Why Housing Unaffordability Is Everyone’s Problem

GlobeSt.com
Author: Carrie Rossenfeld

ORANGE, CA—In Orange County, it’s estimated that 80% of the nursing workforce is commuting from outside the county because they can’t afford to live there, a problem that exacerbates traffic, transportation and quality-of-life issues, Heather Stratman, CEO of the Association of California Cities—Orange County, tells GlobeSt.com. Stratman says the lack of affordable housing in the region is a far-reaching issue that truly does affect everyone in the county.

The ACC-OC’s mission is to be the authoritative regional voice for public-policy issues, with a focus on education that empowers, policy that is collaborative and advocacy that is service oriented. We sat down with Stratman to chat about the affordable-housing crisis, its impact on the region and what can be done about it.

GlobeSt.com: Affordable housing in California is a major issue, which touches a variety of policy areas including the state’s economic growth, wages, and employment among others. Can you elaborate on a few of these challenges?

Stratman: Here in Orange County, I think we just have this amazing county. We have 34 cities, no one city really dominates here. Our focus at ACC-OC is on regional issues, and there’s not a city in Orange County where affordability of housing isn’t a major issue. When I think of the county today, I think how do we keep the county healthy: the economicsfinancials and keeping people close to home without long commutes. Housing is important in the county. And we don’t just need one type of housing stock—it’s not just single-family homes with backyards. That’s one type of home that’s attractive, but we’re also looking at rental units; multifamilyhousing is even more important as our seniors are aging because we need senior housing and infill developments where it’s possible to actually build them. The general public has misconceptions from the development of these residences about traffic and congestion, and don’t really want those people moving here. It’s about getting past those sentiments and keeping people healthy.

We need some level of stock so our nurses, teachers and public-safety people can live here. This is a huge challenge because of NIMBYism. So many residents work off anecdotal stories based on fear, and if we don’t get past some of that, the health of the county deteriorates. Students are graduating from top-notch universities here, but they can’t afford to work or live here. I recently read that the average income required to buy a single-family home here is $157,000, and most people think that’s really high, but if that’s your average, our wages aren’t keeping up at all. This is a business discussion we need to start to have.

GlobeSt.com: A recent figure provided from the California Housing Partnership Association indicates there is an over one million affordable-housing-unit shortfall in the state. Can you speak to what that number translates into from a policy perspective?

Stratman: There are several issues here. First, particularly for cities, is the fact that in 2012-2013, Governor Brown dissolved RDAs. People were getting a piece of the property-tax increment that went to RDAs, and developers used that for affordable housing, but we lost that incentive tool. We have several cities that have designated by-right zones, yet developers cannot build in those cities. Some features of by-right are attractive, but if a developer can’t make it work and stay in black and the city can’t incentivize, they’re immediately in the negative. I’m not criticizing the RDA repeal, but this was a major turning point in attracting developers who would develop affordable units.

Like it or not, California is a is state with lots of regulations, and it’s driving up housing prices. MS4 storm-water permits, for example, are required for discharges from an MS4 serving a population of 100,000 or more.  Developers have to provide a system to capture all storm water on site, and the costs are passed on to the homeowners: $50,000 and $70,000 here and there adds up. If you piece it all together, prices have gone through the roof. From a developer’s standpoint—and we work with a lot of developers, both affordable and market-based—we hear from them time and again that when they want to move forward with a project in any city, there’s an 18-to-24-month time frame, and there is no certainty. CEQA and the city council can delay the process, which drives costs up, adding to the lack of affordability.

GlobeSt.com: There is a misconception that affordable housing is simply a low-income-earner concern. The reality is that the middle class are affected as well. Can you touch on that point?

Stratman: In Orange County, it’s estimated that 80% of our nursing workforce is commuting from outside the county because they can’t afford to live there, and nurses make fairly decent money in this county. That should tell us something about the lack of affordability. Driving up costs impinges on keeping our workforce local, and it creates quality-of-life and transportation problems, traffic problems and problems with workers not being with their family. Orange County has a healthy economic sector; we have lots of jobs, but we’re not building houses that allow people to live here. On average, the homes we’re building cost well over $1 million at this point.

GlobeSt.com: One of the ACC-OC’s areas of focus relative to affordable housing is the issue of homelessness, and the Association-backed approach to a “Housing First” solution. Can you explain that model?

Stratman: In early 2016, we participated in a countywide study led by UCI in partnership with United Way and Jamboree. We participated through the city lens, and the study took us about a year to complete. We concluded that in fiscal year 2015-2015, the cost to support homelessness in the county was $300 million, and this was for a Band-Aid on a problem that’s only continued to grow. The key recommendation from the study is that we have to have a housing-first approach. There are nearly 20,000 homeless people on the street here, and there is a huge sector at risk of falling into homelessness because of lack of affordability. There are multiple families living in a two-bedroom apartment just to pay rent. This is not a healthy environment. No matter what the issues of homelessness—mental illness, substance abuse, etc.—we need shelters and units to get them off the streets and services to help people at the sites so they don’t fall back into homelessness. Cities can utilize funds in a more effective manner.

A statewide bill that’s sitting on the governor’s desk, AB346, would allow cities with stranded assets to use leftover funds for rapid rehousing, permanent shelters and affordable housing. It creates flexibility; they can pool their dollars and build something to get a much bigger bang for their buck. We believe in collaboration and regionalization when it works, and it makes sense to streamline and create cost efficiencies to get things done.

GlobeSt.com: Real estate developers are an integral part of closing the affordable housing gap. How can the developers have more impact in this regard? And as a follow-up, are state regulations on new-housing developments causing developers problems?

Stratman:  They’re not causing problems, but they’re raising the costs to build, which is not good for people who are trying to buy. We work closely with National CORE, an affordable-housing developer, through which we have been able to build affordable units in Yorba Linda. Most people would say that’s almost impossible; this is a true bedroom community of single-family homes and equestrians, but what this developer did was tale a zoning change to the ballot. It took two times for the city to pass the zoning change—it was a big-box retail area—but it eventually got the zoning change, and the developer and city worked well together. I give National CORE a solid A. It built the first 57 units and is going into Phase II. It’s establishing a bus route for this community to allow folks to get to work and school. The gem of a true public/private partnership is that it allows the developer to make it work and allows the community to have a voice at the ballot. I would love to see more of that take place. It’s an example from which we can learn.

GlobeSt.com: What other affordable housing initiatives is the ACC-OC advancing or advocating for at the local, state and federal level?

Stratman: In communities where it makes sense, by-right housing can work, but the state shouldn’t be mandating this on our cities; the cities should be left to decide what works for them and where. This has met with such resistance from residents who say it doesn’t preserve the character of their individual communities, but by incentivizing cities to do it where makes sense, it’s great for getting more units built in a more desirable time frame.

GlobeSt.com: What progress can Californians expect over the next five years on affordable housing?

Stratman: Our number-one challenge is a funding source. Right now, the federal budget would strip away a lot of funds going to developers and cities for affordable housing. We’re kind of at a standstill, and the problem is still evident for people right now. I’ve heard rumors that in his last year, Governor Brown is going to make a big legislative push to do something. We want to be engaged. This is a local issue, and my hope is that we will find some common ground with the state to allow cities to make decisions and provide the financial tools and incentives to encourage developers to come into the community. I’m hopeful, but right now, they’re not doing a very good job

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