CALIFORNIA | HOUSING Inflation and Housing Affordability
Posted by: Bob Silvestri - May 19, 2022 The Marin Post https://marinpost.org/blog/2022/5/19/inflation-and-housing-affordability
"The California State Legislature and the Department of Housing and Community Development continue to believe that they can will affordable housing into existence by piling on punitive regulations to strip locally elected governments of planning and zoning control while removing barriers for private, for-profit development to drive growth and disregard environmental and social justice impacts. And, ironically, they are doing this in the name of the environment and social justice."
FULL HISTORY OF LOW INCOME HOUSING DEVELOPMENT
Redevelopment Agencies in California: History, Benefits, Excesses, and Closure
FROM 1945 until 2012
FROM 2014: "In San Jose, the country’s fourth-most-expensive housing market (San Francisco is first)... redevelopment used to subsidize close to 1,000 units a year of below-market-rate housing...“We expect this year with the funds we’ll have to produce about a quarter of that amount.” Corsiglia said. “And even at 1,000 units a year, that wasn’t enough to meet the need. So we’re falling farther and farther behind.”
The ruling effectively eliminated RDAs and on February 1, 2012, more than 350 RDAs shut their doors, taking more than $1.5 billion reserved for affordable housing development with them and leaving affordable housing stakeholders struggling.
“The redevelopment funds were a large percentage of the [funding for] affordable housing developments in California. More than $1 billion in annual funding for affordable homes just disappeared. That loss is incredibly significant,”
The Mission District in SF successfully created low-income housing by restraining gentrification: Mission Action Plan 2020 passed in 2017 after a year long moratorium on market-rate development.
Luxury apartments or essential housing? How America's most notorious junk municipal bond peddlers are getting rich off California's affordability crisis
This history of bond financings is sobering. When issuers have stretched normal underwriting standards to borrow more money or try to create affordability by taking on more risk the results have undermined – rather than strengthened – support for affordable housing
Catalyst Housing Group has deployed $1.3 billion so far to buy seven market-rate complexes, refurbish them and rent them to individuals and families in the “missing middle,” earning of 60%–120% of the local median household income, according to founder Jordan Moss.
This plan made a Marin man rich, but did it really provide middle income housing?
Catalyst Housing NOT related to Catalysts for Local Control
Better than JPA's?
Billions of dollars in projects approved through one company, Catalyst (no relation to Catalysts for Local Control) even though there is a huge loss of property tax, a bad track record, questionable benefits, and huge upfront fees taken.
Under "the Joint Exercise of Powers Act. CalCHA issues governmental purpose bonds for the purpose of financing projects that provide, preserve and support affordable local housing for low-income, moderate-income and middle-income families and individuals."
Who owns Annadel, under the JPA model? Responsibility is opaque, with multiple management agencies. Tenants went without hot water for months, and there was no responsible entity to take responsibility.
"At Annadel ...we launched the Essential Housing program, a comprehensive rental housing platform that aligns rental rates with the area's average median income instead of the leading rates in the market"
WILL THIS FIX THE SHORTAGE OF LOW-INCOME HOUSING?
NO. About 39% of the housing is supposed to be low and very low income. Even with section 8 vouchers, these units will produce a loss for developers. Most projects will be by private builders and investment consortiums (on land picked for them by localities). There are no requirements to add low-income housing, just some pot-sweeteners (called "bonuses") if they do. Developers can negotiate with cities desperate to get projects started. Recently, the threshold for low-income units was reduced from 25% to 20% for a project in Corte Madera.
WILL THIS LOWER THE PRICE OF RENT OR HOME BUYING?
NO. The price of land, materials, labor and the rise in interest rates will be factored in. It just produces more housing for those who can afford it. The whole housing market mania is just a win for investment developers, who are largely responsible for the skyrocketing home prices, as they buy up assets and take them off the market.
ARE THE HOUSING MANDATE NUMBERS ASSIGNED FAIRLY?
NO. Big cities are where increases can be absorbed, with supporting transportation and infrastructure. The large developments are intended to create density in areas with quality transit and other services.
But small towns are to be loaded with density too, regardless of constraints. In Mill Valley, for example, the narrow, windy roads were built by the logging industry in the late 1800s, for horses. The evacuation infrastructure cannot be expanded. Adding density there puts thousands at risk in case of fire.
ARE THE NUMBERS ACCURATE?
NO According to the audit. The HCD has not been able to show methodology. AUDIT ongoing, now at California Department of Finance (CDF). See Links at right.
WAS FIRE DANGER CONSIDERED?
VETO: Safety was deliberately prevented in Newsom’s SB 182 VETO (would have required evacuation routes for new construction) This the link to his comment; to sum up, it would slow the housing:
SIGNED INTO LAW: SB 1292, which deliberately discourages trying to avoid building in hazard zones https://openstates.org/ca/bills/20212022/SB1292/
It states that for every unit NOT built in a hazardous area, TWO must be built elsewhere else, in its place.
IS THERE A PENALTY IF NUMBERS AREN'T MET?
YES State can issue severe fines and put city into receivership. State decides what public lands will be given to developers, so they continue building housing. Takes over locality's zoning process completely, and all residential projects become by right and subject to ministerial (instant) approval. CEQA is waived. Zero local input. Fines up to $10,000 per day, up to $100,000 per month, plus loss of state funds. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB215
IS THIS 2.5 MILLION EVEN POSSIBLE?
NO. Every developer in the state will be competing to get materials in short supply (driving prices higher) to build those 2.5 million units. Labor costs and interest rates are rising, and water is becoming scarcer. https://wolfstreet.com/2022/04/26/sales-of-new-houses-sag-inventory-piles-up-to-highest-since-2008-as-mortgage-rates-spike-homebuilder-costs-explode-amid-shortages-of-all-kinds/