New State Incentives for Pro-Housing Policies Threaten Affordable Home Production

Under a new directive from the Governor who understandably wants to reward jurisdictions doing their part to help the State increase the supply of homes,
the California Department of Housing and Community Development (HCD) will soon be required to award points to funding applications from “pro-housing” cities and counties for several key affordable housing programs – including the Infill Infrastructure Grant (IIG), Affordable Housing and Sustainable Communities (AHSC),
and Transformative Climate Communities (TCC) programs. Pursuant to Assembly Bill 101, implementation is not required to take effect until July 1, 2020. However, HCD and the Strategic Growth Council have already begun modifying the TCC, IIG, and AHSC program guidelines to award points to projects located in jurisdictions that have adopted pro-housing policies such as, but not limited to:

  • Implementation of programs, over the past five years, that finance infrastructure with accompanying increased housing capacity or local financial incentives for housing, including a local housing trust fund or fee waivers.
  • Adoption of a Non-discretionary Local Approval Process for residential and mixed-use development in all zones permitting multifamily housing or established workforce housing opportunity zones or housing sustainability districts.
  • Zoning more sites for residential development or at higher densities than is required to accommodate 150% of the minimum regional housing needs allocation for the low-income allocation in the current housing element cycle.
  • Adoption of accessory dwelling unit ordinances or other mechanisms that meet specified standards to reduce barriers for property owners to create accessory dwelling units.
  • Use of objective design standards for multifamily residential development or adopt fee transparency measures, including publicly available fee calculators.

The California Housing Partnership agrees that incentivizing local governments to implement policies that facilitate an overall increase in housing production is a laudable goal. However, requiring these highly competitive programs to award points to applications from pro-housing jurisdictions will have the unintended consequence of

penalizing developers and advocates who have taken on the arduous task of building much-needed affordable housing in less housing-friendly areas. Applying pro-housing incentives in this manner effectively rewards anti-housing attitudes by decreasing the likelihood that affordable housing development will be funded in cities and counties dominated by these sentiments. Within the context of the IIG and AHSC programs, for example, both programs fund specific types of affordable housing that are widely needed in all communities – arguably more so in areas that have been and remain resistant to affordable housing.

The California Housing Partnership recommends an adjustment to the Administration’s current pro-housing incentives strategy to help curb its unintended effects: apply these incentives to programs for which only local governments are eligible applicants or that are not a source of funding for affordable housing developments.

If the goal is to incentivize housing production in communities that have been reluctant to approve zoning and entitlements for new housing, pro-housing incentives should be applied only to funds frequently sought by local governments – such as transportation, park, and general funds. Removing the link between pro-housing incentives and programs providing affordable housing funding directly to developers will help to ensure that affordable housing developments in all communities are on a level playing.