In summary

Negotiators working on the Build Back Better package must not miss the huge opportunity to invest in needed housing in California and elsewhere.

By Carol J. Galante

Carol J. Galante is the founder of the Terner Center for Housing Innovation at the University of California, Berkeley.

Barry Zigas, Special to CalMatters

Barry Zigas is a senior fellow at Consumer Federation of America.

Housing aid is threatened in Washington as the Build Back Better Act reconciliation package moves toward a vote. The original $327 billion housing portion is by far the largest and most needed investment in affordable housing in decades. This aid must be protected from deep reductions if we are to address California’s and the nation’s housing crisis.

The pandemic laid bare the deep inadequacy of our existing housing support system, especially in California, where a million people are homeless (more than a third of the nation’s unhoused) and more than 5 million households struggle to make rent or pay the mortgage. As have other states, California has had to step up with eviction moratoria and short-term rental aid to keep lower-income families in their homes. The proposed federal aid package is a more rational approach.  

The House and Biden administration proposals combine a significant increase in rent subsidies with new investments to build new and protect the existing supply of affordable homes. This is groundbreaking.

Increasing housing funding — particularly direct subsidies that ease crushing financial burdens on low-income renters — is essential, as demonstrated in the Terner Center for Housing Innovation’s 2021 framework titled “Building a Better Ladder of Housing Opportunity in the United States.” Without a larger attack on the fundamental obstacles that prevent the housing supply from expanding and increasing access to high-opportunity neighborhoods, however, we risk merely pumping more money into an already constrained market. This would push up prices further and reinforce historic patterns of racially inequitable development.

The Build Back Better package would make existing programs, such as housing choice vouchers, HOME housing block grant and public housing, more cost-effective.

For instance, the package was to include $4.5 billion to increase housing supply by underwriting efforts by state and local governments to overhaul and reform land use and zoning rules. This would incentivize states and local governments to rewrite or remove the regulatory barriers that have contributed for decades to the acute shortage of housing across the price spectrum. (House negotiators were working on a final bill Sunday.)

Also, $7.5 billion for a new U.S. Housing and Urban Development Department-administered Community Restoration and Revitalization Fund. This would  support community-led projects seeking to stabilize neighborhoods and encourage equitable development. There also is $500 million set aside for community land trusts and shared equity homeownership.

Such discretionary grants and support projects will help overcome the effects of years of housing disinvestment. Coupled with provisions to amend restrictive zoning, this funding could be a powerful tool to reduce housing inequity and increase access to quality homes in good neighborhoods.

The historic $90 billion in renter assistance includes:

— $15 billion for Project Based Rental Assistance to prevent displacement of low-income renters from rapidly gentrifying neighborhoods. 

— $500 million for supportive  services to help households that qualify for housing choice vouchers to apply.  Project-based rental subsidies preserve existing homes for extremely low-income residents.

— Housing choice vouchers that could hit the street within 12 months of legislation enactment.   

These are exactly the kinds of long-term support programs California desperately needs to leverage the billions of dollars of state funds signed into law earlier this fall. The state funds provide capital to accelerate affordable housing production and convert hotels and commercial buildings to long-term housing for the homeless. 

When the political negotiations in Washington focus solely on total numbers, new efforts to underwrite neighborhood housing development and tackle local regulatory obstacles are at risk. Negotiators must not miss the huge opportunity to invest in needed housing. They need to retain the key components of the House and Biden administration proposals. Failing to take an integrated approach to housing needs risks squeezing one part of the economy at the expense of another.

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