This week in affordable housing news…:

State update:

• Proposition 1, the mental health bond championed by Governor Newsom, secured enough votes to pass this week, with the Associated Press calling the race more than two weeks after the election. The measure currently leads by 29,000 votes out of more than 7 million votes cast. The razor-thin margin caused Governor Newsom to postpone his planned State of the State address on Monday and has forced advocates for the other bond proposals moving toward the November ballot to recalibrate their strategies. CHC continues to support AB 1657 (Wicks), a $10 billion housing bond that would support a range of successful affordable housing programs facing cuts due to the state’s growing budget shortfall. The Legislature has until June to take action to put the measure on the ballot.

• Legislative leaders and Governor Newsom announced an agreement this week that takes a first step toward closing the state’s budget gap—identifying $12 billion to $18 billion in funding “solutions” in the current budget that will trim a sizable portion of the projected budget shortfall (currently ranging from $38 billion to $53 billion) before lawmakers take up next year’s budget this spring. The Newsom Administration’s January budget proposed cutting $1.2 billion in housing funding in the 2024-25 budget and eliminating the state’s enhanced $500 million Low Income Housing Tax Credit. CHC and our partners are working with legislators to reject those cuts and maintain funding for the state’s critical housing programs.

• Although California has more than doubled production of new affordable homes in the last five years, the state is only funding 12% of what is needed to meet its housing goals. In the meantime, renters need to earn 2.8 times the state minimum wage to afford the average rent in their community. These are some of the central findings of the California Housing Partnership’s 2024 Affordable Housing Needs Report, an annual assessment of the state’s affordable housing landscape. This year’s report also finds affordable housing production beginning to slow down—after reaching a peak of 23,551 units funded in 2022—due to a decline in state and local funding. CHP’s recommended policy solutions include developing an ongoing revenue source for affordable housing, putting a $10 billion housing bond on the ballot, and making the state’s $500 million LIHTC expansion permanent. 

Top news stories:

EDITORIAL: Prop. 1 passed—barely. Now the real work to fix California’s mental health crisis begins.
San Francisco Chronicle
After more than two weeks of suspense, Proposition 1, Gov. Gavin Newsom’s marquee ballot measure to overhaul California’s behavioral health system, appears to have barely passed muster with voters. But it was hardly the overwhelming bipartisan victory the governor had been hoping for. The message to elected officials, and Newsom in particular, is clear: Voters are increasingly skeptical about pouring billions of dollars into homelessness and behavioral health programs that don’t seem to measurably improve street conditions. Prop. 1 is a crucial opportunity for the state to prove that it can deliver results.

California’s home insurer of last resort sees enrollment surge, raising concerns over its finances
Los Angeles Times
With home insurers scaling back coverage in the state, enrollment is surging in California’s backstop insurance plan—as is the plan’s risk of sustaining losses that it can’t cover. Victoria Roach, president of the FAIR Plan Assn., told lawmakers this week that property owners even in areas with low wildfire risk were finding it difficult to keep their homes insured as companies increased rates, limit coverage or left areas susceptible to natural disasters amid climate change. That has prompted thousands of Californians to purchase coverage through the state insurer as a last resort. The FAIR plan has about 375,000 policyholders, with risk exposure of $311 billion as of December 2023—up from $50 billion in 2018. “We’re one of the largest writers in the state right now in terms of new business coming in,” Roach said. “As those numbers climb, our financial stability comes more into question.”

Fresh batch of YIMBY housing bills clash with coastal protections (again)
CalMatters
Last year, state lawmakers broke from tradition by not including an exception for the California coast in a major housing law—SB 423 (Wiener). The bill passed over the opposition of the California Coastal Commission, the voter-created state agency tasked since 1976 with scrutinizing anything that gets built anywhere along California’s 840-mile coast, a zone that runs inland from the high tide line into urban areas that are 1,000 feet at their narrowest and five miles at its thickest. “Once you start exempting classes of development from the Coastal Act, there will be no shutting that barn door,” said Sarah Christie, the commission’s legislative director. Sure enough, a small herd of bills now trotting through the Legislature would further erode the commission’s long-guarded authority in the interest of spurring more housing on some of California’s most exclusive, valuable and tightly regulated real estate.

The movement for tenant protections is growing in the Bay Area—but one city is feeling the backlash
San Jose Mercury News
The Concord City Council joined many cities across the Bay Area by approving a tenant protections ordinance last month that increased “just cause” eviction protections to most of the city’s tenants and established rent stabilization for roughly half its rental stock. The effort to update the city’s rental policies has been underway since 2016, including seven marathon meetings and dozens of hours of public comment since January 2023. Still, homeowners, landlords and real estate agents are opposed to the final result—and a referendum petition is now circulating to put the question before voters on the November ballot. “I just did not believe that the council was doing the right thing,” says Jo Sciarroni, the real estate broker and property manager who filed the petition: “(Tenant organizers) may have won the battle, but the war is not over.” The law has now been suspended while Sciarroni and other residents work to collect 7,204 signatures within 30 days.