Report card shows how badly California is failing on affordable housing – Daily News

on Nov28
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Between job losses, pandemic lockdowns and quarantines, and the stress of working and schooling from home, the crises of 2020 spotlighted the importance of access to secure and affordable housing.

But across California, not nearly enough housing was built last year to keep up with the state’s mandates — and most of what was added wasn’t affordable to a majority of residents, according to an analysis of state housing permit data.

To meet state-mandated goals to provide housing to people at all income levels, cities and counties would have needed to permit roughly 145,000 new homes last year. About 17% should have been affordable to medium-income buyers and renters, while the rest should have been split about evenly between higher and lower affordability.

In reality, cities and counties reported issuing about 109,000 housing permits in 2020, a decline from recent years. About 11% of those units were moderately priced and 16% were in reach of lower-income residents. The other 73% were to build homes that would be affordable only to higher-income households — or that would force people to spend too much of their income on living there or cram too many people into too small of a space.

On the Southern California News Group’s third annual housing permit report card, which grades every city and county in the state on how well they’re doing at meeting their goals to add housing, the majority are earning C’s and D’s. There are twice as many F’s as there are A’s.

Only 20 jurisdictions statewide out of 538 with housing mandates are on track to meet their goals in every affordability category.

“It’s disappointing, but sadly not surprising,” said state Sen. Scott Wiener, D-San Francisco, chairperson of the Senate Housing Department.

NIMBYism — responding to the push for more housing with “not in my back yard” — remains the biggest challenge to ending California’s housing crisis, Wiener said.

There’s “continued pushback to any meaningful housing development, a disconnect from the reality that communities face: There is a profound shortage of housing.”

Here are 10 key takeaways from this year’s housing permit report card.

1) The report card measures progress in four housing categories

California’s housing department uses a process called the Regional Housing Needs Assessment, or RHNA (pronounced “reena”), to determine how many housing units are needed in various regions of the state in cycles that start every four to eight years. Local governments within each region then divvy up the total number among all of the cities and unincorporated county areas.

Each jurisdiction’s total RHNA goal is divided into four categories:

  • Very-low-income housing that would be affordable for people making less than half of the median income in their area (there are 3.3 million of these households in California)
  • Low-income housing for people making 51-80% of median income (2 million households)
  • Moderate-income housing for people making 81-120% of median income (2.8 million households)
  • Above-moderate-income housing for people making more than 120% of median income (5.6 million households)

Jurisdictions are supposed to file annual progress reports to the state. SCNG’s latest report card is based on numbers filed this year that reported how many units had been permitted through the end of 2020.

The report card measures how close a city or county is to meeting its targets in each of the four affordability categories, based on how far it is into its cycle. For example, if a city is supposed to permit 80 low-income homes in an eight-year cycle, and 2020 was year six of that cycle, it would need to have permitted 60 to be fully on track and earn an A in that category. If it had permitted zero, it would get an F.

Extra credit points can be earned by doing well in the lower and moderate categories, by showing significant improvement from last year and by jurisdictions with relatively high RHNA goals.

Just like a GPA in school was an average of your grades in all classes, the overall report card grade is an average of the grades in all four categories and those bonus points.

2) Not enough housing is being built to meet goals

Cities and counties across California have been tasked with permitting 1.16 million new homes during the RHNA cycles in effect in 2020.

They would need to have permitted about 940,000 by the end of last year to be on track to meet those goals. Collectively, they’ve added about 740,000.

The situation is worse when you consider how those 740,000 homes are distributed.

Jurisdictions had permitted only 18% of the very-low-income units they’d need to be on track, 26% of the low-income units and 56% of the moderate-income units.

It’s only the above-moderate-income housing where things are going well — jurisdictions have permitted 43% more units than they’d need to be on track and 16% more than they’ll need to meet their final goals.

3) That disparity is reflected in the grades

In the very-low-income category, only 45 jurisdictions are earning an A on SCNG’s report card, while 222 are earning an F for having permitted zero units since their current RHNA cycle started.

The grades for above-moderate-income housing are almost exactly the opposite: 262 A’s versus 46 F’s.

4) Another disparity in renting vs. owning

The permit data illustrates how far out of reach homeownership is for lower-income Californians.

For one thing, California builds more apartments and multiplexes than it does single-family homes — about 52,000 vs. 44,000 in 2020.

More than half of the moderate and expensive housing built last year was meant to be owner-occupied. But 91% of low-income housing and 97% of very-low-income housing was built for renters.

In specific numbers, only 1,050 homes permitted statewide last year were considered affordable for purchase by people who live in the state’s 5.3 million low- and very-low-income households.

Meanwhile, California’s median house price hit record highs in five months of 2020, and rose 16.8% throughout the year to $717,930, according to the California Association of Realtors.

5) There are a few hopeful changes

Statewide, the average report card grade was a C-, the same as last year. But for each of the past two years, the small number of A’s has ticked up, while the number of F’s has decreased.

Also, the 17,000 low- and very-low-income homes permitted across California in 2020 is better than the 10,000-11,000 that were added in each of the past five years.

Wiener and state housing officials cited Project Homekey as a bright spot when it comes to housing for California’s neediest residents. The state created the initiative during the pandemic to convert spaces such as hotels and motels into housing for people experiencing or at risk of homelessness. An April 2021 report said the project created almost 6,000 new housing units and helped more than 8,200 people.

Another change that has officials optimistic is the loosening up of rules around accessory dwelling units, often called granny flats or backyard cottages.

“I continue to be pleased and impressed by ADU permitting,” Megan Kirkeby, the state’s deputy director of housing policy development, said via email.

More than 12,000 ADUs were permitted in each of the past two years, which Kirkeby called “a strong showing for something that used to bring less than 1,000 units a year; we see many jurisdictions adding new programs to encourage ADU production further.”

6) Only places with easy goals are earning high grades

The 20 jurisdictions that were fully on track to meet their housing goals in every category by the end of 2020 were Beverly Hills, Buena Park, Calistoga, Costa Mesa, Fort Bragg, Guadalupe, Hillsborough, La Habra, Newport Beach, Paso Robles, San Marino, Santa Ana, Sonoma, St. Helena, West Hollywood, Westminster and the unincorporated areas of Modoc, Plumas, San Bernardino and Sonoma counties.

Those 20 jurisdictions all had very easy goals to meet. Seven of them had goals of less than 10 new homes in eight years. Collectively, all 20 were asked to build just over 2,000 new homes over the course of eight years — which would be an increase of less than one-half of 1% of the housing they had when their goals were put in place.

That doesn’t mean everyone with a low goal is doing well. The average grade for jurisdictions asked to permit 100 or fewer new homes was a C, while the average grade for places tasked with adding 1,500 or more new homes was a D+.

7) Lots of growth doesn’t necessarily mean good grades

California’s fastest-growing cities are adding lots of housing, but their overall scores are dragged down because almost none of it is for lower-income residents.

Menifee, in Riverside County, recently joined the 100,000-population club, up from about 75,000 residents a decade ago.

Of the 5,400 housing permits Menifee issued between 2013 and 2020, only 30 were for lower-income housing. That ratio is one of the worst in the state, but many other fast-growing cities are near the bottom of that list as well.

Menifee Community Development Director Cheryl Kitzerow pointed out that cities are legally required to designate enough space where homes could go to meet their RHNA goals — a process often referred to as “setting the table” — but don’t actually build homes. Developers do.

She said Menifee hasn’t permitted more affordable housing because no developers have proposed building it.

“We’re issuing upwards of 1,400 building permits a year, so I think our pro-good-development approach is showing through,” Kitzerow said.

8) Good affordable-housing grades take work

“Setting the table” isn’t just about setting aside land for housing. The state requires cities and counties to have programs in place that encourage housing for all income levels and remove barriers that prevent it.

In a pair of Bay Area cities that are getting an A in one of the lower-income categories, officials said that proactive policies and community buy-in are important.

In Morgan Hill, one of every eight homes is affordable, Housing Director Rebecca Garcia said.

The city has prioritized affordable housing for the past 40 years, Garcia said, so it’s baked into the culture there. She said she’s never seen a person speak in protest of an affordable housing project at a City Council meeting.

The city has a policy that 15% of any new development has to be affordable.

“In subdivisions, you can’t identify the affordable housing; everyone looks the same,” Community Development Director Jennifer Carman said.

East Palo Alto has the Bay Area’s largest share of lower-income residents, and that makes the community generally supportive of affordable housing, said Rachel Horst, the city’s housing and economic development manager.

She said the city has good partnerships with several affordable housing developers that do a great job of community engagement.

Even so, Horst said, challenges abound to building low-income housing.

Land, material and labor costs are the same, no matter how much a home will sell or rent for, so affordable housing developers usually rely on other funding to make the projects pencil out. Horst noted that tax credits are limited and highly competitive.

9) There are real consequences to not meeting goals

“I think we live with the consequences every day,” Horst said.

Even in cities that are meeting their RHNA goals, there isn’t enough affordable housing, she said. “This means rents are high, really high, and continue to go up. Sales prices continue to increase.”

That puts many people at risk of dislocation. Another direct consequence is that Californians have some of the heaviest housing burdens in the country.

The government says people shouldn’t have to spend more than 30% of their income on housing; if they do, they’re considered cost-burdened. Four of every 10 California households fits that bill, the worst rate in the nation, according to federal data.

About 8% of California households have more residents than there are rooms to sleep in (counting every room but the kitchen and bathroom). California ranks second only to Hawaii for overcrowded housing.

That can have negative societal effects in areas like education and health, Garcia said.

“When a child is living in a house that’s too crowded, it’s like a pressure cooker for kids,” she said. “If they’re doubled up, or living in garages, how do they study, do their homework, excel?”

The coronavirus pandemic put a spotlight on how many Californians live in overcrowded conditions, Wiener said.

If someone living in a crowded household gets sick, it’s much harder to isolate and stop the spread. Lower-income residents who are more likely to live in overcrowded housing were much harder hit by the virus.

If you ask most people if their city should add more housing, they’ll say no, said Ben Matlock, the city planner in Yucaipa.

But he said you can get more community buy-in to housing development by framing the question in a different way:

If you had friends or family moving here from a different state, would you want them to find a nice place? When your kids move out — or want to move back and start a family — do you want them to be able to afford to live nearby? When it’s time for you to downsize, do you want good options for a smaller house in town?

10) What’s next: Much higher housing goals

“California has underproduced housing for decades,” said Adam Wood, vice president for Orange County operations at the Building Industry Association of Southern California. “If we went on a building spree, it would still take years to catch up, we have dug ourselves such a deep hole.”

State officials agree. That’s why they’re ratcheting up the housing goals as regions enter new RHNA cycles.

In an eight-year period that started in October, a six-county region of Southern California is being asked to permit 1.34 million new homes — more than triple the expectations from the previous eight years.

The Bay Area will begin a new cycle in early 2023. Those jurisdictions will be expected to add more than 440,000 new homes, more than doubling the goal from the last cycle.

As new cycles start, cities and counties have to come up with a plan called a housing element that lays out how they will meet their housing needs. Places without adequate housing elements can lose their advantage when it comes to some types of funding, and can open themselves up to lawsuits, Kirkeby said.

To help local governments meet and exceed their goals, she said, the state housing department has provided almost $400 million in planning grants and will provide $600 million more next year for planning and implementation.

Matlock said the new goals are very ambitious, but state programs that give cities more tools will be helpful.

“People need three things in the world: food, water and shelter,” he said. “As an agency, we’re doing our part to provide that third piece. Let’s find quality housing opportunities for everyone.”

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