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FCL NEWSLETTER -- April, 2002

Affordable Housing -- Tending to California's Most Basic Needs
Dire Housing Trends -- Would Assist Low- Income Family Housing
Housing Bond Measure -- SB 1227
Three Bills -- Burdens on working families
A Local Housing Success -- Sacramento Mutual Housing Assn.
This Month in FCL History -- 30 Years Ago
Wilson Riles, Jr. -- to Speak at 50th Anniversary Dinner May 30th
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Articles in Prior Newsletters

Affordable Housing: Tending to California?s Most Basic Needs

The cost of housing in California creates tremendous hardships, and the situation is only getting worse. The physical and psy- chological impact when individuals and families cannot afford a decent place to live can be devastating.

On an individual level, California?s lack of affordable housing stems primarily from the fact that the cost of housing has outstripped many families? economic resources. Because the gaps between income and housing costs are growing larger for individuals, stopgap measures will help fewer people, unless more resources are available.

Three typical methods of creating affordable housing are to provide the family with a rent subsidy that supplements their income; to subsidize developers to construct units that they will rent to tenants at below-market rates; and community-based programs that encourage families to build or manage their own affordable apartments or homes.

Rent Subsidies

Housing and Urban Development, the federal bureau responsible for overseeing housing projects, has recently favored the use of ?Section 8? vouchers. The Section 8 program works when there is a balance of supply and demand and the cost of housing is more or less in line with the average family?s income (rent should constitute about one-third of income). However, it cannot be used as the only source of assistance when the demand significantly exceeds the supply, as is the case in California, because more people request vouchers than the state is able to provide. The waiting list for a Section 8 voucher through a local housing authority is five to ten years on average in California. In a very tight housing market, landlords can rent to tenants who don?t need subsidies without the hassle of dealing with vouchers. This makes it difficult for families to find affordable housing even if they do have a voucher.

Construction Subsidies

Another method of closing the income-to-rent gap is to give developers subsidies to build houses that are legally required to be rented at a below-market rate for qualifying families. Some of the primary ways to produce affordable units are listed below:
  • Very low-cost financing with adjustable principal repayment options. Zero to 3% interest rates at interest-only payments until the project can afford to start repaying the principal.
    Starting in 1988 voters approved several bond acts authorizing a total of $600 million in general obligation bonds for state housing programs. Most of these funds went either to new construction or rehabilitation of multi-family units. With the exception of a few projects, all of these funds are still supporting affordable housing units and are legally protected as affordable units for years to come.
  • Low-cost financing. Revenue-based tax-exempt bonds or community redevelopment funds allow financing two to three percent below the market interest rate with a long-term principal repayment schedule.
  • Grant funding. Usually used for very low-income populations and specialized programs for elderly or disabled individuals.
  • Use of tax credit funds. A program funded through the Internal Revenue Service allows a company to purchase tax credits for future use. The funds derived from that purchase go to the developer as a grant to create affordable housing.
  • Creation of low-cost sites. If the city or county has passed affordable housing ordinances, the developer is required to set aside a percentage of the sites for affordable housing. Density bonuses. By allowing more units to be built in a subdivision, the city or county can lower the individual cost of each site.

    Homeowner Community Programs

    Some of the best providers of low cost housing are those that involve the residents themselves. Because these programs require a lot of commitment and organization, they do not account for large numbers of housing units, but they are significant for the quality of the contributions they make to the communities where they exist. These efforts do not require government sponsorship, but they might proliferate if they received more overt encouragement.

    Several decades ago, Quakers in the Visalia, California area helped start Self-Help Enterprises. This non-profit housing development corporation has developed into one of the better non-profit housing providers in the state. Habitat for Humanity and similar community-based organizations have started a significant number of California non-profit housing projects.

    Co-housing is another option that has developed in several California cities. A dozen or so families jointly develop a city block, or acreage, with living units that may share common spaces, such as kitchens, family rooms, play areas, garages and storage. Individual unit costs tend to be lower than the costs of independent houses, and there are other advantages to living in an intentional community that tend to reduce total living costs, so that the housing is more affordable.

    As shown by this article, significant programs are already in place. Unfortunately, the need for affordable housing has exceeded the resources budgeted for these projects in recent years.

    What You Can Do

  • Support SB 1227 (John Burton, D., San Francisco) to place a Housing Bond Proposition on the November ballot to provide $2.1 billion for affordable housing projects starting in 2003.
  • Ask your city council members if the teachers, firefighters, and police officers that serve your community can afford to live in the city they serve.
  • Work for affordable housing ordinances and become involved in the development of the housing elements of the general plan for your area.
  • Serve on a shelter board to answer the needs of homeless families and individuals.
  • Support non-profit housing agencies such as Habitat for Humanity. The role of these groups is crucial to answering this overwhelming need. Affordable housing should be developed and managed so that the cash flow is reinvested in the property.

    ? Ken Schwarzentraub

    DIRE HOUSING TRENDS

    The situation is dire for many Californians looking for a place to live. The following trends in California?s housing situation place an enormous burden on working families:
    Loss of affordable apartments. In the last four years, privately owned, federally subsidized apartments were lost nationwide, with 20,000 lost in California. In Sacramento County for example, 26% of the affordable multi-family housing stock has been converted to market-rate housing, and another 24% is at risk in the next few years.
    Burdensome rental rates. More than one-third of all renter families? statewide use over half of their incomes for rent. It requires 106 hours per week at a minimum wage to pay rent for the average two-bedroom unit in California.
    Difficulty of home ownership. As of October 2000, 70 percent of households could not afford the median-priced homes in the areas where they live. Housing costs increased at a rate of 7.5% per year between 1969 and 1999. At the same time, wages have increased much more slowly.
    Threat of homelessness. The Department of Housing and Community Development estimates that there are more than 360,000 homeless individuals in California, and other data discloses that one-third of the homeless population are families with children.
    Substandard conditions and overcrowding. One out of every eight housing units statewide is in substandard condition and one of every eight metropolitan California rentals is overcrowded.

    SENATE BILL 1227 (Burton)
    HOUSING BOND PROJECTS

    The Housing Bond Proposition is for the November 2002 ballot. The proposed allocation of the bond proceeds is as follows:
    $895 million	? 	Multifamily Housing Program 
      200 million	? 	Farmworker Housing Grant fund 
      195 million	? 	Emergency Housing and Assistance Program 
      195 million	? 	Supportive Housing for individuals who are disabled
      195 million	? 	CalHome (a comprehensive program that assists in the development of affordable single family homes)
      290 million	? 	California Homebuyer Down-Payment Assistance Program
      30 million	? 	Code Enforcement and compliance program
    

    Three Bills Would Assist Low-Income Family Housing

    Three measures introduced in 2002 seek to make more affordable housing available for working families. Each bill serves to illustrate theimportance of local decision making in this important area. The State can set general guidelines and provide funding incentives, but actions bycity councils and local communities are the key to lasting housing solutions.

    AB 1866, by Rod Wright (D., Los Angeles) seeks to make more housing developments eligible for certain fiscal incentives under the density bonus law, and to streamline the approval process for homeowners that want to establish ?granny flats? or other added housing units on their property. The bill is designed to prevent local agencies from denying a density bonus through local ordinances that have the practical effect of preventing the development. FCL SUPPORTS.

    AB 2292 by John Dutra (D., Fremont) prevents local governments from imposing density reductions that depart from established zoning standards, and provides that developers can recover attorney fees and costs if a court overturns illegally imposed restrictions. FCL SUPPORTS.

    SB 1403 by Sheila Kuehl (D., Santa Monica) allows the 60-day no-fault eviction notice that now applies to the cities of Los Angeles, Santa Monica, and West Hollywood to be adopted by any city with vacancy rates below 10%. When tenants face a very tight rental housing situation, thirty days is often not enough time for them to relocate within the community where they have become established. The bill also enacts other tenant protections. FCL SUPPORTS.

    A Local Housing Success

    Stereotypes about the poor, about non-white communities, and about renters can create a for- midable challenge to affordable housing projects. Hostility toward the poor, and their lack of influence among elected officials, prevents funding for affordable housing from getting the priority it deserves at all levels of government budgeting. Local nonprofit housing developers often face an uphill battle.

    Sacramento Mutual Housing Association (SMHA) is a local nonprofit that now houses 2,000 low- income residents in the affordable housing it has developed. Last year, this association collaborated with a broad-based organizing group, Sacramento Valley Organizing Community (SVOC), to design and obtain financing for 20 townhomes for very low-income families. The housing would replace a deteriorated, blighted, and poorly designed apartment complex that was acquired after the property went into foreclosure.

    The new design was attractive and would be built with the same high quality, durable materials that would be found in higher rent market rate housing in well-off communities. Nevertheless, the neighborhood business association and neighborhood association board protested the intended use as housing for the poor. The vast majority of the residents of the neighborhood are low-income, the predominant housing stock is aging and deteriorating, and the neighborhood has lacked any substantial investment in housing or services for decades. The neighborhood decision-makers, when faced with these facts, still protested this safe and well-designed, affordable alternative for families that were living in unsafe conditions.

    Because state laws are in place that make it illegal to deny development proposals of multifamily housing on appropriately-zoned parcels, as well as to deny housing based on racial prejudice, the development could not be stopped based on land use issues. However, SMHA and SVOC allowed the neighborhood boards to substantially change the design because elected officials and redevelopment laws provide neighborhood groups with the power to recommend funding on developments in redevelopment (and often in non-redevelopment) areas. Elected officials have a difficult time approving the public financing for these developments if anti-renter interests control the neighborhood groups. It was essential for SMHA and SVOC to work with the groups to obtain their support. Knowing that state laws and federal fair housing laws created barriers to down-zoning the property due to prejudice, the neighborhood group felt pressure to cooperate.

    The residents of the neighborhood were convinced of the value of the development only after they understood how SMHA incorporates a wide variety of services, activities, and resident involvement in its properties. SMHA also committed to assisting the neighborhood in its goal of increasing homeownership programs. Business owners who did not live in the neighborhood, however, continued to protest the multifamily use. With the residents? eventual support, SMHA was able to bring the development to city council for approval of a loan made available from local and federal affordable housing funds. In a highly competitive application process, state and federal tax credits and private grants were eventually awarded for the development. Ground broke on the development in February 2002.

    Nonprofit affordable housing developers experience neighborhood opposition with almost every housing development. However, after the affordable developments are constructed and in operation, the properties often receive praise and support from the same people and groups that opposed them. Unfortunately, prejudice clouds people?s perceptions, and before they have personal experience with affordable housing, being told about the benefits of affordable housing doesn?t make an impact.

    It takes a few paragraphs to summarize the challenge of getting this development underway, but it would take pages to give justice to a description of the time and energy that advocates spend working for affordable housing. Even after this uphill struggle, the 20 townhomes are being developed don?t even make a dent in alleviating the crises faced by the tens of thousands of families needing housing assistance whose names appear on the Sacramento county housing assistance waiting list.

    For more information on SMHA and other housing organizations, refer to www.mutualhousing.com.

    ? Rachel Iskow, Executive Director of SMHA and co-chair of SVOC

    This Month in FCL History: 30 Years Ago

    FCL Newsletter, April 1972 Vol. 21, No. 4
    LOW INCOME HOUSING

    Six proposals to help low income persons with their housing problems have been translated into legislation by the California Housing Coalition, an alliance of about 200 organizations lobbying for adequate housing and for strengthened tenant rights. The FCL is an active Coalition member.

    The CHC-sponsored legislation for 1972 consists of the following measures....

    AB 49 (Burton, D., SF), ?rent subsidy? bill to direct the Department of Housing and Community Development to make money available by July 1, 1974 to local housing authorities which have programs of providing low-rent housing in private units....

    SB 1454 (Moscone, D., SF), to establish a Housing and Community Development Agency to provide financing for housing for low and moderate income persons. The Agency would issue tax exempt bonds to raise money for low-interest mortgages. The Agency could make loans to non-profit and limited dividend corporations for rehabilitation or construction, make grants to non-profit groups to assist in site purchase and to provide operating subsidies, underwrite the bonding of small contractors and minority contractors who can?t get private bonding, and make grants or loans to innovative demonstration projects. Assemblyman William Bagley (R., San Rafael) is preparing a similar bill, reportedly with emphasis on home ownership....

    AB 2103 (Meade, D., Oakland), to provide assistance to owners of low and moderate rent units and of owner-occupied homes so that they can repair or improve their housing buildings to meet local housing and building code standards. The assistance would be provided by a property tax rebate coming from state funds through the Franchise Tax Board....

    AB 1965 (McAllister, D., San Jose), a complex statute to revise the laws relating to retaliatory evictions, the landlord?s obligation to assure that his rental units are habitable, repairs, tenant suits against landlords who violate building codes, and evictions because the tenant has joined a tenant association.

    Against Housing Bias
    AB 1687 and AB 1878 (Miller, D., Berkeley), to declare that it is the intent of the state not to occupy the entire field of removing segregation and discrimination in housing and to provide that any city or county may adopt fair housing legislation and may carry out a fair housing program augmenting the efforts of the state Fair Employment Practices Commission.

    SB 992 (Roberti, D., L.A.), to require that the owner of every residential structure of five or more units post on the premises a notice giving the name and address of the owner or his responsible representative, with the same information to appear on every lease or rental agreement. (Low income tenants are likely to know who the rent collector is ? but who is responsible for maintenance and repairs?)

    Wilson Riles, Jr. to Speak at 50th Anniversary Dinner

    Wilson Riles, Jr., the featured speaker at FCL?S annual din- ner on May 30, brings insight drawn from his challenging and enlightening experience working for social change in diverse settings. Most recently, he ran against the odds for Mayor of Oakland against incumbent and former Governor Jerry Brown. He served for nine years as the American Friends Service Committee Regional Director, and also had a long tenure on the Oakland City Council.

    Mr. Riles will speak on ?Creating Peace and Justice at Home? as we celebrate FCL?s 50th Anniversary and look forward to its development in the years to come. His accomplishments include the fight for Oakland?s Anti-apartheid and Nuclear Free Zone ordinances, and leadership of the opposition to a military charter school.

    Throughout his career, Riles has consistently advocated for affordable housing, services for homeless people, health care reform, alternatives to incarceration, and non-proliferation of weapons of mass destruction. An avowed pacifist, he has been actively involved in community organizations such as the Northern California Coalition for Immigrant Rights, the San Francisco Zen Center, and Interfaith Alliance to Heal Society.

    Riles comes from a distinguished legacy. His father, the late Wilson Riles, Sr. was State Superintendent of Public Instruction and the first African-American to be elected to statewide office in California. Wilson Riles, Jr. earned his B.A. from Stanford University and received his master?s degree in educational psychology and child development. He served in the Peace Corps for two years as a math teacher in West Africa.

    The evening will include a reception, a dinner buffet (Mexican cuisine with a vegetarian option), and the debut of a video production featuring those who have worked with and supported FCL over the years. Seating for this event is limited by space to no more than 120.

    Act soon to secure your reser-vation or sponsorship of this event. Contact the FCL office at (916) 443-3734. Tickets are $60 each ($35 low-income).

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