Officials, Builders Give Housing Views at Forum
Polite finger-pointing, agreeable disagreeing and a consensus to form a more effective coalition of private and public interests dominated the 1985 California Housing Forum, a recent two-day conference here co-sponsored by the County Supervisors Assn. of California (SCAC) and Californians for Housing, a statewide advocacy group composed of builders, bankers and elected officials, among others.
While the 70 attendees and participants carefully sidestepped trying to speak as a single voice on such divisive issues as rent control and public housing, they were able to agree on four topics they felt required their respective organizations’ close attention in 1985. These were:
--Financing of infrastructure or public works.
--Rental housing, (for example, Assembly Bill 53, which would raise the cap on multi-family tax-exempt bonds from $900 million to $1.5 billion).
--The need for the group as a whole to analyze the effects of President Reagan’s tax simplification plan upon the California housing market.
--The need for some form of technical assistance to be available to communities throughout the state where increased production of affordable housing is a central concern.
In addition, representatives from the Reagan and (Gov. George) Deukmejian administrations addressed the group on 1985 spending priorities and how California housing interests can influence these.
June Koch, assistant secretary for policy development and research, U.S. Department of Housing and Urban Development, began her dinner remarks by noting that “not many states even have a group like yours, and I think it’s remarkable that you do.”
Koch said that tax reforms currently being considered by the Reagan Administration could force rents to go up “by about 35%” and that homeownership costs “for the typical first-time home buyer could go up by about 15%.”
But, she said that HUD’s “basic agenda--to increase affordability of housing, especially for lower-income families and first-time home buyers--will continue (in Reagan’s second term).” She added that one of the Administration’s major efforts “has been an effort at federal-local-private cooperation called “The Joint Venture for Affordable Housing,” an attempt to reduce housing costs “by simplifying and streamlining local regulations and procedures.”
Referring to recent speculation that increased economic growth will drive both interest and inflation rates up again this year, Koch said: “I see no basis for that expectation. Nothing at the moment is even threatening to put pressure on (housing) prices. In addition, the pressure on interest rates which was expected to come from the federal deficit has not materialized.
Expect a Good Year “Under these circumstances there is every reason to expect 1985 to be at least as good a year for housing as 1984. Starts should exceed 1.7 million. Even Wall Street firms are starting to recommend (to their clients) sneaking into cyclical housing stocks.”
While saying nothing to dim that optimism, a member of the Deukmejian team found herself defending the state’s spending package for housing. Susan DeSantis, director of the California Department of Housing and Community Development, admitted that housing has been less than a top priority of the Deukmejian Administration--around $12.2 million, or one-tenth of 1%, of a budget approaching $30 billion, has been earmarked for housing programs--but told the group that “the governor’s office receives a package that has been put together by the Senate and Assembly. Your emphasis should be to work (with those elected officials) earlier in the process.”
Block Grant Funds DeSantis also announced that her department will be awarding $30 million in community development block grant funds in 1985. Such money is used for a variety of housing, public facilities and economic development activities “primarily benefiting lower-income households,” she explained.
Some programs to be covered include home-buyer assistance, deferred-payment rehabilitation loans, emergency-shelter funds and rent-supplement payments to sponsors of rental housing developments being financed under the Farms Home Administration 515 Program.
In addition, DeSantis said, $5 million in “predevelopment loan program funds will provide 7% loans to local governmental agencies, nonprofit organizations and cooperative housing corporations for the preliminary costs of developing assisted housing for low-income families and elderly or handicapped persons.”
New programs authorized in the last legislative session will include a program to help provide financing to tenants who want to purchase their mobile-home-park spaces. “The bill,” DeSantis said, “is designed to counteract the shortages of spaces . . . and improve the financing options available to mobile home owners.
“It should also reduce pressure on localities to enact mobile home park rent control ordinances.”
Pressure reduction was a key concern for another speaker, although he saw it as a need for home builders and buyers. Stan Swartz, newly-elected president of the 5,300-member California Building Industry Assn., felt that infrastructure financing is a burden borne mainly by “just new home buyers or tenants in new apartments.
“When cities and counties require developers to assume the lion’s share of these essential costs (schools, roads, sewers and other public works), this ‘ups’ the already high cost of housing in our state. It threatens to put homeownership right out of reach, particularly for first-time buyers.”
Priced Out of Market Swartz told the group that “only 11% of our California households can afford a $112,000 median-priced new home at today’s 13% interest rates. If you tack another $3,000 onto that home’s price to cover infrastructure costs, 75,000 households are priced right out of the market.
“For the buyer who still manages to qualify, that $3,000 fee will cost (more than) $14,000 over the life of the loan.”
Swartz said that his trade association would like to see the responsibility for financing infrastructure “spread evenly over a community as a whole, as it was prior to (1978’s) Prop. 13.”
Increasing Cost The increased costs of public works facilities and other government-imposed regulations prompted one of the conference’s co-sponsors, Californians for Housing, to release a 24-page report entitled, “The Hidden Costs of Housing” prior to the meeting. The report, which lays much of the responsibility for inflated home prices on the doorstep of local government, states that infrastructure and related costs “may comprise from 10% to 30% of the final cost of new housing,” according to Jay R. Stewart, executive director of the group.
Stewart, who coordinated the study prepared by Ward Connerly & Associates, Sacramento-based consulting group, said that the development review process, for example, “increased from a manageable four to six months in 1970 to an unwieldy 17 to 32 months in 1980. Each month of (governmental) delay can add 1% to 2% to the cost of each unit.”
Yet, despite the implicit damnations courteously hurled back and forth among elected officials, private industry representatives and bureaucrats during the conference, not a single attendee who was asked, expressed anything other than new optimism about meeting again--and soon. As Maggie Erickson, a Ventura County supervisor said at the wrap-up session: “I found this awfully worthwhile. You (developers) create problems for me and I create problems for you. Sometimes we create our own problems. At least we’ve been given the chance to understand that.”
