December Legislative Update

On November 22nd, the Select Committee on Housing Affordability for the Middle and Working Class held a hearing in San Francisco to discuss the challenges to addressing the housing crisis for California’s Missing Middle. Key to the discussion was that more needs to be done to expand the work currently underway, such as reducing impact fees, zoning changes, and CEQA reforms to make a dent in the affordability crisis.

The hearing consisted of two panels—the first, Middle Income RHNA Goals focused on the feasibility and barriers to introducing Regional Housing Needs Allocation goals explicitly for middle income housing production for local jurisdictions. It  included among others, Melinda Coy from the Department of Housing and Community Development and Anya Lawler from Western Center. Ms. Coy gave an overview of RHNA and what HCD does to allocate production numbers to jurisdictions. Ms. Coy noted that while HCD uses four categories to allocate housing, there must be an understanding that the moderate category may not necessarily mean the same as middle-income housing. Ms. Lawlor focused was on the needs for low-income and below moderate housing. According to her numbers, 76% of low-income Californians are paying 50% or more of their income in rent or housing. She also noted the lack of data addressing homeownership rates and the challenges of building closer  to job centers. There was also discussion on the impact stratifying incomes are having on the median levels in various communities, but despite that,  more people are moving from moderate to low-income brackets.

The second panel focused on the effect developer fees have had on the cost of housing and the variation among different jurisdictions. Hayely Raetz, from the Terner Center spoke about the challenges this disparity can cause, for example some can be in excess of $150K in some jurisdictions, which may disincentivize developments for more low-income or high density housing in order to pencil. This can be further compounded when fees are charged per unit rather than total square footage—as the former incentivizes single family housing when in many parts of the state multifamily may be more appropriate.

The overarching theme from panelists was to encourage the Legislature to continue building on both new and existing programs to assist with production, preservation, and protection; to reduce the barriers we previously created that have inhibited production, and disincentive the market from producing more low and moderate income housing. The Legislature should decide what it wants to focus on in the next year to drill down on some of the most pressing issues.