income seniors, who live in homes that are at risk for being converted to market-rate rentals.
The strength and vitality of California’s communities rely on the people who live and work there. For families to thrive, they need safe, decent, affordable homes. For businesses to thrive, they need to at-tract and retain skilled workers. Afford able homes are essential in creating strong, sustainable communities — and there simply aren’t enough. It’s time to make home affordability a top priority for the sake of all California communities.