Newsom Made Big Housing Promises — Here’s How He Plans to Deliver
On the campaign trail, Gavin Newsom promised to deliver 3.5 million more homes over the next seven years to ease the housing shortage in California. That’s an ambitious production plan, considering it’s nearly quadruple what our state has been able to produce in previous years. With an ambitious goal, Newsom set forth an ambitious budget to match.
It’s been a little less than a month since Gavin Newsom was sworn in as the new Governor of California. One of his first major actions in office was outlining his budget proposals. Although the proposals still need to be confirmed through the Legislature, they come to a total of $209.1 billion, which is roughly $6–8 billion larger than last year’s budget under Jerry Brown.
$1.7 billion of that budget is allocated for housing. Governor Newsom has wasted no time in getting to work on housing through both budget allocations and work with the Legislature. Read on to learn more about what we can expect for the future of housing with Governor Newsom at the helm.
Funding
One of the many challenges our state faces in developing enough housing is funding. Governor Newsom wants to leverage the resources of private industry to help bridge the funding gap — and he thinks Silicon Valley tech companies should lead the way. His proposal suggests developing a low-interest loan fund available to developers who want to construct workforce housing. This workforce housing would serve middle-income Californians with a household income around $85,000. The loans would be financed in part by the state, who would contribute $500 million to the fund, with some of Silicon Valley’s largest tech firms chipping in the rest. Around the same time, the Chan Zuckerberg Initiative along with several other funding partners including Facebook and Genentech announced a $540m fund to support housing affordability solutions in the Bay Area. So far, the fund has only raised about half that. None of the Bay Area tech companies have matched Microsoft’s $500m commitment it made to affordable housing in the Seattle area.
Newsom isn’t going to wait for private donors to take care of the issue on their own. His budget provides for $750 million in one-time funding for local governments to move quickly on housing production. A third of the fund would help cities to expedite their planning and environmental studies to approve housing more quickly. The rest of the funding will be provided to cities that meet their production goals as a bonus.
Accountability
Newsom’s plan also suggests that we need stronger incentives to encourage local municipalities to build their fair share of housing. Our housing shortage is a regional and statewide issue that will require every corner of our state to build more housing; unfortunately, many municipalities have been falling short.
Some areas habitually fall short of meeting their RHNA allocation (the measure the state uses to quantify the need for housing in local jurisdictions). Under Newsom’s plan, the cities that fail to build enough housing will have revenues from the gas tax withheld. He said in his announcement speech that “to me, transportation is housing and housing is transportation”, signaling the close tie between housing density and transportation capacity. It seems that Newsom wants to rethink how we assign RHNA housing goals while also giving more teeth to them. We’ll have to wait and see if any legislation comes forward to follow through on the controversial plan.
The state is also holding cities accountable by taking legal action. Governor Newsom announced that he would be mounting a lawsuit against the City of Huntington Beach for refusing to develop affordable housing. This type of legal action against local municipalities only recently became allowed (thanks to AB 72), making this a first-of-its-kind lawsuit. Huntington Beach is ironically the same city that is suing the state, alleging SB 35 — which limits cities’ ability to hinder the permitting of new housing — is unconstitutional.
We’re excited to see that Newsom is expressing clear urgency and prioritization around building more housing. In his speech announcing his budget priorities for housing, Newsom emphasized the importance of the state no longer allowing housing production to languish under local control, elevating the issue to a statewide priority. “In our home, no one should live in constant fear of eviction or spend their whole paycheck to keep a roof overhead. We will launch a Marshall Plan for affordable housing and lift up the fight against homelessness from a local matter to a statewide mission,” Newsom said.
We look forward to bold leadership from the state and the Governor that pushes local municipalities to rise to the occasion.
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