Senate Standing Committee on Housing

The Joint Hearing of the Senate Committee on Housing and the Assembly Committee on Housing and Community Development will begin in 60 seconds.

That's very official.

Yes.

Okay, the Joint Hearing of the Senate Committee on Housing and the Assembly Committee on Housing Development will come to order. Good afternoon, everyone. As we continue to take some precautions to manage the ongoing Covid-19 risks, the Senate and the Assembly would like to welcome the public and has provided access to both in person and teleconference participation for public comment.

For individuals wishing to provide public comment via the teleconference service, the participant toll free number and access code is posted on our Senate Committee website and it'll also be displayed on the screen. That number is 877-226-8163 the access code is 439-8318 we'll maintain decorum during the hearing as it's customary, and any individual who's disruptive may be removed from the remote meeting service or have their connection muted.

We also have representatives today from the State of California, research institutes, local communities, and people who build housing who are participating remotely. For our remote participants, please mute your phones or computers. This will greatly aid in eliminating any Acoustic feedback. I ask that each time you wish to be recognized that you use the raise your hand feature in the program. Each time you're recognized to speak, a pop up window will appear asking if you would like to unmute. Please select unmute before you begin speaking.

Our it personnel will put you back on mute when you are done. Once you're recognized to speak, please make sure you can be seen on the screen and state your name. And then at that point, you're ready to address the Committee for Today's hearing. We will be hearing all of the panels of witnesses on the agenda before we take public comment. Once we have heard all of those witnesses, we'll have a public comment period.

For those who wish to comment on the topics on today's agenda and for remote public testimony, we will have a period of 20 minutes for that public comment. So California, as we know, is in the midst of a crippling housing crisis and its impacts are felt across the entire state. We know that the biggest driver of this crisis is that we simply don't have enough homes available or affordable for people who need them across the income spectrum.

In fact, our Department of Housing and Community Development estimates that California must plan for the development of more than 2.5 million homes over the next eight years, with a million of those homes being affordable for lower income households over the last half century.

California has made it impossible to have enough housing for everyone who needs it, with a combination of local permitting obstacles, zoning barriers, opposition to change in neighborhoods, a history of segregation and exclusion, increased construction costs, and other factors have combined to create this debilitating shortage. We also know that our housing crisis and lack of affordable housing is directly related to the high rate of homelessness in California.

California is 12% of the nation's population, yet we are 30% of the nation's unhoused population and one half of the nation's unsheltered homeless population. That's not random. It's not because we have more mental health or addiction problems here than elsewhere. Those problems are everywhere. It's because housing is in short supply and exorbitantly expensive here.

In recent years, the Legislature and the Governor, both Governor Brown and now Governor Newsom, we have worked collaboratively and thoughtfully and holistically to address these challenges and to spur and facilitate housing development at all income levels. We have passed a series of aggressive laws to streamline housing approvals, to reform zoning, to enhance existing laws, such as our AdU law, housing Accountability act, and so forth. We have invested billions upon billions of dollars in subsidized affordable housing, far more than we had for many, many years.

And we have provided substantial resources for local planning and housing infrastructure and provided resources to HCD, as well as increased enforcement powers to HCD and to the Department of Justice. We're already seeing some of the results. It's not as quickly as we want, but it is gradually moving in the right direction. ADU construction has grown exponentially, from a handful of units per year to over 10,000 per year.

Affordable housing development approached 20,000 units last year, which is double prior annual totals, according to the San Francisco Planning Department. In San Francisco alone, since 2018, Senate Bill 35, a law that I authored, has expedited nearly 3000 new homes, overwhelmingly affordable to Low income residents. The purpose of today's hearing is to take a look back at the laws we passed, how they're being implemented, what's working, what's not working, what we could tweak or change significantly to make it work better.

And this is part of our effort. I know in the Senate we are very focused this year on what we call protecting our progress, looking at the work we've done in the budget and the policy arena in recent years, and really making sure that it's meeting our needs and that we are protecting the progress and building on the progress that we've made. So I look forward to today's hearing.

I now want to turn it over to the amazing chair of the Assembly Housing and Community Development Committee, Assembly Member Wix.

Thank you, chair Wiener. I also want to just thank you for your tireless work in this space since the moment you've been here. In all the work that you did in San Francisco prior, you've been a true leader in this space. And I think Senator Wiener nicely summarized the issues and the goals of today's hearing. I just want to add to the sense of urgency we have. One out of 150 Californians will be homeless at some point this year. One out of 150.

80% of Low income renters have to sacrifice essential needs like food or medicine just to pay the rent. And only 18% of Californians can afford to buy a home. And the reason for these problems actually is pretty plain and simple. It's a lack of housing. We know we need to provide services to our unhoused neighbors. We know we need to protect tenants from losing their homes, and we know we need to make homeownership more available to folks.

But ultimately, the solution for all of those is millions of more homes. We have a desperate need. I chaired a joint oversight hearing last week. We had Secretary golly and Secretary Castromirez and many others talking about the overlay between homelessness and mental health and our challenges that we have to address this issue. And what came up time and time and time again in that hearing is the need for ongoing funding for affordable housing and the need to build more housing.

We have to build more housing in this state. We are millions of homes shy of where we need to be. We have to make it easier to build that housing. And I will say we are where we are right now because of conscientious policy choices we have made in decades prior that have put us where we are.

And it's only been really the last seven years that the Legislature has really taken this issue head on and has really focused on doing the necessary streamlining that we know that we need to do. As chair Wiener said, we've passed hundreds of bills in streamlining efforts. We've put in billions of dollars to address this crisis. So I'm looking forward to the conversation today to have a better understanding of what has been working.

Where do we need to continue to have change, what else do we need to continue to invest in and hear from the cities specifically, they're on the front lines of this, around what is working from their perspective. Also hear from the developers who are trying to build the necessary housing that we have in our communities around their perspective. And one of the things I really appreciate about the housing issue is it's not a partisan issue.

Democrats and Republicans, I think, can come together on this issue to figure out the right solutions. It's a sort of three dimensional chess, often the politics around it. But I'm excited about the collaboration that we have from all different stakeholders in this space because I know that we all share the same goal, and that is to ensure that future generations have the ability to afford homes and to live in this community and to attain the American dream. And I know that we all believe in that.

And from my perspective, that means building more housing that we need. So with that, I will turn it back to chair Wiener.

Thank you, Madam Chair. I do want to just stress what chair Wicks just said, that this has been a bipartisan and bicameral effort over the last number of years, which is refreshing given some of the politics that pervade this country these days. So before we start, if any of our colleagues and the Senators or some of my Members want to make any brief opening remarks, you're welcome to do so. Or wait until we have the panels. Okay.

Seeing none, we'll move forward and we will alternate facilitating the panels. The first panel is an overview of recent policy changes and affordable housing investments. The goal of this panel is to better understand the enormous amount of work that we have done in recent years to address the housing crisis, to acknowledge wins, whether it's around adus or housing streamlining, with SB 35 or other streamlining laws or AB 2011 and other opportunities and ways we can improve.

And so today we're joined by an all star cast, Ben Metcalf, the managing Director at the UC Berkeley Turner Center for Housing Innovation Lourdes Morales, the principal fiscal and policy analyst at our Legislative Analyst Office and then Megan Kirkabee, the Deputy Director for housing policy development at the California Department of Housing and Community Development. So with that, we will turn it over to our first panel, starting with Mr. Metcalf.

Wonderful. Good afternoon. Thank you. Chair Wiener, chair Wicks, for your amazing leadership over the last several years, and particularly for pulling together. This conversation allows us to take stock a little bit of where we are in California after several years of significant activity. Again, my name is Ben Metcalf. I'm the managing Director at UC Berkeley Turner Center for Housing Innovation. We are a center committed to rigorous research that helps advance the dialogue and move the needle from a policy conversation here in California and nationally.

And I'm going to set the stage today for what's going to follow. Give you a few of my thoughts and highlights in terms of where we've made success and where we've fallen short. Let me start by echoing what we heard at the top from Senator Wiener. First of all, just the sheer volume of laws that have passed over the last six years is really staggering.

By any objective measure, some 100 laws have been signed by Governor Brown or Governor Newsom, making some 275 changes to code sections. This is substantially more than we've seen in years past. It's certainly more than legislating that we see in other states around the nation. And although the attention often goes to the Legislature, the Executive branch, the administrative agencies have also been equally busy with hundreds of new guidelines, NOFA's regulations, as well as significant increases in headcount in all the state housing agencies.

So what does all that add up to? Well, I'm not sure entirely, but here are a few thoughts. One certainly, as was mentioned at the top, is that we have meaningfully increased our investment directly into building new affordable housing. So sort of maybe think of this as sort of stopping the hemorrhaging or helping the most vulnerable, even if we're not addressing sort of the system root causes there.

We have been successful, certainly just looking over the last 10 years, we've increased the share, the number of new construction affordable housing units that we've built in California to approximately 20,000 units per year, even as costs have grown significantly. Consistently outpacing inflation and project delays have hampered our ability to move this forward quickly. We've delivered this through a range of different housing sources. A small list here, but certainly no place like home, affordable housing and sustainable communities.

The permanent local housing allocation recipe two, our core MHP program, Cerner Cal Home, as well as investments like Homekey. All of these taken together have really supercharged our ability to build affordable housing. They've also allowed us to fully take advantage of all of the federal Low income housing tax credits.

It's great to sort of be able to say today that California does not leave any federal housing tax credits on the table, as was the case for much of the question of just building supply or adding supply more broadly, California is a funny animal. We are very much a belt and suspenders kind of place in the sense that we both have been working and are working to push our cities to more aggressively and comprehensively plan.

And as I'll talk about, we've also been more aggressive in terms of giving prescriptive requirements to those same cities as to specific things that they should change in their local policies. Notable accomplishments here obviously are the much higher arena goals that have been housing targets that have been handed down to cities in California in the 6th cycle. Much stricter requirements on what cities are able to count as a valid site. Fewer cemeteries or church parking lots, more credible sites now are going into the mix.

Very significant fair housing overlay that's also affecting who gets the RHNA allocations and which sites are identified in ways that are really a big win in terms of opportunities for building in places that have the greatest access to opportunity, that help address some of those historic patterns of segregation. And of course, we've really doubled down on enforcement in a number of different ways to really make sure that these goals, these plans are really meaningfully being held. Cities are being merely held to account for doing them.

But again, it's a both and here. So the state has also handed down very prescriptive zoning requirements to really force the hand of cities to accept certain kinds of housing, things that get built more frequently in their communities. And here, I think the two where we really see two sort of areas where we really have seen the most progress really are in the smallest on the one hand, the smallest housing, on the other hand, our sort of largest affordable housing on the other.

We have seen our share of adus grow dramatically now representing about a fifth of all building permits issued in California, up from almost a rounding error again about a decade ago. We've made a number of improvements just to make that much easier, cheaper, faster, ministerially approved over the counter for homeowners. SB nine is really sort of too soon to tell, but I think we also have some promise here in terms of making them easier to access for homeownership.

And the state density bonus law is another great example of where the state has, through an override, allowed developers, particularly those who are building affordable housing, to be able to access greater density and to get access to concessions to local zoning to allow housing to happen. Anchoring those zoning requirements has been pretty wide ranging reforms across the board to help cities actually deliver on the plans that they have in place.

So whether that's strengthening of the Housing Accountability act to make it much more painful for cities when they decline to approve conforming projects, or streamlining reforms such as Senate Bill 35 and others that require cities to ministerially approve certain kinds of projects that conform to zoning, we are seeing broadly an ease for housing to typically move forward. All that sounds good. The problem is when you look at the numbers, you don't see what you might expect to see after that summary.

If you take as a starting 0.0 when a lot of this housing activity started. And you look at this chart here all the way to far right. In fact, permits issued declined from 2017 to 2018 to 2019 to 2020. They're actually up a little bit in 21 and 2022, but not significantly, not in a way that one could say, jeez, we've really supercharged the supply of new housing. So I think we are coming up short.

But I think it's important to say that it's also early, and I think it's important to spotlight places where we really are seeing progress. So one of these is Senate Bill 35, and specifically, I would say, affordable housing production in California. So Senate Bill 35 has really not delivered in its intent in terms of unlocking new market supply, but it really has become the primary vehicle of choice for folks building subsidized rental affordable housing.

It offers a much quicker throughput to get projects approved, and when complemented with state density bonus law, allows developers to build substantially larger projects than local zoning might otherwise allow. It also has become a very helpful vehicle for contending with some of the historic NIMBY challenges that have thwarted affordable housing, developers allowing projects to get built, and the kinds of communities which historically may have resisted them.

One point I'd make here is that part of the uptake and benefit has also been that state subsidy scoring systems reward projects that use this entitlement. Often local funding programs do as well because of the obvious benefits in terms of timing and cost. But that is also likely compounding some of our current over subscription problems.

Part of the challenge is we're building a lot of housing today that might have been built a year from now and increasing incredible demand on our very scarce affordable housing subsidy programs. The other end of the spectrum, where I would say we've really made tangible, quantifiable progress, is in the single family zoning flexibility area, particularly with the growth of accessory dwelling units. And I think there's a really helpful story, maybe a playbook, that we can think about following.

One point I would make is that AdU laws on the books go back a couple of decades, but really it was in 2016 that we saw our first major reform legislatively, followed by a series of sort of technical fixes and cleanup bills in the Adu space over the last five years. I think that is worth noting that that is, I think, often how our best sort of housing work happens is through diligence effort. It's also the case that adus require local ordinances.

They really obligate cities to step forward and come up with a workable plan at their local community as well. So what about everything else? So what about the huge middle of the housing stock, sort of in between the smallest on the one hand and the affordable housing on the other? Well, first of all, again, I would say time will tell. So the numbers are lagging.

And like anything we've taken years to get into this hole, we'll take years more to sort of see if this stuff pays fruit. I do think the technical and financial assistance the state has made available, on the one hand to cities to help build out their capacity, and on the other hand, obviously to developers to help them build the affordable housing has been critical, not nearly enough. I think both of these need redoubled investment from the state in the years to come.

I think cost issues is a huge x factor. It's an area that we've really not tackled over the last few years. But especially as we sort of step up to the edge of an economic downturn, it becomes even more apparent that this is a place where significant work is needed. Labors and material costs have gone up. Building code requirements, for all kinds of good reasons, become ever more stringent. Cities turn to impact fees increasingly to fix holes in their budgets. This is work that is untouched.

And lastly, clearly the state has to keep its foot on the gas. With the enforcement and accountability side, I think that's been a huge help, is just having the oversight that comes from the Attorney General's Office and from HCD's housing accountability unit. So if you squint, can you see sort of a path with what we've done to get us there in the future? Maybe.

I think one big leap of faith that you would have to take to sort of tell a really optimistic story here would be to look at the next cycle of the housing element. I hate to say that for those of you who are just coming out of this cycle, the next cycle will be upon us soon. And I think the 6th cycle was a big play. It really was successful, is successful in increasing residentially zoned land.

It really is successful in at least forcing localities to grapple with constraints to development, the things that are impeding those sites from being built upon. But I think we saw cities really struggle to deal with these very significant new requirements and we saw a lot of back and forth between the city, the state and advocates trying to sort through what the right path was to deliver on the ambition of these six cycle changes.

I do think that a future seven cycle in which we're able to introduce more of an evidence based approach to identifying whether the suite of policies that the city has in place are substantially or only moderately inhibiting housing development. Sort of a yardstick, if you will. Using real time data has to be part of the solution set for getting us to a place where that housing element cycle can really begin to deliver in an even more meaningful way than it has in this round.

And with that, I think, again, if you squint, you might see an optimistic path forward on making real progress to California's historic housing shortages.

Thank you very much, Mr. Metcalf. We'll do the three witnesses and then open it up to questions and comments from the two committees. Next we'll hear from Lourdes Morales.

Turning to the first page, federal, state, and local governments implement a variety of programs aimed at helping Californians, particularly low-income Californians, afford housing. Bonds and tax credits are the two main ways the state has funded these activities in the past. Voters have authorized various bonds through the years to support state housing programs. Most recently, in 2018, voters authorized a total of $6 billion in bonds for various housing-related programs. I'll discuss these in more detail later in my presentation.

Additionally, the state's Low-Income Housing Tax Credit Program provides tax credits to builders of affordable rental housing. The state has historically made about $100 million available annually for this purpose. However, the state's housing affordability crisis has become more acute in recent years, and as a result, the state has significantly increased its fiscal role in addressing housing affordability. The state has done this largely by expanding existing programs and expanding some new programs that help subsidize housing development, primarily using one-time and temporary funds.

I'll turn to speak in more detail about the base funding I first mentioned and then outlining the discretionary spending in recent years. So on page two, we provide an overview of one of the state's most recently authorized bonds. The table outlines the $4 billion provided from Proposition One, the Veterans and Affordable Housing Bond Act of 2018. Now it's allocated to various programs. $3 billion of this funding, aside from sort of the funding for the veterans home ownership, is allocated to programs administered by HCD and CalHFA.

Most of this funding is to the multifamily housing program. In all of this $3 billion CalHFA and HCD have allocated so far, $322,000,000. An additional 1.7 billion has been encumbered. This means that HCD and CaLHFA have 973,000,000 remaining in bond funding from Proposition One. The next release of funding is expected in the spring, and HCD anticipates exhausting all of the Proposition One funding by the end of the 2024 calendar year.

For completeness, I'll note the $1 billion for veterans home ownership that's administered by the Department of Veterans Affairs has about $636,000,000 in bond authority remaining, and the next release of that is scheduled for the fall. Turning to the third page, No Place Like Home provided $2 billion in bond authority specifically for permanent supportive housing for people who are in need of mental services and are experiencing or at risk of experiencing homelessness. This program is also administered by HCD.

All of this funding has been allocated as of August 2022, and we provide a snapshot of what was going on at that time. So, as you can see, the No Place Like Home dollars have funded a total of 247 projects. These projects anticipate creating nearly 8000 units supported by No Place Like Home dollars. Importantly, the projects fund a variety of units. So some of the units are No Place Like Home, but some of these projects also have other units supported by other sources.

So in all, the projects would support the development of nearly 18,000 units. Excuse me. 119 of the funded projects are under construction, 30 are complete, and nearly 500 units are currently occupied. As I noted initially, the state has historically relied on bond funding to support its housing programs, but more recently, the state has established a new ongoing source of funding for housing.

The Building Homes and Jobs Act, or SB 2, from 2017 established a $75 recording fee on real estate documents to generate revenue that is used to increase the supply of affordable housing in the state. The table on page four outlines the statutorily established allocation methodology and how much revenue has been collected from this source over the years. As you can see, the first year of funding is split between planning grants to locals and homelessness funding.

Beginning in the second year and beyond, 70% of the funding from SB two is distributed locally for their housing programs, and the remaining funding is allocated towards mixed-income housing, farm worker housing, and production incentive grants. In all, over $1.8 billion in revenue have been allocated from SB 2 since the 2017-18 fiscal year. Finally, the state has authorized additional spending augmentations in recent years, reflecting its increased fiscal role as the housing affordability crisis has become more acute.

The table on page five generally captures the major discretionary spending actions within the state within the departments that are principally responsible for administering the state's housing programs, those being HCD, CalHFA, and the Tax Allocation Committee, since the 2019 fiscal year. Importantly, this is the additional discretionary action, so it does not include the previously authorized base funding for the sources I just described: Prop one, No Place Like Home, and SB 2. So, for example, No Place Like Home has historically been supported by bond funding.

So the $325,000,000 for the program noted on this table reflects the additional state action the state has taken to expand the program beyond the 1.5 billion provided by Proposition One. We will not go through sort of every program on this table, but I'll just note that sort of overall you can see about $15 billion in additional discretionary funding has been provided. Most of this funding has gone to HCD, which received just over $12 billion.

In some cases, this funding expands existing programs, as in the No Place Like Home example I mentioned. In other cases, the state has established additional new programs, such as the $2 billion provided for HCD's accelerator program, which addresses funding gaps for shovel-ready projects that have been unable to access tax credits to get those started more quickly. Additionally, 2 billion has been provided towards state low-income tax credits. Again, this is in addition to the ongoing annual authority of about $100 million.

And finally, about $1 billion has gone towards CalHFA for programs that help finance developments such as ADUs and to assist with home ownership. So that concludes my overview of recent state spending actions. I'm happy to take questions when appropriate. Thank you.

Thank you very much. And then finally we'll hear from Megan Kirkabee from HCD.

Great. Thank you for hosting us today, and so glad to join with Lourdes and Ben to talk about these pieces. So I'm going to cover a little bit about how the state has been implementing all those things that you heard Ben and Lourdes talk about. So it just cannot be understated enough how much work there is going on right now to address the housing crisis working upstream as well as addressing the needs of Californians and what they're experiencing today.

So at this moment, all cities and counties in California are in some phase of the process in updating their housing elements or their local housing plans, which this cycle, as you heard Ben talk about, is different. It requires the need to plan and zone for the addition of two and a half million new homes over the next eight years, which is more than double where we were at last cycle, where jurisdictions only needed a plan for 1.2 million homes statewide.

Obviously, increasing the amount of area where housing can be built by upzoning existing land is one of the most important ways we're increasing supply and bringing down land costs. HCD reviews all of these local housing elements to ensure that jurisdictions are following best practices, identifying sites that are developable, and removing local barriers to housing production. And Ben was not wrong.

It is time to start thinking ahead, as hard as that is for me. We just yesterday launched California's Housing Future 2040 to begin gathering input on the next Regional Housing Need Assessment. So in wonky terms, that will be the 7th cycle. So there'll be surveys, webinars, other opportunities to weigh on that process all throughout this year. So I'm going to talk a little bit today about the Regional Housing Need Assessment. That's where a lot of the implementation efforts sort of start to stem from.

So as I talked about, that is a much larger planning goal than it was in the past. And the RHNA, as it's commonly referred to, is a projection of the additional housing units that are needed to accommodate our growth for all income levels from the start until the end of the projection period. And that's another really nerdy term. But really, to just talk about this planning period, this eight-year cycle that we think about housing plans within. It is absolutely a planning requirement.

It's about asking jurisdictions to do what's within their control, to address their particular housing challenges and make housing possible. And then it's a building target. It's not a prediction of how much housing activity there will be or a ceiling. If a jurisdiction is doing the right things and is actually meeting the RHNA, that's not a reason to stop. And it's not limited due to existing land use capacity. So you might hear the term built-out or things like that.

Rezoning is often necessary to accommodate the planning for your regional housing need. So it starts with the State and the Department of Finance thinking about what that regional housing need is for each cycle and coming up with a methodology. That is distributed down to the councils of government. These are the regional governments in California, and then they allocate that regional need down to individual jurisdictions. And there are five statutory objectives with how that has to be allocated out.

And at the core of those objectives is climate inequity. The allocation needs to be increasing housing supply and the mix of housing types, rental homeownership, multifamily, single-family, and affordability in an equitable manner. It needs to be promoting infill development, socioeconomic equity, working also to protect open space by growing in an infill way, promoting jobs, housing fit. So making sure we're building housing where we need it, where jobs are. Balancing disproportionate household income distribution.

So at its core, RHNA was created with a Fair Housing grant from HUD. And that's a big part of what it's trying to do, is think about how we grow in a more inclusive way and affirmatively furthering fair housing. This was new for this cycle, but as I said, it's been sort of the basis for RHNA all along is really thinking about how are we building inclusive communities, how are we bringing more resources to underresourced communities, how are we thinking holistically about how we grow?

And we're incredibly grateful to the Legislature for the massive amount of change that has been improving how housing works in California and how housing has been planned for. So that meant we were planning for more housing where we needed it, near jobs and transit. There were affirmatively furthering fair housing requirements in the housing element for the first time. So every single jurisdiction had to look at their history of racial segregation, had to think about what they are doing to meet their community's needs.

There was a much higher bar in terms of greater evidence to show potential for development, streamlined approval on sites that were being reused. So adding more potential for these sites to become a reality. So what's different this cycle? The bar is higher, but every single housing element that is compliant will have a much better chance of actually producing housing than we've ever seen before. So HCD is stewards of this particular law.

It is our job to review these local housing plans, and these are no longer a paper exercise, it's a contract with the state.

It's a term of our, we say, program commitments, but local governments, and you'll hear more from the second panel today about this, but they need to do the work of not just zoning appropriately to meet their regional housing needs, but looking at what is going on in their community, what are their housing challenges, what are their governmental constraints, and coming up with time bound milestones and commitments of what they're going to do over the next eight years to address those particular housing challenges.

And if those commitments are not upheld, that's something that our Housing Accountability Unit can address. And so to talk a little bit about this. How did we help jurisdictions meet this newer, higher bar? Before the cycle started, we put out more than almost $400 million in planning grants. Those were really to help jurisdictions get started in meeting this higher bar. But we also kept going. There were thousands of hours of technical assistance.

We did really personalized TA at the regional level, updated all of our materials to make sure all these new laws that got passed all had some additional explainers behind them. And then we built a housing hub. So whenever we got sort of the same question 2,3 times for some piece of TA, we would just assume everybody needed that TA and built a housing hub with templates that people could tap into. We're very grateful, as Ben mentioned, that those planning grants and implementation grants have continued.

There is now the Regional Early Action Planning Grant 2.0 out, which we do in partnership with OPR, SGC, the Air Resources Board, where we are putting out an additional $600 million in planning and implementation grants to kind of keep these things going and turn them into reality. And then, of course, every single housing element letter has to contain our findings that are a complete set of findings. It's a roadmap for a jurisdiction to obtain compliance.

At the end of the day, we want people to be in compliance. We know that's when housing is going to begin to happen, is when these ordinances are updated, when these policies begin to change for the better. And so we want people to meet the law and become join us in compliance. We have grown substantially in the amount of laws that we are the steward of over time.

I'm not going to name all of these, and actually there are probably a few more I need to add to this slide. The Legislature continues to do good work on housing, and we want to make sure that we don't just pass laws that never get followed. Right? We want to make sure that we are actually helping jurisdictions follow those new laws that have been created for a reason. So this is just a little bit of a snapshot.

You can find this on our website at any time, but we track the Housing Accountability Unit's impact in just the last couple of years, a little more than a year. We have been tracking the amount of places where we intervene and we've been able to unlock housing that that was not on a path to be successful otherwise. And so we're nearing the 5000 mark. And I'll say many of these don't turn into lawsuits. Right.

Because a lot of what we're able to do is to intervene early to explain the law sometimes to be the bad guy, which I'll talk a little bit more about. But to say, hey, actually you do need to get out of the way here and let this housing be approved. And in terms of accessory dwelling units, this is another sort of story of success. Right. And of how the fact that legislation works.

Ben touched on this a little bit, but I'll just add to it, this was an 800 new homes a year, very small piece of the puzzle for a long time. Legislation came in, really changed what it took to remove barriers, to change the fee structure around accessory dwelling units, kind of touched on loophole after loophole until where we've been at the last few years. We are now seeing more than 20,000 new homes every year through this accessory dwelling unit work.

And it is a huge piece of HCB's technical assistance that we provide, tons of work with individual homeowners, helping them overcome things. And we put out this accessory dwelling unit handbook. I've been made aware a lot of real estate agents, I guess, use this as part of their selling point now when they're selling homes to show actually how easy it is to add an accessory dwelling unit to the home. And we address housing through other strategies as well.

We've been doing a lot of work around the Surplus Land Act. This is something that HCD became a steward of only recently, and we plan to grow our TA much further here. We have a lot to offer local jurisdictions to make this easier. We are not interested in making this something hard, but this is a huge opportunity to bring new housing stock into the fold and to let make sure the affordable development community knows about surplus land that is coming online.

We have really great partnership with the Department of General Services, who's helped us map a lot of this land, really show where these opportunities are. And then on our own side of the table, we've looked at the underutilized land that the state has. And so far we have over 5100 new homes in the pipeline that are going to happen through a long term lease structure on underutilized state land.

So all of the stuff that I just talked about I will say helps bring down housing costs, helps increase housing supply for market-rate housing. But those same interventions also help the state's investment in affordable housing stretch much further. So everything you heard Lourdes talk about, Ben, touched on this, too. The subsidized housing work that we do is a critical piece of the puzzle, but we want it to go far.

And so we need to make sure that everything I just talked about is happening so that we can actually. See those dollars turn into homes. And so we know that for every 10,000 homes that have been funded by HCD, these are going to stay affordable for 55 years and serving, on average seven households over that time. So the state has been able to house 175,000 Californians over the lifetime of those 10,000 homes. This is a big deal to be able to think of housing as not just an asset, but also this ongoing social service that we're providing in terms of long-term affordability.

So I just want to close by saying you'll get to hear from me again on our local gov panel and hopefully get to hear some cool and creative things that the locals are doing as well. But just like my fellow panelists, happy to answer questions whenever the time is right. Thank you all.

Thank you very much. After we hear from Chair Wicks, we'll go to Senator Blakespear and then Senator Caballero.

Thank you for the presentation. To, question for Mr. Metcalf. We've clearly seen some successes, like the ADU bills that you mentioned in your presentation and some bills that we know haven't worked as well. And then there are some that it's a little bit too early to tell. I know. Notably, Senator Caballero and I worked last year on AB 2011 and SB 6, and those will be implemented in July of this year.

Given that, what do you think are still the big moves left for the Legislature in terms of expediting production of housing?

Thank you. Good question. As I said in my remarks, I think the cost issue remains an existential one. I think particularly as we are looking at economic challenges, rents not going up at the same rates they are. Certainly home building has been really hit by high interest rates. One of the consistent pieces of feedback has been how do we figure out ways to get more workers into the workforce?

How do we figure out ways to reduce and improve construction technology, have more innovation, rely more heavily on industrialized construction? I think those are opportunities where the state does have a role. It's not exactly within maybe the housing Committee's purview, strictly speaking, but I think it's a place where there's still a lot of room to run. I also know the question of sort of impact fees and kind of how cities are assessing those and when they make sense to apply, I think is another one.

Cities obviously have fiscal issues, but they have to figure it out. So that plus a residential building code, I think all of that needs to get put under a microscope in the next couple of years. And then one last thing, partly because Megan was talking about public lands, I didn't talk about that in my remarks, but I do think there's a huge opportunity for us to figure out ways to sort of onboard some of what redevelopment agencies used to do.

One part of that, we talk a lot about the tax increment, but one big part of that was actually just land assemblage, land banking, helping facilitate the disposition of public lands. And so that's still a missing component or missing tool in our toolkit.

Thank you.

Thank you. Senator Blakespear.

Yes, hello. Well, thank you very much to the panel. And I just want to say also thank you to the Chairs for organizing this from the Assembly and the Senate. It's great to have the opportunity. This is just my second hearing, so I'm really thrilled to be here on this so I come from being the mayor of a city that had never had an approved housing element.

And when I became the mayor of the city of Encinitas, we were locked in a pitch battle with HCD, regulatory battle, where Ben Metcalf was actually the Director, and we had multiple very expensive lawsuits that were draining our General Fund. And luckily, I and my colleagues spent a lot of time over multiple years ending that entire quagmire around housing. So I feel very well aware of the local barriers to producing a compliant housing element, but also more affordable housing, and also homeless serving housing.

And so what I really want to ask today is that it seems to me, Ben, I appreciated the documentation you provided that basically said that production is relatively stagnant, despite the fact that we've done so much. We probably have stemmed the tide of it going down, the number of units that are produced, and we have 20,000 units of affordable housing that are produced per year. And then we have a really good showing with the ADUs.

But so, recognizing that 20,000 units of affordable housing is nowhere near the million we need when it comes to the affordable housing needed to stem the tide of homelessness, and the reality that the lack of affordable housing is the biggest contributor to homelessness, when we think about the reality that we are actually not substantively going to be able to move the needle on homelessness, given the current system, the regulatory approaches we have, the amount of money that we've dedicated to this.

And so I think all the time about how can we expand the RHNA process to incentivize. And the words that you use today, Megan, were contract with the state. How do we create a contract with the state, with local governments, to actually provide housing for homelessness, for homeless people? But RHNA ultimately is rooted in local control. It is, as was said, it's a planning requirement, it's a building target, but there is no production requirement as part of RHNA. And so I just really wonder if there's.

I think that it's such an urgent problem, homelessness, and it's getting worse every single month, and we need to really focus on the part. As we said, it's not that California has more mentally ill or drug addicted people. There's that subpopulation, which is obviously urgent as well. But every state has that. But we have this critical shortage of affordable housing. So what can we do? Is it surplus lands and the state directly building housing on its surplus lands?

Is there some way to reduce the cost of the housing, to create homeless-serving or virtually free housing? Public housing, something in that area that's either tied to the RHNA process as the very bottom layer of it that is not currently there in our RHNA process. It's so striking to me how much we talk about in RHNA, and it ends at the very low-income and the extremely Low income, but never the homeless.

And so local communities that struggle with NIMBYism are off the charts NIMBY when it comes to helping homeless people because those populations are even less seemingly worthy of our consideration than low-income people, which are very hard to get NIMBY communities to build for.

So my question really is to Ben or to Megan to say, when you think about the RHNA process, or alternately outside of the RHNA process, is there a way that you see that we could be providing for homeless-serving housing in the shorter term without waiting 10 years to get a million units on the high side of truly affordable housing? Because waiting for the supply side to just deliver this, I just feel that that's an unacceptable wait and we just need to do better.

Thank you. I'll jump in and then Megan, you can follow. Number one, I think there are many opportunities just to help keep our most vulnerable renters stably housed and avoid the shock of them falling into homelessness in the first place.

So I think we've seen over the last couple of years, incredible policy shifts around sort of thinking about things like rent stabilization, rental protections, emergency rental assistance funds that can sort of be one-time subsidies that go to very vulnerable renters who have recently lost a job or had a health issue to keep them housed.

The second is, I think, on the sort of question of just building more housing, particularly permanent supportive housing for formerly homeless individuals, I think we have a couple of success stories to look at. Certainly, Homekey was a big one these last couple of years that was a major driver of our overall permanent supportive housing supply. A lot of that did come from the conversion of existing motels.

I think there's still a lot of opportunity in that space of conversion of existing apartment buildings, buying occupied buildings, but moving formerly homeless individuals into vacant units as they trit out using vouchers. So I think there are approaches that we can use. Obviously, if we can't solve the systemic issues that are putting people into homelessness in the first place will never really be able to keep up. But I think there's more we can certainly do there. It does require funding and investment from the state.

I think it also is helped now by flexibilities around Medi Cal program that allow us to provide many of the services that used to come out of the housing side of the state budget can now increasingly come out of the healthcare side of the budget in the permanent support of housing. I think that's going to be a big help as well.

Yeah, I mean, I think echo a lot of what Ben said and say this has to be about upstream and has to be about the urgent crisis, too. And on that upstream piece, a lot of what I talked about is critical because cost burden is what's driving homelessness. Right. If you have people paying higher and higher percentages of their income toward housing cost every month, they are going to be a car breakdown away from homelessness.

Like this is where housing instability comes from, is high-cost burdens and a lack of affordable housing. And so we have to be addressing that as the upstream piece of this. And I think the good news is we're setting a lot of pieces in place to do that. But Homekey is a piece of how we solve the right now, too. And I think it's important to think about how quickly we've been able to move on that.

We're talking about 210 different sites since we launched just in 2020. We're talking about 12,700 plus new housing units coming online. That is expected to serve 211,000 people over the project supportability term. So Homekey has to be something that we continue to do that's going to be a really important piece, and it's a speedy strategy, but also pairs with it a lot of the things we know have a long-term impact on helping people exit homelessness.

And then the other thing, I think Ben almost touched on this a little bit. But preservation is an important piece of this, too, is we have funded a significant amount of housing over time. The last thing any of us want is for that housing to be lost at the end of its affordability term.

It is so critical, and not as much in my shop, but others at HCD do this really important and hard work of preserving and rehabbing affordable developments to keep that housing as part of the affordable solution. We know that it's a big homelessness risk when we see those affordable units convert to market rates. So I think preservation needs to continue to be part of what we're doing to address that.

Great. Thank you, Senator Caballero, followed by Assembly Member Quirk-Silva.

Thank you, Mr. Chair. First, let me thank you for your presentations. I appreciate the information and the data. Let me just say that this is an oversight hearing, so I want to make sure that we're being critical about how we look at things and trying to figure out how can we do this better. This Legislature has really prioritized pushing out large sums of money, and it's not clear to me from the different programs what's working and what isn't.

And by that I mean, and to be more specific, where it's working and where it's not. My district has always been rural, agricultural, and whether I've been in local government as a City Council Member and a mayor, the reality of the situation is blue-collar communities tend to build affordable housing and wealthy communities don't. And I haven't seen a big change in that, quite frankly.

And so I'm wondering, as I look at some of these, Ben Metcalf, I'm wondering if there are trends that you've seen in the research that you've done where a majority of the housing is occurring generally in the state. You talked about the number of units over the past year or two and where the affordable housing is going and what we can take from that.

And then in regards to the overview of state housing spending that was put together by the LAO, what would be really helpful is, as you look at all of these funds to determine how many units were created, again, and where were they created. So we can see, I mean, I would expect the Farmworker Housing Funds to go into rural California, but beyond that and the transit-oriented development not to be in rural California.

But it would be really helpful if we could look at this and get an understanding of where we're putting our resources and how we can maximize the resources that we're putting out there to create the most amount of units.

And to key off of what was just mentioned by the former questioner in the Assembly as to is, rather than set up a system where we're, for lack of a more elegant term, smacking cities and counties for not building the RHNA numbers, I'd like to think that if you're building your RHNA numbers, that there are bennies you get, there are carrots out there, that you get money to help build a transit opportunity, that you get help to build the roads, and the sewer, and the water facility, so that there's really an incentive to do this.

I have a community in my district that has overbuilt. They've significantly overbuilt the RHNA numbers in all categories, including low-income, and they're being told that they start from scratch the next year and there's no benefit. I mean, it's just like, thank you very much. You've done great, and we're moving on. It's the City of Greenfield in Salina Valley. And so the question becomes, how can we make this a system that actually incentivizes and gets us more bang for our buck?

So, Ben, if you've got an idea about any trends or any of the speakers actually about when we put money in funds, how they get distributed around the state. The map that was used on the screen was really good. The ADU map was really good, and I think that's what we need for all of these funds.

So, first, I'll just say I think you nailed it in one regard, which is the fragmentation of our affordable housing subsidy delivery system is problematic. It's just not ideal. It's not how you would build the system if you were starting from scratch.

And I think it is important for the Legislature to think about ways in which we can channel more sort of new monies into single core programs that then have various sort of flavors to them, as opposed to having a proliferation of different programs that then require builders of affordable housing to sort of cobble together and stack in complicated and time-consuming ways. In terms of where the housing is getting built, I think your characterization is generally correct for much of the housing that happens in California today.

But I would say again, if we think of the two sort of success stories of the last five years as being one ADUs and the other subsidized affordable housing, it's interesting to note that the distribution of both of those has shifted over time towards our more affluent, relatively higher opportunity areas. Most of the state's affordable housing was historically being cited in higher-poverty neighborhoods.

The state has, both through zoning changes and through priorities in the scoring system, through SB 35, enabled a lot more of that housing to get built much more evenly across higher and lower opportunity regions, and ADUs as well, are disproportionately getting built today in California, in wealthier communities, too. So I think that those are the places, those two pieces are where we see some better distribution than we do with sort of mainstream workforce or home builder activity.

Just to add to that. That's right. We talked about a lot of things that have changed, but they were the other way for many, many decades. Right. And so jurisdictions were successful in politicizing the RHNA allocation, which meant that certain jurisdictions got less housing to plan for, so they didn't have to zone for as much multifamily housing.

You combine that with community opposition that didn't used to have an Accountability Unit to address that, and you combine that with the fact that a lot of jurisdictions that were not friendly to multifamily housing then didn't have the densities to support a transit system.

So then our housing programs want you to be near transit, and all of these things sort of reinforce and build on each other to a place where you have a portfolio that's imbalanced and doesn't create housing choice in all types of communities and in all regions. And so I am dramatically proud of the work that we've done to sort of begin to change course there. I think it's important, and we're doing it on both sides.

We're doing it on the RHNA is less politicized than it used to be. So those housing targets to start with are different. That means we're going to see different kinds of zoning in wealthier communities than we've ever seen before. We're also realizing our programs may have had some unintended consequences by thinking about transit but not thinking about job centers as a path to reducing driving and commutes.

And so all those things are here and are creating change in terms of where that housing choice is available in the affordable housing portfolio. But we've been on that path for probably five years, and we were on the other path for many decades. And so it's going to take time for that balance in the portfolio to come. And, of course, people make land purchase decisions way far in advance. And so this is not going to all change tomorrow.

But I think we're on the path and we're seeing the changes in our program that are showing us that this is working. So I think we feel good about a lot of that.

That is good news. I appreciate your comments. Thank you.

Thank you, Senator. Assembly Member Quirk-Silva. And then followed by Senator Wahab.

Yeah. Good afternoon, and thank you for the panelists. I appreciate the information. I, too, have some questions, but I guess I'll just zero in on two areas, ADUs and the surplus land. Of course, we can celebrate that many more ADUs are being built. I have, in fact, had some legislation to help clarify what's happening in the ADU. What was noted by my colleague here from the Central Valley about, I think you just said that about ADUs being built in wealthier areas.

It makes sense because, again, you have to own your own home, you have to choose to want to build on your property, and you have to have access to capital. We've seen a very lack of access to capital related to ADU building. Now, last year in the budget, we had support for applications, 40,000, we know that was oversubscribed to, and I think immediately but we also saw people taking and doing workshops for individuals so they could attain that 40,000.

But we didn't put any, I think, guardrails around who could get access to that. So again, any unit being built in the State of California is important to me because it means somebody's going to be housed. We don't know who's being housed. And again, it very well could be the grandmother or the mother-in-law or the 30-year-old couple coming home. And that's a good thing.

But I do think we have to go back as a body and look to access to capital for families who do not want to take a second out on their home and encourage others to join in this. I would say also there is not a run on ADUs, meaning we have, I think you said, 20,000 across the State of California. That is definitely an increase. But sometimes we will get NIMBYs that will say everybody's building an ADU. And we know that's simply not true.

But if we could get more information on the access to the capital, either by the speakers or by our body on who actually got those $40,000 grants. Because what I understand, they're already used and the money has already been put out. But who got that money? The last thing that I'll talk about is the surplus land. I'm looking up because that's where you were coming from. But I know.

Is on the surplus land, I actually did indeed ask for an audit which was done and we found that there's over 4000 pieces of surplus land across the state. And yet we found at that time there was only about 20 of those 4000 properties that had any plans to start building. So I know one of the parts of the audit was that there would be a website to make sure individuals or developers can see where these lands are, see if a project can be proposed, and get it moving.

So again, I think it would be, Ben, I'm asking, have you followed that? Because again, if we don't even have applicants or interest in these properties yet, we're looking five years out before we can see any housing. So if there's any comments on the surplus property. Thank you.

I think the Excess Lands Disposition Program is a huge opportunity for the state and a great success story. But it's been really, as you point out, clunky and the throughput has been very anemic. But I do think there are great opportunities there, at scale, to build large numbers of units in the right places and also to use the powers of the state to also make it easier to go faster. The state is an active partner on these disposition opportunities.

The state needs to flex more in terms of using its zoning, using its permitting, using its CEQA ability to do things that a normal developer can do and to do it faster and cheaper. So there's a big opportunity there. I would just. On the ADU front, I think one of the real challenges here is in the capital mortgage markets for single-family homeowners to be able to actually finance the proceeds, to be able to facilitate the construction of those ADUs.

The primary way that most Californians today, their mortgages are held by Fannie Freddie or FHA. And Fannie Freddie and FHA have not really had mortgage products that work for pulling out money to do ADU construction. I think with California's success, those federal agencies are beginning to pay attention. We saw last year Freddie Mac begin to allow for the underwriting of some of that rental income. FHA just put out a rulemaking notice a month ago asking for feedback about how to do the same thing.

But I will note that $50 million that had been proposed, that was in the budget last year to help think about how California could better leverage these government-backed federal mortgages is proposed for rescission by the government in the January budget. I think that is a mistake. I think that's actually a much more effective kind of tool to be able to, if you can leverage those federal mortgage products, you can get to scale much more than writing every homeowner a $40,000 check one by one by one.

So I think there's some thinking that is worth doing on that program.

Great. Senator Wahab.

Thank you and thank you to the chairs for facilitating this. So to the speakers, I know that we're focusing mostly on, in particular, development. One of my biggest concerns on a lot of the housing discussions is that we're talking about production and trying to make sure that we produce as much as we can and make it streamlined and so forth. But when it comes to preserving and protecting, there's not a lot of conversation there. In particular, ADUs, for example, cost a good chunk of money to develop.

It also only happens in areas that actually do have land to develop, and it's also not necessarily rented out to non-family members as well as it's at market rates. When we talk about affordability, there is no real discussion on affordable housing, and particularly, I mean by investments and protecting against certain investments, even with the bills that have come out, where we are splitting lots and so forth.

The concern that I have is that a lot of the flat lands are purchased and the homes are demolished and obviously upzoned to build a couple more units and so forth. What are we doing in regards to deed-restricted, tackling the vacancies that we are seeing in multifamily complexes, and just affordability across the board? It's not just a development problem.

Well, I think there was a few things there I'll say on the ADU piece. I think there were some really smart decisions early on to be thinking about, not just opening the pathway for new development of ADU, but also being, a lot of jurisdictions have made the shift to really trying to bring in from the cold accessory dwelling units that may have been unpermitted in the past and kind of bring that into legitimacy.

And I think that has been a very important piece of the equity conversation on the ADU is not just like the new creation of ADUs, but how are we helping people sort of legitimize housing that may have been created over time? We are still seeing ADUs as an affordable by design solution, even when there is not deed restrictions.

That's not to say that the deed restrictions wouldn't promote long term affordability or be something to consider, but we are still seeing them be a piece of the housing choice that is offering a different rental price than single family homes, new construction. And then I think you were talking about the preservation piece as well.

We're really grateful that there's been a recognition on the preservation space, and we do have a preservation program at HCD that's looking at that old portfolio, is making sure we're keeping track of it, is really looking to jump into some of these hard aging properties and preserve them. And so I think that's important work and I think we need to keep doing it. I think you mentioned a third piece, which was the vacancy rate, and our vacancy rate is actually pretty low. That's not to say there isn't work to do there, but we can follow up. I'm getting a note that we could follow up with specific stats on that if you'd like to talk more about the vacancy rate.

Yeah, no, I would like to talk about the vacancy rates because there are new buildings going up and at the amount that they are charging for rent and so forth, they are actually not filling the space, even, I will say even Capitol Towers in Sacramento.

But one of the other concerns that I do have is, when we are talking about preserving naturally affordable units, if you take a look at the LIHTC funds and how it's being utilized and how many people were evicted, what are the safeguards that we're putting in place to correct bad actors.

And we, just so you know, and we can offer a further briefing on this. But HCD does have stewardship over Preservation Notice Law as well, which can prevent that type of thing from happening. At a minimum, allows for better noticing of the tenants and no rent increases until that proper noticing has been done. It also requires noticing of potential affordable buyers to take over those properties in advance.

And there's sort of a right of first refusal to the affordable community for the sale of those properties through Preservation Notice Law. So that's something that didn't used to have accountability behind it. It's a law that's been on the books, but nobody was necessarily enforcing it. So I do think that's a change and should result in some movement in that space as well and protecting those tenants.

Thank you. And I would like for your office to follow up with my office with details and facts and figures. Thank you.

Thank you very much. Next, Senator Cortese, followed by Senator Padilla.

Thank you, Mr. Chair. My question is primarily directed to Mr. Metcalf. And first of all, let me just say I greatly appreciate the attention on excess lands and surplus properties. And I do think for purposes of hearings and policy, we should be very good about distinguishing between those two different kinds of properties.

Obviously, surplus properties being city, county, local agency properties, some of which have to go through their own processes to be declared surplus, some of them which local entities will refer to as surplus, which aren't really surplused in the sense that they want to sell them, but they are made available for ground leases and for joint venture opportunities to bring revenue into those and diversify portfolios in those local entities.

But I appreciate the work done before I got here a couple of years ago, appreciate the work referred to by Assembly Member Quirk-Silva, the mapping work that's been ordered up. And I also want to just say, while I'm acknowledging contributions, I am really encouraged by the new Members that have come in, particularly to our house, because I know them better so far. I assume the same thing may have been happening in the Assembly, but with local government experience. Very, very fresh, recent local government experience coming in here.

Those of us who also have that experience, I will say, at least for me, for each month that I'm removed from those meetings and those hearings and those face to face discussions about things like ADUs, it gets a little bit more conceptual and a lot less real in terms of implementation. And I think implementation is where we really need to focus. And Mr. Metcalf, you were talking about what could be huge upside potential, if I'm not mischaracterizing your statement, with regard to surplus lands.

And again, I agree with that wholeheartedly. We ran a bill that was signing the law, SB 791, which called for the standing up of a technical advisory group in HCD to work with local agencies, including school districts, that frankly don't have the capacity to go out and hire expensive consultants and go through land use processes on their own dime to try to get surplus property put into play.

As sort of a separate question, I'd like to ask the HCD representative, if possible, the Deputy Director, to indicate how that's going, whether or not that division has been created and what kind of outreach has been done.

But in my conversations with HCD at the time, it was very apparent, I think through no fault of HCD's, that there's very, very limited capacity to deal with thousands of excess lands that the state has, let alone a multiplier effect of thousands and thousands, hundreds of thousands of pieces of surplus property that local governments have. And I think they referred to it at the time as our small but mighty team is trying to get this done. So, of HCD, how's that going, number one?

What do we need to do to support an increase of capacity to get this work done? What do you need from us if indeed this Legislature wants to see the Surplus Lands Act and excess lands fully maximized and optimized? And, in addition to that capacity question, let me just say, Mr. Metcalf, I just like to hear from you more specifically, what do we need to do so it's not clunky, so that we can accelerate, rapidly accelerate.

I appreciate the fact that there's 5100 excess developed so far, properties. I guess those are, I don't know if those are dwelling units or parcels, and about 5000 surplus. But the Bay Area alone, of course, has a 440,000 RHNA goal on the next planning horizon alone. So, while every little bit helps, we're obviously not going to get there at that pace, nor do I expect surplus lands and excess lands are the silver bullet.

But it just seems like when there's thousands of pieces of property out there, including in the Bay Area, that we should be doing whatever we can in terms of the Legislature and the Governor's office trying to supply the tools necessary to speed things up. So please react to that, if you will. Thank you.

Look, that's great. Yeah, so absolutely. I think more technical assistance, training resources for local governments to help them understand what disposition processes actually entail and how to do them well, critically important. Number two, sort of more staff capacity and support at the state level to the Department of General Services, Department of Housing, Community Development will help there as well.

I'd suggest that there's also another opportunity, like a big one, an even bigger one, which is, I think there is a finite amount of land that the state is going to be able to move through its channel. I think we are going to always struggle with a school district, a small school district that's never done disposition before.

I do think we're crying out here for empowering locally accountable regional governance entities that can actually be the custodian of both the local and possibly some of these state lands as well, and do that disposition. I think we're beginning to see more attention on the position of regional housing agencies, but we're not there yet. Bay Area Housing Finance Authority, BAHFA, you may be familiar with, doesn't today have authority to hold land? It should.

We need to start thinking about how we can get high capacity, locally accountable regional entities that can take some of the load off these local governments and do a sort of best in class disposition, again, for both the state lands and the local lands. I think that's the ultimate solution.

I appreciate if I could just follow through the Chair before HCD responds. As a former MTC Chair, regarding the Bay Area Housing Finance Agency and being there when Mr. Chiu's bill was enacted. That bill, partially at my behest, but of course at the Commission's behest, includes a provision that says that that housing finance agency can acquire and can accept surplus properties within its jurisdiction for joint ventures and affordable housing financing opportunities. I just met with MTC ABAG this morning. They haven't received or sought, to my knowledge, even one property in that regard. So the legislation is there, the law is there, they're allowed to do it.

Again, and I appreciate your comments, but I'm still not hearing what's the mechanism for us to, beyond passing the law and enabling them to do it, to actually have it happen? So anyway, I won't interrupt again, Mr. Chair, but thank you for letting me follow up.

Well, and I'm happy to kind of report a little bit on how we're doing with that 791 implementation. I think it's a great piece of legislation. I think you're spot on from all the locals I talked to. There can be a sense of overwhelm with the Surplus Land Act and a lot of change in a short period of time. And so we've been able to really boost the amount of technical assistance tools we provide on our website, including templates for folks to use.

We're also really staffing up there to take some of the lessons learned we learned from our state excess sites program so that underutilized state land where we were putting it out for affordable development. So really take a lot of the things we learned from doing those RFPs for those parcels of land and turn those into toolkits that locals can basically take off the shelf if they want to start doing RFPs on their surplus land.

There's also been a lot of development in the mapping space, so we have some new tools there to really start to amplify what is available. And then I'll say another really important piece of the puzzle. And this can be really hard to grasp when you're not living in the housing element, housing planning world every day. But there's so much going on in terms of these eight year commitments that local jurisdictions are making.

And for many, many jurisdictions, this is the first time they're really sitting down and thinking about, from an eight year planning perspective, what am I going to do with my surplus plan? And so we have countless jurisdictions that are making some of those housing element commitments or contracts I talked about, are talking about their surplus land, are saying, I'm going to do an RFP in this time period to turn this parcel into affordable housing.

And because they made that commitment in the housing element, we can also hold them to that commitment through the accountability unit. And so all those things are coming together in a way that I think I'm optimistic about, and we're obviously happy to talk more about it.

Thank you. Thank you, Mr. Chair. And I want to thank for both of the individuals for their responses.

Thank you, Senator. Senator Padilla.

Thank you very much, Mr. Chairman, and my thanks to both Chairs for convening this. Just to get a better, deeper understanding around quantifying a critical element of the problem. The Statewide Housing Plan provides an estimate of state annual expenditures of over $18 billion annually over the next eight years to underwrite a majority of the demand of 140,000 produced units every year to address the needs of folks that we characterize as being lower income households.

It indicates that that would be an estimate of the annual expenditure in order to subsidize that demand for this segment of household earners. For purposes of that number, is that based on what subsidization? in other words, are we characterizing this based on construction subsidies, on direct rental subsidies, and what was the assumed qualifying income thresholds that we used to arrive at that expenditure number for underwriting?

Those numbers don't track exactly for me, but that doesn't mean they're wrong. We might need to follow up on the Statewide Housing Plan piece. But the Statewide Housing Plan does, that first slide I showed with the housing planning goal, those are planning requirement building targets for different income thresholds, and those are based on the area median incomes for the different regions. So there are extremely and very low income housing goals, low income housing goals, moderate and above moderate income housing goals for each of those. And then they would adjust to those regional AMI, the area median incomes.

Mr. Chairman, if I might. I understand how we characterize the different segments of the market and the demand of low income households. I understand that. What I'm asking is, we have an estimated annual expenditure on the part of the state that would be required to bring at least a majority of that demand into what we call affordability. So is that based on construction subsidies? Is that based on direct rental subsidies? And if so, what were the assumed qualifying income thresholds that would be served by those subsidies? And I am reading from the 2022 Statewide Housing Plan as it's cited in the background paper.

I will look into that and figure out what source that is citing so we can answer the question correctly. I don't want to misspeak.

I would appreciate that. If you could just get that over. And then lastly, Mr. Chairman, and maybe to Ms. Kirkeby, 20,000 annual production on ADUs is quite a robust number. And to the point made by one of our colleagues, ADUs have been produced by a lot of good work, SB 9 and other incentives to allow landowners to easily subdivide and to produce, the assumption being that because they are ADUs, they are always going to be relatively more affordable.

However, oftentimes those things are really driven by market factors, geographic factors. So we have an estimate of the production annually and new ADUs. Do we have any other data yet about how those are breaking out in terms of what kind of rents are being demanded for those ADUs or even costs?

Yes. So we do have a dashboard on our website that shows all the annual progress report data that comes in from the local governments. And all of that is tracked by, it does tell you the ADUs, and it does tell you that where those rents are set relative to the incomes for the individual. So it gives you a sense of where those ADUs are coming online. Are they serving moderate income households or are they serving lower income households for that community?

Thank you very much. Thank you, Mr. Chairman.

Thank you. Colleagues, any other questions? Okay, I want to thank panelists. I do want to, just before we turn over to Chair Wicks, I just want to reiterate a couple of things. First of all, the laws that we're talking about have been in effect somewhere between two months and maybe five years, or five years, really, we're talking about. So we're talking about two months to five years. And I know all of us want to see a lot more housing at all income levels built like yesterday.

I certainly do. But we know that it takes time. And when we spend 50 years driving the car into the ditch, passing some laws is not going to turn that around overnight. And construction is not as fast as we want, et cetera. So two months to five years. There was an analysis by the Terner Center about SB 9, for example. It's always good to do analysis. Honestly, it was great that that analysis happened.

Super premature to read a lot into that analysis for a law that's been in effect for 12 months. And we see that with other laws, it takes time to really accelerate. And because of some of the work we've done on RHNA, it's hard to overstate what the impact is going to be of the new housing elements. And with the much higher RHNA numbers, that's going to be, I think, transformational. So we all are chomping at the bit to get this done faster, and I think it's going to happen, but it's going to be a gradual acceleration. So thank you. Chair Wicks.

Thank you. I want to thank the panelists in our first panel and thank Chair for the reminder of how long the state has been involved in trying to solve the problem, and some laws haven't even been in effect yet at all. So more good things to come. The next panel is going to focus on how cities are accommodating the housing crisis and dealing with housing.

Despite some of the changes that we've made recently, land use is still typically a local issue in terms of zoning, objective standards, and the process to approve housing. If we're going to fix the housing crisis, we need our cities and counties to be partners in making it easier and less expensive to build housing at all affordability levels.

Today we're going to hear from three cities that are proactively trying to do exactly just that, as well as from HCD, who will share some stories about cities that perhaps are not fully ready to do their part. And so with that, we will start with, and we'll save questions for Members after all panelists have testified. We will start with Anita Gutierrez, Development Service Director for City of Pomona.

Hello. Good afternoon. Chair Wicks, Chair Wiener, and Members of both committees, thank you so much for the opportunity this afternoon to share Pomona's perspective on housing production. Share my screen. So thank you so much for the opportunity this afternoon. Briefly about Pomona. For those not familiar with Pomona, let me just spend a few moments situating Pomona for you. We're located within the San Gabriel Valley, the eastern edge of Los Angeles County, abutting San Bernardino County on our City's eastern edge. We're a charter city and we're located about 45 minutes east of downtown Los Angeles.

For perspective, Pomona's RHNA for the 21-29-6 cycle RHNA is 10,558 units over the next eight years. For comparison, our fifth cycle RHNA allocation was 3626 units. Of those 700, 979 were actually built. We have a lot of underutilized density based upon our General Plan, which I'll get into in just a minute.

So with our current housing element, we're able to accommodate all of our new RHNA, those 10,000 units within existing sites, without any zone changes or General Plan amendments, which was pretty significant for a city of Pomona's size. Some data points to consider and what paints the picture and the constraints of what our community faces. We're a younger community with a median age about 32, 152,000 in population.

So we have a lot of younger families shifting from maybe a transition point, moving from renting to owning, or maybe from a smaller home to a larger home. We have a median income of about 60,000, which is, highlight that to point out that it's about 11% lower than our county's average.

We have a low median income, a pretty high poverty rate, and as I've heard mentioned on some of the first panel, a pretty significant cost burden, particularly for our renters, about 60%, with significant overcrowding as well. So I mentioned those things to paint the picture of what Pomona is trying to solve for. We know we need more housing, we know we need affordable housing and housing options.

And so, as I'll describe in just a few minutes, this is why Pomona is choosing to lean into pro-housing. We share the same goals of housing production and trying to find options for our community. Using the availability and affordability as indicators of housing production success for the City. I'll briefly discuss what legislative actions have spurred housing production the most and what's helped us produce the housing, as well as affordable units. And finally, some possible legislative opportunities to help further support pro-housing Pomona's vision.

So, first and foremost, beginning with our General Plan in 2014, Pomona has really been laying the groundwork for housing production in the City for several years now. In 2014, Pomona adopted a General Plan that spread our density, and that's the map that's here before you. It spread our density across the City, enabling 100 plus dwelling units per acre in our TODs.

It enabled a pathway for 20 dwelling units per acre in single unit unit zones and encouraged mixed use development across our main corridors in our downtown. This really set the stage for where Pomona is at today. The current zoning code update that was supposed to complement this and implement us all into our zoning code was a bit delayed and really made it into our corridors and in our downtown.

But what that did is it paved the way for SB 330 and some of the legislative actions that I'm going to mention here. So, SB 330. The map on the left depicts our overlay zone that Pomona adopted codifying SB 330. And you'll notice it covers about 90% of the city, with the exception of the specific plan areas that are carved out. This did a couple of things.

It immediately enabled density through zoning, where our General Plan had already outlined the density allowed within the city, but not yet codified it in zone. So about 90% of our city was covered through that. It eliminated, through that overlay, conditional use permits for housing, created a pathway for objective design review, and narrowed the findings for denial and for approval.

This map here, what you'll notice is that while it covered so much of the city, it also made SB 9, generally not applicable to Pomona because we'd already eliminated single unit zoning by enabling that 20 dwelling units per acre as a minimum. The impact of SB 330, which we think is pretty significant. This has paved the way for ourselves, for Pomona's housing moment, where we have over 2400 units in the pipeline, double what was built in the whole eight year cycle previously, in our fifth cycle.

And combined with SB 330 applications, we have about 1100 of those units, of those 2400 units accounted for through SB 330 specifically, and about 449 of them already approved. So there's no doubt in our mind that SB 330 has allowed more units to move forward faster than without it. I'll note two considerations that are taken into account when considering SB 330 and the effectiveness of it.

First, we've not seen that SB 330, while it has produced units, they haven't been affordable units. Of the 1100 units here that I mentioned, those are all market rates that have been coming in as affordable, unless specifically under the City's inclusionary measures that we've adopted at the local level. Also, as I've heard mentioned a few times on the previous panel, is that there is some risk here. So, for example, some risk of displacement.

So, for example, with the increased density that's allowed now, and that we have to implement under SB 330, a project that might have existed for 20 or 30 years with four to five units on it, now has the ability to build, let's say, 35 units on it, which is great for housing production and may even retain some of those affordable units.

But for those tenants that have been there 20 or 30 years, long term, it may have put them at risk of eviction and displacement and finding new homes. And we hear consistently from Pomonans within the City of wanting to stay in Pomona and find affordable housing within the community that they've grown up in and have lived in for generations. And secondly, on SB 330, some of the streamlining benefits that it has brought forward. It's allowed the denial findings to reduce potential denial findings, eliminated the zone changes and relief from standards to accommodate the density.

Thank you. Thank you.

As I mentioned before, SB 330, some concerns with affordability. What's Pomona doing on the affordability front in and of itself? So Pomona has multiple 100% affordable projects in construction or about to begin construction. One of the best tools that we have used and helped us is to provide funding to stand up those developments has been the permanent local housing allocation funding that we leverage with regional housing trusts to build multi layered funding sources for those affordable housing developments.

However, the funding only allows us to Fund one a year, and as you can see here, Jamboree or Caesar Chavez project, our national core one each year, which has really added additional units to our city, but has limited us in order to maybe move forward with multiple per year, which we would love to do. And then also on the affordability front, we have a locally adopted inclusionary housing ordinance which includes 7%, 11% and 13% affordability at a moderate rate based upon those new units coming in.

It also establishes a local city housing trust for anyone paying into in lieu fees as part of that inclusionary ordinance. And then on to ADUs, which I know has been a lot of talk this afternoon as well. So Pomona itself has seen significant increase in the production and application of accessory dwelling units. We're processing 15 to 20 dwelling units per month, 70% of which are garage conversions.

There's a recent study that came out by UC Berkeley that ranks cities with grades based upon their ADU production, and out of the 119 jurisdictions, 25 have A's, and Pomona is an A-. So we're doing really well with the accessory dwelling unit production based upon that state legislation that's helped us to enable things to move faster and clear those barriers. And we're also using PLHA funding to support ADU production through interest-free loans. And then it brings us to our housing element.

As I said, we really leaned into being pro housing, a pro housing city. We named our housing element pro housing. We really see it as the opportunity to evaluate those policies, some of which I've just mentioned, and then continue to modify and update to help bring forward the production of housing and affordable housing within the city. And then lastly, some opportunities that may be helpful for the legislative to support pro housing and may even provide incentive for cities looking to seek that pro housing designation.

Firstly, affordability on the affordability front, as I mentioned, that PLHA funding has been significant in being able to stand up those developments and add that funding sources from the local level, the more flexible, non population based funding to fund more affordable housing projects, more than one a year that we're able to currently do the power to assemble land, which I've also heard, I think Ben from the Turner center mentioned a significantly important issue for the city to be able to do that.

That's one of our greatest contributions as a city in the production of affordable housing, is to provide the land through long term loans. However, we have limited land left in aggregate, as the city that we own. Since we're an infill city, there's going to be pockets that need to have to be assembled.

So the power to assemble that land for the provision of affordable housing would be a really valuable tool for medium sized cities like Pomona, and then for production, the flexibility to achieve the same density in more specific city manner to be consistent with our zoning code and our General plan. So, for instance, we're in the middle of comprehensively updating our zoning code into a modular zoning form based zoning effort.

So really focusing on those objective design standards to really drill down into what type of form we're looking for in our development, future development. So a little bit of flexibility and some of these legislative actions lock us into existing development standards in place at the time. But planning is evolving.

And as we plan and try to do better planning and better form based objective design, standard planning, some flexibility, and being able to adapt to use those would be really beneficial for cities complying and trying to meet those same densities and meeting our goals, and then ability to incentivize second units. So similar to ADUs. As I mentioned, Pomona is producing ADUs. We'll have 635 ADU applications by the end. We had 635 ADU applications by the end of 2022.

We also see the benefit in second units, but right now, at a local level, we see a bit of a conflict in second units and ADUs. There's a lot of incentives with ADUs, but not so much with second units. And so we are able to provide more design control with second units. We're also in the midst for local governments trying to create multimodal cities, pedestrian friendly development.

And so some of the ADU laws and the placement of them, like in the front yard and setbacks, things like that, sometimes compromise the design form that the city is trying to achieve. So the flexibility into being able to pivot to one or the other would add some value to cities, again, maybe as an incentive, while still achieving the same density, and even providing some ability to have homeownership with second units, as opposed to maybe use. And then lastly, infrastructure and public health.

The State Implementation Dollars for capital improvements like complete street VMT reduction. So there's some planning dollars that we're definitely utilizing to do some street zoning and GHG gas analysis, hopefully putting us in the competitive market to apply for ATP down the road, but implementation dollars to really capture those capital improvement dollars, it would be really significant. And why that's different than, let's say, an infill infrastructure grant, is that infill infrastructure grant, which some of our housing development, 100% affordable housing projects have used,

Is it's for specific projects and maybe larger blocks, maybe in bigger cities. But along with SB 330, while we've reduced burdens and obstacles through reduction of discretionary permits like cups local level, we've also lost a bit of the opportunity to capture some of the improvements needed for those developments. So let's say underground infrastructure, streetlights, sidewalk improvements. There's a large portion of our city that does not have curbs or sidewalks with our industrial area that's intermixed with residential.

So those capital improvement implementation dollars to really effectuate infrastructure change in those areas where housing is happening, affordable housing is happening, but not maybe directly tied to an affordable housing project like the 100% affordable housing projects that are applying for them. And then lastly, the additional considerations in SB 330 for pollution burdened cities. So, Pomona is currently ranked by Cal and viruscreen as high to very high in terms of being exposed to harmful pollutants. We have four freeways crossing our freeway.

And so with SB 330, again, going back to that map that I showed in the beginning, where it covers 90% of our city, we're locked into those densities under SB 330. But some of those sites are also very close to rail lines, freeways, heavy truck traveled roads, and so some flexibilities and some considerations to maybe pivot and move those densities as we evolve our thinking on public health and environmental concerns, maybe move them away from those areas, but still again, achieving our same density.

So thank you so much. Those are the thoughts from Pomona's perspective.

Thank you very much. Next we will hear from David Loya, community development Director for City of Arcata.

Good afternoon, Chair Wicks and chair Wiener and Committee Members, thank you so much for the opportunity to speak to you today. Share my screen my name is David Loy. I'm the Director of community development with the City of Arcata, and happy to bring to day some perspectives from the City of Arcata. See pictured in the foreground there. City of Arcata is located in the far north. We are approximately 10 acres. I'm sorry, 10 sq mi located here you see depicted in the red.

And I've got some quick facts on the side here, just to give you some context. But really what I want to tell you about the City of Arcata is while we're a, and we appear to be rural, really a compact urban city, we're taking a lot of the lead from the state in the housing policy that's been promoted over the last several years. Trying to share that with our decision makers to try and transition and change, because we do have some significant challenges.

I'll share with you, and I recognize that this is a little bit of preaching to the choir within our city. But some of the key pieces here, I just wanted to point out our owner occupancy rates are very low relative to the rest of the state. Our area median income is also low, although we have a high degree of education in our community with a higher than average number of bachelor's or higher degrees in the city.

And I think the relationship between that area median income being so low and the number of people with higher degrees being high relates a lot to another key piece to our economy and housing challenges, which is the Cal Poly, formerly Humboldt State University. Our median home values are relatively low compared to the rest of the state and in particular compared to urban centers, as are our rents. In addition, our sales are low.

And so you can imagine all of these factors combine together to create sort of a pressure on housing in our area. In addition, we have sort of. The trifecta is how I look at it. Not only do we have the driver of Cal Poly, which brings in a new crop of students every year, but we also have a relatively modest climate. We're a climate change refuge.

And with the pandemic sort of unleashing people from their desks, we have a lot of people who've moved up here and are coming in from out of the area, being able to cash out of higher housing cost areas and purchase and or move in locally and still continue to earn those out of area rents. And so all of these things combine together in addition to the area in General, just being a destination that has high quality of life.

To really put a microscope on City of Arcada and its housing pressures, looking up close, you can see from that other aerial image we're set in a very green setting. But looking up close, we're just like any other city, pretty built out. And I think this is an interesting contrast because many in our community think of ourselves as rural. But we, for all intents and purposes, function like a little city. There's tons of opportunity for infill development in our community and redevelopment in our community.

Zooming back out to the macro level, you could see Arcata in the foreground. There, just to the north of the bay is surrounded by the bottom lands to the west and the forest lands to the east. And really one value that arcatas all share is the idea that we want to respect and protect those working lands around us. These images were pulled from our last housing element update cycle, and so some of the numbers are a little dated.

But at the time the state was projecting that housing needs through 2025 would be 1.8 million units, and the expected production was a little less than half of that. And in the City of Arcata, looking back through the first five housing element cycles, we'd actually produced 70% of our RHNA allocation. I'm happy to say that much of that production was in the Low and very Low income categories.

We were really successful at competing for housing grants, primarily through housing community development, but that means we left 30% on the table, and so we basically have 20 years of underproduction in our community. In our current housing element cycle, we had been allocated 610 units. I know for some of these larger jurisdictions, you're probably thinking 610 is pretty light lift. But when we went through and did our inventory, you can see on the left part of the screen here the red parcels that are lit up.

This is our parcel mask from our GIS. The red parcels that are lit up are the ones that we were able to include. And it got us to just about a third of the total unmet housing need. Adding to that the number of ADUs we thought we could produce, we got to about half. And so we had about half of our arena that we're trying to meet through this housing cycle, which triggered a mandatory rezone.

Add to that that many people are overpaying for their housing costs. Now, this is again a little dated, but at the time we were doing our housing element update, every income category had a significant portion of people paying rent. That was more than 50% of their income. Considering that 67% of our population is renting, that's a pretty heavy lift. And then added to that the fact that we estimate somewhere between five and 10% of the population of the City of Arcata is unhoused.

Many of these people are right on the verge of being unhoused as well. And so, pretty significant problem in terms of the dynamics between those housing pressures that we see, external and internal, and then the housing vulnerability of these folks.

I would also add to this that the housing problem is so significant that we're seeing many of our major employers wing inflatable, open door community health, mad river community health start to think about becoming housing developers for workforce housing for themselves, because our community just can't produce enough housing. I'm going to reflect back on the piece of the data that I can look at and see a dramatic impact, and I'm hearing this as a recurring theme.

The ADUs bills that passed and the updates that happened as a result of those really doubled, if not more than doubled, the rate of production of ADUs. This is the only concrete correlation that I can pull from all of the changes in housing element law, the Housing Accountability Act, density bonus, and all these laws that have changed so dramatically over the last several years. But it is kind of interesting.

The one dip we see in 2021 we think is attributable to Covid-19 and so I will sort of round out with some of the things that we've seen working. Certainly the planning grants, building capacity, the state putting money to the commitments that they wanted to see has been instrumental. I can tell you that the rate of accomplishing the planning is not fast enough.

With our first SB two grant, we thought we'd be done with revisions to our General plan and some of the form based code work that we're doing to really ramp up housing production within two to three years, and we're about four years into it now. But those planning grant funds are critical and important. The project grants are also very important.

Over the last couple of years, we've been able to produce over 200 units, all for people earning 80% less median income or less, and many of those earning less than 50% area median income. In fact, we had about 150 home key units produced over just the last two years. I think that one of the things that we need more of, and I heard allusions to this as well, is some kind of redevelopment light.

The city was very effective with its redevelopment dollars of bringing affordable housing to the community, and anything the state can do to support that is appreciated by locals. In addition, the streamlined permitting provisions, while we haven't seen a whole lot of it in the City of Arcata, we are trying to track that and share that information with our decision-makers to ensure that they're up to date and understand what the state expects. I think things like the pro-housing designation are really good.

It's nice to see incentives coming from the state to support those objectives. And as always, you'll hear from any local, I'm sure is that we want to see more flexibility to meet those state objectives, and so less prescriptive laws can be the better. I've heard a lot of this throughout the hearing so far is that many of the bills just really haven't had the traction yet. They haven't had the time necessary or they haven't been implemented yet.

It takes local jurisdictions quite some time to catch up and amend local ordinances. In the City of Arcata, we've seen one SB nine subdivision, and we've had a few other people inquire, but that really hasn't had the impact that we thought it might. AB 2011 is kind of in a lot of ways, a groundbreaking piece of legislation that what I've described to my decision-makers as sort of the anti-planning law, if you will.

It's a complete reaction to the fact that local jurisdictions aren't doing enough to create the housing and meet those housing targets. And so we're seeing more of this sort of state level pressure for housing development. I think that while we haven't seen it in our community, I think it's having an impact on our planning process, and I think that it really shows the desperation that we're facing. Housing Accountability act provisions, the end density bonus provisions, local developers just really aren't using these.

But we're trying to encourage folks to look at these as means for getting housing completed. And we're using this and trying to leverage all of these ideas and concepts that the state has been putting forward into some local planning. We're adopting or going through the process of adopting an area plan. And the idea behind the area plan is to try and come up with objective standards, form based code, and then make development that meets that form based code ministerial.

If those key pieces remain intact, I feel like we will have learned a lot from the bills that the state has put forward and implemented locally. And then lastly, areas that many of the folks in our region have talked about as needed reform in order to help with housing production, first and foremost is strengthening the infill exemptions in CQA.

We strongly believe that projects that happen within the city boundaries largely can't have environmental impacts, and so where we've planned for them, we should be able to implement those without further environmental review. The Coastal act. This isn't true for all cities, obviously, but for the City of Arcata, the Coastal Act is a significant piece of legislation that we have to navigate when doing projects in the coastal zone. Obviously, sea level rises, critical piece that was never conceived within the act.

And there have been regulatory and process fixes that Coastal Commission has tried to implement. But I think that state level action to amend the Coastal Act to take into consideration sea level rise, and to take into consideration that sea level rise has differential impacts across the state would be important. Lastly, the Housing Community Development grants program, we've had a wonderful relationship with the state and produced hundreds of units over the last couple of decades, well over 600 units using HCD grants.

And so this is a productive relationship. I understand the reasons for the regulatory changes, the programmatic changes, but I think that I'm always encouraging maximum flexibility when it comes to the use of those funds, in particular with home and community development block grant funds, where we can make those uses flexible. And then lastly, I guess I just want to put the idea out there that it's really important to make progress on all levels.

We need to address climate change, and so we are having better building codes, better energy code, and this applies to other state level regulations that affect local jurisdictions. But this is a good example of where those changes in energy code actually make development more expensive to build. And so we need to balance the cost of compliance with the effect on housing affordability.

I think those are some of the key things that I've been thinking about and talking with my colleagues in the region over the last couple of weeks, and I appreciate the opportunity to share them with you.

Thank you very much for the presentation. Next we will hear from Lisa Gluckstein, Mayor Breeds, housing advisor in the City and County of San Francisco.

Hi, everyone. Can you all see my screen? Yep. Great. Well, first of all, thank you to chair Wiener and chair Wicks for your strong leadership on housing and also for convening this important hearing today. And thank you to the rest of the Committee Members also for allowing me to present to you about San Francisco's housing goals and challenges. I'm Lisa Gluckstein, housing and land use policy advisor to Mayor London Free.

So I won't pretend that I can summarize all things San Francisco housing in 5 minutes or so, but I'll start with some basic background. So San Francisco's housing crisis is rooted in a long history of exclusion, population and jobs growth, and chronic underproduction of housing. We have a notoriously complex permitting process for approving housing, and some of these processes are baked into our charter, which means that they have to go to the voters to be changed.

And we also have a very strong advocacy community that doesn't always support new housing. So considering our dire need for more housing in the context of a pretty tough economic outlook. The mayor is taking decisive action to support new housing production, very much in line with the state's broader mandates. And happily, HCD certified San Francisco's housing element on February 1st of this year.

This reflects a strong partnership with HCD and the hard work of many state and city employees, just a fraction of whom are pictured here. Fundamentally, we agree with the state that we must achieve our housing elements goals because it's simply the right thing to do, to provide homes to the unhoused, to meet our environmental goals, and to provide new opportunities to our residents and workers.

As we all know, the housing element is just a plan, and we have a lot of work to do to make it real. That work includes creating new capacity for housing through rezoning, reducing constraints that get in the way of development, such as conditional use authorizations, and providing affordable housing opportunities across our city while meeting the housing needs of diverse communities. And we have to move quickly because San Francisco's RHNA obligation is quite sizable. 82,000 units. That's, for context, 20% more than San Francisco has today.

Historically, we've added an average of about 3500 new units per year. And you can see on the right here that we've gotten close to 5000 units per year in recent years, up to 2021. Unfortunately, due to economic factors, that number is trending downward since last year, 2022. So, to put this in context, our RHNA requires an average of 10,000 units per year, or roughly three times historical production.

And so, as you can see in the dark orange on the right here, past production has been concentrated in the eastern portions of the city near downtown. So as part of our housing element, to accommodate this large RHNA obligation, we're committing to distributing new housing opportunities across our city, particularly in well resourced neighborhoods that haven't seen much development over the past decades.

So on the left, the dark blue on the map shows that current zone capacity is heavily concentrated on the eastern side of the city, in line with past production. And on the right, highlighted in orange, you'll see that we're planning to rezone major transit corridors on the west side of the city to accommodate over 36,000 new units of housing to meet our arena shortfall. We all know that adding zone capacity is meaningless if we can't actually get those units built.

So we're also taking a hard look at our own processes to make new housing construction more feasible. That includes making housing approvals simpler and faster, limiting discretion and touch points in the process for decision makers to interfere, and reducing fees and exactions that add costs to already costly development. So while we're reducing these constraints and costs, we're also actively working to address the question of how we create over 46,000 new units of affordable housing in line with our arena goals.

Currently, the city funds about 40% of each affordable housing project locally, and relies on state sources in the form of tax credits and soft debt to Fund the remainder. That translates to a need of roughly $19 billion in local funding, plus $30 billion from the state to make it possible for us to meet our RHNA goals given current levels. So there are a lot of challenges.

But to get each of these processes started, the mayor earlier this month issued an Executive directive which prioritizes housing element implementation across the city. So this has achieved a few things. One, it established oversight structures and groups within the city that are clearly responsible for housing element implementation, creating internal accountability. Second, we sent a clear message to all departments that each of them is individually accountable to the housing elements goals.

So that includes departments like the Department of Building Inspection, the Public Utilities Commission, the port, all these departments that touch housing. And we're asking them to take a hard look at their processes and shorten their approval timelines and their processes to make it faster for housing projects to move forward. And then lastly, we set clear and faster timelines for certain legislative actions in line with the goal set forth in the housing element.

So, for example, we're planning to put forward ordinances that would remove certain approval requirements, such as conditional use authorizations. We're looking to reevaluate our inclusionary requirements, which, compared to most other jurisdictions across the state, are quite high. And we're looking at new project financing tools, such as infrastructure finance districts. So beyond the local changes, we also look to state law to make a lot of this possible. And recent state efforts to streamline housing have benefited San Francisco immensely, especially density bonus and SB 35.

So through SB 35, we've approved over 3000 new units of housing since 2018. And if you remember looking back to the historical production chart, that's close to an additional year's worth of housing production since SB 35 went into effect. And most of those units are affordable. In addition, permitting is roughly four times as fast. So the bottom line is that state intervention in our very complicated permitting processes has made a huge difference. And we support Senator Weiner's ongoing work to extend SB 35 this session.

State stream landing has allowed us to deliver more 100% affordable projects in San Francisco. And as I mentioned earlier, we also rely heavily on state funding sources to make this possible. But there are some challenges. So the competitive Sidlac process has limited access to funding for our projects, which, thankfully, we were able to rely heavily on the California Housing Accelerator Fund to fill the gap.

But there is a lot of outstanding need, as I mentioned before, and we're looking to the state to increase available funding because that will make a huge difference as we work to meet our RHNA goals. So just to summarize, everything. So we rely heavily on the state's leadership and partnership as we work towards our housing element goals. And we've been very happy to have a strong collaboration with HCD.

We look to them for technical guidance and support as we've gone through our housing element drafting and approval process. And as we're looking to implement and we want to continue that, we're working actively to reform our own very complex and very specific approval processes. And we're also looking to the state's legislation to help with that as well.

So, for example, SB 423 which would extend SB 35 this session, and AB 1114, which would help us with the fact that a lot of our building permits are discretionary, which creates problems for housing approvals. We're also working to reduce the cost of building both mixed income and affordable housing in San Francisco through our own processor forums, fee reduction, et cetera.

And at the same time, we need to figure out how we can expand and be creative about local and new local and state funding sources, including through Senator Wiener's replacement housing Bill and new bond measures that we know are in the works. And lastly, we have strong pro housing local leadership in Mayor breed, and we've relied heavily on the state's oversight and authority to make sure other decision makers do right by our housing goals. So we're grateful to the state for their oversight as well.

So we look forward to continuing our partnership with the state to extend these efforts. And I welcome any questions from the chairs and Committee Members when appropriate. Thank you all.

Thank you very much. Next we will hear again from Megan Kirkabee from HCD.

Hello. Can you see me again? Okay.

We can.

Apologies. I ate a snack at the wrong moment, and I'm deeply sorry.

That's okay.

But I just wanted to thank the jurisdictions that spoke. I said this before, but I can't emphasize it enough. We want jurisdictions to come into compliance. Our team is deeply passionate about providing technical assistance on these housing elements. It is hard work. It is thousands and thousands and thousands of hours of work. And I'm glad that I don't have to do it most of the time.

But through that work, I get the pleasure of seeing the outcomes, not just what you heard from three jurisdictions today, but many jurisdictions, that I get to see what it means for them to come into compliance. We have a wealthier beach community that not even to meet their regional housing need assessment, but to meet their fair housing obligations of their housing element, totally changed their R1 zoning to allow up to six units by right.

So going above and beyond SB nine, we're also seeing a lot of these missing middle strategies, be those ADUs or SB nine strategies. And then we have other jurisdictions with voter initiatives that put them directly in conflict with state law. And several of those jurisdictions are stepping up to say, we cannot respect our voter initiative and be in compliance with state law. We're going to follow state law.

They've had to make those sort of hard calls that are not always met with praise, and they require bravery. And so we get to see that. We also see a lot of this resistance to change in the beginning. But through this partnership, through this joint work together, we saw a jurisdiction starting out claiming way more accessory dwelling units than would be possible for them to really achieve or in the realm of realistic. Right.

And that's all in this interest of sort of putting off the inevitable, avoiding the rezone, avoiding the hard conversation. And so this housing element work is also a way in which we can sort of be the bad guy that I talked about earlier of saying, no, you've got to do this. You've got to comply with state law. You've got to show realistic development potential here. And through these iterations, it is not just do a draft, do an adopted, get in compliance.

This is a back and forth conversation to get to a better outcome. We reviewed over 500 housing elements in the last fiscal year. Most of those are this back and forth and are moving the ball forward toward a better housing element. So that's something that I appreciate that I get to see that sort of multiple rounds of revisions and ending up with something we all can be really proud of.

That said, we still have quite a few jurisdictions that haven't gotten there right, that haven't gotten across the line. There's no perfect way to show this on our dashboard, but obviously somebody who's out of compliance might be in a different phase of the process. We do have jurisdictions that have submitted no housing element far past their due date, and they are talking to our Housing Accountability Unit. Right.

There are going to be places where we have our TA approach is no longer working and we need to use our stick approach to get people back to the table. But we also have jurisdictions that are out of compliance but are putting in the work, are showing up to the meetings with us, are making the revisions to get into compliance. And so little by little we're going to see those numbers start to creep up.

And I think that speaks to several of the panel members mentioned this already. But the need for these carrots, too, that a lot of our jurisdictions that have met this housing element bar are pushing further to be pro-housing jurisdictions. That means they're not only willing to be in compliance with the law and show that they're meeting that threshold, but adopt additional policies that are documented to have an effect in addressing housing challenges.

And we want to make sure that they have some benefit for doing that. So we have the Pro-Housing Incentive Pilot that's out where we're putting dollars on the table, a $26 million state investment to encourage jurisdictions to become pro-housing and to get additional points under that program.

Then the Affordable Housing Sustainable Communities Program, the Infill Infrastructure Grant, the Transformative Climate Communities Program, Solutions for Congested Corridors, Local Partnership Program, the Transit Inner City Rail Capital Program, all of these programs have recognized that if you're doing your housing planning, that's going to be good from a climate change perspective as well, and that we need to really reward jurisdictions that are doing that work. And so there are additional funding points and priority throughout those programs.

And something you'll see layered throughout all those programs that I think is important to note is local governments apply for those programs. These are programs that work for local governments. So we are trying to meet the actor who's going to be most influenced by this. Most have the most influence over this housing planning process through those programs. So as of right now, we have 10 pro-housing jurisdictions. We have quite a few more in the queue, but we are always welcoming more people to that.

What we hope will not be an exclusive club. And that's something that I think is going to continue, is really trying to move people where they are at to being more of a part of the solution. Because we need every city and county in California acting with urgency to plan for, encourage, and improve housing.

We are still too often, I would say, having to intervene with our Housing Accountability Unit to remove illegal roadblocks for homes that are waiting approval or facing requests that would add significant costs and delay.

We work with locals enough to know that most locals know without more housing that they are going to experience tremendous consequences as a result of folks paying too much towards housing. Whether that's loss of businesses, less cash in people's wallets to frequent small businesses, you're going to see increases in homelessness, longer commutes, more traffic. But it's a hard thing to support housing at the local level sometimes. And so we do want to be here.

We do want to step up and say people need to follow state law and we need jurisdictions to do what's in their control. We're not asking for the moon or for a miracle. We know that markets change and real estate cycles exist, but there are significant things that jurisdictions can do to be doing what's within their control to address the housing crisis.

And so whether that's addressing findings that we've provided you on a past due housing element, completing a rezone that you've committed to, not putting undue burdens on multifamily housing that does come before a jurisdiction for approval, and proactively engaging with us. We're here to help. We don't have all the staff in the world or all the time in the world, but we have a lot of enthusiastic folks and a lot more than we used to who are here to help.

And we want to do that on all the things I mentioned, as well as the surplus land work that we've been talking about and then not leaving housing funds on the table. Right. I mean, there are more resources than there used to be. There are programs for locals to access and making sure that they are seeing themselves as part of that solution on the affordable side as well.

Thank you. And we will bring it back here for colleagues that have questions. We'll start with Chair Wiener.

Thank you. And I also want to welcome Senator Skinner, the author of SB 330 here. So first of all, I want to go back. I think it was the representative of Pomona talked about the desire to. I also keep looking up at the TV, even though they're not on the TV screen anymore. Oh, here they are. They're on the laptop. Who I guess was Gluckstein, perhaps? No. Ms. Gluckstein was from San Francisco. Miss Gutierrez. Sorry.

From city of Pomona had talked about the need to strengthen CEQA infill exemptions. Was it you who talked about that, or was that Mr. Loya? I'm sorry, I got confused. Mr. Loya, can you just comment more on that. And just to be clear, you know in all this work, we've had some tension with cities, although there are plenty of cities that are really working hard to do the right thing.

And I know that cities sometimes get frustrated and we try to be collaborative, but I know that one, a consistent refrain that I hear from city planning staff, from City Council Members, mayors, is that, hey, we're trying, and CEQA is making our lives a lot harder. We're trying to comply with state housing law. We're trying to build sustainable housing near jobs and transit, and we're having problems because of CEQA and CEQA appeals and lawsuits and so forth.

So, Mr. Loya, could you just expand on the comment that you made?

Sure. Yeah, I'd be happy to. I think that you've characterized it correctly, the issue that a local jurisdiction can go through its process and even approve a project, but then there are further appeals is a challenge. If the projects fit within a CEQA exemption, they're pretty protected from those kinds of challenges.

Whereas if they are required to go through any kind of environmental review requiring negative declaration, that could easily get pumped up to an EIR, which, of course, is added time and money, that EIR can then get challenged in court, which is added time and money. And even if they prevail, it's been my experience that developers are looking at their holding costs as much as they are looking at the actual cost of development.

And so each of those steps, each of those procedures, every hearing they have to go to, every legal challenge that they take is a holding cost. It creates less housing, ultimately, and there are some exceptions from the exemption for infill exemption that I think if those were cleaned up, more projects would fit within the exemption and fewer would be accepted from that exemption, and then that would result in less holding costs.

So I guess where I was going with this is just trying to strengthen CEQA exemptions. And I've seen this in a couple of the housing bills that have come out is that they have specific exemptions for affordable housing, in particular that they're exempt from CEQA. And so I would just like to see more of that.

I think it supports local process for those jurisdictions that are really trying to do the right thing and to promote housing, in spite of the fact that in every community you're going to have at least one person, and that's all it takes is one person who's ready to raise a legal challenge.

Yeah, anyone who can pay a lawyer. We've seen this with affordable housing in Lafayette, where some mega NIMBYs, or is it Lafayette or. I can't remember the East Bay city that has, Livermore. Their City Council did the right thing and approved a great affordable housing project. And some mega NIMBYs who have money and are just funding CEQA lawsuit, they don't represent a majority. They're just able to do that. It's just super undemocratic.

And then of course, we're seeing what's happening right now at UC Berkeley where the California Court of Appeal issued a decision that college students are pollution. And that's really what they frame it in a much rosier, nicer-sounding way. But it's that college students, because everyone knows, apparently, that college students make noise. Actually, human beings make noise. We all make noise at all ages. But it was fun to be a college student. And college students, according to the court, are pollution.

And so they have to be mitigated as if they were like tailpipe, like exhaust or like fumes from a refinery. That's literally how the California Court of Appeal classified college students who are just trying to get an education at UC Berkeley and be part of the middle-class and yet their pollution. That's how far CEQA has fallen from what it was intended to do, which was to actually protect the environment. And so we're doing some work on that. CEQA has to be fixed.

Thanks for noting some of the laws that remove projects from CEQA entirely, like SB 35. And thank you, Ms. Gluckstein, for noting how successful San Francisco has been. With about 3000 units entitled, two-thirds of which have been built already, it's been very successful. And we're going to, through SB 423 this year, work to remove the sunset and make SB 35 even more effective. And then once SB 2011 goes into effect, I think we're going to see that continuing acceleration. So thank you, everyone.

Thank you, Chair Wiener. Senator Skinner, do you have questions?

I don't necessarily have a question. I'm appreciative of the fact that both the city's responses, but also of the HCDs taking the RHNA enforcement process very seriously and holding our cities accountable. However, I. It 's very important that we do this. However, having good RHNAs is still not necessarily going to result in achieving the actual construction of the housing. And while that's not the panel's per se obligation to address, we are of course facing problems of higher interest rates.

We're seeing a kind of drop in market housing. We've got projects that have permitted but haven't broke ground, an indication by developers that they might not. Anyway, I feel like we're going to have to work together with our state agencies to kind of understand that landscape and see whether in the near term is there space for either more investments in the very affordable or low-income housing, and is there more ability to get that broken ground right now than some of these market-rate projects.

And again, the financing on this side is not an expertise. I have. I know one of our panels talked about the loss of redevelopment. We do have in two areas, the Regional Housing Finance Authorities, both in Bay Area now in L.A., and it seems to me that more of those would obviously help.

I don't know if any of our city panelists spoke at all about whether they had efforts to try to put things on the ballot that might help them fund housing that then failed due to the threshold. And I don't know whether any of them wanted to speak to that. The voter threshold that's required to get those passed, did any of our cities want to speak to that?

I can speak briefly. The last affordable housing bond that we passed was in 2019 for $600 million, and that passed at the current threshold. So we're always looking for opportunities to bring more funding and looking at BAFA as an opportunity to get funding across the region, which we understand in San Francisco that to succeed in addressing our housing crisis, we need all the jurisdictions across the region to also be part of the solution.

And so we're very supportive of looking at the regional level for bond measures that would be helpful in building more affordable housing.

And with that, do you have an estimate of how many, given the cost of construction now, how many units you are going to be able to achieve with that bond measure at a 600 million? It was a 600 million bond measure. I know it's not covering all the costs, it's helping to match and such, but do you have an estimate?

I don't have that offhand. I know that we're estimating that bond to last roughly another two years, and then in terms of funding our current pipeline, and we're going to need additional funding beyond then.

Okay.

Thank you, Senator Skinner. Any comments? Okay, well, I also want to appreciate Senator Weiner's comments. I was a loud college kid myself, as I'm sure many of us were. So we deserve housing, back in the day. With that, we will turn it over to our next.

Families with a lot of kids can be loud, too.

Yes. And a six-year-old and a two-year-old now. They're very loud. I'll turn it back over to Senator Wiener to take us home.

Thank you. Assembly Member Wicks. People who like music are loud, too. Lots of loud people. So our third and final panel is about the perspective from the people who build housing, both market rate and below market rate. So we'll be hearing from three witnesses, Mark Mcdonald, who's the Co-founding Principal and CEO of DM Development. Anne Silverberg, the CEO of Related California, NorCal, Affordable and Northwest divisions and Steve Egert, the founder of Anton Devco, which is a smaller developer of affordable and market-rate housing.

So welcome to the three of you, and we'll go in that order. Mr. Mcdonald, Ms Silverberg, Mr. Eggert.

Great. Thank you, Senator Wiener.

Good afternoon. My name is Mark MacDonald. I'm the co-founding CEO of DM Development. I first wanted to thank the Senate and Assembly Housing Committee for inviting us here today to share our thoughts and experiences and for all of your leadership and legislation to help increase housing production and help solve the housing crisis in California. DM Development is a San Francisco based real estate development firm. The focus is on market-rate, ground-up, multifamily development, both for sale condominium properties as well as for rent communities.

And I'm proud to say that in almost all of our market-rate developments, we also build on-site below market-rate units to create mixed-income communities. And our current primary focus is to develop housing that addresses the missing middle by creating innovative projects to feature both naturally affordable market rate units as well as capital A affordable housing. This afternoon I've been asked to give you a brief overview of the development process. I just want to make sure that my slides are advancing. Can everyone see this? The development process really starts with site selection and then proceeds to site acquisition, design and entitlements, permits, and financing.

Excuse me, your slides are not advancing.

Okay, let me stop sharing and try again. Okay

That works.

Perfect. So I'll start again. The overall development process begins with site selection, which is typically a year process, although it could take quite a bit longer to identify a site. And then we proceed to site acquisition, which again is typically about a year process, but could take longer design and entitlements.

A typical kind of non SB 35 process could take two years in San Francisco, permits and financing after the entitlement phase is about a year, and then typically construction, which is a multi-year process for most of the projects that we do, and then leasing thereafter. So the overall timeline could be six to eight years from beginning to end.

Diving into each of these phases in the site selection phase, we looked for attractive development opportunities and target geographies with the appropriate zoning in terms of height, bulk, and density to create our target product types. We do in-depth market analyses looking at a site's proximity to employment, amenities, and transit, as well as we look closely at the entitlement process and the regulatory environment in a given area, and we evaluate whether there are any environmental issues or particular site issues relate to historical resources or hazardous materials.

Once we've identified a site that is suitable for development, we move into the site acquisition phase, where we first start by conducting a very thorough underwriting process, which involves working with an architect to do a feasibility study and really to understand the number of units, square footage, parking, amenities, et cetera, that we can build on the site. Based on the feasibility study, we build a project pro forma that then models costs, revenues, and the overall project returns.

After we've assessed financial viability for a site, we make an offer to acquire the property and in many cases, this will involve multiple rounds of negotiations and bidding. Once our offer has been accepted, then we go through a lengthy due diligence process, complete the definitive documentation for the transactions, and ultimately close on the deal. We normally look at, I would say, around 100 deals for every deal that we close.

And as I mentioned earlier, the process of site selection and acquisition can be a multi-year process. Once we've acquired a site, the entitlement process begins. This typically starts by hiring an architect and a land use attorney to put together a concept plan and then holding a preliminary project review meeting with the San Francisco Planning Department to solicit their feedback before we submit an application. The next step is to prepare and submit what is called a preliminary project application.

The PPA is a process that really kicks off the formal entitlement phase. The Planning Department reviews our applications and after 60 days, issues a PPA comment letter which provides feedback and a roadmap of what the entire entitlement process will look like. This roadmap includes the submission of a project application, a so-called PRJ application. Once that application is submitted, there will be mandatory neighborhood outreach meetings and the current planner will be assigned to review the project.

This process will include design reviews by a variety of different internal Planning Department teams, and it will also include an environmental review. An environmental planner will be assigned, and a variety of different environmental studies will be needed, including shadow and wind and other. Each will require their own specialized consultant to complete.

The environmental review varies by location for the project and could include a community plan exemption for projects whose environmental impact has already been studied, but it could also involve a medicated neg dec or a more extensive, focused EIR or a full-blown environmental impact report, which could add a year and significant cost to the process. Throughout the planning and entitlement review process, we're engaging in lengthy community outreach and collaboration with a public relations consultant.

We meet with community stakeholders, including neighbors, influential community groups, and district supervisors to solicit feedback, answer questions, and potentially modify our project to gain support. Larger projects could require up to 100 meetings or more before we get to our formal Planning Commission hearing. Once the planning review and environmental review are done, there are many public hearings that could be required to gain approval. If a project impacts a park, you might be required to hold a reckon park hearing.

If your project impacts a historic resource, you might be required to hold a Historic Preservation Committee hearing. Ultimately, there will be a public hearing in front of the San Francisco Planning Commission. We'll need to win support from the majority of the seven-member Planning Commission, and then even after winning, there is a 60-day appeal period after which our project could potentially be appealed to the San Francisco Board of Supervisors as well. Our project could be the target of a CEQA lawsuit.

The entitlement process is very lengthy, time-consuming, and extremely risky. And in most cases, entitlements take around 18 to 24 months if you're going through the normal process, but in many cases, it could take much longer depending upon neighborhood opposition. Once projects are fully vested, you'll kind of move into the next phase of the project where we seek permits and then raise financing to build the project.

This typically starts by engaging an architect to kind of go through the full design, development and construction phase for a project. Typically, we wouldn't advance the drawings to this stage before entitlements because there's a very high risk that the project might not get approved. In parallel, we'll be permitting our project through the Department of Building Inspection and processing a variety of permits, including the excavation shoring permit, site permit, street improvement, demo permits, et cetera.

We'll also need to negotiate what's called a guaranteed maximum price contract with our general contractor to build the building. And then lastly, and most importantly, we'll need to identify, negotiate, and close a joint venture equity partner, as well as close a construction financing lender to provide the financing to build the project. We as market rate developers work at the behest of our investors who need our development projects to meet certain return thresholds.

And these investors, many of whom manage money for pensions and endowments, have a lot of options where they can place their capital to achieve the best risk-adjusted returns. All of these tasks on the permitting and financing slide could take another year after we've achieved our project approvals to complete.

And if the capital markets turn against you, as they have in the current environment as a result of rising interest rates, it could take considerably longer to lock in financing necessary to get a project off the ground. So once you succeed in getting your project financing, you have all of your permits in place. You can break ground and move forward into the construction and lease up phase. Construction is very complex and risky.

It requires very specialized staff to oversee a project through all phases of successful completion on time and on budget, culminating in a certificate of occupancy. Once the construction is complete, we work closely with third-party property management groups to plan and execute detailed marketing and lease up plans for our buildings.

The California Legislature has done an excellent job over the last number of years, passing legislation to help make more attractive land available for housing development and to streamline the development process through bills such as SB 35 and AB 2011. My firm has availed ourselves of many of these bills such as SB 35, and it has significantly helped reduce entitlement time and risk.

The primary issue that I see now is that many housing developments don't pencil given the high cost to build and the fact that rents have not yet recovered to pre-COVID levels in San Francisco. Ben Metcalf highlighted this point earlier on the first panel, and that point was spot on. The returns now to develop housing ground-up are simply not there for many investors to deploy capital into ground-up housing development projects that are quite risky.

And so to jumpstart housing, we really need to focus on creative ways to make housing less costly to build in California. So thank you for your time and attention and I'll take questions later and would be happy to discuss any of these topics in more detail. And I'll hand the presentation off now to my panelists who will provide their perspectives and views on the development process.

Thank you so much, Mr. Macdonald. We'll now turn it over to Ms. Silverberg.

Thank you. Thank you very much. I missed the opportunity to prepare a PowerPoint presentation, and those of you who know me know that I love PowerPoint presentations, but I will just use my words today. So, honorable members of the committees, thank you for this opportunity to speak. My name is Anne Silverberg. I'm the CEO for Related Northern California and Northwest Affordable Divisions. And in my role, I am currently overseeing the creation of over 5000 units of affordable housing.

And in our 30-year history, Related California has been one of the larger developers of affordable and mixed-income housing in the state and we have developed over 18,000 units. So first and foremost, again, I want to say thank you. I would like to express my gratitude, my deep, heartfelt gratitude, actually, to the lawmakers, the staff members of the Assembly and the Senate, most particularly the housing committees, as well as the Newsom Administration, for your clear commitment to combating this severe housing crisis that we're in.

The laws and the policies that you've all worked tirelessly to design and pass and implement have been critical to our ability to address this very large challenge of housing unavailability and insecurity. We all together here face an enormous task to ensure that Californians have access to permanent affordable housing, near basic services, near employment, near high-quality transit. And really, the progress that's already been made is making an incredible difference in our ability to deliver affordable homes quickly. So again, thank you.

I want to build a little bit on the description of the development process that Mark just went through. I will say for us in the affordable housing space, the steps that he described are the same with affordable. But I would like to highlight just a few unique advantages and also challenges that are faced by affordable housing developers in California, particularly right now. So first, I want to start with what's working.

Always best to do that, and it happens to be at the start of the process when it comes to site selection. I do want to say that the recent amendments to the Surplus Land Act and the Excess Sites program under Governor Newsom's executive order really both have been very effective in making more sites available and accessible for the development of affordable housing. I know the conversation earlier was about how to improve that and make it even better, and we support that, of course.

But we're already starting to see the impact of having these sites available. I would say if you like to take this one step further, we encourage facilitating site acquisition, particularly in what might be a down real estate market, by supporting public ownership. There was some talk of this earlier with some of the presentations, land banking, as well as low-cost loans or grants for land acquisition. All right.

Second, and this is near and dear to my heart, I feel so strongly about this, also in the category of what's working, the recent suite of land use reform and streamlining laws, starting with SB 35, but now also including SB 330, AB 1763, 2162, 2923, and soon to be implemented, AB 2011, have literally revolutionized how we're proceeding with entitlements and sequoia clearance with affordable housing.

I have been in this industry doing this work for nearly 30 years, maybe over 30 years, but we'll just say nearly 30 years. And so I can say this from my own experience, and I can say this very confidently. Instead of spending years and years of time and millions of dollars to defend and process and often fight for affordable housing, affordable developers are able to choose from a menu of laws now to use in streamlining entitlements and secret clearance in a way that we didn't even dream of even a decade ago. So in many cases, we are seeing the effects of all of your hard work.

Our organization alone has entitled 818 units and seven projects since SB 35, and we have another 1176 units in process. Some are just months away. So we're seeing real progress here. And I know there's more to be done with CEQA and streamlining to expand the applicability and importantly, to extend and make permanent the sunsetting legislation of SB 35. So AB 423, if I have my number correct here, but it's really important to see those changes, the extension and to make that permanent.

But I can say so far, at the project level, the changes that are resulting from this legislation are very significant. Significant in terms of time savings, housing dollars, and providing some certainty to the process, which in affordable housing is really important. I would say also beyond the project level, on a macro level or a statewide level, this is bringing many more projects forward, creating a really robust and full pipeline of critically needed affordable housing ready to be built for Californians. This is working. All right.

So this leads me to the next thing, which is a challenge. If you follow Mark's process description, one of the next items to tackle is financing. And this is really where we need to focus our energy today. Our greatest challenge in the affordable housing space is funding. We are moving projects forward through the approvals process, readying them for development, and then they're getting bottlenecked at the financing stage.

This has been the case over the last several years, but is becoming even more true and more acute today. We have to address this challenge or we'll fall further and further behind in our effort to house Californians. I would say over the last several years, we've been able to produce units up to the caps to our maximum under the LIHTC program and the Tax-Exempt Bond programs.

There are federal caps that are imposed per capita on those two programs, and those are really what we're using as the main engine for 100% affordable housing. That's about 20,000 units a year. That was pointed out earlier. It's not nearly enough, but at least it's something. What we're worried about now is falling short of that.

I had planned on presenting a case to encourage additional capacity for the state to come up with a way to replace the federal credits and go beyond the limits of the per capita limit of the Federal Government. But unfortunately, I think our subsidy situation is so much more dire that we really have to focus on at least supporting the production levels that we've had over the last couple of years.

Right now, much of the critically needed soft debt that we use to complete the capital stack for affordable housing is actually, well, it's already been insufficient, but now it's starting to run dry. To give you a sense of the enormity of this problem. The recent HCD Super NOFA round for state-level financing was oversubscribed five to one. 3.5 billion in requests for 650,000,000 in resources. Those are projects that are ready to go.

And the MHP program in particular, which is a really critical program for the development of affordable housing, was oversubscribed ten to one. Ten to one. So to make matters worse, the HCD directors indicated that MHP next round may be the last round that we have. So this problem is only going to get worse as we run out of funding and then further the state credits that are allocated through the CDLAC process.

Another way to fill that capital stack for affordable housing was also seriously oversubscribed in the last round. All of the credits for the entire year will be gone in this first round. So the next couple of rounds there will be no state credit. And we still have many, many projects that apply for credits that will not get an award and are stalled out. So the severe lack of funding is coming at the worst possible time when housing needs are as acute as they've ever been.

We've never been so far behind and we are facing a moment in the economic cycle where we actually could make some progress. Affordable housing often tends to be countercyclical to market-rate housing, and we really could be moving forward. We can't afford to repeat what happened in the last economic downcycle. Many of us experienced this where the downcycle occurred and the affordable housing industry sat idly by, unable to produce housing for lack of available funding.

We not only lost ground in our housing production, but we also lost really critical workers in our industry, including construction workers that never came back and we're still feeling the effects of that even today with housing and labor shortages. So to avoid this problem, I would recommend the following. Increase the availability of funding for affordable housing and replace and expand the funding that's currently being depleted, stabilize affordable housing production long-term with a reliable, ongoing, dedicated source of funding for affordable housing.

Just like the streamlining legislation was groundbreaking and legacy-producing, it was historic, this is an opportunity to again make a move that will change the way we build affordable housing. Having some predictability and stability in the system is critical. Also, build some flexibility into the system to allow funding sources to fill gaps in the capital stack as they're needed, and utilize the most efficient mechanism to deliver these resources to project to ensure the maximum benefit.

More funding is needed for affordable housing now to keep the production at least at the levels that it's been over the last couple of years and making these sources predictable and ongoing will allow everyone to plan efficiently and deliver this housing to Californians. Just one last plea to those of you who have made history and are interested in doing it again. You've made so much history by positively changing the way we address housing issues in the state.

So many more units will be built as a result of your hard work and your partnership with lawmakers and the governor, all of whom have worked diligently to pass and implement effective policies. We look to you now to make more money and more history with more money committed and dedicated to affordable housing to encourage development in the state. Again, thank you for all of your support, and I hope these comments will be helpful as you navigate the current environment. Thank you.

Great. Thank you to the three panelists. Any questions? I'm sorry, one more. Mr. Eggert. My sincerest apologies. No, go ahead, Mr. Eggert. I'm sorry.

Okay, great. Well, Senator Wiener and Assemblymember Wicks and Senator Skinner, who I hope is still there. It's my honor to talk with you here, and thank you so much for all your help with affordable housing over all these years and housing in general. And I'm in Sacramento. I'm based in Sacramento. So anytime that you'd like to get together and talk, I welcome that opportunity, and that's why I'm here this afternoon. So my company, Anton DevCo, was founded in Sacramento almost 30 years ago.

We've built 12,000 units. About half are affordable and half are market rate. We started inland in Sacramento, then moved to the Bay Area, and we have built in Southern California, both inland and coastal. And now we are building in Colorado and we're building in Arizona. So this geographical diversity is enormously interesting to me as someone, as a student of housing and who's made housing my life's work.

And so I'll just share a few thoughts, and then I'm happy to answer any questions you have even now or later or what have you. The next thing on my list is to just get back on thanking you for what you did. SB 330 is a really interesting law for us as market rate folks. I remember going through that and reading that and how whoever wrote that law knows what we deal with with cities and trying to close all those loopholes.

And so that level of detail in particular was just super helpful for us. The ADU Law is helpful. The Density Bonus Law, obviously, some folks have mentioned density bonus law is a great law, and it's continually strengthened. HCD has been enormously helpful, and I'm going to share a case study in a moment where HCD was helpful to us, but just overall, the focus on production, because that's the way to make anything more affordable, whether it's housing or widgets or anything, is more supply.

And that's what we're in the business of doing. A couple of key facts on costs that I'd like to share with you. Open my Kimono a little bit. In Colorado, we have a 400 unit project under construction in Aurora. Aurora is the Denver area. It's a Denver metro near Fitzsimmons Medical Center. And then we also have a project under construction in Santa Cruz, California, which is 200 units. Those projects are both podiums. They're both seven stories altogether.

They both have a little tiny bit of affordability, minimal affordability, but they're market rate deals. The Colorado project, our hard costs are $256 per square foot. The same project in Santa Cruz, $429. That is 1.6, almost a 1.7x. And that does not include prevailing wages. If it was prevailing wages, the project would be twice as expensive as the Santa Cruz project be twice as expensive as the Colorado project. Just by way of information, that 400-unit piece of land cost us $11 million in Colorado.

And that piece of land for 200 units in Santa Cruz cost us $22 million. And the person we bought it from slaved away in the City of Santa Cruz. I'm sure you can all imagine for years to get that project approved. We bought that project and paid that price as an approved deal that was already through zoning and CEQA. Just a couple of other facts. We also have out of state, a four story project we're working on wood frame with no structured concrete surface, parking.

That's $237. This is real time numbers. And those other numbers are real. Those numbers were priced about 12 months ago. Okay, so the other project, the lower density project we have is $237 per square foot. The project, we have a project in Sacramento, affordable housing project, $328 per square foot. So even Sacramento, which has lower construction costs than the Bay Area, the costs are enormous. Some of those costs are seismic and can't do anything about that.

But the vast majority of that cost is labor for sure. So I asked my team to find out what the prevailing wage rates were and what the market rate was, because prevailing wage is above market. It's way above market. Okay. And just so we're all clear on that, and obviously way above, it's like a super hyper minimum wage, as I'm sure we all know.

So in Colorado, we pay our wood framers, our rough framers, the guys with swing hammers, we pay them $85 to $90,000 per year. They get $40 an hour, which translates to 85, $90,000 a year. Not a bad living. Down in the South Bay, those same guys make $110 to $120,000 per year. And that information is in line with the prevailing wage information we got, which shows some of these market rate at $115,000. The prevailing wage rates are $86 an hour, $170,000.

So for us doing market rate, we're already paying a fortune for the land, taking all the secret risk. It's a no-go. I don't know how many non-high risers are being built with prevailing wage carpentry, because that is not a trivial price. I think it would translate into the 20 million range of additional cost, something like that. When we talk about why housing is not built and why more housing is not built, that is a chief culprit.

It's not the only culprit, but it's a major culprit, and it's a solvable culprit. So SB 35 is so close to being such a great law, and I just want to concur with Ann on the affordable housing, how much it helps. But for market-rate housing, for the reasons I just described, it does not help because we must pay prevailing wage.

But if that one provision was struck, the prevailing wage requirement, and I know that the new law, there's conversations about going to the skilled and trained workforce, which is, you could pass that law, but then you're going to reduce the amount of housing built, for sure, no question. But if you're simply in SB 35 and the rewrite to SB 35 to eliminate the prevailing wage requirement, that brings market-rate housing into play, and now you're really getting supply. So that's one tool.

But SB 35 and SB 330, and all these are really nibbling around the edges. I mean, if we're going to be just level with each other, what we would do, what I would recommend if you really want to see housing built. And again, when you compare how much housing is being built in the Bay Area, compared to Phoenix, 27,000 units. Denver, 25,000. Those are multi-units. Okay? There's not even count the single family. So they're getting serious, serious production.

They don't have CEQA, they don't have prevailing wage requirements, and everything is built. The laborers are protected, the environment is protected. Everything's working great, okay? But that's really the difference between what I'm seeing in those markets and what I'm seeing in the California markets, especially the Bay Area's, is especially a problem. So therefore, very well aware of the politics, but I would eliminate the prevailing wage requirement. I would welcome a debate with representatives of labor on that.

And then the other thing, of course, is, and Senator Wiener was referring to it, I thought in a certain way that CEQA has been corrupted. I mean, we're all been around the track, we all know it. And I would recommend we just simply exempt all infill housing from CEQA, period. And I appreciated Assemblymember Wicks' comments in the San Francisco Chronicle recently, kind of, you know, alluding to the politics of what we're dealing with here.

But if we really want to get at this, those two things will change the face of housing in California, and then you'll really see production get built. And the best part is it does not cost the State of California anything. It does not need a permanent, I mean, permanent source of housing for below market rate is great, but for getting real, I mean, the serious production, most of the productions is and is going to be market-rate housing without spending a dime. We can get it done. And so that's what I wanted to say. And like I say, I'm happy to answer any questions. I'm sure you've heard this before from builders, but it's my duty to kind of offer my thoughts, and happy to answer any questions.

Thank you. I know we're rounding out the panel here. Appreciate all the panelists offering their expertise. Really just two comments. One, I want to underscore what Ann said about the ongoing need for affordable housing. Ann, I see you and I hear you and all of you around the need for that, and I'm committed to that. I know Senator Wiener is as well as are many of us, and I think it's the big thing that we need to tackle next.

And I'm personally working on that over the next couple of years, and I'm committed to figuring out some sort of ongoing funding for affordable housing that matches the crisis that we're in. And so we'll have more conversations on that, but that's really critical. And then, respectfully, I wanted to just disagree with the last panelists. I think in terms of how the conversation was laid out, if you look at a bill like AB 2011, yes, there are prevailing wage components in it, which we think were really important. But this was also a bill that was supported by the affordable housing developers as well as the carpenters union and others, which we sought to strike a balance to ensure that we can provide such wages because we think those are really important. It's important to grow our workforce.

It's important to have the wage theft protections, the healthcare component, the apprenticeship requirement, et cetera, so we can build the workforce that we need to. And we believe that by providing the CEQA streamlining and the ministerial approval, that streamlining process will then allow developers to then ensure that they are paying their workers what we believe they should be. Because we do think this is an honorable profession, one that needs to be paid accordingly.

And we also know that there are wage theft issues that exist within this industry. We want to seek to ensure that we're protecting those workers. And so our hope is that 2011 strikes that balance. And as someone who's a big supporter of prevailing wage and the labor movement, but also someone who's a big housing production person, our goal is to be able to ensure that we do both of those things. So I just wanted to provide some comments on that.

Great. Thank you. I did have a question that I wrote down. Let me just. Yeah. Okay. So it looks like we're down to the Chairs right now. I don't have any additional questions. I'm just very appreciative of everyone participating, and I also am appreciative of the recognition of the sea change in terms of state housing law over the last few years and what that has meant. And we're definitely not going to make everyone happy. There's always going to be some push and pull and give and take.

It's important in legislation for all major participants to be flexible and willing to have those conversations and not say my way or the highway. My way or the highway doesn't usually work very well, doesn't lead to productive dialogue. So we try to come up with the best laws that we can, and it's always an ongoing conversation. So thank you to these final panelists for your insights and to all the panelists today. And with that, we'll open up for public comment first.

And because this is not a bill hearing where we ask people just to say whether they support or oppose, I'll just ask public commenters, if you say your name, your affiliation, if any, and then just a brief comment, that would be fantastic. So we'll start with live in person. So come on up.

Hello. Good evening. Hi. My name is Andrew Melendez. I'm a political science student at St. Mary's College. And, yeah, I just wanted to come out and just voice my support for all the bipartisan work that's going on in terms of just doing your help for affordable housing. I'm from Richmond, California, so I understand how important it is to have affordable housing for our communities. So, yeah. Thank you very much.

Thank you.

Hello there. My name is Oscar Soriano, and I, too, am from Richmond, California. And I understand that there are many factors that contribute to the current State of housing, and I'd like to thank you for keeping on the fight to fight the crisis. So that's all.

Thank you so much.

Good afternoon, members of the committee. So, my name is Anila Perez, and I'm a student at Contra Costa College and majoring political science. And I'm just fully aware the current housing situation, how it has impacted people who are more in disadvantaged areas. These are people who rarely can afford affordable housing, and there are families who had to make sacrifices when it comes to keep a roof under the heads.

As someone who lives in a low-income neighborhood, I have seen the struggles of our community, especially in my hometown of Richmond, California, because of the rising cost of living. My parents are paying more rent, which has been making our lives more difficult, especially in a low-income area. I believe the rent and living equity should be applied to all Californians, no matter what their background or income is. Housing is a human right. Thank you so much.

Thank you so much.

Thank you.

Good afternoon. Mark Stivers with the California Housing Partnership. And speaking briefly to the choir, I just want to say, I want to second the wonderful comments of Ann Silverberg. The affordable housing development community is very grateful for the reforms that have taken place in the land use over the last couple of years. We look forward to working with you to expand and continue those reforms. And we obviously concur that the biggest single barrier to building more low-income housing these days is actually the financing thing.

So we appreciate the support from both of you. The affordable housing community, along with the homelessness community and the tenants rights community, have joined together this year for the first time in a comprehensive budget ask. We look forward to the Legislature putting together funds that is not just for production, which is obviously critical, but also for other homeless strategies that keep people from becoming homeless, and for preserving the affordable housing that we have. So we look forward to working with you on those and just want to reiterate that comment from Ann Silverberg. Thank you.

Hello. My name is Harrison Linder. I'm the assistant director of housing policy for LeadingAge California. We're an association representing nonprofit providers of housing, care, and services to older adults across the care continuum. I'd just like to advocate that, looking forward in your housing policy, to make sure to consider the specific needs of older adults. Over the last five years or so, the increase in the number, excuse me, the increase in the older adults seeking homeless services has gone up by 80%. It's about double the general population. And when looking at housing services for older adults, housing is one thing, but to keep older adults held, they really need services along with it. So specific set aside housing projects for older adults are very important. Thank you.

Good afternoon, honorable members. Alex Lantsberg here on behalf of the State Building Trades Council. For the past six years, California has been in the midst of a massive experiment in the deregulation of the residential production sector. Since 2017, this body has passed I thought about a dozen. I learned 275 streamlining bills and sequoia exemptions covering both affordable housing and for profit residential development. The results have actually been pretty easy to see, and Mr. Metcalf talked about them. Affordable housing construction has benefited immeasurably.

The thousands of units of affordable and supportive housing have been or are in the process of being built. And the reason is that because we've been providing funding for those. Private projects, however, continue to languish, mirroring the housing depression gripping the entire nation, including Arizona, notwithstanding what the gentleman just said earlier. Total production since 2017 has basically been flat and far below pre-financial crisis levels.

We will not solve this crisis with more streamlining, disconnect, or disconnecting housing from the training system that's needed to build our workforce, or watering down the labor standards as established in the past five years as that very same gentleman suggested. Instead, we need active measures, just like many of these folks have said, for direct state intervention and investment to build the housing we need for workers and families while supporting productivity, safety, and dignity for construction workers. Thank you.

Good afternoon, honorable Chairs. My name is Cynthia Castillo. I'm a policy advocate for Western Center on Law and Poverty. We've really appreciated today's conversation around production of housing, particularly ensuring the production of housing affordable to low, very low, and extremely low households, which represents the most significant gap in our housing stock.

In our efforts to spur production, we must ensure that land use and zoning policies affirmatively further fair housing, meaning undoing patterns of segregation and exclusion, while also protecting low-income families and communities vulnerable to displacement. I really, really want to align my comments as well with Ann and Mark, who mentioned that the most significant thing the Legislature can do now to support solutions to affordable housing and the housing crisis is to address the significant gaps in funding for affordable housing rental assistance and other tools to ensure housing stability.

A lot of those issues are outlined in our 2023 and 2024 housing and homelessness budget blueprint, which really appreciate folks support on that and uplifting the ongoing need for funding mechanism for affordable housing and homelessness programs in the state. Really appreciate your time. Thank you.

Thank you. Any additional public comment here in the hearing room? Seeing none, we'll move to remote public comment. Is the operator, are you there?

Yes.

Okay. I don't know why I keep looking up. They're not up there. I just automatically look up into the sky. The voice of God. So we'll open up the lines. Can you please queue up any remote public commenters?

Absolutely. If you'd like to make a public comment at this time, you press one and zero. And we'll go to our first line. Line 94, please go ahead.

Hello there. My name is Jordan Wynne. I am the community activation specialist for United Way of Greater Los Angeles. I'm calling in this afternoon in order to speak in support to adapt and bring forward the coordinated budget letter that was submitted. I'm speaking in strong support of that coordinated budget letter that was submitted for the 2023 and 2024 housing and homelessness budget blueprint.

For the first time, advocates and practitioners across the affordable housing, housing, justice, and homelessness spaces came together to put together this set of comprehensive recommendations. But we know we need a comprehensive approach to solving the housing crisis. There's no silver bullet, and we need investments in affordable housing production, preservation, and anti-displacement measures. Many of the bills discussed today to make it easier to build affordable housing are important, but they're a complement to, not a replacement for the funding of affordable housing.

We need to make sure that we can secure additional funding just to keep production at year. And of course, as we know in many of our most populated regions, we're way far behind. Los Angeles County itself is 800,000 units behind where it should be in terms of housing production. This is an emergency. We need to use as much as we can to budget for the affordable housing, not just any kind of housing, but affordable housing. That's really what I wanted to emphasize on this call. I'll end my comment at this time. Thank you very much.

Thank you. Next speaker.

Next, we go to line 102. 102, please go ahead.

Hello, this is Kevan Insko with the Quaker based advocacy group the Friends Committee on Legislation of California. I'm also speaking in strong support of the coordinated budget letter, the 2023-24 housing and homelessness budget blueprint. Thank you.

Thank you. Next speaker.

Next, we'll go to line 103. Please go ahead.

Thank you, Chairs and staff. Mitch Steiger with the California Labor Federation, appreciate the opportunity to testify today. We just wanted to mention that delegates to the California Labor Federation convention voted to support the skilled and trained requirement for housing streamlining. And our executive council has since adopted principles affirming that standard. This ensures that when developers get their projects fast tracked, that workers get the guarantee of quality jobs and safe work sites. But we strongly believe that cutting corners on workforce standards to benefit developers won't save money, but will create more California workers in need of affordable housing. Thank you.

Thank you. Next speaker.

Next, we go to line 98. Please go ahead.

Honorable Chair and members, Amy Hines-Shaikh with Wildcat Consulting, representing Housing Now, the California Community Land Trust Network, and Abundant Housing Los Angeles, in strong support of the comprehensive and unified budget request letter. And then also SB 225, which is related to the Community Anti-Displacement and Preservation Program, which is also included in the unified budget letter. Thank you so much.

Thank you. Next speaker.

Next we'll go to line 96. Please go ahead. Next we go to line 99. Please go ahead. Go ahead, line 96.

Hi. Apologies. I pressed the wrong buttons there. This is Rae Chen Huang with Housing Now. The senior organizer with Housing Now. We are a coalition of over 150 organizations that work collaboratively together across the state and across various coalition spaces to be able to advocate for those who are most impacted by the housing crisis, which are primarily tenants and unhoused folks of color.

Today I am speaking to be able to support the unified housing and homelessness budget. Ask that we have collaboratively worked on together to submit, as well as in support of ensuring that those who have been historically disenfranchised that their voices are going to be front and center and to make sure that we are prioritizing producing housing that is actually affordable to low, very low, and particularly extremely low-income households.

At this moment, I also want to lift up that one of the things that we believe, solutions that we believe are important to be able to end the housing crisis is the moving towards acquisition of housing off of the speculative market. And that is with SB 225, which you'll see in the letter, and other forms of social housing developments that we'll see perhaps in this year. Thank you so much for your time.

Thank you. Next speaker.

Next, we'll go to line 99. Please go ahead.

Hello there. Shanti Singh. I'm the legislative director at Tenants Together. Our 50 plus tenants rights member organizations across California and their tenant members have been battered by COVID evictions and rental debt on top of the existing housing crisis. We live in the world's richest subnational jurisdiction, and yet millions of low and middle-income California tenants are begging for acquisition and production resources. It's really important the work that's been done against obstructionism to affordable housing.

But we won't be able to streamline or rezone something if we don't fund it in the first place. Given that we have a 1 million unit shortage in California for low-income people, we urge members to focus on establishing ongoing funding mechanisms for affordable housing and homelessness programs to begin to meet the skills in need and the urgency of this moment. We also support construction laborer, most of whom are California tenants, in being able to afford the housing that they build. Thank you.

Next speaker.

Next, we'll go to line 88. Please go ahead. Line 88, your line is open. We'll move on to line 97. Please go ahead.

Good afternoon. Michelle Pariset here with Public Advocates. Thank you, Chair Wicks and Chair Wiener, panelists, and staff. This hearing and the discussion. Very briefly, I'd like to urge you to focus the state's limited resources on affordable housing, especially for extremely low-income households, as this is where the most significant gap is by far.

The biggest role the state can play in solving the affordable housing crisis is to fund affordable housing construction and rental assistance at the scale of the need. In that spirit, I urge you to support the unified affordable housing and homelessness budget pack that's been mentioned several times here today. Thank you very much.

Next, we'll go to line 105. Please go ahead.

Good evening, Chairs Wicks and Wiener. This is Brian Sapp on behalf of Lighthouse California with our client, Habitat for Humanity. We are disappointed in the lack of focus on homeownership of the hearing today. It already deserves its own hearing to focus on homeownership. We are very much appreciative of the CalHome Program, which is the only state program that actually allocates funding towards affordable housing for first time home buyers in California through lashes budget and AB 2217.

This cost effective and efficient program offers competitive grants to local public agencies and nonprofit organizations to enforce new construction to enable home rail building and production for low and very low-income households. This program addresses the supply crisis that protects homebuyers from erratic fluctuations in home sales, prices, and interest rates that are associated with home loans. We are thankful for your time today, and we look forward to working with you more in the future. Thank you.

Thank you. Next, speaker.

Next we go to line 108. Please go ahead.

Good evening. My name is Abram Diaz, and I serve as the policy director of the Nonprofit Housing Association of Northern California. We represent affordable housing builders and leaders across the Bay Area and the broader Northern California region. I'll join with my colleagues in supporting our coalition housing and homelessness blueprint. We recognize there is no silver bullet for our crisis, and we really need investments in affordable housing, production, preservation, homelessness ,and anti-displacement that are commensurate with the scale of the need.

In the Bay Area, we found that we have about 400 affordable housing developments in various stages of predevelopment that create an estimated 32,000 affordable homes. But we need significant financing in order to move that all forward. We're very committed in finding ways to support state efforts, but also local bond efforts. As you recognize, local jurisdictions have an important part to play, and we believe we can go a lot farther together when we work in partnership. Thank you again for your attention to the issues today and really appreciate that great discussion.

Thank you. Next speaker.

At this time, there's no others in queue.

Okay. We will close public comment, bring it back to the Joint Committee hearings. I want to thank everyone for participating in here and particularly for our staff, both the Senate and Assembly Housing Committees, for working extremely hard to put this committee together and all of our colleagues for participating, and the panelists and members of the public. We have a lot of work ahead, but I feel good about where we're going. But as we heard today, we need to rev it up in a lot of different areas. And I know we have a growing number of legislators who are deeply committed to this work, and so I feel good about the work ahead. So thank you. Chair Wicks.

Thanks, everyone for tuning in.

Great. And with that, we are adjourned.