July 2019

July 2019

“Instead of trying to blame the rental owner, focus on the ineffective programs provided by the government in the status quo.”

Newsom’s House

A Brief Assessment of the Housing Priorities in the State Budget and What’s Next

As the proverbial bad guy in the debate for increased affordable rental housing, we know all too well what it means to be the focal point of tenant groups’ frustrations. And, while we know the real problem is a HUGE deficiency in housing production, we are never truly surprised when public officials from local and the state government place the blame on our industry. Which is why it was refreshing to see Governor Newsom provide actual funds to address the homelessness problem throughout the state. For example: Auditing Community-Based Transitional Housing Program for Efficiency

A little-known secret about state departments is that they loathe to be audited because it tends to reveal substantial inefficiencies in their administrative process. Often audits find the issue is related to outdated software, understaffing or a general misapplication of their grants. The Community Based Transitional Housing Program is supposed to provide cities and counties with grants that local governments can use to increase housing for recently released convicts. Unfortunately, the program has been fraught with problems. Some legislators and advocates have claimed the solution is forcing rental owners to accept this population as tenants; whether by making them a protected class or simply mandating they must be accepted. Such aggressive attacks on the freedom to contract have been heavily weighed by legislators this year. Which is why the Governor’s approach is appreciative. Instead of trying to blame the rental owner, focus on the ineffective programs provided by the government in the status quo.

Substantially Funding New Development

Every year homelessness continues to be on the rise in California. The state has been slow to respond, and likely has exacerbated the issue with over-regulation and band-aid solutions designed to mask the long-term systemic problems. Now, cities like Los Angeles are considering a tax on vacant units as a way to “incentivize” owners into filling their units at below market value. Such ideas gain traction when residents are frustrated with the homelessness crisis and local governments believe they are ill-equipped to address the challenges. The new budget proposes a half billion in developer loans to increase affordable housing and another half billion on the Low-Income Housing Tax Credit Program. That billion in funding will likely take years to be allocated and properly leveraged, but at least something is being done that is not placing the onus on us…the one’s providing the housing in the first place. There is also a reported $650 million on homeless programs and grants for communities to create better safety nets. This will have a stronger effect on our rental properties than may be first realized.

Reading the Tea Leaves on Governor Newsom

If watching his cabinet appointments left you thinking he was 100 percent on the side of housing advocates like Western Center Law and Poverty or Tenants Together, then you may be on to something.

And, while the budget does not illuminate his thoughts on rent control, we can be thankful the Governor is so forthwith about it himself. To figure out his stance, one merely needs to look at his statements once AB 1482, which would place a statewide rent cap of five percent + CPI on owners, passed its first policy committee: “families shouldn’t be forced to live hours from where they work…Vulnerable residents—seniors, families with small children and people on a fixed income — shouldn’t have to live in constant fear of eviction.” Or, consider rumors by Politico and the Sacramento Bee newspaper that he has called legislators to urge AB 1482 continue to move through the process and tweeted he was “grateful” when it got off the Assembly Floor.

It is possible this is all about accommodating progressives in his first budget. Governor Newsom’s book, Citizenville, details how technology and government can work together to re-imagine the way governing can occur in the digital age. In that book, the Governor points out how businesses and corporations need to be more pro-active on the housing front and how there needs to be more private-public partnerships. Hopefully, this is where the Governor truly wants to lead the state on issues of housing. Proposals like Google’s recent push to build 25,000 homes on their own land are more aligned with his original platform than comments recently made to the media. Then again, he was the former Mayor of San Francisco. Maybe we should have always seen this coming…