SENATE RULES COMMITTEE
Office of Senate Floor Analyses
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SB 555
THIRD READING
Bill No: SB 555
Author: Wahab (D)
Amended: 5/22/23
Vote: 21
SENATE HOUSING COMMITTEE: 9-1, 4/24/23
AYES: Wiener, Blakespear, Caballero, Cortese, McGuire, Padilla, Skinner, Umberg, Wahab
NOES: Seyarto
NO VOTE RECORDED: Ochoa Bogh
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/18/23
AYES: Portantino, Ashby, Bradford, Wahab, Wiener
NOES: Jones, Seyarto
SUBJECT: Stable Affordable Housing Act of 2023
SOURCE: Alliance of Californians for Community Empowerment Housing Now! CA
Public Advocates
Tenants Together
DIGEST: This bill creates the Stable Affordable Housing Act of 2023 (Act) for the purposes of planning for the development of social housing through a mix of acquisition and new production.
Senate Floor Amendments of 5/22/23 change the title of the bill in alignment with the rest of the text.
ANALYSIS:
Existing law:
1) Specifies that a housing authority may engage in a number of activities in order to provide housing to low income individuals, including:
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a) Preparing, carrying out, acquiring, leasing and operating housing projects and developments for persons of low-income;
b) Providing for the construction, reconstruction, improvement, alteration, or repair of all or part of any housing project;
c) Providing leased housing to persons of low-income; and d) Offering counseling, referral, and advisory services to persons and families of low or moderate income in connection with the purchase, rental, occupancy, maintenance, or repair of housing.
2) Requires each city and county to prepare, adopt, and administer a general plan for their jurisdiction, which must include a housing element, to shape the future growth of its community.
3) Specifies that each community’s fair share of housing be determined through the regional housing needs allocation (RHNA) process, which involves three main stages: (a) the Department of Finance (DOF) and the Department of Housing and Community Development (HCD) develop regional housing needs estimates at four income levels: very low-income (VLI), low-income (LI), moderate-income (Mod), and above moderate-income; (b) councils of government (COGs) use these estimates to allocate housing within each region (HCD is to make the determinations where a COG does not exist); and (c) cities and counties plan for accommodating these allocations in their housing elements.
4) Establishes HCD oversight of the housing element process, including the following:
a) Local governments must submit a draft of their housing element to HCD for review;
b) HCD must review the draft housing element, and determine whether it substantially complies with housing element law, in addition to making other findings;
c) Local governments must incorporate HCD feedback into their housing element; and
d) HCD must review any action or failure to act by local governments that it deems to be inconsistent with an adopted housing element. HCD must notify any local government, and at its discretion the office of the Attorney General, if it finds that the jurisdiction has violated state law. 5) Requires each city and county to submit an Annual Progress Report (APR) to the Governor’s Office of Planning and Research (OPR) and HCD by April 1 of each year, including the following:
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a) The report must evaluate the general plan’s implementation, including the implementation of their housing element, and provide specified quantitative outcomes, such as number of applications for housing projects received and housing units approved;
b) Authorizes a court to issue a judgement to compel compliance should a city or county fail to submit their APR within 60 days of the statutory deadline; and
c) Requires HCD to post all city and county APRs on their website within a reasonable time after receipt.
This bill:
1) Defines “social housing” as:
a) Housing units owned by a public agency, a limited-equity housing cooperative, a local authority, or a mission-driven nonprofit entity. b) Permanently deed-restricted units affordable to ELI, VLI, LI, and Mod- income households.
c) Full protection for residents against termination without just cause or for any discriminatory, retaliatory, or other arbitrary reason, and due process prior to being subject to eviction procedures.
d) Units protected for the duration of their useful life, and the land associated with the housing units is protected permanently, from being sold or transferred to any private person or for-profit entity or a public-private partnership.
e) The right for residents to participate directly and meaningfully in decision making affecting the operation and management of the housing units in which they reside.
f) Newly constructed units of social housing and market units or other housing units preserved or rehabilitated as social housing.
2) Sets a 10-year goal of creating 1.2 million units of social housing through a mix of acquisition and new production.
3) Sets a five-year goal of creating 600,000 units of social housing through a mix of acquisition and new production, of which no less than 200,000 units that are affordable to ELI and VLI households.
4) Requires HCD, no later than January 1, 2025, to develop, adopt, and submit to the legislature a Social Housing Plan for achieving the social housing unit goals set forth in the Act, and shall include all of the following:
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a) An analysis of:
i) Available funding, public lands, and other resources and opportunities; ii) Capacity and capacity building needs of public agencies and mission- driven nonprofits;
iii) Constraints and obstacles;
iv) Range of existing social housing models; and
v) Job creation and local economic benefits of usually a locally based, union-represented workforce for construction and maintenance of social housing.
b) A plan for how to:
i) Utilize funding, public lands, and other resources and opportunities to achieve the goals, in collaboration with public agencies and mission- driven nonprofits; and
ii) Remove constraints and obstacles to achieving the goals, including constraints on the use of public land and public funding that do not require legislative action.
c) Recommendations for how to:
i) Make additional resources available, including potential revenue sources for a social housing fund.
ii) Remove constraints and obstacles to the goals.
iii) Create new housing development and property management capacity at the state level, including a Social Housing Authority.
d) A schedule of specific implementing actions and programs to achieve the goals, as defined.
5) Requires HCD to submit an annual report to the Governor and the Legislature, beginning January 1, 2026, on the state’s progress toward achieving the goals of the Act, the implementation status and outcomes of all programs and actions, and recommendations for executive and legislative action.
Background
Social housing is simply publicly-subsidized housing, but within a specific framework, most commonly used outside of the United States. All definitions of social housing distinguish it in various ways from privately-owned, for-profit housing provided through market mechanisms. The Assembly Select Committee on Social Housing held an informational hearing on October 20, 2021 and Rob Weiner from the California Coalition for Rural Housing shared the Organization for Economic Cooperation and Development (OECD) definition of social housing as: “the stock of residential rental accommodations provided at sub-market prices SB 555
and allocated according to specific rules rather than according to market mechanisms.”1
Comments
1) Planning for housing and the RHNA process. California, along with the rest of the country, generally relies on the private sector to develop its affordable housing stock. However, cities and counties are required to plan for a certain amount of housing development across various income categories. This happens through “general plans” for future land use development that each city and county’s legislative body adopts. Every general plan must include a “housing element” that details existing housing conditions within the jurisdiction, the need for new housing at various household income levels, and the strategy that the jurisdiction will use to address that need. The need for new housing is determined through the RHNA process, which involves three main stages:
a) DOF and HCD develop regional housing needs estimates at four income levels: VLI, LI, Mod, and above moderate-income;
b) COGs use these estimates to allocate housing needs within each region to cities and counties (HCD makes the determinations where a COG does not exist); and
c) Cities and counties plan for accommodating these allocations in their housing elements
Local governments must adopt a new housing element every eight years (though some rural jurisdictions must do so every five). These adopted housing elements must be approved by HCD, which must find them in “substantial compliance” with the law. Every eight years a new RHNA cycle begins and the process restarts. Currently the state is in the 6th RHNA cycle and housing element updates in this cycle will also need to include information on steps the local government is taking to affirmatively further fair housing objectives.
Each year, the local government’s planning agency must submit an APR to HCD and OPR that documents implementation of its housing element and progress towards meetings its RHNA target. The APR must include information about all proposed and approved development projects, a list of rezoned sites to accommodate housing for each income level, and information on density bonus applications and approvals, among other provisions. The
1 California Assembly Select Committee on Social Housing. October 20, 2021. https://www.assembly.ca.gov/media/assembly-select-committee-social-housing-20211020/video
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APRs provide statewide and local data across California’s 539 cities and counties which allow for tracking the amount, type, location, and affordability of new housing development. In addition to providing completed residential construction data in the jurisdiction, APRs also include data on the number residential developments which are still in the initial permitting and entitlement phases. It should be noted, HCD and OPR are unable validate the accuracy of data submitted to them, as there is no comprehensive statewide parcel map for comparison; therefore the quality of data submitted through APRs are an important aspect to understanding how cities and counties are meeting RHNA. 2) Planning vs. building affordable housing. While the RHNA process requires local governments to plan to address housing need in their jurisdiction, it does not mean housing will actually get built. A number of factors affect housing development and, in order to build affordable units for low-income and very low-income households, government subsidies are generally needed to make the project economically viable. According to the California Housing Partnership Corporation (CHPC), while California has more than doubled its production of deed-restricted affordable units in the prior three years, in 2021 the available public funding for affordable housing provided just 16% of the units that would be needed to meet the state’s targets for low-income homes.2 The lack of affordable housing disproportionately impacts California’s most economically-vulnerable households. According to data from the 2019 American Communities Survey, over half of the state’s renter households are considered rent-burdened, which is defined as paying more than 30% of their income towards housing costs. For low-income renter households in the state the share of cost-burdened families is even higher at 80%. To address the shortage of affordable housing options, California must plan for more than 2.5 million homes over the next eight years, and no less than one million of those homes must meet the needs of lower-income households.3
3) Sorting out the Differences. There are discrepancies between this bill and other housing bills in the legislature this year.
There is a strong argument that social housing should be mixed income and serve a wide range of income levels. In Vienna, Austria—one of the best examples of a long-standing social housing system—social housing provides
2 California Housing Partnership. “California Affordable Housing Needs Report”. (March 2022) https://1p08d91kd0c03rlxhmhtydpr-wpengine.netdna-ssl.com/wp-content/uploads/2022/03/California-Affordable- Housing-Needs-Report-2022.pdf
3 California Statewide Housing Plan. https://statewide-housing-plan-cahcd.hub.arcgis.com/
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affordable homes to a large percentage of the population, a fundamental difference from means-tested assistance in the US (see comment 2).
Related/Prior Legislation
SB 584 (Limon, 2023) requires HCD to collect an unspecified laborforce housing assessment from owners and transient occupancy businesses in residential property that are rented for specified transient occupancy and allocate the funds for the construction, acquisition and rehabilitation of affordable housing and renter protection programs, as specified. The bill is currently in the Senate Committee on Appropriations.
AB 309 (Lee, 2023) enacts the Social Housing Act, which creates the California Housing Authority for the purpose of developing mixed-income social housing, under the direction of the California Housing Authority. The bill is currently in the Assembly Committee on Appropriations.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee:
HCD estimates annual costs of approximately $1.3 million and 6.0 PY of staff through FY 2024-25 to develop, adopt, and submit the Social Housing Plan.
Specific duties include: significant outreach and coordination with specified stakeholders; conducting research and analysis on sites, funding, and feasibility efforts; drafting recommendations; and developing and preparing the initial plan. Additional unknown annual staffing costs, likely in the hundreds of thousands annually, would be required to monitor progress towards achieving the specified goals, assess implementation status and outcomes of all programs and actions, and develop recommendations in the annual report. (General Fund)
Unknown significant ongoing State Operations cost pressures to implement the recommendations specified in the Social Housing Plan. The magnitude of future state staffing needs would depend upon the scope and scale of the plan and ongoing recommendations. Any future staffing needs would be evaluated as part of the budget process. (General Fund)
Unknown major cost pressures to provide additional capital resources to achieve the five- and 10-year social housing acquisition and production goals specified in the bill. (potentially General Fund, bond funds, local, and/or regional funds)
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SUPPORT: (Verified 5/18/23)
Alliance of Californians for Community Empowerment (co-source) Housing Now! CA (co-source)
Public Advocates (co-source)
Tenants Together (co-source)
Affordable Housing Network of Santa Clara County
AFSCME California
Aids Healthcare Foundation
Alliance for Community Transit - Los Angeles
American Federation of State, County and Municipal Employees, AFL-CIO Bend the Arc: Jewish Action, Southern California
Berkeley Tenants Union
Beverly-Vermont Community Land Trust
California Community Land Trust Network
California Democratic Party Renters Council
California Federation of Teachers
California Green New Deal Coalition
California Labor Federation, AFL-CIO
Canal Alliance
CAUSE
CEJA Action
Central Valley Empowerment Alliance
Chispa, a Project of Tides Advocacy
City of Santa Monica
Community Coalition
Community Power Collective
Congregations Organized for Prophetic Engagement
Council of California
East Bay Alliance for a Sustainable Economy
Evolve California
Faith in The Valley
Glad Tidings Community Development
Healing Justice
Housing Land Trust of the North Bay
Human Impact Partners
LA Forward
Latino Health Access
Legal Aid of Sonoma County
Long Beach Residents Empowered
Los Angeles Neighborhood Land Trust
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Mi Familia Vota
National Association of Social Workers, California Chapter National Housing Law Project
Natural Resources Defense Council
Oakland Tenants Union
Pasadena Tenant Union
PolicyLink
Power California
PowerCA Action
Public Counsel
Sacramento Regional Coalition to End Homelessness
San Luis Obispo County Democratic Party
Santa Clara Valley Water District
SEIU California
SF Council of Community Housing Organizations
Sonoma Valley Housing Group
Starting Over Inc.
State Building & Construction Trades Council of California Strategic Actions for A Just Economy
Thai Community Development Center
The Children's Partnership
Trust South LA
OPPOSITION: (Verified 5/18/23)
California Association of Realtors
ARGUMENTS IN SUPPORT: According to the author, “Stable affordable housing takes the profit motive out of a basic human need. It provides publicly-, community- or resident-owned housing that is permanently affordable to residents who cannot afford market rents. Stable affordable housing is sustainable in the long-term, prevents homelessness, allows families to grow their savings, and stabilizes communities. Today, more than one-quarter of California renters are severely rent burdened, spending over one-half of their income on rent. Rent burden hits lower-income residents hardest of all, and the unaffordability of rents is a major driver of homelessness. And middle-income residents are now the fastest- growing group of cost-burdened renters. SB 555 creates a ten-year plan to grow its nascent stable affordable housing sector to the scale needed. This bill would set 5- and 10-year goals for the creation of housing for the lowest income residents. SB 555 charges the Department of Housing and Community Development with developing a plan to achieve the state’s stable affordable housing goals, both SB 555
through acquisition and preservation of existing housing and production of new stable affordable housing. California can ensure that residents have secure housing they can afford, by creating a thoughtful plan to achieve permanently- affordable housing at scale.”
ARGUMENTS IN OPPOSITION: The California Association of Realtors is opposed, stating that the bill would put home ownership opportunities further out of reach for lower income communities by reducing naturally occurring affordable housing stock.
Prepared by: Mehgie Tabar / HOUSING / (916) 651-4124
5/23/23 13:28:23
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