What is, and can be, done to make Housing more Affordable in California? Victoria Basolo, Ph.D., AICP Dept. of Planning, Policy & Design University of

What is, and can be, done to make Housing more

Affordable in California?

Victoria Basolo, Ph.D., AICP

Dept. of Planning, Policy & Design

University of California, Irvine

[email protected]

BACKGROUND

Why do we care about affordable housing?

• Regional web of relationships: jobs, housing, transportation, environment

• Economic stability and social equality

Victoria Basolo, Ph.D., AICP UC Irvine

Production Roller Coaster

Source: California Department of Finance.


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Year

No

. of

un

its

Single-family units

Multi-family units

How Severe is the Shortage?

About 220,000 units needed a year through 2010 (Landis, et al., 2000)

A shortfall of approximately 138,000 units in 2000, after controlling for demographic variables (Johnson, et al., 2004)

“Nearly 250,000 homes and apartments are needed each year” (Nevin and Colby, 2005)


Where’s the Shortage?

Geographic: Los Angeles area (including Orange and Ventura Counties), San Diego County, and the San Francisco Bay Area (Landis et al., 2000; Johnson et al., 2004)

Lower-Income: 651,000 shortfall of affordable housing units (California Budget Project, 2002)


Segmented Housing Markets (quality submarkets)

Income Mortgage Loan2

$100,000 – $149,999

$625,000 or >

$

Housing Sub-Markets

20.3%

23.9%

11.2%

Need subsidy; rent ($695)< $25,000

$25,000 - $49,999 Rent ($695 - $1,250); ~$205,000

$50,000 - $74,99918.3% $205,000-$310,000

12.4% $75,000 - $99,999 $310,000-$420,000

High

Low

Source: U.S. Census Bureau. 2006. American Community Survey.

11.1. Inflation-adjusted dollars

2. Assumes Conventional loan, 10% down, 30-year fixed at 6%

Example: County of Los Angeles MFI 20061 = $56,930

$150,000 and >

13.8% $420,000-$625,000


Why is there a Shortage?

Claim #1

Local development entitlement process delays production; development/impact

fees increase costs


Studies of Development Fees

A study of jurisdictions in Contra Costa County found that fees raised the cost of a home from between $20,000 to $30,000

In some cases, the developer could pass on 100% of the costs to the buyer, in other cases, the developer had to pay about 75% of the costs of fees (Dresch and Sheffrin, 1997)

A study of 89 local governments found that fees added an average of $24,525 to single-family units and about $15,500 per apartment unit (Landis, et al., 1999)


Why is there a shortage?

Claim #2

Regulation is costly and, in some cases, prohibits development

- CEQA

- Growth management/control regulation


Regulations Research:CEQA; and Growth Control Ballot

Initiatives, 1986-2000

CEQA law suits are relatively rare; no systematic study of increased costs statewide, but anecdotal (single case) examples do exist (LAO, 1997)

Anti-growth measures have been a popular response to growth by California communities; Southern California and San Francisco Bay Area lead the way in number of ballot measures proposed and adopted (Nguyen, 2004)

Voter requirements (approval of development) and urban growth boundaries (UGBs) are the two approaches that gained in popularity over time -- Southern California uses voter requirements most frequently; the Bay Area uses UGBS most often (Nguyen, 2004)


Why is there a shortage?

Claim #3

There is little or no land left to develop (at least in urbanized areas)


Available Land

Landis and his colleagues (2000) estimate that there are over 24 million acres of potentially developable land in the state

“Built out” in the mind: land uses change, redevelop



Claim #4

Housing doesn’t pay – the effects of Prop 13 continue to be felt (fiscalization of land use)


Conventional Wisdom: Housing and Tax Generation

“A home must cost (be valued at) $550,000 to pay for itself”

There is no definitive research on this topic


From: P. Lewis, in Economic Development Quarterly ( 2001).

Research on Fiscalization of Land Use in California



Claim #5

Cities, for the most part, do not want affordable housing, because of economic interest and/or social biases


Research: City Expenditures and Affordable Housing

Cities in a region compete against each other for economic benefits and higher levels of inter-city competition result in cities:

1. Being less likely to spend any of their own source revenues on affordable housing

2. Being more likely to spend on economic development compared to affordable housing

3. Being more likely to support homeownership programs compared to rental programs (Basolo,

2000, 2007; Basolo and Huang, 2001)


Median HH Income Poverty

Socio-spatial Distancing: Orange County Voucher Holders

by Income & Poverty


Source: Sample data from survey of voucher holders, 2002 (Basolo); Census 2000, SF1 and 3. Note: Sample of 1,213 households from OC Housing Authority voucher population (families are overrepresented in the sample).

Existing Responses

Cities and Counties:

Do nothing (other than what is mandated by State law)

Implement existing programs “status quo” policy

Adopt “new” programs

State:

Statewide ballot measures such as PROP 46, PROP 1C

State creates and amends existing and new planning laws


What could we be doing now and in the future? (Cities & Counties)

1) Create mixed-income housing zones (new or overlay).

2) Streamline development process for innovative developments with housing mix.

3) Seek state law allowing substitution of redevelopment set- aside dollars for development fees for mixed-income developments (i.e., transfer $s to general fund).

4) Create local housing trust funds – sole or regional funds.

5) Create housing land trusts (through nonprofit).

Develop new (and improve existing) policies and programs


What could we be doing now and in the future? (State)

Change state law to counteract the fiscalization of land use: revenue redistribution favoring mixed use, mixed-income developments and transit-oriented developments.



Regional governance-planning would involve:

1) Stronger linkage between housing and jobs in communities through the housing element -- recognizing the spin off effect of “good” jobs;

2) Localities in each region negotiating the details of their regional plan, thus being masters of their shared destiny (including better trade or transfer program with compensation being linked to distance from trader to receiving jurisdiction with limits to distance allowed in transfer).

Support state law to reform local governance to create participatory and effective regional plans



3) Create a permanent source of funding for State housing programs: State housing trust fund – Improved local

match program as incentive.

4) Regional planning would link State-regional funding to traffic and air quality targets (reward regions that reduce traffic and improve air quality through their housing programs such as TODs, higher density infill near job centers, etc.).

***Simplify planning law (many “tweaks” over the years) and provide incentives (as well as penalties for failure to comply) to realize effective plans and their implementation.


Support state law to create a housing trust fund and link state funding to regional accomplishments

What could we be doing now and in the future?


Encourage quality research on costs and benefits of public policies, including evaluation research on existing programs

Acknowledgements

My sincere thanks to the researchers providing information for this presentation and to the state and local housing staff, elected officials, planners, developers, bankers, real estate professionals, housing advocates, and legislative consultants that I interviewed from 2003-2007 about California’s housing environment


Documents

What is, and can be, done to make Housing more Affordable in California? Victoria Basolo, Ph.D., AICP Dept. of Planning, Policy & Design University of