From: Armando Sanchez
Sent: Friday, July 26, 2024 6:10:51 AM
To: Lisa Diaz Nash < [email protected]>; Rob Newsom <[email protected]>; Adam Loraine <[email protected]>; Richard Hedges <[email protected]>; Amourence Lee <[email protected]>; Alex Khojikian < [email protected]>; Rachel Horst <[email protected]> Subject: Countywide Article 34 Measure
Hello Mayor, Council Members and City Manager,
I am writing to request that the City of San Mateo support us in encouraging the San Mateo County Board of Supervisors to place a measure on the November ballot to allow local government agencies to develop, construct, and acquire affordable rental housing for low-income persons pursuant to Article 34 of the California Constitution. The Board of Supervisors directed the County Manager to reach out to cities and get their input on placing this measure on the Ballot.
Why this matters:
• Advantageous: HEART and government agencies have certain advantages with respect to property taxes and issuing bonds that make the acquisition and preservation of rental housing more feasible than it is for nonprofit organizations. Agencies like HEART and interested cities need to fill this housing gap.
•Effective: HEART's Board of Directors directed HEART to pursue funding and carry out a program to acquire and preserve 5- to 25-unit apartment buildings. HEART is about to complete its first acquisition, an 8-unit building in Redwood City. The per unit cost of this acquisition is $350,000, significantly less than the cost of building a new unit which currently costs over $1.1 million.
•Barrier: Article 34 makes it difficult for HEART and other government agencies to buy and preserve existing housing, or to create new affordable housing directly by requiring projects to be voted on by the residents of each community. We need a ballot measure to satisfy this constitutional provision so that we can undertake this work without having to take each project to a vote.
Please look at the attached fact sheet about Article 34. We hope you agree with us and tell the County Manager and the Board of Supervisors that the City of San Mateo supports placing the measure on the ballot.
Thank you,
Armando
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Armando F. Sanchez
Executive Director
Housing Endowment and Regional Trust of San Mateo County
Article 34 Fact Sheet
Article 34 is a segregationist stain in the California constitution passed in 1950 (Proposition 10).
It was literally supported by segregationists and it passed very narrowly (less than 2%). Article 34 "appealed to racist fears about integrating neighborhoods" and was meant to keep affordable housing and communities of color from being located within certain neighborhoods. And it has stymied affordable housing construction ever since.
Passing a ballot authorization is how we get past Article 34. This is just another tool in the toolbox when it comes to acquiring and creating more affordable housing opportunities in San Mateo County.
This allows us to:
• Acquire existing affordable homes in danger of converting into market-rate, and keep those homes permanently affordable.
• Acquire existing market rate homes, and convert them into affordable / middle income homes.
• Engage in land banking—acquiring old/vacant/blighted/underutilized properties for future redevelopment, renovation, or use. This will maximize land use. • Actually function as a public developer and build affordable housing directly. • Have actual local control. When local jurisdictions own land, they can dictate the entirety of its use: labor standards, environmental standards, proportion of affordable homes, and deeper levels of affordability of what is built. We control every dollar in revenue generated by that
Other jurisdictions that have passed Article 34 Authorizations:
• South San Francisco (passed by a margin of 20 points in 2022) • San Francisco (passed by a margin of 47 points in 2020) • Berkeley (passed by a margin of 52 points in 2022)
• Oakland (passed by a margin of 60 points in 2022)
• Los Angeles (passed by a margin of 40 points in 2022) • Emeryville
• Santa Clara County
• Sacramento County (passed by a margin of 20 points in 2022) Counterarguments and Rebuttals:
• This is an unnecessary measure.
• Recent lawsuits show why such a measure is necessary. • The state legislature has a variety of Article 34 exemptions that fit the county's needs.
• The state has legislatively passed a series of exemptions to Article 34. However, local jurisdictions still have their hands tied, and valuable attorney time is used to find ways to get around Article 34 within its specified exemptions. Millbrae's recent court case argued that ALL of the exemptions for Article 34 are unconstitutional, risking affordable housing construction and acquisition in the future statewide. Regardless, a blanket A34 authorization would free up much attorney time and get affordable housing built faster.
• This will take away funding from schools, cities, etc. because public property does not contribute to the property tax base.
• Schools, parks, all public facilities, and existing affordable housing do not contribute to property taxes. Does that mean we should no longer build any more parks and affordable housing? Of course not.
When our local jurisdictions build publicly owned mixed-income housing, we control every dollar in revenue that the property generates. That rent can be reinvested into our schools, parks, roads, infrastructure, or even in lowering the rents. This will add resiliency to our public budgets.
• This is a duplicative authorization that BAHFA is already pursuing in the 9 county bay area
• Polling clearly shows that the BAHFA bond measure and associated A34 authorization will be close and there is no guarantee it will pass. We should be safe and place this measure on the ballot instead of waiting for 2 more years and who knows how much further litigation from certain cities. • Local governments should not get into the business of property management, ownership, landlording, construction, etc.
• The United States is the outlier when it comes to publicly led development and ownership of housing.
• In Singapore, 80% of housing stock is publicly owned; In Vienna, 40% of housing is publicly owned; and in Hong Kong, 60% of housing is publicly owned. These countries and cities have largely avoided a housing crisis of our scale. Most countries in Europe and Asia have between 10-20% of their housing stock in public ownership, and is offered to a mix of incomes.
• In comparison, less than 1% of American housing stock is publicly owned.
Publicly led development of housing is becoming more mainstream in the U.S.
• CADA in Sacramento is a JPA between the State of CA and City of Sacramento and has been building hundreds of homes.
• Montgomery County Maryland's Housing Opportunities Commission has created a $100 million revolving loan fund and has built/financed thousands of homes. This approach has allowed them to guarantee 30% of all new housing to be affordable (compared to the 15% required of private developers).
• Our local government is experienced in managing and completing large multi-million dollar capital projects. Housing would not be any different. • As is the case around the world, the actual property management would not be handled by city staff, it would be contracted out to non-profit property managers. • Is there capacity to run a countywide campaign? Political concerns, etc? • South San Francisco passed this measure easily by a margin of 20 points. There was minimal campaigning for the measure.
• IMPORTANT: The measure needs to ask a simple question: "Should the County of San Mateo be authorized to construct or acquire low-rent housing for veterans, seniors, families, and workers?" This question should be modeled off of what has passed in South San Francisco. When asked a simple question, the measure should be naturally popular and not require much additional campaigning for its passage.