PD Editorial: California loses out on billions for affordable housing

California’s reputation for exorbitantly priced housing is unassailable, and it creates an extremely high barrier for people in need of affordable housing. The barrier has gotten only higher during a pandemic rife with high job losses. It’s inexcusable, then, that the state is blowing $2.7 billion in bond resources earmarked for affordable housing.

A new report by State Auditor Elaine Howle’s office reveals a clunky, convoluted system. Four agencies are tasked with overseeing affordable housing: the Department of Housing and Community Development, the Housing Finance Agency, the Tax Credit Allocation Committee and the Debt Limit Allocation Committee.

Many would-be developers of affordable housing find navigating those multiple agencies and their Byzantine rules overwhelming. They give up, leaving bonds, loans and tax credits on the table, where they eventually expire and help no one get into a home.

Consider just the most egregious example cited in the report. The Debt Limit Allocation Committee oversees tax-

exempt bonds that government agencies sell to help finance affordable housing. It allowed $2.7 billion in potential revenue to expire between 2015 and 2017. Yet it never disclosed that the bonds had been lost, and it struggled to explain to auditors why it had happened.

That’s money that could have helped many people who can’t find housing they can afford.

In Sonoma County, a worker needs to earn more than $34 an hour to afford an average-priced two-bedroom apartment, according to the California Housing Partnership, a private, nonprofit advocacy group. About three-quarters of extremely low-income households spend more than half of their earnings on rent, leaving far too little for food and other necessities.

The auditor recommends streamlining how the state doles out its subsidies for affordable housing. Developers who apply for aid to build affordable housing should find a uniform, simpler process. That doesn’t mean there should be no accountability and scrutiny, but it doesn’t take four agencies to do it.

The Legislature should follow the audits recommendations. Start by eliminating the Debt Limit Committee that lost $2.7 billion in bonding authority. Transfer management of tax-exempt bonds to another agency.

The audit offers other sound changes lawmakers could pursue. For example, the state should produce an annual update on its housing strategy, rather than one every four years. That would help keep the public, lawmakers and industry informed about where things stand. Lawmakers also should demand a better appeals process to resolve disputes over eligible affordable housing projects quickly and fairly.

Nor is this just a state-level problem. The audit found that too often local jurisdictions thwart affordable housing projects. Lawmakers must wield carrots and sticks to require localities to be more accommodating to affordable housing projects. If necessary, ask voters to demand greater leniency by way of ballot measure.

“California's ongoing affordable housing shortage has contributed to the homelessness crisis and has left more than three million renter households with burdensome housing costs,” the report concluded.

The Legislature created the disjointed bureaucracy that now inhibits building desperately needed affordable housing. Lawmakers should waste no time dismantling it.

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