Assemblymember David Chiu Joins Colleagues to Announce Bills to Address Affordable Housing Crisis Monday, 19 December 2016 12:02 Sacramento, CA—Assemblymember David Chiu (D-San Francisco) today was joined by Assemblymembers Phil Ting (D-San Francisco), Anna Caballero (D-Salinas), Miguel Santiago (D-Los Angeles), and Speaker pro Tem Kevin Mullin (D-San Mateo) to announce four bills to address California’s affordable housing crisis. These bills will fund production of housing for low-income families, incentivize local governments to complete upfront planning and environmental review and approve housing permits to increase housing supply, fund the enforcement of existing state housing law by the Attorney General, and provide rental assistance to homeless Medi-Cal recipients. The authors of the individual bills are listed below. “Every Californian deserves a safe, affordable home. The affordable housing crisis threatens our state’s economic prosperity and climate goals and deepens inequality,” said Assemblymember David Chiu, Chair of the Assembly Housing and Community Development Committee. “There is no single solution to resolve the crisis. My colleagues and I have put forward solutions to increase funding, incentivize and streamline housing creation, and to enforce existing housing law where creation is not occurring.” “Housing costs more in California. Exploding housing costs have uprooted families from their communities and reduced access to high- wage jobs of the future,” said Assemblymember Phil Ting (D-San Francisco). “We have a recipe for disaster on our hands and need serious reform. It’s insane to think that business as usual leads to anything but more income inequality and homelessness. We need an affordable housing breakthrough so that our future is more prosperous and inclusive.” “Housing costs have gotten so high that families can’t make ends meet, employers can’t recruit, and teachers and police officers can’t live where they work,” said Assembly Speaker Anthony Rendon (D- Paramount). “The comprehensive approach taken by my Assembly colleagues lays out a roadmap to addressing the housing crisis in California.” “The lack of affordable housing in many communities results in people living in unsuitable and unsustainable conditions, often resulting in significant overcrowding and multiple families living in housing units intended for only two or three people. As a society we can no longer ignore the critical need for housing within our communities. I am proud to co-author legislation that would take an important step towards in investing in California and its future,” said Assemblymember Anna Caballero (D-Salinas). "As the representative of the third poorest district in California, I am proud to be authoring an important part of the Assembly's affordable housing package in 2017," said Assembly Majority Whip, Miguel Santiago (D-Los Angeles). "The enhanced enforcement provided by AB 72 will ensure that all of or state's local jurisdictions are taking our housing crisis seriously." “Unfortunately our state was not able to move the needle in any substantial way last year on housing issues. As a result affordable housing will remain a priority for the upcoming legislative session. I am happy to co-author this package of bills with Assemblymember Chiu. Each of these bills indicates a commitment to addressing the issue of funding as well as the challenges that local governments confront with respect to planning. I look forward to working with Assemblymember Chiu and our colleagues on these issues during the 2017-18 session,” said Assembly Speaker pro Tempore Kevin Mullin (D-San Mateo). “California did not get into this crisis overnight, and it will take creative efforts and political will over many years to climb out of it,” added Assemblymember Chiu. “I look forward to more legislative proposals in the coming months to create more funding and to address other barriers to housing production and affordability." Assemblymember Chiu is also working with colleagues and stakeholders on additional legislation for introduction in early 2017. These efforts include proposals similar to a Massachusetts law that streamlines the approval of housing projects with high affordable levels and creates a state appeals board to review local denials of affordable projects. Lawmakers are also looking at strategies to create greater responsibility for housing at the regional level in response to situations like a proposed commercial-only development in Brisbane as well as ways to strengthen the state’s fair share housing law. To obtain feedback on both introduced and forthcoming bills and to solicit other solutions to address the housing crisis, the Assembly Committee on Housing and Community Development expects to hold oversight hearings around California in early 2017. AB 71 (Chiu; Co-authors: Ting and Mullin) Bring California Home Act: This bill provides an ongoing state funding source for affordable housing by eliminating the state mortgage interest deduction on vacation homes. This deduction results in a revenue loss to the state of approximately $300 million annually. The funds saved as a result of eliminating the deduction would then increase the Low Income Housing Tax Credit (LIHTC) program by $300 million per year. State investment in affordable housing for lower income families has been drastically reduced in the last five years. Voter-approved bonds to fund construction of affordable housing have been exhausted; Proposition 46 of 2002 and Proposition 1C of 2006 together had provided $4.95 billion for affordable housing. Along with the elimination of redevelopment agencies, our state’s funding of affordable housing has dropped by $1.7 billion each year. Virtually no low-income Californians, who make up 38 percent of the state’s population, can afford their local housing costs. Nearly 70 percent of low-income and very-low income households spend more than 50 percent of their income on housing costs, according to the McKinsey Global Institute. The mortgage interest deduction disproportionately benefits those with higher incomes and larger mortgages. To qualify for a mortgage interest deduction, a taxpayer must itemize deductions, which low- and moderate- income homeowners typically do not do. In 2012, 77 percent of the benefits of the federal mortgage interest deduction went to homeowners with incomes above $100,000. The largest investment that the state makes on housing is through the mortgage interest deduction. According to the Franchise Tax Board, the deduction on primary homes results in over $5 billion in revenue loss to the state every year. In addition to the deduction taxpayers can take on their primary home, they can take a deduction on a second home. The estimated impact of the vacation home mortgage interest deduction on the general fund was $360 million in 2016-17 and is projected to be $250 million in 2017-18 and $270 million in 2018-19. The LIHTC program is one of the only remaining sources of funding available for affordable housing development in the state, making it competitive and overprescribed. In 2014, only 49 percent of applicants were awarded credits. By increasing the annual state tax credit allocation amounts to $300 million, California could leverage an additional $600 million in federal housing resources that would otherwise go unclaimed by our state ($200 million in federal 4% credits and $400 million in federal tax-exempt bond authority) as well as hundreds of millions of dollars of private sector investment and local funding dollars. AB 72 (Santiago; Joint author: Chiu; Co-author: Mullin) Increased Enforcement of Existing State Housing Laws: This bill appropriates funds to the Attorney General (AG) to enforce existing state housing laws. There are various laws at the state level to hold local communities accountable in approving housing. These include housing element law and the Housing Accountability Act. The AG has had the authority to enforce these laws but does not have funding earmarked for this purpose. AB 73 (Chiu; Joint author: Caballero; Co-authors: Mullin, Ting, and Santiago) - Spur production of high density, transit-oriented housing: This bill spurs production of housing on infill sites around public transportation by incentivizing local governments to complete upfront zoning and environmental review and rewarding them when they permit housing. According to the McKinsey Global Institute, at current construction rates, California will build an additional one million homes by 2025. However, the population is expected to increase by 3.6 million people during that period, largely due to current residents having children. To meet pent up demand and future population growth, California needs an additional 3.5 million homes by 2025. AB73 would provide local governments with an incentive payment when they encourage transit oriented development by zoning at higher densities and complete an Environmental Impact Report (EIR) on the area. Twenty percent of the housing in the district must be zoned at affordable levels. Once zoning is complete, the housing sites within the area would be subject to ministerial approval and subject to prevailing wage. The bill also creates a streamlined judicial review on any cases challenging the EIR. Once a city permits housing units within the area, it would receive an additional incentive payment. AB 74 (Chiu; Joint author: Santiago; Co-author: Mullin) Housing for a Healthy California: Creates the Housing for a Healthy California program to pay for the cost of housing