During his inaugural address on January 7th, the Governor Newsom professed that housing is one of his top priorities for his tenure in office and he practically declared war on local governments who continuously say “no” to housing developments in their communities. On Thursday, he put the money where his mouth was throughout his campaign, appropriating $1.75 billion towards housing and putting “teeth” in housing policies. For the first time in history, cities will be penalized and lose funding if they do not comply and produce their fair share of housing projects.
On Tuesday the 15th, he began to unveil more policy reforms and signed an Executive Order allowing access to state surplus lands and encouraging the legislature to create rent protections for tenants. The press release reminded Californians that “Governor Newsom’s housing proposals are a central pillar of his broader ‘California for All’ agenda. Californians spend more of their income on housing costs than residents of almost any other place in America, and those huge costs are driving middle-class workers and their families further away from their jobs, and often out of the state.”
At the budget press conference, which he conducted without any support from staff, he said, “We are not playing small ball with housing. It will be performance based” he went on to say that he recently met with the 10 Big City Mayors and simply told them, “If you deliver, you will get more!’
Newsom’s recent statements and actions clearly demonstrate that housing and homelessness will be at the forefront of his legislative agenda and will not take a backseat to other campaign promises such as universal health care or early childhood education.
Increase in funding
Newsom’s budget proposals include a major infusion of more than $1.7 billion in one-time and ongoing affordable housing cash. That includes:
- $500 million in one-time cash for local governments to combat homelessness — of that $300 million will go toward regional planning, and $200 million as awards for cities that build new shelters or permanent supportive housing
- A quintupling of ongoing cash (from $80 million to $500 million) for the state’s most important low-income housing financing tool, the low-income housing tax credit
- $500 million in one-time cash for “moderate-income” housing production, or the so-called “missing middle” of housing for California’s middle class; (Newsom said he has also urged Silicon Valley firms to match this funding)
- $25 million to get more homeless Californians on federal disability programs
Policy Reforms
- Homelessness. Expected to appoint a new homelessness czar in the next few days to help coordinate state, regional and local initiatives.
- CEQA and Streamlining. Policy “tweaks” that would allow new homeless shelters to avoid prolonged environmental reviews — a regulatory structure that often holds up new housing plans. He stated “Yes. CEQA waivers for these projects. I know it sounds cliché, but if we are doing it for stadium projects, we sure as hell should do it for the 30,000 souls living on our streets.”
- Enhance use of EIFDs. Eliminate voter approval for tax increment financing mechanisms for Enhanced Infrastructure Finance Districts.
- Impact Fees. Details were not provided regarding local impact fees, but the Governor referred to them as “ridiculous” and followed with “we will go to the ballot if we have to.”
- Surplus Lands. The January 15th Executive Order directs the Department of General Services (DGS) to take an inventory of all state-owned lands for potential development no later than April 30, 2019. The Department of Housing and Community Development and Housing Finance Agency will be directed to develop new screening tools to evaluate state lands and, where appropriate, state agencies can consider exchanging excess state land with local governments for other parcels, for affordable housing development. DGS, in consultation with the Department of Housing and Community Development, can issue Requests for Proposals on individual parcels and accept proposals from developers of affordable housing interested in entering into low-cost, long-term ground leases of parcels on the priority map.
- Tenant Protections. In the January 15th press release, he committed to increasing protections and relief for renters. It stated that he “looks forward to working with the Legislature to find common ground on efforts to prevent rent spikes and create stability for renters.”
- Local Land Use/Zoning Reform. When questioned by a reporter about SB 50 (Weiner) during the January 10th press conference, the progressive local land use reform bill aimed at providing higher density housing projects near transit, the Governor stated that this was a “healthy debate that must continue,” but he cautioned against a one size fits all policy and referenced the need to recognize variances in bus lines that need to be considered.
Historic Incentives and Penalties for Cities
- To incentivize cities to approve more projects – $500 million has been appropriated in awards to cities and counties that meet new, short-term housing goals.
- Newsom wants to revamp the whole housing-goal setting process. Statewide, Reginal Housing Assessment Need formulas will likely be overhauled, for example, the city of Beverly Hills technically meets their RHNA goals by building 3 units.
- Newsom proposes taking away transportation funding — including revenue generated by the recently enacted gas tax — from cities that fail to meet longer-term housing goals. But Newsom later clarified that, saying he would probably investigate other sources of transit revenue as the “stick” — not the gas tax.
How many units will his plan build?
When questioned by a reporter after his formal budget presentation on whether or not his housing agenda would meet the 3.5 million unit goal he reiterated during the campaign, he left it quite vague by noting that the figure was one that was designed by an agency and that his new team was starting to work up their own “realistic” production goals and a timeline.