May 25, 2002 - From the May, 2002 issue

Report Critique

Chris McKenzie, Executive Director of the League of California Cities, offers a critique of the Little Hoover Commission report, "Building the Dream: Solving California's Affordable Housing Crisis," reprinted in TPR.

Chris McKenzie

Chris, the Little Hoover Commission just released its report entitled "Rebuilding the Dream: Solving California's Affordable Housing Crisis." As the Executive Director of the League of California Cities, give us your reaction to the report.

The report contains some excellent suggestions for providing financial assistance in expanding affordable housing across the state, but some of the recommendations concerning enforcement of the housing element law are predicated in part on an unconscious or deliberate refusal to confront one of the harsh realities of housing development-local governments generally do not construct housing. Local governments regulate land use, they can help provide fiscal incentives, and they can even facilitate financing and housing packages coming together through their redevelopment agencies, but by and large the financing and development of housing is the responsibility of the private sector.

The biggest concern that I have is that part of the report appears to be based on the incorrect assumption that if you penalize local governments enough, housing supply will be expanded. That's absurd. In fact, a recent FieldPoll on growth and development confirms that Californians have ambivalent feelings toward development-it's like that old saying, "The only thing we hate more than sprawl is density."

As a result, Californians also appear to be conflicted about meeting our housing needs. While they generally want to see them met, they certainly don't want them met in their backyards. So the idea that stricter penalties on local government will expand the supply of housing is incorrect and something that the League has opposed to the past. To the extent the report endorses that, we think that's an approach that will continue to

backfire on the state.

That being said, the report contains some solid recommendations for reconciling conflicting state policies that affect housing production, tracking housing construction and improving financial assistance. When all is said and done, the lack of financing for affordable housing is the most significant problem that needs concerted attention.

One of the report's recommendations suggests linking future funding of transportation, parks, etc. with the development of housing. Is that what you're talking about? Could you elaborate on your reaction to that?

The idea of creating development incentives or connecting certain funding streams to different kinds of development is a perfectly legitimate role for the State of California to talk about. And using certain funding streams to encourage housing or mixed-use development is something that the League has suggested is appropriate for the state to explore. But the idea of withdrawing existing funding streams-like the gas tax for example-is really a suggestion built on a house of cards.


And again, the assumption goes back to the belief that local governments build housing. Local governments can open doors to housing construction, they can remove barriers, they can encourage it, but unless they're going to be the financier and the developer, they can't build it. That's been a role that we've generally reserved for the private sector.

Instead of looking toward these negative incentives, the state ought to use its financial resources to incentivize mixed- and joint-use public projects, etc. Punitive, blind approaches won't get us to where we want to be as a state.

Let's end with a snap-shot of the bigger picture. The Governor has just released his May budget alterations. Give us some perspective and reaction to those suggestions.

The League's number one priority-the protection of the VLF-was endorsed by the Governor. And we're deeply appreciative of that. But there are some components of his recommendations that we have some concerns about.

Let me stick with housing to illustrate my concerns. The Governor has proposed that local redevelopment agencies contribute local property tax dollars to county ERAF funds which helps the state meets its legal obligation to fund schools. This directly reduces the capacity of these agencies to aid in the construction of affordable housing because a portion of that money is used for affordable housing. Again, it is simply another example of statewide policies being in conflict.

Overall however, we are pleased with his recommendations. We are very concerned about county health and welfare programs, juvenile crime prevention programs, etc. These programs really help keep people safe in the cities. We're very concerned about those cuts and will continue to monitor the hits they may sustain as the budget makes its way into the legislature.


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