REAL ESTATE TOPICS...Addressing California’s Housing Affordability

How to Address California’s Housing Affordability Crisis

By Treasurer John Chiang

A wise man once said that the best way to get out of a hole is to “stop digging.” Today California is short 1.5 million affordable homes for families struggling to make ends meet, and the hole is growing bigger each year.

Rents keep soaring. Homelessness is at a record high. Businesses cite high housing costs as a reason to move jobs out of state. And with rents still rising by double-digits, families cannot make ends meet no matter how hard they work. Housing costs have driven the state’s poverty ranking from 15th to the absolute worst in the nation.

We have to stop digging – and start building affordable homes for California’s families.

For nearly 10 years, a state budget crisis and policy choices slowed building of affordable homes, even as a tide of need rose higher. When the redevelopment program was eliminated and voter-approved bonds ran dry, more than $1 billion in annual state investment in affordable construction was wiped out. Since the beginning of the economic downturn, California under-utilized its private activity bond authority and lost out on billions of dollars in resources that could have been used to build affordable housing and create thousands of jobs. Meanwhile, families living on the edge sank deeper into despair.

Gov. Jerry Brown has opened up a much needed, statewide dialogue about California’s housing crisis with recent proposals to break down barriers to development. His embrace of a $2 billion plan to build housing for chronically homeless people living with mental illness is a breakthrough in tackling one of our state’s most complex, longstanding challenges.

However, even if they are fully implemented, these proposals only offer relief for a subset of individuals and families within the broad spectrum of housing need. California can and must do more to address the growing number of families who will not be able to afford the rent even if development restrictions are eased by state and local governments. These families – often headed by working parents in low-wage jobs—are the growing face of the homelessness crisis in California.

As treasurer, I administer two state programs that deploy dollars and incentives to spur production of quality, affordable developments that guarantee affordable rents for families for the 55-year, assumed life of a building. These are safe homes that support children’s learning, families’ health and communities’ quality of life.

I am proud my office championed reforms that many leading, affordable-housing advocates are calling “the most significant in the past 15 years.” They optimize and leverage scant state housing dollars to obtain maximum federal match and private investment that create California jobs. Yet with state investment at a record low, our production of more than 7,000 new units a year is far less than what is needed to meet growing demand for affordable homes.

As our state’s chief investment officer, I see the cost of our neglect of housing needs from an economic lens as well as a human one. The credit rating agencies that influence the cost of borrowing for infrastructure projects and schools say the cost of housing is hurting businesses, and our CEOs say a lack of workforce housing is the reason companies like Toyota are moving jobs out of state.

Without action at the state level to invest in the programs proven to deliver quality, affordable homes that lift families out of poverty, California will only see more economic despair and homelessness.

So let us stop digging – and start building.