Transcript What is, and can be, done to make Housing more Affordable in California? Victoria Basolo, Ph.D., AICP Dept.

What is, and can be, done
to make Housing more
Affordable in California?
Victoria Basolo, Ph.D., AICP
Dept. of Planning, Policy & Design
University of California, Irvine
[email protected]
UCI
BACKGROUND
Why do we care about affordable
housing?
• Regional web of relationships:
jobs, housing, transportation,
environment
• Economic stability and social
equality
Victoria Basolo, Ph.D., AICP
UC Irvine
Production Roller Coaster
180,000
160,000
No. of units
140,000
120,000
100,000
80,000
Single-family units
60,000
Multi-family units
40,000
20,000
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0
Year
Source: California Department of Finance.
Victoria Basolo, Ph.D., AICP
UC Irvine
How Severe is the Shortage?
 About 220,000 units needed a year through 2010
(Landis, et al., 2000)
 A shortfall of approximately 138,000 units in 2000,
after controlling for demographic variables
(Johnson, et al., 2004)
 “Nearly 250,000 homes and apartments are
needed each year” (Nevin and Colby, 2005)
Victoria Basolo, Ph.D., AICP
UC Irvine
Where’s the Shortage?
 Geographic: Los Angeles area (including Orange
and Ventura Counties), San Diego County, and
the San Francisco Bay Area (Landis et al., 2000;
Johnson et al., 2004)
 Lower-Income: 651,000 shortfall of affordable
housing units (California Budget Project, 2002)
Victoria Basolo, Ph.D., AICP
UC Irvine
Segmented Housing Markets
(quality submarkets)
Example: County of Los Angeles
MFI 20061 = $56,930
Housing Sub-Markets
Income
Mortgage Loan2
11.2%
$150,000 and >
$625,000 or >
13.8%
$100,000 – $149,999
$420,000-$625,000
12.4%
$75,000 - $99,999
18.3%
$50,000 - $74,999
23.9%
$25,000 - $49,999
High
$
Low
11.1.
20.3%
< $25,000
$310,000-$420,000
$205,000-$310,000
Rent ($695 - $1,250); ~$205,000
Need subsidy; rent ($695)
Inflation-adjusted dollars
2. Assumes Conventional loan, 10% down, 30-year fixed at 6%
Source: U.S. Census Bureau. 2006. American Community Survey.
Victoria Basolo, Ph.D., AICP
UC Irvine
Why is there a Shortage?
Claim #1
Local development entitlement process
delays production; development/impact
fees increase costs
Victoria Basolo, Ph.D., AICP
UC Irvine
Studies of Development Fees
 A study of jurisdictions in Contra Costa County found that
fees raised the cost of a home from between $20,000 to
$30,000
 In some cases, the developer could pass on 100% of the
costs to the buyer, in other cases, the developer had to pay
about 75% of the costs of fees (Dresch and Sheffrin, 1997)
 A study of 89 local governments found that fees added an
average of $24,525 to single-family units and about $15,500
per apartment unit (Landis, et al., 1999)
Victoria Basolo, Ph.D., AICP
UC Irvine
Why is there a shortage?
Claim #2
Regulation is costly and, in some cases,
prohibits development
- CEQA
- Growth management/control regulation
Victoria Basolo, Ph.D., AICP
UC Irvine
Regulations Research:
CEQA; and Growth Control Ballot
Initiatives, 1986-2000
 CEQA law suits are relatively rare; no systematic study of
increased costs statewide, but anecdotal (single case)
examples do exist (LAO, 1997)
 Anti-growth measures have been a popular response to
growth by California communities; Southern California and
San Francisco Bay Area lead the way in number of ballot
measures proposed and adopted (Nguyen, 2004)
 Voter requirements (approval of development) and urban
growth boundaries (UGBs) are the two approaches that
gained in popularity over time -- Southern California uses
voter requirements most frequently; the Bay Area uses
UGBS most often (Nguyen, 2004)
Victoria Basolo, Ph.D., AICP
UC Irvine
Why is there a shortage?
Claim #3
There is little or no land left to develop
(at least in urbanized areas)
Victoria Basolo, Ph.D., AICP
UC Irvine
Available Land
 Landis and his colleagues (2000)
estimate that there are over 24 million
acres of potentially developable land in
the state
 “Built out” in the mind: land uses change,
redevelop
Victoria Basolo, Ph.D., AICP
UC Irvine
Why is there a Shortage?
Claim #4
Housing doesn’t pay – the effects of
Prop 13 continue to be felt (fiscalization
of land use)
Victoria Basolo, Ph.D., AICP
UC Irvine
Conventional Wisdom:
Housing and Tax Generation
“A home must cost (be valued
at) $550,000 to pay for itself”
There is no definitive research
on this topic
Victoria Basolo, Ph.D., AICP
UC Irvine
Research on Fiscalization of
Land Use in California
From: P. Lewis, in Economic Development Quarterly ( 2001).
Victoria Basolo, Ph.D., AICP
UC Irvine
Why is there a Shortage?
Claim #5
Cities, for the most part, do not want
affordable housing, because of
economic interest and/or social biases
Victoria Basolo, Ph.D., AICP
UC Irvine
Research: City Expenditures
and Affordable Housing
 Cities in a region compete against each other for
economic benefits and higher levels of inter-city
competition result in cities:
1. Being less likely to spend any of their own source
revenues on affordable housing
2. Being more likely to spend on economic
development compared to affordable housing
3. Being more likely to support homeownership
programs compared to rental programs (Basolo,
2000, 2007; Basolo and Huang, 2001)
Victoria Basolo, Ph.D., AICP
UC Irvine
Socio-spatial Distancing:
Orange County Voucher Holders by
Income & Poverty
Median HH Income
Source: Sample data from survey of voucher holders, 2002 (Basolo); Census 2000, SF1 and 3.
Note: Sample of 1,213 households from OC Housing Authority voucher population (families are
overrepresented in the sample).
Poverty
Victoria Basolo, Ph.D., AICP
UC Irvine
Existing Responses
Cities and Counties:
 Do nothing (other than what is mandated by State law)
 Implement existing programs “status quo” policy
 Adopt “new” programs
State:
 Statewide ballot measures such as PROP 46, PROP 1C
 State creates and amends existing and new planning
laws
Victoria Basolo, Ph.D., AICP
UC Irvine
What could we be doing now and in
the future? (Cities & Counties)
Develop new (and improve existing) policies and
programs
1) Create mixed-income housing zones (new or overlay).
2) Streamline development process for innovative developments
with housing mix.
3) Seek state law allowing substitution of redevelopment setaside dollars for development fees for mixed-income
developments (i.e., transfer $s to general fund).
4) Create local housing trust funds – sole or regional funds.
5) Create housing land trusts (through nonprofit).
Victoria Basolo, Ph.D., AICP
UC Irvine
What could we be doing now
and in the future? (State)
Change state law to counteract the
fiscalization of land use: revenue
redistribution favoring mixed use,
mixed-income developments and
transit-oriented developments.
Victoria Basolo, Ph.D., AICP
UC Irvine
What could we be doing now
and in the future? (State)
Support state law to reform local governance to
create participatory and effective regional plans
Regional governance-planning would involve:
1) Stronger linkage between housing and jobs in communities
through the housing element -- recognizing the spin off effect
of “good” jobs;
2) Localities in each region negotiating the details of their
regional plan, thus being masters of their shared destiny
(including better trade or transfer program with compensation
being linked to distance from trader to receiving jurisdiction
with limits to distance allowed in transfer).
Victoria Basolo, Ph.D., AICP
UC Irvine
What could we be doing now
and in the future? (State)
Support state law to create a housing trust fund
and link state funding to regional accomplishments
3) Create a permanent source of funding for State housing
programs: State housing trust fund – Improved local match
program as incentive.
4) Regional planning would link State-regional funding to traffic
and air quality targets (reward regions that reduce traffic and
improve air quality through their housing programs such as
TODs, higher density infill near job centers, etc.).
***Simplify planning law (many “tweaks” over the years) and
provide incentives (as well as penalties for failure to comply) to
realize effective plans and their implementation.
Victoria Basolo, Ph.D., AICP
UC Irvine
What could we be doing now
and in the future?
Encourage quality research on costs
and benefits of public policies,
including evaluation research on
existing programs
Victoria Basolo, Ph.D., AICP
UC Irvine
Acknowledgements
My sincere thanks to the researchers
providing information for this presentation
and to the state and local housing staff,
elected officials, planners, developers,
bankers, real estate professionals,
housing advocates, and legislative
consultants that I interviewed from 20032007 about California’s housing
environment
Victoria Basolo, Ph.D., AICP
UC Irvine