Housing bills launched in new session

Meanwhile state Sen. Jim Beall, D-San Jose, unveiled a proposal allowing cities to reduce their Educational Revenue Augmentation Funds, or ERAF, in favor of allocating that money to affordable housing projects, or other local improvement measures.

Both efforts seek to establish ongoing financing sources dedicated to addressing the state’s affordability crisis, which Beall suggested is preferable to the piecemeal approached previously adopted by Gov. Gavin Newsom.

Senate Bill 795

Beall, alongside state senators Mike McGuire, D-Healdsburg and Anthony Portantino, D-La Cañada Flintridge, crafted Senate Bill 795 to offset revenue lost when redevelopment agencies were eliminated under former governor Jerry Brown.

Beall said he believes the proposal, which mirrors a similar piece of legislation vetoed by Newsom last year, could be an essential source of revenue for local officials looking to fund developments.

“This allows cities to have a financing tool to produce housing for the homeless and affordable housing for working people in their community and that’s what they are looking for,” he said.

Beall added the bill could relieve some of the pressure local officials are facing in attempting to meet the Regional Housing Needs Allocation, which sets residential development goals across the state.

To that end, city officials often claim they are mandated by Sacramento to build housing — and face penalties if they do not — but are not offered the money to afford such projects.

Under the proposal, cities could trim their ERAF contribution in favor of financing affordable housing projects, transit-oriented developments, infill development, neighborhood revitalization or climate change planning. To assure school systems are not shorted, the bill proposed the equal education contribution would be backfilled through the state budget.

Beall said the proposal is an essential pivot from Newsom continuing to seek one-time payments in his annual budget toward addressing significant issues such as housing and homelessness facing millions of Californians.

“We need to establish an ongoing partnership,” he said.

He added the initiative could foster the collaboration between local and state officials needed to combat a problem as rampant as the prevailing housing shortage.

“It’s a statewide problem, so the state should partner with local governments,” he said.

Michael Lane, deputy director of Silicon Valley at Home, an affordable housing advocacy group, expressed his support for the proposal.

“The bill represents a strategic and targeted approach to providing exactly the type of investment needed in order to finance more affordable housing and the related infrastructure that makes it possible,” he said in a prepared statement.

Assembly Bill 1905

Chiu’s similar effort to establish a sustainable financing source for housing and homeless supports efforts would do away with the mortgage interest deduction on vacation homes and amend the regulation for primary residences.

Assembly Bill 1905 would eliminate an ability to claim the deduction on second homes. And for loans made during 2018 or later, as well as primary residences, the maximum interest a filer could claim would be cut by $250,000 to $750,000, in alignment with federal regulations.

Such an initiative could generate between $400 million and $500 million which Chiu suggested could be channeled into a housing and homelessness response fund.

“It makes little sense for the state to subsidize the wealthy’s ability to own two homes,” said Chiu, in a prepared statement. “Eliminating this tax break to create a permanent source of funding to address our homelessness crisis is simply the moral thing to do.”

Similar to SB 795, Chiu said the bill represented an attempt to push Newsom away from one-time allocations for housing programs and toward a more reliable solution.

Recognizing those protecting the rights of private property owners and the wealthy maintain outsize influence in Sacramento, Chiu noted he may face staunch opposition to his proposal. However, he balanced that perspective by expressing confidence his fellow lawmakers would support an effort he considers virtuous.

“Normally, the more difficult bills are the ones worth fighting for,” he said in an email. “Many of my colleagues see the need to create a permanent source of funding to address our homelessness crisis, and I think they will agree that it doesn’t make sense to subsidize a person’s ability to have two homes when thousands sleep on our streets every night.”

Other efforts

State Sen. Scott Wiener, D-San Francisco, reintroduced Senate Bill 50 with hopes of advancing his divisive proposal to upzone California and make way for more, dense development.

The attempt to facilitate the construction of additional units stalled in the state Legislature last year, when it was set aside as a two-year bill. With its resurrection, SB 50 has until the end of the month to make it out of Senate to become a law this year.

Another two-year bill from 2019, Assembly Bill 1484, aims to amend how fees are assessed on new residential construction. The proposal from Assemblyman Tim Grayson, D-Concord, would limit the amount of impact fees facing home builders.

Proposals which stalled last year can be introduced again in the new legislative session, and lawmakers are expected to offer additional housing bills over the coming weeks.

austin@smdailyjournal.com

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