Report: California renters bear increasing burden of housing costs vs. income

580 200 Nadine Ono

Affordable housing project in West Hollywood, CA (Photo Credit: Art Gray/Wikimedia)

Increasing rental rates and decreasing funding on the state and federal level continue to add fuel to California’s affordable housing crisis. That’s according to a series of reports analyzing the housing needs of nine counties released today by the California Housing Partnership Corporation (CHPC). The reports also outline steps officials can take on the local and state level to alleviate the situation.

The nine counties profiled include Alameda, Fresno, Los Angeles, Orange, Sacramento, San Diego, San Joaquin, San Mateo, and Ventura.

Key findings in the reports show that rental rates keep rising, while incomes overall are falling. Additionally, workers earning minimum wage cannot afford the average rent in any of the nine counties. In five of these counties, renters need to earn more than three times the minimum wage to afford rent.

Other findings show that more than a million of the lowest income households have no access to affordable homes and almost a million extremely-low income (ELI) and very low income (VLI) households pay more than 50 percent of their income to rent, leaving little money for other essentials.

These findings show that the lack of affordable housing is putting a severe burden on lower income populations causing more people to fall into poverty.

At the state level, CHPC recommends the following policy and legislative actions be taken:

  • Invest at least $1 billion from the state’s General Fund surplus into established state programs prioritizing the lowest-income households.
  • Expand the California Low Income Housing Tax Credit. (AB 2817)
  • Improve the value of the California LIHTC by up to 40 percent at no cost to the state. (SB 873)
  • Give state voters the opportunity to approve a new housing bond similar to SB 879
  • Authorize local governments to use tax increment financing for locally approved affordable housing benefit districts and to issue bonds. (AB 2031)
  • Reaffirm cities’ authority to require the inclusion of a percentage of homes affordable to low- and moderate income households in new rental housing development. (AB 2502)
  • Streamline local approvals including environmental review for 100 percent affordable housing developments consistent with local plans and zoning.
  • Create an ongoing, predictable revenue source of at least $500 million annually for the production and preservation of homes affordable to lower-income households.
  • Approve the No Place Like Home Initiative to create affordable rental homes for the chronically mentally ill at no cost to the state using a portion of Proposition 63 revenues.
  • Allow Community Revitalization and Investment Authorities to use property tax increment available to Enhanced Infrastructure Financing Districts. (SB 975)

Each county has local recommendations in its respective report, from adopting or strengthening regulations limiting conversion of rental housing to condominiums in Alameda County to requiring that all new residential developments set aside 15 percent of homes with prices affordable to ELI and VLI families in exchange for concessions and incentives in Orange County.

CHPC President & CEO Matt Schwartz said implementing the recommendations would make a dent in the number of units needed, but California would still see a shortfall.

“In the first couple of years, if we did the first three things, we would probably triple production of affordable rentals through the tax credit program, but it would only get us maybe 25-30,000 units a year,” said Schwartz.

So more needs to be done, Schwartz added, on the building front: “We need to make it easier to build within reasonable limits that don’t anger environmentalists, at the same time, we have to make an immediate down payment on investments or we will lose all our ELI and VLI neighbors. Because they have no other options, they’re being displaced almost hourly from those markets.”

Today’s reports shows the importance of the California Economic Summit’s One Million Homes Challenge, which includes an action plan to build one million affordable housing units over the next decade. Earlier this month, the Housing Action Team sent a letter to the California Legislature commending them on working on recent efforts to tackle the affordable housing crisis.

But the Summit also urged lawmakers to collaborate on a larger strategy that also includes policy fixes to reduce building costs and also expand the supply of housing for Californians in the middle-income range.

The Summit will work with lawmakers on a variety of ideas, such as passing legislation to promote construction of accessory dwelling units, expanding local fiscal incentives for housing development and encouraging policies that ensure affordable housing is built in the strategic locations, like near worksites and transit.


Nadine Ono

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