Category Archive: State Updates

  1. Around the State

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    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   

    San Diego Mayor Faulconer

    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.  

     

  2. California Governor Newsom’s Budget Commits to Housing in a Big Way

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    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. 

  3. Proposition 10 Creates Local Rent Control Controversy

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    Proposition 10: Rent Control aims to repeal a law that currently prevents city and county governments from enacting rent control. Known as the Costa-Hawkins Act, the law prohibits rent control on single family homes, new housing built after February 1, 1995, or when tenants first move into a unit. If passed, Proposition 10 would restore authority to city and county governments to determine whether they should enact rent control policies and limit how much landlords could raise the rent each year.

    Supporters contend that California renters currently pay 50 percent more than counterparts in other states, straining households’ ability to cover the costs of other necessities such as food, childcare, education, transportation, and healthcare. A policy brief from the Urban Displacement project concludes that the proposition would be beneficial to Bay Area renters, particularly in terms of preventing displacement. It found that including single family homes in rent control ordinances, a policy not permissible under Costa-Hawkins, could have significant impact because they make up an increasing percentage of the area’s rental stock.

    However, the brief also highlights the potential unintended consequences of repealing Costa-Hawkins. In particular, the brief addresses the possibility of units being removed from the rental market. A Terner Center brief highlights other possible consequences, including the possibility of slowing already lagging production. Housing construction in California has not met growing demands, and the report notes that further shortfall would only exacerbate the housing crisis.

    The Terner Center brief also highlights a more nuanced perspective: Proposition 10 aims to increase tenant protections, a necessary action given the housing crisis, but those protections do not have to be implemented in a way that affects production. Instead, they suggest modifications to Costa-Hawkins, including an “anti-gouging” rent cap and further incentives for developers to include affordable units in their market-rate developments.

    Estimating the true effects of Proposition 10 is difficult due to a lack of data surrounding rental units, landlords, and tenants. Additionally, Proposition 10 allows local governments to adopt rent control, but does not require these provisions. As such it is difficult to predict the specifics of the policy across the state. However, the repeal of Costa-Hawkins and implementation of rent control has some potential to negatively impact affordable housing. If Proposition 10 passes, careful consideration will need to be given to the development of specific local policies to truly protect California’s vulnerable communities.

    Jennifer LeSarJennifer LeSar, President and CEO, has more than 30 years of experience in the real estate development and investment banking industries, and 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. She can be reached at jennifer@lesardevelopment.com.

  4. State Homeless Council Chair Announces Plan for Emergency Aid

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    Image of CA Homeless Coordinating and Financing Council websiteAt the July 2018 meeting of the California Homeless Coordinating and Financing Council (HCFC), Council Chair Alexis Podesta announced plans for distributing $500 million in emergency funding to help local governments address homelessness. To receive Homeless Emergency Aid Program funding, jurisdictions must declare an emergency shelter crisis and local Continuums of Care must demonstrate strong coordination between cities and counties. The HCFC anticipates that the NOFA will be released by the end of September 2018, with funds distributed on a rolling basis until January 31, 2019, one month following the close of the application period. In addition, the HCFC anticipates that Round 2 funding will open in April 2019.

    The HCFC also reviewed and adopted assessments that covered the extent to which the California Tax Allocation Committee (TCAC) and California Housing Financing Agency (CalHFA) programs employ a Housing First approach. The assessment found that the TCAC Low-Income Housing Tax Credit Program currently does not set tenant eligibility or programmatic requirements other than those based on income and recommended that it amend its regulations to require projects that serve homeless households to use the Housing First model. The CalHFA assessment of its Special Needs Housing/Mental Health Services Act program resulted in similar findings, as well as recommendations to update its term sheets. Both agencies used the Housing First Checklist adopted by the HCFC at its April 2018 meeting. The HCFC will receive assessments from the state Department of Health Care Services and Department of Veterans Affairs at its October 2018 meeting.

    Finally, the HCFC received reports on three additional priorities related to the implementation of Housing First guidelines and regulations:

    1. Statewide homeless data integration project. This project would help state leaders better understand how to target funding to communities, populations, and interventions to achieve the greatest impact. The recommendations, which are based in part on a review of HMIS solutions implemented statewide, include acquiring an off-the-shelf solution, leveraging the HUD HMIS data structure, analyzing statewide HMIS security standards, creating participation incentives, and providing options for direct data entry for small Continuums of Care (CoC) with fewer resources, among others. The HCFC also received a presentation from Santa Clara County Consortium about the benefits of using an integrated data system to inform policy and program decisions.
    2. Homeless housing and interventions needs assessment. The HCFC discussed a phased approach to a needs assessment designed to help stakeholders quantify the level of need and resources required to functionally end homelessness. The assessment would incorporate statewide data and research, data from CoCs with the largest homeless populations, and snapshots of two to six other CoCs representing the geographic and population diversity of the state.
    3. Catalog of state-administered homeless programs. The catalog (Appendix D of the HCFC staff report) provides information on programs providing housing and housing-based services, including the funding agency, eligible uses of funding, applicant eligibility, available funding, and upcoming funding cycles.
  5. LA Motel Conversion Ordinance to Increase Housing Production

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    On April 17, Los Angeles Mayor Eric Garcetti signed a local ordinance that will enable owners of underutilized hotels and motels to convert these facilities into transitional or supportive housing for people experiencing homelessness or who are at risk of becoming homeless. The Los Angeles City Council had previously voted 13-0-2 in favor of the ordinance. The ordinance supports efforts outlined in the City of Los Angeles Comprehensive Homeless Strategy Report to promote the adaptive reuse of private properties that could accelerate the cost-effective development of transitional and supportive housing to provide shelter and supportive services for people experiencing homelessness. Key components of the ordinance include:

    a. All units must be used for transitional and/or supportive housing, but the project will not increase the floor area, building footprint or height, or number of units.

    b.  Projects will maintain a minimum 20:1 ratio of dwelling units to on-site supportive services offices, but supportive services cannot exceed 10% of the total floor area. Projects with fewer than 20 units are required to have at least one office.

    c. Projects that have a Certificate of Occupancy will not be subject to additional zoning ordinances, and interior alterations, such as adding in-unit cooking facilities, can be made.

    d. All project will be reviewed by the Department of Building and Safety to ensure that they meet application requirements, zoning compliance, and performance standards. These standards require the applicant to have an executed contract with a local agency to provide housing onsite with links to services either onsite or offsite.

    e. The project cannot reduce the number of onsite parking spaces, and must adhere to requirements related to security night lighting, recycling, and trash facilities.

    f. When no longer needed for transitional or supportive housing, the facility may be returned to its original use and any space repurposed for supportive services can be converted back to guest rooms or dwelling units provided it does not result in the facility exceeding its Certificate of Occupancy.

    g. Projects cannot result in the alteration of buildings listed or nominated as historic buildings without appropriate consultation with the Office of Historic Resources.

    Jessica Ripper, Senior Associate, covers issues at the intersection of housing, health, and human services, and also manages marketing and business development. Jessica can be reached at jessica@lesardevelopment.com.

     

  6. The Future of Costa-Hawkins Repeal

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    For Rent SignThose of us deeply committed to a healthy housing market for all understand all too well how a constrained housing supply has resulted in increased rent burdens on the majority of tenants in California. Here at LDC, we are engaged in working on a variety of strategies to address both the housing crisis and address displacement of California’s low and moderate-income renters.

    Along with many housing advocate colleagues in the state, we have been following the recent proposals and discussion of one of the most controversial housing market interventions that exists – rent control.

    On January 11, efforts in the California legislature to repeal the Costa-Hawkins Rental Housing Act failed to move forward when the California Assembly Housing and Community Development Committee voted on AB 1506 (Bloom), resulting in a 3-3 tie with one abstention. The bill would have allowed local governments to strengthen rent control ordinances.

    Enacted in 1995, Costa-Hawkins, prohibits cities and counties from strengthening existing rent control ordinances, and prohibits the application of rent control ordinances to duplexes, single family homes, and housing of any type built after 1995.

    Despite the failure of AB 1506 at the Assembly committee level, Costa-Hawkins could still be repealed if California voters pass a November 2018 ballot measure proposed by the Alliance of Californians for Community Empowerment and championed by nonprofit community organizing groups and tenant right’s advocates. If Costa-Hawkins is repealed, cities and counties would be allowed to draft rent control ordinances free from the restraints of the 1995 law.

    If your community is interested in strategies to mitigate displacement and rising rent pressures, please reach out to us at jennifer@lesardevelopment.com or artemis@lesardevelopment.com.

    Artemis Spyridonidis covers housing policy issues, including structural solutions to the housing affordability crisis, consolidated plans, housing elements, accessory dwelling unit policy implementation, and regional issues across the state of California. To learn more about LDC’s policy services, contact Artemis Spyridonidis, Senior Associate, at artemis@lesardevelopment.com.

  7. Countdown to the 2017 California Economic Summit

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    CES logoAs leaders, we are called to promote public actions and private choices, which create the social, economic, and environmental conditions that contribute to a vibrant, just, and sustainable future – a prosperity shared among us and with future generations. To achieve this vision, we must work together to address challenges such as poverty and income inequality, technological disruptions, and climate change by engaging in civil discourse, identifying solutions, and building the public will to engage in collective action. What can you do lead the way toward greater prosperity for all Californians?

    Attend the 2017 California Economic Summit. Join state and local leaders as we come together to advance solutions for housing, workforce, and water sustainability, and seek to articulate a compelling vision and clear strategy for improving incomes, economic security, and upward mobility.

    Since 2012, California Forward and partners in the California Economic Summit have articulated and advanced an evolving public agenda for shared prosperity. We now seek to accelerate that progress with an even stronger commitment to more explicit goals, and an affirmation of the Summit as a venue for respectful and candid engagement among those of different minds.

    If you’re already registered, take five minutes to encourage your colleagues, partners, and other local leaders to attend. And if you’re not yet registered, do it now using the code LESAR17.

    You can also learn more about the program and logistics on the California Economic Summit website.

    Lead the Way!  If your organization has an inspiring story to share with Summit attendees, submit a request to host a Lightning Talk.

    Join the Conversation.  Contribute your ideas in a guest blog to the Elevate CA web series.

  8. State Lawmakers Take Action on Homelessness

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    Tents set up by people who are homeless on Skid Row in Los Angeles

    Tents set up by people who are homeless on Skid Row in Los Angeles

    Affordable housing advocates weren’t the only winners last week as California lawmakers worked to push through a flurry of bills before the end of the legislative session on September 15th. In addition to creating a permanent source of revenue to fund affordable housing, SB 2 (Atkins) provides funding for programs for people experiencing or at risk of homelessness. In 2018, half the funds will be made available to the Department of Housing and Community Development to provide funding for programs for people experiencing  or at risk of homelessness. The legislation specifies that use of the funds includes, but is not limited to, providing rapid rehousing, rental assistance, and navigation centers, as well as the construction, rehabilitation, and preservation of permanent and transitional rental housing.

    Several other bills aimed specifically at addressing homelessness also passed during the 2017 legislative session:

    AB 727 (Nazarian) authorizes counties to expand access to housing assistance for people in programs funded by the Mental Health Services Act. The use of MHSA funds for rental subsidies was previously restricted to individuals participating in Full Service Partnerships who require intensive services to stabilize and to individuals who were referred to services from the field. This bill will allow counties to continue to support individuals as they transition to lower levels of service along the continuum of care.

    AB 74 (Chiu) establishes the Housing for a Healthy California Program, which aims to create supportive housing for homeless SSI recipients by leveraging Medi-Cal benefits. The program would be funded through the federal Housing Trust Fund or other sources available to the Department of Housing and Community Development (HCD), and would be released through competitive grants to counties and operating reserve grants and capital loans to developers. Numerous studies have demonstrated the cost-effectiveness of coupling stable housing with physical and mental health services for high utilizers of public services.

    AB 932 (Ting) establishes a pilot program allowing specific cities and counties to develop a plan and local ordinances to expedite the construction of emergency shelters on land owned or leased by the city upon declaration of a shelter crisis. HCD would be required to approve local ordinances adopted during the pilot program to ensure compliance with health and safety standards. Eligible localities that declare a shelter crisis are required to submit an annual progress report to the Legislature indicating the total number of residents in shelters, the number who have moved from a shelter into permanent supportive housing, and the number who have exited the system, as well as other data on steps the locality is taking to reduce homelessness.

    AB 210 (Santiago) allows counties to develop multidisciplinary teams to expedite the process of linking homeless adults and families to housing and supportive services by allowing provider agencies to share information and coordinate care. Allowing for a coordinated interagency response will not only improve government efficiency, individuals and families will benefit from greater continuity of care.

    LDC will continue to follow the news from the 2017 legislative session and provide you with updates on how these and future measures, if enacted, are implemented in cities and counties statewide.

    If you are interested in learning more about how to maximize the opportunities created by the legislation, please contact Jessica Ripper, Senior Associate, at jessica@lesardevelopment.com for a briefing or trainings for your team.

  9. Legislators’ Push for Affordable Housing Package Dominates News Cycle

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    Efforts to address California’s housing shortage took center stage in Sacramento last week as Gov. Jerry Brown and legislative leaders struck a deal on three key measures—Senate Bills 2, 3, and 35. The measures have been the subject of intense debate as leaders statewide seek to stimulate development and improve housing affordability.

    Senate Bill 3, authored by Sen. Jim Beall (D-San Jose) was amended August 28th to increase the bond to $4 billion and renamed. The amended bill would authorize $3 billion in bonds for the construction of new low-income housing, and add $1 billion to extend the Cal-Vet Farm and Home Loan Program, which provides homeownership subsidies to veterans. The Building Homes and Jobs Act (SB2), authored by Sen. Toni Atkins (D-San Diego), was also amended to provide for more local government control of the funds generated from real estate document fees. The third measure, Senate Bill 35 authored by Sen. Scott Wiener (D-San Francisco), would streamline local planning reviews for new construction. Both SB2 and SB3 require a two-thirds approval by the Legislature.

    The news and opinion pieces highlighted below offer a robust picture of the debate taking place statewide:

    Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

    For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO, at jennifer@lesardevelopment.com.

  10. New AHSC Grant Guidelines Approved, ELP Advisors Again Provides Technical Assistance

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    AHSC Sustainable CommunitiesCalifornia is gearing up for Round 3 of the Affordable Housing and Sustainable Communities (AHSC) grant program, and ELP Advisors will once again play a key role in providing technical assistance to select applicants.

    On July 17th, the Strategic Growth Council (SGC) approved new guidelines for the next round of AHSC grantmaking. Earlier this month, the council announced that LDC’s affiliate, Estolano LeSar Perez Advisors, in partnership with Enterprise Community Partners, has once again been chosen to provide technical assistance to qualifying AHSC applicants. We are excited to continue our successful partnership with SGC and to team with Enterprise in providing comprehensive assistance to applicants across California.

    The new AHSC guidelines make some important changes since the last round, many in response to feedback from applicants. We are hopeful that these changes will make the application process less cumbersome, more effective and allow a wider range of communities to be competitive for funding. Here’s a rundown of the major changes:

    Bye bye, concept app: Repeat AHSC applicants will be happy to learn that concept applications are no longer required. They have been replaced with a checklist and an optional consultation with SGC staff. This change should greatly streamline the application process and give applicants a good idea of their competitiveness prior to investing time and money into a detailed application. A host of other, smaller changes are also aimed at streamlining and simplifying the process.

    New housing and anti-displacement requirements: The guidelines strengthen and, in some cases, add new requirements aimed at ensuring AHSC funds flow to communities that are complying with state housing law and protecting vulnerable communities from displacement.

    Changes to include more rural projects: Thanks to changes to the net density requirements, projects across a wider spectrum of rural communities will now be eligible for AHSC.

    Indian Tribes now eligible: Federally-recognized Indian Tribes are now eligible to apply for AHSC grants.

    New threshold criteria: Several scoring elements that were optional last year have become mandatory, known in AHSC lingo as “threshold” requirements. These include certain housing affordability and urban greening elements.

    You can review the new guidelines here.

    With the guidelines adopted and the technical assistance team in place, Round 3 of AHSC grantmaking will get underway this fall. The notice of funding availability (NOFA) will be released in October, applications will be due in January, and awards will be announced in May.

    Even before the NOFA is released, the council will begin the process of selecting applicants to receive free technical assistance from ELP Advisors and Enterprise. No details yet, but we expect there to be an announcement in August. We’ll keep you posted.

    For more information about AHSC grants and technical assistance opportunities, please contact Autumn Bernstein, Principal, at autumn@elpadvisors.com.

    LeSar-Autumn-5x7Autumn Bernstein, Principal, Estolano LeSar Perez (ELP) Advisors, is an expert in urban planning, transportation, housing, and environmental policy. She has 15 years of experience as a policy advocate, strategic advisor, non-profit executive and facilitator in communities across California. Autumn is a native of the San Francisco Bay Area and lives in El Cerrito.