California AG sues Huntington Beach for failure to comply with State Housing Element Law
Last week, Governor Newsom authorized Attorney General Becerra to file suit against Surf City Huntington Beach for willfully refusing to comply with state housing laws after extensive attempts. This is the first time we have seen this kind of a lawsuit. In 2018, AB 72 took effect allowing the state to revoke a city or county’s housing plan if it was out of compliance and to file suit if needed.
By law, a city must have a Housing Element that assures they have zoning for enough housing to meet the projected population growth across all income levels.
San Diego Mayor Kevin Faulconer stakes the claim of being the first YIMBY Mayor
During Mayor Kevin Faulconer’s State of the City Address in San Diego last month, he continued his commitment to finding solutions to increase housing supply. His major initiatives will focus mostly on transit-oriented development projects where he wants to offer lower parking standards and do away with height limits near transit stations, except for those in coastal areas. He also plans to offer to developers a by-right process in any community for projects that incorporate low income and supportive housing. As is true across the state, reactions are mixed with strong proponents and opponents on each side. We will be sharing the messages that resonate as his proposals move through the city council deliberations process.
By Kris Kuntz, Principal
At LDC, our work on homelessness has primarily been focused in California so when we had the opportunity to work outside of the Golden State, we welcomed the opportunity.
In January we began our work with the City of Medford, Oregon on a homeless system improvement plan that will outline key strategies that the City can adopt as part of a regional approach within Jackson County for their homeless Continuum of Care.
During our visit we had the opportunity to meet with key stakeholders and tour encampments. Stakeholders included the Mayor, City Council, County officials, members from the faith-based community, and business leaders. We toured a homeless encampment along the river with the Police Department, visited homeless services programs including the Medford Gospel Mission, an unaccompanied youth program, and a low-barrier winter shelter in the basement of a church. We also had the opportunity to see a Tiny Home village operated by Rogue Retreat that provides interim housing.
Although local stakeholders and efforts may look different than other West Coast communities, many of the challenges Medford faces are well known to both large and small cities throughout California, Oregon, and Washington: vacancy rates are low which impacts affordability especially to those at the low end of the income spectrum; unsheltered encampments are a significant concern to the general public, businesses, and elected officials; and most importantly, those experiencing homelessness are really struggling.
Our trip last month was mostly focused on listening and learning. It was exciting to see the multitude of sectors engaged in the issue and already brainstorming and offering up strategies and ideas to help solve a difficult problem. One thing is for sure, to address homelessness whether it is in Medford, Oregon, Portland, San Francisco, or Los Angeles, housing both in the form of thoughtful interim housing and more affordable and supportive housing is going to be needed. Strong partnerships across a community and a common vision that everyone can buy into is equally a part of a successful equation. We’ll keep you updated on our progress in the coming months.
Very shortly after our new Governor called on the private tech sector to do more to address the housing shortage, Facebook announced the $500 million Partnership for the Bay’s Future which includes an investment fund and a policy fund. The goal for the investment fund would be to bring 8,000 affordable homes to San Francisco within 10 years. The Policy Fund will be administered through the San Francisco Foundation. Challenge Grants will be offered for protection of tenants and preservation of existing affordable housing, and Breakthrough Grants will focus on production. Other major corporations including Morgan Stanley, Kaiser Permanente, and Genentech are involved as are philanthropic organizations such as Ford Foundation and family foundations for the two founders of Hewlett-Packard.
Facebook’s notice came right after Microsoft announced that it will also invest $500 million in affordable housing in Seattle. Microsoft stated that they have an interest and will take responsibility to help people left behind in the communities that were transformed by the housing boom caused by their industry.
The Microsoft plan is to provide some of the funds for construction costs for non-tech workers which includes teachers, firefighters and other middle- and low-income residents. The balance will subsidize the preservation and construction of middle-income residences and philanthropic grants to fight homeless. Although Microsoft isn’t building housing for its employees, the fact that they are taking responsibility for what their success has done to existing communities is inspiring.
Might this groundbreaking news be an emerging employer trend? Maybe, but there are critics.
Some argue these tech giants should be taxed to solve the housing problem they created rather than take a philanthropic approach. Speaking on a Time Magazine panel at the Davos Economic Summit this week, Rutger Bregman, historian and author of Utopia for Realists, Bregman stated “I hear people talking the language of participation, justice, equality and transparency but almost no one raises the real issue of tax avoidance, right? And of the rich just not paying their fair share.”
Adhi Nagraj, director of SPUR, a San Francisco Urban Planning organization, was interviewed by CNN and said that Facebook efforts are laudable but “shouldn’t take the place of money from local, state and federal governments.”Philanthropy and high wealth donors can be a part of the equation by providing funding for housing, but government shouldn’t look to them as the silver bullet.
Employers have been late to the table as partners in solving the housing crisis; but they have much to lose if we can’t retain our workforce. We hope to see more employers not only contributing funding but really stepping up to advocate for housing at the community, local, regional and state levels. This important voice has been missing likely because understanding the housing crisis is complicated, therefore making it challenging on where in the discourse to weigh in. If you are an employer seeking to understand your workforce’s housing needs and challenges and how to advocate for solutions, please contact our CEO Jennifer LeSar at firstname.lastname@example.org.
By Brian Gruters, Associate
Last month, LeSar Development Consultants staff joined hundreds of Angelinos and San Diegans walking city streets during the early morning hours, cataloguing people who are unable to find a decent place to sleep. Despite progress over the last several years, and positive developments on the horizon, California’s crisis of homelessness is as dire as ever. As a result, the annual Point in Time count, now in its 14th year, has become a sort of ritual for those working to end homelessness across the state.
Sadly, the details of the conversations we had weren’t surprising. Everyone interviewed was over 50 years old, had major barriers to finding a home or employment and had mental health and/or substance use issues.
Another interesting observation was that each person we interviewed was from San Diego County, and a majority were from the neighborhood they were currently living in. This again is reflective of regional trends where 74% of people experiencing homelessness in San Diego in 2018 became homeless within the County of San Diego. In LA that number is slightly higher at 75%. As a side note, the team also noticed that every single person they encountered was polite and willing to talk, despite being woken up early in the morning. Our conversations were filled with empathy for these human beings who seemed to appreciate being recognized as such.
Participating in the count this year made us reflect on what we do here at LDC. It reinforced things we advocate for, best practices in the field, such as a housing first approach to ending homelessness, and data-informed policy-making. Volunteering for the Point In Time count left us filled with gratitude for the work we do, the problems we are trying to impact in a positive way and for how fortunate we are to have work, a home and be part of a community that cares.
By Sarah Snook, Associate
We’re very excited to share this overview of Governor Newsom’s budget to aid Californians in achieving the California Dream. Our Governor’s budget focuses on mitigating the increasing cost of living, a campaign he’s dubbing “California for All.” Newsom acknowledged housing cost as a key driver in increased cost of living and has responded by proposing a $7.7 billion investment in housing and homelessness programs or initiatives across agencies for 2019-2020. Of this money, $1.75 billion additional dollars would be allocated towards increasing housing production and $625 million additional dollars would be allocated towards alleviating homelessness.
The new $1.75 billion one-time, General Fund money directed towards housing production is divided among four key purposes: missing middle housing construction, expanded tax credits, incentives for local production, and technical assistance. The technical assistance and incentive moneys are distinct but related to one another. The Governor has proposed allocating $250 million towards technical assistance for local governments to plan for additional housing production. This could include rezoning for greater density or changing permitting practices to allow for quicker turnaround. Part of this process would be setting up planning milestones. Once jurisdictions reach their planning milestones, they are eligible for general purpose funding taken from the proposed $500 million incentives pool.
Missing middle construction is residential construction that targets and is affordable to middle-income individuals, such as public service employees like firefighters and teachers. Missing middle housing typically takes the form of multi-family, low-density development such as duplexes and townhomes. Historically, this form of housing has consistently been the hardest to produce in California; it has generally been financially infeasible to build. Newsom’s proposed plan to increase production of this housing type is to expand CalHFA’s Mixed-Income Loan Program by $500 million in one-time funds. The program currently operates on $43 million annually and provides loans to developers to produce mixed-income developments at a low subsidy level. The goal of this program is to reduce the costs associated with constructing missing middle units.
Lastly, our Governor has proposed expanding the State Housing Tax Credit by $500 million annually. This $500 million would be split between two programs: $300 million towards an expansion of the existing tax credit program and $200 million allocated to a new program targeting moderate income households. The new program is intended to be used in combination with the Mixed-income Loan Program.
In homelessness funding, Newsom has suggested allocating $300 million towards regional planning to allow local governments to create a regional plan to address homelessness. $200 million of these dollars will be directed towards federally designated areas and the remaining $100 million will be directed towards the State’s eleven most populous cities. An additional $200 million would be provided in incentive funding and available to jurisdictions that show progress towards developing homeless resources such as support housing or emergency shelters. Additionally, Newsom has proposed $100 million be allocated to a new Whole Person Care Pilot program, which would coordinate homeless care across agencies, including social services, behavioral health, and housing. Lastly, the Governor has expanded the 2017 $45 million one-time funding for Supplemental Security Advocacy, to $25 million annually. The program helps assist homeless and disabled individuals to apply for federal benefits.
Aside from funding priorities, our Governor has proposed a number of policies to aid in housing affordability and homelessness, including streamlining CEQA for homeless shelters, conditioning Gas Tax transportation funding on regional production goals, and allowing long-term ground leases of excess state land for housing development.
Some of the Governor’s ideas can be moved forward because they are within the authority of the Executive Branch; budget issues must move through the Legislature for consideration and final approval.
LDC is pleased to announce the addition of two new senior staff members, Mary Lydon and Jamie Taylor. Ms. Lydon will bring her 25 years of experience in the land use arena to LDC to focus on communications and innovation. Ms. Taylor, a national expert on the structural determinants of homelessness and its intersection with health and criminal justice systems, will be joining our Homelessness Policy and Systems team.
Mary Lydon joined our firm as a Principal and will lead marketing, communications and business development. She has a depth of experience in Smart Growth land use planning, real estate markets, community and stakeholder participation, and economic development strategies. Ms. Lydon has worked with private-sector developers, public-sector agencies, and nonprofit organizations. She is a former Planning Commissioner and Stadium Advisory Group member for the City of San Diego and has held key leadership roles within the Housing You Matters Coalition, Urban Land Institute, the Downtown San Diego Partnership and several nonprofit boards over her career. Ms. Lydon attended Harvard University’s Kennedy School of Government and completed the Executive Leadership Program in 2010. She also holds a Bachelor’s degree from the University of Wisconsin, Madison. Ms. Lydon can be reached at Mary@lesardevelopment.com
Jamie Taylor is joining our firm as a Senior Principal. She has been conducting program evaluations and providing technical assistance on evaluation design and data utilization to improve policy and program planning for over 25 years. Working for federal, state and local agencies, Dr. Taylor provides subject matter expertise on the structural determinants of homelessness, and its intersection with health and criminal justice systems. Dr. Taylor is currently leading a multi-site data integration project, combining data analytics, rapid-cycle evaluation, and a sustainable integrated data infrastructure to connect health, and housing data, supporting cross-sector goals for health and housing stability. As a leading expert on applied analytics, Dr. Taylor is also the site coordinator for a national evaluation to assess the impacts of housing and shared medical appointment treatment for people who experience long term homelessness, and substance use disorders. She also led a Shared Housing White Paper project for SAMHSA, and currently leads the development of a Data to Action Training curriculum and a national Community of Practice to build capacities for data-driven decision making among state and local data leaders. Previously, Dr. Taylor was the project lead providing evaluation training and technical assistance to 20 states funded under SAMHSA’s Now Is the Time Project AWARE, and lead developer of an 8-module online Data Essentials Training Curriculum to advance data literacy and data-driven planning capacities. She can be reached at Jamie@lesardevelopment.com.
On Monday, January 7th, our new California state officials were sworn into office. Among them were the State’s eight Constitutional officers: Governor, Lieutenant Governor, Secretary of State, Controller, Treasurer, Attorney General, Insurance Commissioner, and Superintendent of Public Instruction. Sworn into their respective offices for the first time were Governor Gavin Newsom, Lieutenant Governor Eleni Kounalakis, Treasurer Fiona Ma, Insurance Commissioner Ricardo Lara, and Superintendent of Public Instruction Tony Thurmond. Notably, this cycle the California people elected officials that increasingly reflect the demographics of the state. Three of the eight officials are women, three are Latino men (one of whom is also the first openly LGBT person elected state-wide), and one is an African-American man. As their personal stories unfolded on Monday, the combined diversity of their stories parallels the history of many Californians. We heard the histories of being first generation, of being raised in homes with strong work ethics, and in homes enmeshed in the cycles of poverty but also of hope. Each of these officials has demonstrated a commitment to progressive, inclusive ideals, and many have highlighted educational opportunities and stable housing as a key policy area of focus.
Here are a few excerpts from each the inaugural addresses of our State’s Constitutional Officers.
Governor Gavin Newsom promised Californians a “progressive, principled” government in his inauguration speech. The new Governor outlined his vision of a California for all where we will face our threatening problems together. This includes bold strategies to address climate change, like expanding the current cap-and-trade system. He doesn’t want to merely meet the goals but exceed them. Newsom also introduced the idea of guaranteed healthcare for all Californians, noting that the state could use both our “market power” and our “moral power” to influence healthcare. On criminal justice, the Governor promised to close all private prisons in the state and fight for reform, so justice is the core of the system, not profit.
The Governor continued by addressing the housing affordability crisis, a central tenant to his campaign and the biggest threat to our prosperity, equity and environmental sustainability. He called the number of homeless individuals on California’s streets an “epidemic,” and committed to “launching a Marshall Plan for homeless housing.” He stated that we need to stop stigmatizing mental health and start supporting it. Additionally, Newsom committed to inclusive and sustainable growth, indicating a commitment to increasing the housing supply for all income levels by using infill in the State’s urban regions.
Throughout his inauguration remarks, Governor Newsom emphasized the need to make progress together. In fact, he goes so far as to call this fundamental to California values and the basis to treating all Californians with respect. Quoting an African proverb, the Governor summarizes: “If you want to go fast, go alone; but if you want to go far, go together.” This is a call that empowers all the people of California to lead the way, including our many time forgotten rural communities.
Lieutenant Governor Eleni Kounalakis focused largely on expanding access to higher education, as she believes it is the “best way to address our rapidly changing digital economy.” A former developer, Kounalakis’s campaign also highlighted the State’s housing affordability crisis. She promised a commitment to affordable housing and community infrastructure to aid in equitable growth. LeSar Development Consultants is pleased to see the expanding alignment with our Constitutional leaders around our housing crisis. On an interesting note, following her 18 years as a developer, Eleni was appointed as the U.S. Ambassador to Hungary by President Barack Obama.
Secretary of State Alex Padilla was sworn into his second term on Monday. The majority of Padilla’s remarks focused on increasing voter registration. LeSar Development Consultants agrees that if we are to build and sustain a 21st century State of California that participates in the global economy where all boats are lifted, citizens need to take the time to educate themselves on the issues and candidates and then vote.
Among those experienced in their position, Controller Betty Yee was sworn into her second term Monday morning. Yee first entered the position in 2015 following more than 10 years on the State Board of Equalization. Together with Treasurer Fiona Ma, Yee helped reduce the powers of the Board of Equalization which was known for its members abuses of power. She has expressed interest in increasing affordable housing tax credits and other financing sources, as well as reducing costs of building affordable housing. In her inaugural address, Yee stressed the importance of addressing inequality in the State, attributing it to, “the lack of affordable, stable housing, the cost of healthcare and transportation, limited educational opportunities, student loan debt, [and] displacement caused by disasters.”
Treasurer Fiona Ma assumed office for her first term Monday. Two weeks ago, Ma made clear that she would keep a close eye on large-scale bonds, such as the veterans housing bonds passed by voters in November. The Treasurer’s campaign includes the promise of a Listening Tour around the state this month to gather ideas for how to boost housing production and increasing state agency involvement in housing production. LeSar Development Consultants will be there to weigh in and we hope you will be there too. Prior to joining the California Executive Branch, Ma was Chair of the California Board of Equalization. From 2006-2012, she also served as a State Assemblymember, rising to Speaker pro tempore in 2010.
Attorney General Xavier Becerra was sworn into his second term on Monday, though he was appointed in 2017 and only served a partial term. Becerra promised to protect the State from “the overreach of the federal government.” We agree that now more than ever California must protect its interests from those who want to diminish our prosperity and success by the creation of national policy that specifically hurts us.
Calling on California to be a “beacon of opportunity,” Insurance Commissioner Ricardo Lara made history by becoming the State’s first openly LGBTQ statewide representative. Touted as a “partner in equity and justice” by Sen. Holly Mitchell, and we agree, Lara called on insurance agencies to use their knowledge of mitigating risk to join in the fight against climate change and aid in creating sustainable and resilient communities. Lara began his political career as an Assembly staffer, where he was Chief of Staff to Majority Leader Assemblyman Marco Firebaugh. He served two years as a California Assemblymember and six years as a State Senator.
Superintendent of Public Instruction Tony Thurmond, who was declared the winner in a close election nearly a month after election day, was sworn in on Monday. His inaugural address focused on the school-to-prison pipeline, noting that statistics show he “could have ended up in a state prison.” In his new role, he is now in a position to work to break that cycle. Part of his campaign platform was to increase students’ access to healthcare by providing school-based services, regardless of ability to pay or immigration status. He has also proposed a plan to increase per-pupil spending. Thurmond’s background is in social work, where he focused on providing services and education to at-risk youth. In 2014, Thurmond was elected to the California State Assembly and spent four years representing Oakland and the East Bay.
The upcoming 2019 Community Information Exchange (CIE) Summit, presented by 2-1-1 San Diego, brings together leaders from across the nation to engage in discussion on the intersections of health and social services to build strong and thriving communities. Last month, we featured 2-1-1 San Diego’s recently released toolkit, which highlights the development and evolution of a CIE. CIE advances care coordination by enabling providers of housing, health and social service providers to engage in cross-sector data sharing.
The 2nd annual summit, titled Driving Cross-Sector Collaboration and Data Sharing to Create Healthier Communities, will take place on April 24 to 26, 2019 at the Marriot Marquis San Diego. Individuals can register for the summit here.
Over the past two years, California’s Legislature and Governor Jerry Brown have demonstrated their determination to pass legislation to address the State’s growing housing affordability crisis. Many of these efforts respond to growing public recognition that the future of California’s economy depends on a housing market in which cities plan for and develop adequate housing for individuals and families at all socioeconomic levels. The trend is expected to continue in January 2019 when Governor-Elect Gavin Newsom, who ran on a platform to provide additional financial incentives to promote smart growth while holding cities accountable for their fair share of housing production, takes office.
Key Bills Signify Ambitious Housing Agenda
The new Legislature, which convened Monday, December 3, has already taken steps toward establishing a more equitable housing market with the introduction of several housing and homelessness bills, including:
AB 10 (Chiu) – With more than 20 co-authors from both the Assembly and Senate, the bill would increase the state low-income housing tax credit (LIHTC) to $500 million annually, including $25 million annually dedicated to farmworker housing, with increases to the total tied to the Consumer Price Index.
AB 11 (Chiu) – This bill would reinstate California redevelopment agencies, which were dissolved in February 2012. Redevelopment agencies historically utilized tax-increment financing and were key in providing financing for affordable housing developments, but were eliminated in the wake of the Great Recession. AB 11 also includes protections against the misuse of funds, a common criticism of the former redevelopment agencies.
SB 18 (Skinner) – The Keep Californians Housed Act aims to decrease evictions and resulting homelessness. The bill would require the rights and obligations of landlords to be easily accessible online and provide a sustainable source of funding for the California Emergency Solutions and Housing Program, which would administer rental assistance and legal aid funding to tenants experiencing eviction.
SB 48 (Wiener) – If passed, this bill would create a right to shelter for all homeless and unhoused individuals in the State and include the navigation center model, a best practice supported by many homeless advocates.
SB 50 (Wiener) – This bill is a more polished version of SB 827, which failed last legislative session. The bill aims to increase residential density near public transit centers by lifting local height and density restrictions within 1/4 to 1/2-mile to transit. The bill addresses previous concerns, including a 5-year deferment period for communities concerned with displacement and gentrification.
Bay Area’s CASA Process
Several of the newly introduced legislative measures, namely SB 18 and 50, have ties and have been influenced by the Bay Area’s CASA Process. CASA has been a regionwide process that convened diverse stakeholders to address housing affordability and it has been facilitated by LDC President and CEO Jennifer LeSar. On December 3, CASA’s Technical Committee approved a 10-element Compact, which proposes a housing legislative package encompassing tenant protections, preservation of affordable units, and the production of new units. The Compact will be presented to the CASA Steering Committee on December 12. If you would like to bring a CASA-like planning process to your community, please email Jennifer LeSar.
Building on a Strong Foundation
These legislative developments build on the momentum created by the 2017 Housing Package, which included the Building Homes and Jobs Act (SB 2) and the Veterans and Affordable Housing Bond Act of 2018 (SB 3), which became the Prop 1 ballot initiative that passed with overwhelming support in November.
Earlier this year, the Legislature passed SB 828, which reforms the methodology used to set Regional Housing Needs Assessment (RHNA) goals. This change aims to create a more transparent and equitable process, and better hold jurisdictions accountable for producing units toward their goal.
In an effort to protect housing for low-income households, including those who are homeless, the Legislature also passed AB 3194, which prohibits jurisdictions from rejecting a development of very low-income, low-income, or moderate-income housing or an emergency shelter without evidence to demonstrate that it would have a “specific, adverse impact upon the public health or safety.”
Other key bills passed during the legislative session include:
AB 2923, which gives BART more autonomy over its land surrounding existing transit stops. BART has expressed interest in using the land to develop housing, including affordable units.
SB 918, the Homeless Youth Act of 2018, established further requirements for the Homeless Coordination and Financing Council. These requirements focus on the needs of homeless youth, including identifying best practices and providing program developments and technical assistance for youth-focused homelessness programs.
AB 686, which requires public agencies to uphold Obama Administration Fair Housing guidelines, which strengthen the Affirmatively Furthering Fair Housing (AFFH) provisions of the 1968 Fair Housing Act. HUD has tried to dismantle the AFFH clause, which is meant to protect against the legacy of redlining.
With more than 30 years of experience in the real estate development and investment banking industries, Jennifer LeSar, President and CEO, brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to comprehensive strategic planning for top executives and executive teams to the origination and underwriting of complex investments in equity funds, multi-family portfolios, historic, and low-income tax credit properties utilizing federal and state financing programs. Ms. LeSar’s educational achievements include two advanced degrees from UCLA – a Master of Business Administration in Real Estate, Finance and Nonprofit Management and a Master of Arts in Urban Planning. She received her Bachelor of Arts from Bryn Mawr College in Political Science and Economics. She can be reached at email@example.com.
In October 2018, the Internal Revenue Service released regulations for investment in Opportunity Zones, a concept established in the Federal Tax Codes and Jobs Act of 2017. The zones are designed to spur private investment in economic and community developments in economically distressed communities. The State of California now has 890 designated Opportunity Zones out of 8,000 nationwide. The zones would function as a form of impact investing, where private investors are interested in two bottom lines: the capital impact and the social impact.
Within California, Opportunity Zones have the potential to replace public redevelopment dollars lost by the dissolution of redevelopment agencies. Opportunity Zones also allow private investors to contribute to their local communities. The regulations released by the IRS in October were particularly investor-friendly and include a provision clarifying that all capital gains on investments made in Opportunity Zones before 2048 would be excluded from the capital gains tax. Investors may invest capital gains from an asset in a Qualified Opportunity Fund (QOFs) within 180 days of the transaction. The taxes on those gains are then deferred through the end of 2026.
Given the incentives, investors’ interest in Opportunity Zone funds has grown rapidly. Community advocates, especially those concerned with equitable development, have expressed growing concerns about gentrification and displacement within the Opportunity Zones. Given that the tax subsidy grows as property values increase, investors in quickly gentrifying neighborhoods will receive the highest return on investment. The Brookings Institute suggests that with some guardrails, such as tenant protection policies, Opportunity Zones could lead to “smart gentrification,” or gentrification that does not displace existing residents. The long-term impact of Opportunity Zones is yet unknown, but housing advocates hope it could mean the return of redevelopment.
Liz Tracey, Senior Principal, is an expert on affordable housing and community development finance using tools such as the Low-Income Housing Tax Credit and New Markets Tax Credits. For information about community development financing resources, contact Liz Tracey at firstname.lastname@example.org.