Rising to the Challenge of Creating Affordable Housing
by Steve Pontell, Chief Executive Officer of National Community Renaissance
The affordability of housing remains one of the biggest challenges facing Southern California.
We’re approximately 600,000 housing units short of meeting our needs, and with the broader housing market poised for recovery, those numbers will only grow. The only way to
assure the affordability of housing across the entire socio economic spectrum is to have an adequate supply of housing at each price point.
The solution – good economy or bad, housing bubble or not – is a sustainable, local, state and national policy that recognizes the social and economic consequences of an affordable housing crisis, supports public-private partnerships, and begins to tear down the silos that keep us from fixing the problem in a measurable way.
Part of the challenge is acknowledging just how serious all of this is. Layoffs and wage freezes, record foreclosures, and burgeoning demand for rental housing among former homeowners drove rents up – often to 30 or 40 percent of family income – exacerbating an already difficult situation for young, poor and working-class people.
In California, the problem was magnified in January 2012, when the state eliminated redevelopment financing – an important tool for developing affordable housing. Suddenly,
millions of dollars a city once had to replace blighted properties with quality, low-cost housing were taken away.
That money hasn’t been replaced, and it appears increasingly unlikely that a pure public-funded alternative will take its place. Enter the private sector – in partnerships with communities and others who understand the bigger picture when it comes to affordable housing.
Therein lies the key – that this isn’t just about affordable housing, but the ability of communities to revitalize themselves, of people and families to become self sufficient, and businesses to prosper.
Joel Kotkin, a national housing expert and advisor to National Community Renaissance (National CORE), points out that as families pay more for housing, “they have less available for food, transportation and other key expenses. It also has severe societal ramifications: Depressing demand of employment-generating construction projects, lessening the opportunities for upward mobility, reducing the demand for other goods and services…all of which leads to slower overall economic growth.”
In other words, fix affordable housing, and everyone benefits.
To that end, a new Senate bill – the California Homes and Jobs Act of 2013 – would create a half-billion dollars in state seed money to incentivize the development of safe and affordable single-family homes and apartments.
The money would come from a small, $75 recording fee on real estate transactions, not including home sales. This would generate $500 million a year, which, in turn, would leverage another $2.78 billion in federal and local funding and bank loans each year.
The impact would be felt far and wide, creating 29,000 jobs a year and filling an affordable housing void that limits our ability to attract and retain employees.
We’re seeing positive developments at the local level as well – for example, increasing density allowances to make it more financially attractive for affordable-housing developers.
At National CORE, we applaud these efforts and look forward to partnering with communities and private investors to fill this critical, and urgent, need.
Steve PonTell is chief executive officer of National Community Renaissance, the third-largest national non-profit developer of affordable housing, based in Rancho Cucamonga. For more on National CORE’s affordable housing initiatives, please visit www.nationalcore.org.