Proposition 1C projects are ready, and the state's economy could use the stimulus
California's real housing problem has little to do with the mortgage meltdown. The real problem is the giant gap between incomes and housing costs.
While housing prices rose dramatically between 2000 and 2006, incomes did not. Yet sales volumes were at record levels and first-time buyers were entering the market in record numbers. Aggressive marketing of risky, high-cost, no-documentation mortgage loans allowed people to buy houses at prices way beyond what they could afford. That, in turn, kept prices going up and up.
But as everyone knows only too well, that bubble burst. So we're back to the basic problem: California is not producing housing that residents can afford.
Fortunately, when California voters approved five bonds in November 2006 to update the state's increasingly outdated infrastructure, one of those bonds (Proposition 1C) was targeted at increasing the overall supply and affordability of housing.
The state has scheduled three rounds of funding, for June 2008, June 2009 and June 2010. This year's round of project applications produced more strong applications than there was money to support them. So now the Department of Housing and Community Development is recommending that the amount of money in the first round be increased to allow the state to get a full complement of strong projects under way. Legislators should heed that suggestion.
At this time of economic downturn and high gas prices, increasing the supply of affordable housing in urban infill areas and near transit hubs will provide jobs, transportation options and housing close to jobs.
Assembly Bill 1252 is the vehicle. The Senate passed it 35-0 on Monday. The Assembly should do the same today.
For the 2008 round, legislators originally had allocated $240 million for infill infrastructure grants (for sewer, water, roads and so on). That money ran out after 27 projects, which received amounts based primarily on the number of housing units that will be produced and the affordability level of those units. The railyard project in Sacramento was one of two projects that received the maximum $30 million funding.
The department would like to fund 19 more grants for infill infrastructure and add more money to four already funded projects. The Triangle project in West Sacramento would be a beneficiary of the change. That project was originally awarded $16.7 million and would get $6.3 million more if AB 1252 passes. The Township 9 project in Sacramento would get $19.1 million. Broadway Lofts at 19th and Broadway in Sacramento would get $4.4 million.
For the 2008 round, legislators also had originally allocated $95 million for transit-oriented development grants. That money ran out after 11 projects. Again, The railyard in Sacramento was one of only two projects to win the maximum award of $17 million. The department would like to fund five more transit-oriented development grants and add more money to a project in San Diego.
While it will reduce the funding available in the 2009 and 2010 rounds, speeding up the grants is justified. These strong projects are ready, and the economy needs the stimulus. The Assembly should pass this bill and the governor should sign it into law without delay.
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1 comment:
As we have seen from the recent real estate meltdown prices drop quickly when there is a small oversupply of houses. The most cost efficient way for government to assure housing affordability is not for government to provide subsidies. Instead, government should remove obstacles to housing construction. Then, builders will not be able to keep themselves from building a couple houses too many. Home prices will come into line with incomes.
It's not magic.
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