Will This Election Solve California’s Housing Crisis?
California hasn’t yet identified which is the most effective solution for addressing its affordable housing problem, as rental prices rise to 2.5 times the national median, and homeless rates follow: In 2017, California held more than a quarter of the country’s total homeless population.
And not everyone can agree on what’s to blame, either. A recent poll conducted by the Los Angeles Times suggested Californians pointed to a lack of rent control and a lack of funding for low-income housing, as the primary drivers of housing unaffordability—far more than a lack of new construction. A similar April survey from the Mercury News had Californians blaming profit-maximizing developers first; then technology companies; then local governments with regulations deterring development. Yet another poll, administered by the Committee to House the Bay Area and sent to Bay Area policymakers and their staff, highlighted a lack of developable land; shuttered redevelopment agencies; and community opposition to building.
These questions aren’t unique to California. Across the country, increasing access to affordable housing is on the mind, and will be a key issue in the voting booth. But CityLab is highlighting the region specifically because this November, California and several of its cities have specific measures on the ballot that represent a wide range of policy approaches to solving—or at least slowing—the crisis. Homeless advocates and state leaders are hoping that at least a few of them will stick.
Click through to jump to the one you’re interested in: California statewide measures Prop 1, Prop 2, Prop 5, Prop 10; San Francisco’s Prop C; San Jose’s Measure V; and Oakland’s Measure W.
Or just scroll through below for a round-up of the most consequential:
California’s statewide measures
The first two propositions on the ballot use existing resources to increase the state’s budget on housing initiatives by $6 billion.
San Francisco Mayor London Breed has advocated for both measures as a potential solution to her city’s homelessness problem, favoring them over levying a tax on local business. “Homelessness is a regional and statewide crisis requiring a statewide solution,” she wrote in a statement. The San Francisco Chronicle endorses both propositions, as does the Los Angeles Times.
If combined, Props 1 and 2 could inject a vital boost to the affordable housing landscape, says Leslye Corsiglia, the Executive Director of SV@Home (Silicon Valley at Home), an affordable housing advocacy organization. In order to build it, “we need all the money we can get.”
“$6 billion is not enough, but it is more than we’ve ever had,” she continued. “The state has had a very limited amount of money for housing in recent years, so this is an opportunity for the state to have a larger role in building.”
Prop 1: Housing Programs and Veterans’ Loans Bond
Prop 1 would free up $4 billion in “general obligation bonds” for a variety of housing projects for low-income Californians. The money will be allocated to existing programs, and given out as loans and grants to local governments and developers on a competitive basis.
$1.5 billion would fund the Multifamily Housing Program, which supports rental housing for low-income Californians. Another $1 billion of the fund would go to the CalVet Home Loan Program, which helps veterans buy farms and homes. (29 percent of the country’s homeless veterans live in California, according to CalMatters.)
The rest would fund projects that build housing near transit stations or that offer “innovative approaches to creating or preserving affordable housing,” for example; and programs that help with home purchase assistance for low-income buyers, improve infrastructure, provide forgivable loans, and offer grants and loans for farmworkers.
Prop 2: Use Millionaire’s Tax Revenue for Homelessness Prevention Housing Bonds
After the state passed the Mental Health Services Act in 2004, California citizens started paying a 1 percent tax on all income over $1 million a year, which goes towards funding mental health services in the state.
Prop 2 wouldn’t change that existing “Millionaire’s Tax”—it would just start funneling $2 billion of the revenue bonds it already generates into funding homelessness prevention initiatives specifically for people suffering from mental health issues.
Prop 5: Property Tax Transfer Initiative
This initiative would lower the barriers to moving for some home-owners by allowing them to transfer the tax-assessed value from their old home to their new one, no matter how much the new one is worth, and no matter how many times they move, or to where. All owners who are aged 55 and older, severely disabled, and/or suffered property damage due to the disaster would be eligible. (This expands Proposition 13, which allowed tax-assessed value transfers only for homes that were of equal or lesser value, and only within certain jurisdictions.)
The San Francisco Chronicle offered this example of how the change would look in practice:
Suppose their existing home is assessed at $500,000, they sell it for $1 million and buy a new one for $800,000. Because the old home’s assessment was half its market value, the new home would be assessed at only $400,000, or half its market value. That $100,000 drop in assessed value wouldn’t happen today.
Prop 5 is supported by the California Association of Realtors, who argue that by encouraging people to vacate their large homes, the measure could open up housing access for other families; and by targeting older residents, developers might be compelled to build more senior living communities.
But opponents warn that slashing property tax revenue—which nets local governments over $60 billion per year—would reward the mobile rich at the expense of public institutions. According to the State Legislative Analyst’s office, public schools and local governments could lose more than $100 million annually in property taxes when the measure first takes effect, and up to $1 billion each per year as time goes on. It also found that home sales could increase by a few tens of thousands per year.
“For all of its wonderful qualities, California is also one of the most economically unequal states in the nation,” wrote the San Francisco Chronicle’s editorial board. “Proposition 5 would take that inequality and compound it for generations to come.”
Prop 10: Local Rent Control Initiative
Prop 10 focuses on changing regulations, instead of taxation: It would repeal a state law called the Costa-Hawkins Rental Housing Act that, since 1995, has restricted California cities and local jurisdictions from expanding rent-control measures on residential property. In other words, Prop 10 wouldn’t implement any new rent control policies anywhere, but it would unleash the possibility of passing broader ones everywhere.
Rent-control policies can keep rents stable rents for the duration of a particular tenancy, and stop them from being jacked up during vacancies. Advocates of Prop 10—led by the Coalition of Affordable Housing—say the measure will bring more fairness to housing pricing by stopping rental prices from inflating too much between every signed lease; and protect tenants by reducing forced evictions. “Prop. 10 is a limited measure that answers one question: who decides housing policy,” they write. “[L]ocal communities or Sacramento special interests and powerful real estate investors?”
But opponents—led by the California Apartment Association and the California Rental Housing Association—argue that the citizen-initiated measure is poorly designed, and would discourage investment in new housing, when supply is sorely needed. It would put the pricing power in the hands of “bureaucrats” who could add fees on housing and increase rents in the process, they say, and add millions in new costs for local governments. And, because, it might make rental properties less lucrative for homeowners, it could incentivize people to turn them into “profitable uses like short-term vacation rentals, increasing the cost of existing housing and making it even harder for renters to find affordable housing in the future.”
The measure would increase the gross receipts tax on businesses earning more than $50 million—a group of 300-400 companies in San Francisco—by an average of half a percent. That would generate $250 to $300 million a year, which would go towards homelessness prevention and solution services: Half towards building 5,000 units of affordable, permanent housing over the next eight years; and 10 percent towards helping install more than 1,000 new shelter beds. The measure would also allocate about $75 million to mental health services; and about $40 million to services that prevent housing-insecure individuals from becoming homeless ones.
It’s a contentious measure. Mayor London Breed opposes it, along with Twitter CEO Jack Dorsey, Lyft, and a who’s-who of other tech companies in the city. Marc Benioff, CEO of San Francisco’s largest employer, Salesforce, supports it, and has spent more than $5 million advocating for its passage.
Critics point to the relative steadiness of homelessness rates—paired with climbing spending—as evidence that the money the city is currently spending isn’t working, and that more would be redundant. “Before we double the tax bill overnight, San Franciscans deserve accountability for the money they are already paying,” Breed wrote in a statement. What’s more, the measure was drafted without public input, she says, or meetings with the Board of Supervisors or herself. Besides, she argues, it could harm the local economy through lost jobs (though a recent study from the city’s Office of Economic Analysis says impacts would be marginal), and could put San Francisco on the hook for “funding services for residents from other counties.”
Supporters, meanwhile, say the homeless service budget isn’t big enough—with about 7,500 people on the streets each night; 1,200 of them families and children—and that tech companies should have a hand in easing some of the burden. If passed, the city of San Jose will authorize up to $450 million in bonds to fund housing construction. Some is ring-fenced for low-income residents earning up to 30 percent of the AMI, and some for residents making between 80 and 120 percent of AMI, but the majority of the funds are to be for housing for those earning up to 80 percent of AMI. It will amount to an estimated property tax rate of $.08 per $1,000.
While Santa Clara County, where San Jose is located, passed a $950 million housing measure in 2016, most of that fund went to homelessness prevention and housing—Measure V targets the “missing middle” as well as the lowest-earning San Jose residents, wrote the Mercury News editorial board, and will bring the city closer to meeting its goal of building 10,000 affordable units. (San Jose’s mayor says the bond would help the city break ground on at least 9,000.)
In an argument against the measure penned by the president of the Silicon Valley Taxpayers Association and the chair of the Libertarian Party of Santa Clara County, they argue again that money won’t fix the affordable housing shortage; removing regulations on building more housing will. “You got to hand it to big government advocates, they’ve created this housing problem,” they write, “and now they propose to solve the problem with more government and more debt.”
Supporters note that the money will go toward building more housing.
Measure W, Oakland: Vacant Property Tax
Oakland’s Measure W attempts to address two problems at once: That some properties in the city remain unused for much of the year, and that homelessness rates there are growing.
The measure would tax properties that are used fewer than 50 days per year, raising an estimated $10 million in 20 years to fund homelessness services (and illegal dumping prevention programs). City Council member Rebecca Kaplan, who is championing the measure, says Oakland’s 5,000 vacant properties outnumber its 3,000-member homeless population.
The main opponents of the bill are owners of underutilized land, who argue that instead of taxing vacant land owned by them, the city of Oakland should reassess its own vacant plots and—you guessed it—build more affordable housing.
Source: citylab.com
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