Newsom's California Budget: RHNA on Steroids

Newsom California Budget

California’s newly elected governor announced his 2019-2020 budget on January 10, 2019. The $209 billion budget is 4% higher than the 2018-2019 $201 billion budget, and it expands funding for items such as “building a childcare infrastructure,” medical care for a greater number of Californians including undocumented residents, and housing production.

The Basics

Although all items in Governor Newsom’s budget deserve the public’s awareness, especially current hot-button items such as state debt and unfunded public employees pension liabilities, the Nine-County Coalition is especially interested in the governor’s plans for housing production. The big picture of the Governor’s strategy includes allocation of $1.3 billion for housing production, and could be summarized as follows:

* Cities and counties will not receive gas-tax (Senate Bill 1) money unless they meet their building quotas.

* The state’s general fund will receive a one-time allocation of $500 million to expand state loans to developers that produce moderate-income housing.

* Regional Housing Needs Assessment (RHNA) will be revisited to require higher housing production and increased state oversight of cities and counties housing performance. A $750 million one-time allocation will fund state efforts to “encourage” cities and counties to build more housing.

* $500 million will be allocated to help cities and counties build housing for the homeless. The state will streamline environmental review of new homeless shelters and identify state surplus property on which to build affordable housing.

* Expanded programs of infrastructure financing districts and use of federal Opportunity Zones will be encouraged to help poorer communities build housing and encourage developers with tax breaks.

Sticks and Public-Private Partnerships

The Governor wants more “sticks” along with “carrots” to solve the housing crisis, as exemplified by the withholding of gas tax funds and the call for an expanded RHNA.

Also, he wants private entities to provide housing funds, on the basis that labor-intensive large Bay Area employers are flooding the area with people that need a place to live. In response, Silicon Valley established a public-private partnership called Partnership for the Bay’s Future, which describes itself as follows:

The Partnership for the Bay’s Future is a collaborative effort aimed at advancing our region’s future by solving its interconnected challenges—housing, transportation, and economic opportunity.

The collaborative effort aims to expand and protect the homes of up to 175,000 households over the next five years, and preserve and produce more than 8,000 homes over the next five to 10 years.

The Partnership is being launched with the support of the San Francisco Foundation, the Chan Zuckerberg Initiative, the Ford Foundation, Local Initiatives Support Corporation (LISC), Facebook, Genentech, Kaiser Permanente, the William and Flora Hewlett Foundation, the David and Lucile Packard Foundation, and Silicon Valley Community Foundation.”

California for All?

Governor Newsom labeled his proposed 2019-2020 budget “California for All.” We understand his meaning: California for all income levels, not just for those who can afford the high housing prices. However, that label begs the question whether what the Governor is perpetrating is California for some, just not the same some. Are families with children that want a quiet yard and a car to transport the children included? Are the fast-disappearing neighborhood mom-and-pop enterprises challenged by taxes, regulation, and competition from the giant corporations included? Are those who fear the idea of public-private partnerships included? Given the efforts of Partnership for the Bay’s Future are Bay Area counties not in close proximity to “the Bay” included? We shall see.