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Prospects Uncertain for By Right Housing Proposal

League Shares Alternative Concepts with Housing Committee Leadership

August 3, 2016
Since Gov. Jerry Brown unveiled his by right housing proposal, which would pre-empt local discretionary land use approvals of specified housing developments by having all such approvals be considered “ministerial” actions, the League has been a vocal opponent because it would eliminate opportunities for public input and project-level environmental review and restrict design review which are necessary to ensure public transparency, accountability and achieve quality development.
A coalition of over 60 environmental, labor, tenants-rights and social justice groups have also opposed this proposal for similar reasons.

Recent Legislative Developments
Prior to the passage of the budget, the Governor offered legislators $400 million one-time for affordable housing conditioned upon adoption of his by right proposal. When the budget was adopted, the funding was folded into a reserve account, but no agreement was reached on the by right proposal and legislators left for a one-month summer break.
During the break the Governor’s office met with labor, environmental and other groups, but has yet to propose any major modifications to the proposal. With many significant issues outstanding for key stakeholders including housing advocates, labor groups, developers, environmentalists and local governments, prospects for agreement in the final few weeks of the legislative session remain uncertain. The last revised version of the proposal was a draft issued June 10. 
Major Policy Concerns
Taking shortcuts with public input may not be a good long-term strategy. A public hearing allows interested community members to inform the decision-makers of their support or opposition to a project and guarantees that property rights will not be impacted without due process. Good design enables a new structure to match a community’s character. While it may be frustrating for some developers to address neighborhood concerns about traffic, parking and other development impacts, those directly affected by such projects have a right to be heard. Public engagement can also lead to better projects. Not having such outlets will increase public distrust in government and additional ballot measures dealing with growth management. 
This proposal is purported to be a response to the state’s needs for affordable housing, however it also deflects from the reality that the sources of funding affordable housing have slowed to a trickle. California lost over $1 billion annually in affordable housing money with the elimination of redevelopment agencies in 2011. Funds from the 2006 state housing bond have been exhausted and federal dollars have been declining for decades. This massive withdraw of resources has contributed to our current challenges, yet no significant source of ongoing affordable housing funding is on the horizon. 
The League has supported various legislative efforts to develop and restore affordable housing funding. Proposals have included charging new fees on real estate documents, dedicating some of the state’s recent surplus revenues, or enacting a housing bond. All of these, however, face political headwinds. Raising taxes requires a two-thirds vote and is never popular, and the Governor has been resistant to major General Fund expenditures and new debt obligations.
Moreover, many laws related to housing planning and approvals are already on the books. Local governments are required to approve affordable housing and exceptions are very limited, but what locals cannot skip are public transparency and environmental laws. Should the by right proposal be approved, it is highly likely that the public would react strongly to the notion of developers evading public input and environmental laws to which all other projects must comply.
Additional problems with the Governor’s proposal include the following:
  • Many local general plans are out of date because of the financial difficulties local agencies experienced during the last recession, and that even when such plans have been updated, they have not been developed to the level of parcel-based criteria that address site-specific issues, design and environmental analysis. 
  • The proposal lacks a solid nexus with SB 375 planning efforts that attempt to support transit-oriented development and reduction of greenhouse gas emissions.
  • The levels of affordable housing proposed in the Governor’s plan are minimal, below what many local inclusionary ordinances require, plus there is a lack of focus on attempting to address the needs for workforce housing especially in the high-cost coastal areas.
  • The proposal does not recognize the challenges many locals face in offsetting the costs of serving residents of new housing, and a one-time allocation of $400 million is not responsive to the state’s ongoing needs for affordable housing resources.
League Shares Alternative Concepts with Housing Committee Leadership
As legislators look for alternative approaches to the Governor’s proposal, the League recently shared some concepts with the offices of the chairs of the legislative committees with jurisdiction over housing issues, on some incentive-based ways to expedite affordable housing development, which include the following recommendations:
  • Establish a $50 million revolving pot of state planning grant funds to support the development of up-front specific plans and associated environmental studies on housing sites designated by local agencies that are consistent with local planning under SB 375, which could be called Workforce Housing Opportunity Zones.
  • Ensure that the specific plan process within these locally-identified planning areas offer adequate opportunities for public input.
  • Encourage housing affordability goals for these planned areas that are more robust than the Governor’s, and also contain a significant component for workforce housing for those of moderate and middle income, especially in the state’s high-cost areas.
  • When the up-front specific plans and environmental documents are complete for these areas, housing projects consistent with those plans can be much more easily approved.  State law already precludes local agencies from denying affordable projects consistent with local plans.
  • Offer two types of incentives to local agencies that opt to do these additional plans and approve projects containing affordable and workforce housing:
    • Provide an additional property tax incentive equivalent to 10 percent of the increased assessed value of the new housing, by reducing the property tax the city or county would otherwise be required to shift to the state’s ERAF fund.
    • Establish a state affordable housing matching fund program, where local contributions to affordable housing would be matched with equivalent state funds.
Next Steps
The League will continue to monitor any developments associated with the by right proposal during the final weeks of this legislative session. While agreement on a proposal appears uncertain at the time, things can always move quickly. Cities concerned about this proposal should remain in close contact with their legislators and encourage them to oppose the by right proposal and advocate for alternative approaches that do not attempt to exclude the public or environmental reviews and establish a much more significant and ongoing source of funds for affordable housing.

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