CHC Industry Insight

Industry Insight - March 2022

Note from the Executive Director

As the legislative session moves into spring, one issue seems to have caught everyone’s attention: The state Supreme Court’s decision this month to freeze enrollment at UC Berkeley after a neighborhood group’s CEQA lawsuit brought new housing development (and the admission of 3,000 incoming undergraduates) to a temporary standstill.

This outcome outraged just about everyone—and sparked a great awakening about the sprawling nature of CEQA litigation. The Mayor of Berkeley condemned his city’s NIMBYs and filed an amicus brief against them; Governor Newsom said an enrollment cap “is against everything we stand for.” The New York Times called neighbors’ abuse of the law “noxious.” And it didn’t take long for the Legislature to jump into action: The Assembly and Senate unanimously passed a bill this week removing public college enrollment as a separate consideration under CEQA. The Governor signed it the same day, saying the legislation “sends a clear signal that California won’t let lawsuits get in the way” of educating college kids.

For affordable housing advocates, who have spent years fighting these same lawsuits in communities all over California—without the same fanfare—only to see projects tied up in court as the clock runs out on funding sources and tax credits, this all feels very familiar.

It also feels like an opportunity.

The Legislature and Governor showed two things this month: When they care enough, they can act decisively to change the law—even supposedly “third-rail” laws like CEQA—and they can do it quickly and without a single no vote from either party.

Now imagine if they were this focused—and this united—around actually getting new housing built, not just for Berkeley students, but for all of the 1.2 million lower-income Californians who desperately need affordable homes.

There’s no question the issues here—and the solutions—are the same. Eden Housing, one of CHC’s oldest members, is fighting an eerily similar CEQA lawsuit over a 100% affordable housing development in downtown Livermore, just over the hills from Berkeley, that has put the entire 130-unit project on hold—a year after it was unanimously approved by the city council and more than a decade after the site was zoned for housing. A superior court judge has dismissed the lawsuit as “almost utterly without merit,” but that hasn’t stopped neighbors who don’t like the idea of affordable housing from threatening to delay the project indefinitely.

All of this uncertainty has a real cost: Earlier this year Eden was forced to return $68 million in state low-income housing tax credits for the project—and there is now no projected timeline for construction. Eden could be building right now; instead they’re fighting it out in court, without any support or sense of urgency from the Legislature or the Governor, and 130 lower-income families are paying the price.

CEQA is not the only tool used to stop affordable housing, but it’s a big one. There isn’t an affordable housing advocate in the state who doesn’t have a story about an outrageous abuse of this law—for reasons that have nothing to do with the environment.

The Legislature showed this month that they have the ability to act decisively when confronted with a major challenge. It’s our job now to remind them they can—and if they really want to solve the housing crisis, they must.

Sincerely,

Ray Pearl

Executive Director

In Case You Missed It

CHC is sponsoring two critical bills this legislative session:

AB 2334 (Wicks) would expand the AB 1763 enhanced density bonus to all 100% affordable housing developments located in low vehicle travel areas. AB 2334 passed out of the Assembly Housing and Community Development Committee on Wednesday with a vote of 6-1. The bill will be heard in the Assembly Local Government Committee next month.

AB 2006 (Berman) would require HCD, TCAC, and CalHFA develop a process to ensure that only one entity conducts compliance monitoring for projects that have regulatory agreements with more than one of these entities.

Please submit support letters for AB 2006 (Berman) and AB 2334 (Wicks), through the Legislature’s Position Letter Portal and email copies to our Policy Associate, Jennifer Armenta, at jarmenta@calhsng.org. Sample letters are available here.

CA Senator Alex Padilla unveiled the “Housing for All Act of 2022”, legislation that would massively increase federal investments in both traditional and experimental approaches to one of California’s most intractable problems. While the bill faces long odds of becoming law, the California Democrat’s proposal sets a marker for what a progressive federal housing policy could look like. All told, Padilla’s bill would put more than $530 billion over 10 years toward combating homelessness and increasing and improving housing, according to his office, a sum that alone rivals the $500 billion in new funding over five years in President Biden’s massive infrastructure bill for roads, bridges, transit and more.

HCD released its new, updated Statewide Housing Plan, outlining a path forward to meeting the state’s goal of producing at least 2.5 million new homes in the next RHNA cycle—including 1 million homes targeted for lower-income households. The state’s new plan features an array of digital, interactive tools affordable housing developers can use to track everything from site availability to funding resources.

A San Francisco ballot measure seeking to streamline the city’s notoriously ponderous housing approval process includes a detailed labor compromise that could send ripples through this year’s Sacramento housing policy debate. The measure, sponsored by YIMBY Action, the Housing Action Coalition, SPUR, and Grow SF, would exempt a subset of high-priority affordable housing projects from the city’s complex discretionary review system. Only 100% affordable projects, teacher housing, and certain types of inclusionary projects would be able to access the new streamlined process. To qualify, projects with more than 10 units would also have to abide by new hiring requirements—with prevailing wage required for developments up to 40 units and new, flexible apprenticeship rules for projects larger than that. The full language of the measure is here.

Only 16% of the nearly 500,000 renters who have applied for rent relief through the state’s Emergency Rental Assistance Program have received their payments, according to a new analysis from the National Equity Atlas. The majority of applicants—289,000 households—are still waiting for their applications to be reviewed, with the median wait time at 135 days. The state’s remaining eviction protections are set to expire on April 1st.

Ray Pearl, CHC’s Executive Director, met with Senator Ron Wyden last month, where they discussed the value of the Low Income Housing Tax Credit and the current state of affairs in Washington D.C.. Senator Wyden is the Chair of the Senate Finance Committee.

Affordable Housing in the News

This month in affordable housing news saw several major steps back in housing progress in the City of Los Angeles, which was notified by HCD that its new housing element—including plans to produce five times more housing than the last RHNA cycle—is not compliant with state law. HCD said the city’s plan lacked detail on how it would affirmatively further fair housing, particularly around “place-based strategies to encourage community revitalization.”

The city has until October to update its plan and rezone for 255,000 additional homes, a process that would normally take three years. During that time, the Los Angeles Times reports, the city will no longer eligible for funding from many state housing programs (though city officials say they should be able to make some changes to avoid losing out on any funding in the short term).

Another major city housing initiative also came under scrutiny this month, when the city controller released a report concluding the city’s $1.2 billion housing bond measure, Proposition HHH (2016), is not keeping pace with LA’s homelessness crisis. “The costs are too high and the pace is far too slow to address the tragedy on our streets,” said Ron Galperin, the city controller. “This is the most densely populated city in the state,” said HCD Director Gustavo Velasquez: “We just want to make sure that people are doing what they’re supposed to be doing and taking this crisis that we’re facing really seriously.”

CHC Member Spotlight

CHC Member: Midpen Housing

Project Name: Kiku Crossing

Location: Downtown San Mateo

Units: 225

Opening Date: 2024

State & Federal Funding Sources:

$5.2 million loan from the County of San Mateo, $3.8 million loan from HEART of San Mateo County, loans from the California Housing Finance Agency, financing from Bank of America, federal tax credits, and tax exempt bonds.

This innovative apartment community was one of the first in California to use CHC’s sponsored bill, AB 1763, which allows for increased density and height on transit-oriented properties when all of the homes are offered at below market rates.

"Breaking ground on this important new affordable housing opportunity has been decades in the making. I am grateful to MidPen Housing, the County, HEART of San Mateo County, and countless others for recognizing how vital it is to provide people with quality, affordable housing opportunities. Located just blocks away from the Caltrain station, this is a premier example of smart growth” said San Mateo Mayor Rick Bonilla.

CHC 2022 Policy Forum

Special thanks to our Title Sponsor,

Merritt Community Capital Corporation!