Addressing the Lack of Affordable Housing

In West Los Angeles, a kindergarten teacher’s average salary falls $67,000 short of the income needed to buy a median-priced home in the school neighborhood.

In Palo Alto, a police detective’s pay would have to triple to finance a home in the community the officer patrols.

In San Francisco, minimum-wage workers would have to toil 146 hours a week to pay the average rent on a two-bedroom apartment.

As California’s economy continues to sizzle, drawing waves of newcomers to the state and driving unemployment down to historic lows, the gap between those who can afford a place to live and those who cannot is widening. And for the first time in decades, housing experts say, Sacramento politicians seem serious about closing it.

A primary reason is that housing problems are no longer seen as a poverty issue. With the housing crunch increasingly grinding at middle-class Californians and frustrating employers, many of the state’s business leaders are joining the ranks of those calling for relief.

Support is building especially among the leaders of California’s new Internet economy, who complain that the service sector, and even the lower paid segments of their industry, are faltering under the housing pressures.

Gov. Gray Davis and the Legislature are considering a stack of reforms to remove hurdles to construction and make housing more affordable for the working class. The proposals range from putting a $1-billion bond measure on the November ballot to making it more difficult for environmental groups to delay building projects with lawsuits.

“The Legislature understands we have a crisis on the horizon,” said state Sen. Jim Brulte (R-Rancho Cucamonga), part of a bipartisan coalition pushing a package of housing bills this spring.

“This is not just about affordable housing, this is about rebuilding the California dream,” said state Sen. Richard Alarcon (D-Sylmar), the main architect of the housing bond and another coalition member.

Housing Push Finds Widespread Support

All in all, more than 150 pieces of legislation addressing housing concerns have been introduced in the Senate and Assembly, making it one of the hottest political issues of the year in the Capitol.

That newfound prominence has come, in part, because of an unusual convergence of advocates for labor, business, farm workers and the homeless, which has given housing reform great political clout.

“We see a general concern, especially on the part of high-tech employers, who are competing with companies all over the country,” said Allan Zaremberg, president of the California Chamber of Commerce, an influential lobby that has become a strong advocate of housing legislation this year. “The housing market at this point is creating a situation where they are not as competitive as they want to be.”

Corporations are not only concerned that recruiting is being hamstrung by housing costs, but that productivity is as well, because so many workers are spending hours commuting to and from the office. Moreover, companies are worried that housing problems could affect the quality of the future employee pool, because if educators cannot afford to reside in California, public education will suffer, Zaremberg said.

Those fears are not unwarranted. Already, indicators point to some grim new realities in many of California’s most prosperous areas. Over the past decade, construction of new housing has simply failed to keep up with the pace of population and job growth, creating a basic supply-demand disparity that is expected to get much worse in the next few years.

Experts say that for California to meet its housing needs, it must build 250,000 new homes a year. But last year, only 140,000 housing units were built in the state, and only about 152,000 are expected to be built this year, according to the Construction Industry Research Board, a Burbank-based group that tracks housing permits.

“Our clients, who have always been on the bottom tier, now can’t even compete for the miserable housing they’ve had,” said Christine Minnehan of the Western Center on Law and Poverty, which has long advocated low-cost housing. “People in San Jose are even renting their living room floors. People don’t live like that unless they have no choice.”

Put another way, state officials have estimated that for California to strike a healthy balance between employment and housing, it must build one new home for every 1.5 new jobs created. But in all of California’s booming business regions, that ratio has careened out of control--to 6.5 in San Francisco, 6.0 in Los Angeles and 4.7 in Orange County.

“California really is the epicenter of this new economy. This is where all the action is going to be in the foreseeable future. But this is not where the action is” in the home-building market, said John Burns of the Meyers Group, an Irvine-based real estate research firm.

Unless that changes, “You’re going to start seeing more employers leave California, especially those with lower-paid workers,” Burns said. “California is going to become a workplace for the rich.”

Lawmakers seem determined to prevent such drastic consequences from becoming reality. The legislative measures attempting to ease the housing crunch point to a new understanding among lawmakers that the problem requires big solutions, housing experts say.

Many represent progressive efforts to stem urban sprawl and better utilize limited land resources by advocating so-called smart growth tactics and high-density “in-fill” construction in dilapidated urban pockets.

A bill by state Sen. Richard Rainey (R-Walnut Creek) would promote development of “brown field” sites that have been dumped on or even contaminated, and a bill by Assemblyman Lou Papan (D-Millbrae) provides incentives to encourage mixed housing and retail development around mass transit corridors.

Lawmakers are also weighing the combustible issue of lawsuits over alleged construction flaws, looking to reform a legal morass that many say has all but ended condominium construction in California. And several bills, including one by Assemblywoman Denise Ducheny (D-San Diego), would change the California Environmental Quality Act to prevent what some see as abuse of the law by environmental groups to stall building projects they dislike.

Environmental Concerns

Not surprisingly, some of the proposals have raised eyebrows among environmental groups--including the Sierra Club, which has already voiced strong concerns over the Ducheny bill. But many housing experts say the differences can be patched up, particularly because environmental groups are the ones that have been pushing many of the growth strategies the lawmakers seek to smooth the way for.

Nevertheless, some Sacramento observers see potential problems as the bills move through the Legislature. Some have predicted that the housing bills may force a clash between Democrats from working-class districts in Los Angeles and their counterparts in more affluent, environmentally conscious areas.

But others see no such clouds ahead. There is already strong consensus about the need for a housing bond, and the two main ideas on the table, a $980-million bond proposed by Alarcon and a $750-million bond proposal by Assemblywoman Carole Migden (D-San Francisco) are expected to be melded into a unified, $1-billion plan.

Davis is said to strongly support a housing bond, as long as it assists the middle class as well as the working poor, and he has proposed what housing advocates proclaim as the largest housing increase in years as part of his proposed budget.

“Sacramento seems to focus on one thing at a time,” said Carl Guardino of the Silicon Valley Manufacturing Group, which represents 125 of the tech mecca’s top companies, including Intel and Apple, and entertained Assembly Speaker-Elect Bob Hertzberg (D-Sherman Oaks) last week. “Last year, it was guns and education. This year, it looks like housing and transportation, and we are excited about that.”