February 1, 2001 - From the February, 2001 issue

Governor's Respected Housing Chief Offers Glimpse of New Policies

The state housing crisis has no jurisdictional boundary. It touches each an every citizen. And if left uncorrected, it will detrimentally affect the continued quality of life of our neighborhoods and the sustained economic viability of California's job centers. TPR approached Julie Bornstein, director of the state's Housing and Community Development Department to get her take on the crisis. Her response-gleaned from years of experience in real estate and business law, as well as state and local politics-is an incredibly candid discourse of the current predicament and the multitude of ways to correct it, if only we work together.

Julie Bornstein

Julie, your department's 2000-2003 Strategic Plan states that between 1980-1990, housing production trailed demand by 660,000 units, with these figures only slightly improving in the late-90's. Give us a sense of how significant the state's housing shortage is?

Look at the impact the housing crisis is having on people's lives, on the business community and on the economy and its severity is clear. In order for a worker to be able to afford an average 2-bedroom apartment-in any urbanized part of the state-they have to earn more than twice the minimum wage.

To further compound that problem, while the country's homeownership rate is increasing, California's homeownership rate is falling. So we're mired in high prices and a lack of availability. The frightening realization that we're having in Sacramento is that we may see a generation of individuals grow up without the opportunity to ever own a home.

The Governor's recent state of the state address made no mention of housing and while his proposed budget did have housing provisions, they were few and far between. Understandably the utility crisis will dominate the current dialogue, but give us a sense of what the thinking is in the executive branch re: housing. What is the administration's approach?

Our housing shortage is a chronic problem and as such we're not simply looking for immediate solutions. We're looking for long-term answers.

To that end, the state is viewing the crisis in several ways. First, we have the statutory authority to approve the Housing Element of every city and county in the state. That process assures that local jurisdictions recognize and plan for their future housing needs. We're working with regional governments throughout the state to identify, target and allocate housing to regional areas that in turn allocate them to their constituent cities and counties.

A second way that the legislature and the Governor are dealing with this crisis is through diverting excess state revenue to support housing subsidies. The state of California doesn't have public housing projects; we work with the private sector and with local governments to make sure that the private sector has below market financing so they can offer an affordable product to low-income families and wage earners.

To achieve that an unprecedented $500 million was allocated from the budget last year to programs that support single-family home construction, multi-family home and apartment construction, and for specialized needs such as homeless shelters and low-income rural housing. The governor has proposed an additional $300 million in his current budget proposal in order to expand and continue the programs authorized in last year's budget.

In last month's issue of TPR, we asked State Sen. Dunn to comment on what the state's city managers were saying about the housing crisis. Rick Cole, Azusa City Manager and former Mayor of Pasadena, asserted that the core problem for local government was Prop. 13 fiscal disincentives which undermined local support for housing development. As a former Legislator and now as a representative of the executive branch, do you agree with Cole? Does the Governor?

Proposition 13 was put on the ballot without consideration of the consequences or the alternatives. And I would imagine that if you talked to a wide spectrum of voters they would admit that they didn't realize that by curtailing property taxes they also shifted the benefit of increased housing production, land values and money to Sacramento.

The Governor has in fact responded to the fiscalization of land use issue. The money allocated last year and the $200 million proposed this year for the Jobs-Housing Balance Improvement Incentive Program is a direct response to the fiscalization issue. That program gives unrestricted dollars back local government for services and/or capital improvements they feel are necessary.

However, receipt of that money is dependent on the following activities: 1) They must have a compliant housing element. And 2) They have to increase the issuance of residential building permits over their previous 3-year average. If they are able to do that, they will get money back on a per unit basis. If they build affordable or multifamily units in addition to increasing building permits they will add to that reimbursement. And, if they locate these developments in high job-growth areas the payment will increase even more.

We recognize that the current structure of local government revenues doesn't incentivize housing. The current administration is responding to the tune of $300 million to help fix that situation. And over the next 2-year period we hope that cities will realize that, if you build housing, you'll get money back that you can use in your municipality without restriction.

Do you think that a 2-year program will be a significant incentive for local government officials to actually tackle this problem?

We're hearing from local governments that it is significant. When it was first announced last year we spent a lot of time meeting not only with the League of Cities and CSAC, but with individual cities, counties and regional governments. Each has given us very positive comments.

Since you're working with regions on the allocation issue, could you comment on a quote from Mark Pisano that ran in our sister-publication Metro Investment Report earlier this year. "Housing is increasingly the most difficult and important issue our [L.A.] region faces ... In going through our current Housing Needs Assessment we're discovering an increasing reluctance by both political entities and the marketplace to add lower-cost housing to the eastern part of our region [the place where it was going until recently]." Is Pisano's comment consistent with what you are hearing from the state's regional entities?

Communities need a full range of housing if they are going to be "complete." Every jurisdiction wants retail stores and needs to have municipal workers, public safety officers, paramedics and teachers. So if they want teachers to live in the jurisdictions that they teach, police officers to be available in an emergency, and a paramedic not to have driven two hours before he even gets in the ambulance, communities must recognize the need for diverse housing choices in their community. Those communities who believe otherwise should reexamine the pay scale their municipal workers, teachers, janitors, and police officers are receiving.


Interestingly enough when we've tried to quantify exactly which jurisdictions Mark believes are reluctant to encourage this kind of scenario, we find a number approaching only 4 or 5 out of the 183 jurisdictions that comprise SCAG. So, I'm not sure how representative those feelings are on behalf of those jurisdictions.

The Planning Report also interviewed Bill Witte, Principal of the Related Companies of California, who offered this statement on the state's housing short-fall: "While acknowledging the programs and coordination offered by the State Treasurer, the State Controller and [Speaker's Commission on State/Local Government Finance] what is most fundamental is what happens in the arena of local land use decision making. Without land use decisions that incentivize or at least permit housing and/or affordable housing, we can have all the programs and coordination in the world, and you're still not going to see a lot of impact." What is your reaction to Witte's analysis?

His comment shows a lot of insight. And he recognizes the importance of land use planning and the inherent framework that is behind the Jobs Housing Balance Improvement Program and our emphasis on Housing Element compliance.

We need to convince local governments that a housing element with appropriate zoning-including affordable housing-is an essential part of their municipal responsibilities. To achieve that, we have structured these new innovative programs to be responsive to those very phenomena that Bill cites in his statement.

Speaker of the California Assembly Robert Hertzberg has appointed two Blue Ribbon Commissions. The first is examining the California Initiative process and has already heard testimony that local land use initiatives are frustrating comprehensive efforts for housing. The second Speaker's Commission is looking at regional problems and the lack of coordination between localities. What do you would hope to hear and see from these commissions?

We'd be very interested to see the results of the commission on regionalism. We currently have a number of programs that draw on the ideas of funding inter-regional planning efforts for housing, transportation, water and a variety of other resource allocations.

But what has really peaked out interest is what's happening in Riverside County with their Integrated Plan Project. Riverside County has brought the development community, the public, the transportation and the environmental communities to the table to generate the county's general plan so that it answers the concerns re: transportation, habitat conservation and environmental planning. All of those groups are already seeing the benefit of proactive dialogue rather than reactive opposition and criticism. That process, in conjunction with the Speaker's Commission results should have enormous potential for becoming a model for the state.

TPR conducted a roundtable in September regarding smart growth. In that interview, Sherm Harmer, President of the Olson Company, said, "As you look at Smart Growth in California it boils down to three scenarios. First, we must reconnect jobs and rooftops. Second, we need to create an environment where people can improve the quality of life by completing their live, work, shop, play and learn functions with as little reliance on the automobile as possible. And third, we have to reuse existing infrastructure and make it desirable." Is that sound advice? And is the Smart Growth movement still the way to describe what this is all about?

We haven't used the term "Smart Growth" because it means so many things. But the 3 specific criteria that Sherm talked about are certainly driving factors behind our policies at the state level.

We're working hard to connect jobs and housing. Quality of life suffers when people spend 2-4 hours a day commuting-workers become less productive, air quality decreases and perhaps most importantly, family life is harmed. It's very difficult to get a parent or even a teacher to travel back to school at night if they are facing a 2-3 hour daily commute. Not to mention you certainly lose your pool of little league coaches and brownie troop leaders when people are faced with the disconnect Sherm calls, " the jobs and the rooftops "

We're also looking at California's changing demographics. The largest growing age cohort is the baby-boomer generation. How does that relate to land-use? If you have the opportunity to live, work, shop, play and learn in an area where you're not dependent on an automobile, you create a framework and environment for ensuring that people will be able to live independently even if medical conditions or age preclude them from driving. So in addition to improving the quality, Sherm's advice may allow increased independent living.

The third issue should be underscored, put into italics and if possible written in neon-use existing infrastructure. We want our policies to help guide the use of existing infrastructure as efficiently as possible-and that goes well beyond roads, sewers and utilities, and includes schools and public safety.

Last question. It appears that there is a $20 billion school construction need in the state of California to meet a growing student population and a severe shortage of school facilities. If you couple that construction need with our state's need for more neighborhood libraries, parks, health and others public facilities, we clearly have an immense infrastructure challenge. How, in your opinion, can the state and localities intellingently leverage voter approved public funds and resources to both meet the above needs and to revitalize the core of our urban and inner-suburban neighborhoods?

Riverside County again has a number of good examples where a joint-use library was constructed with input and funding from the school district, the college, the county and the city. And now in most jurisdictions, new schools are being sited contiguous to parks so that during school the park is a playground and after school it's public open space.

If more people begin to recognize that quality of life depends on a diverse, well-rounded, well-supported community with good schools, adequate policing, parks, libraries, usable transportation and the ability to have the time to enjoy those amenities then we can make some headway in all of those areas. But, this is not an issue that the state can or should deal with on its own. We need to maximize the resources we have. And the only way to do that effectively is to look for contributions in terms of good ideas and resources from the private sector.


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