California Assembly Passes Bills to Spur Housing Growth

A multi-bill package aimed at addressing California’s housing affordability crisis headed to Gov. Jerry Brown on Friday as lawmakers prepared to draw the curtain on the 2017 legislative year.

Legislative leaders had previously reached agreement with Gov. Jerry Brown over measures to generate money for low-income housing development, fund housing programs and streamline the approval process for new projects, and he is expected to sign them.

“It’s a crisis and we want to act like it,” Sen. Toni Atkins, D-San Diego, said of her measure to impose a real estate transaction fee.

The key components of the package cleared their biggest hurdle late Thursday night when the Assembly passed six bills in a tight vote. The Senate cast the final votes sending them to Brown on Friday afternoon.

Democrats in swing Assembly districts hesitated for weeks to pass one funding bill that could be described as another tax hike, after earlier this year raising the gas tax and renewing a climate change program that could also increase prices at the pump.

Atkins’ Senate Bill 2 imposes a $75 to $225 fee on real estate transactions and is expected to generate as much as $258 million per year for housing development aimed at low-income inhabitants and programs to combat homelessness. Atkins and others have long argued that the state needs a sustainable funding source for housing after the elimination of redevelopment agencies.

“We know that there is housing that the market is never going to build,” Assemblyman David Chiu, D-San Francisco, said.

Republicans and some Democrats were skeptical that the approach would work. “I don’t see government as being efficient and effective,” said Sen. Mike Morrell, R-Rancho Cucamonga, arguing that SB 2 would not do enough to build needed housing.

The bill needed approval from two-thirds of lawmakers to reach Brown’s desk, and it faced an uphill battle in the Assembly.

It took a tense hour Thursday night for the necessary 54 votes to emerge, as two Democratic assemblymen, Adrin Nazarian of Los Angeles and Marc Levine of Greenbrae, held off. The measure ultimately passed 54-25, with one Republican, Assemblyman Brian Mainschein of San Diego, in support, and one Democrat, Assemblywoman Sabrina Cervantes of Riverside, against.

State Sen. Toni Atkins, D-San Diego, and other lawmakers support a package of bills that seeks to encourage more affordable housing construction in California.

Atkins amended the spending plan for SB 2 in August to draw support from more lawmakers.

Under the amendments, half of the funding will be spent on initiatives to combat homelessness and half will go to local government during the first year. Cities and counties will receive 70 percent of the annual revenue beginning in 2019. The remaining 30 percent will be distributed by the state.

Assemblyman Adam Gray of Merced, who chairs a caucus of business-friendly Democrats, introduced the bill. He said the changes were enough to bring skeptical members aboard.

“Our state is facing a housing crisis of epic proportions, made evident by the fact that homeless is at an all-time high throughout the entire state and throughout all of our communities,” Gray said. SB 2 “leaves money in the hand of locals where decisions are best made in how valuable dollars should be spent.”

Senate Bill 3 from Sen. Jim Beall, D-San Jose, places a $4 billion bond on the November 2018 ballot. If approved by voters, $1 billion would be used to help military veterans purchase homes with low or no down payment at below-market interest rates. The other $3 billion would pay for housing development programs.

Taxpayers would cover the principal and interest on the $3 billion for housing projects, with annual debt service costing roughly $195 million over 30 years. Debt service for the $1 billion in borrowing for veterans housing programs would come from participating veterans’ loan payments.

The measure passed 54-20, with some bipartisan support. But two Republican assemblymen who served in the armed forced lambasted their colleagues for using veterans to pass a bond that would largely direct resources elsewhere.

“We have taken the image of the veteran and wrapped this other item in the flag of veterans,” Assemblyman Rocky Chávez, R-Oceanside, said. “I find that offensive.”

Senate Bill 35, from Sen. Scott Wiener, D-San Francisco, seeks to streamline the approval process for new housing by eliminating environmental and planning reviews for some projects.

State law requires California cities to set aside land under local zoning regulations for housing of all income levels, from rooms for the homeless to luxury high-rises. Wiener argues that, too often, local elected officials cave to neighborhood pressure to kill or water down housing proposals, and as a result, cities have not built enough housing to keep pace with population increases.

Under his bill, developers in cities that aren’t on track to meet their state housing requirements will be allowed to bypass local government review. Local elected officials will retain decision-making control in cities that are on track to meet their goals.

The measure, which received support from labor, would also mandate higher prevailing wage for workers on housing projects of more than nine units.

Lawmakers also passed two bills from Sen. Nancy Skinner, D-Berkeley, aimed at addressing the “Not-In-My-Back-Yard” phenomenon that Skinner and other lawmakers say has worsened the state’s housing shortage. Senate Bill 166 would require cities to identify enough development sites to meet unmet housing needs. Senate Bill 167 would prohibit local officials from voting down housing projects that fit within zoning and other land-use designations.

Senate Bill 540 from Sen. Richard Roth, D-Riverside, would allow developers to approve local housing projects under one master plan and environmental review document. Fifty percent of projects would be affordable for low-income households, with an additional 10 percent of low-income housing required in market-rate housing projects.