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Governor, Democratic Leaders Reach Agreement On Major Pieces Of Housing Deal

Ben Adler / Capital Public Radio

State Sen. Toni Atkins (D-San Diego) joins other Democratic lawmakers and California labor leaders at a news conference calling for a housing deal on Monday, August 28, 2017.

Ben Adler / Capital Public Radio

California Gov. Jerry Brown and legislative Democrats have reached a housing deal at the state Capitol that includes a $4 billion bond, a new fee on real estate transaction documents, and several efforts to streamline new development projects.

“We’re going to take a shot at this later this week,” Assembly Speaker Anthony Rendon (D-Lakewood) told Capital Public Radio in an interview Monday, adding that he believes his Democratic colleagues can muster the votes to pass the measures – including ones that require a two-thirds supermajority.

“We’re looking at a tremendous shortage of housing,” Rendon says, pointing to a California Department of Housing and Community Development estimate that the state must build 180,000 new units of housing every year to meet demand. “So I think the governor and everyone else here in Sacramento realizes the urgency of this.”

The bill package includes up to a dozen measures. Although negotiations continue on some of those bills, the three headliners are clear:

  • SB 3, a $4 billion housing bond measure that would require voter approval on the November 2018 ballot. It includes $3 billion to help subsidize affordable housing projects, with the debt payments coming from the state’s general fund; and $1 billion for the California Department of Veterans Affairs home loan program, which will be repaid through mortgage payments;
  • SB 2, a $75 document fee on real estate transactions – excluding new home purchases – to create a permanent funding source for affordable housing projects. It’s projected to raise between $200-$300 million per year; and
  • SB 35, a bill that seeks to force cities and counties to streamline the planning process for urban, multi-family projects. To be eligible, the projects must meet certain zoning and requirements, such as paying construction workers a prevailing wage.

“We recognize that this housing crisis is a problem that didn’t arise overnight, and it’s going to take some time to address it,” Rendon says. “I think this is a good first stab at the problem.”

SB 2 and SB 3 require two-thirds votes in each chamber of the Legislature, and it’s not yet clear whether they’ll be able to pass the Assembly. Both measures already passed the Senate earlier this year, although they’ll need to win final Senate approval should they pass the Assembly.

Assuming all Republicans vote no, every Democrat in both chambers would need to vote yes. Many Democrats are worried about a voter backlash after they approved a gas tax increase and cap-and-trade extension earlier this year.

One of the final outstanding issues in negotiations was the size of the housing bond. As we reported earlier this month, Gov. Jerry Brown linked the housing talks to discussions over a parks and water bond by seeking to limit the bonds’ combined size to $7 billion.

Because the $1 billion veterans home loans portion of the $4 billion housing bond will be repaid through mortgage payments, the state general fund will only be on the hook for repaying $3 billion. That suggests the parks and water bond will end up at $4 billion.

The other bills that comprise the deal are still being finalized could be announced as soon as Tuesday. They include additional efforts to streamline the development process and make it harder for cities and counties to evade state housing mandates.

Editor's Note: This story was updated Tuesday morning to reflect additional reporting.

UPDATE 3:29 p.m.: California lawmakers and labor leaders are mounting a final lobbying push at the state capitol as Gov. Jerry Brown and legislative Democrats near a housing deal.

A vote could come as soon as Friday.

“If we don’t get started in a serious way, with each and every one of these pieces of legislation, we will have more than a crisis on our hands,” Sen. Toni Atkins (D-San Diego) said at a Monday morning news conference touting several bills to address California's sky-high housing costs. “We will have a humanitarian crisis of proportions you have never seen.”

Asm. Miguel Santiago says housing should not just be a privilege for the few Californians who can afford a place to live. “Housing should be a right – that any person who tries hard, who works hard, who plays by the rules has the availability to sleep with a roof over their head at night,” he said.

The three core pieces of the deal are a multi-billion dollar housing bond, a real estate document fee to fund affordable housing projects, and regulatory reforms to streamline developments.

ORIGINAL STORY: This could finally be the week that Gov. Jerry Brown and California lawmakers begin to address the state’s housing affordability crisis. Or, maybe not.

Lawmakers are preparing to vote on a dozen different bills, but they’re mostly focused on three:

The governor has linked the housing bond to a parks and water bond by seeking to limit the bonds’ combined size. That’s pitting advocates for each cause against each other – and lawmakers, too.

“I definitely think that housing is a more urgent need than parks and water,” Assembly Speaker Anthony Rendon (D-Lakewood) said last week. “Keep in mind, I wrote the water bond in 2014, I understand how important it is. I think if you asked most Californians, housing is an incredibly urgent need.”

Another challenge is rounding up the votes for the real estate document fee. That measure requires a supermajority – and some Democrats are wary of voting for a fee increase after already backing a gas tax hike and a cap-and-trade extension earlier this year.

The housing bond requires a supermajority vote too but is seen as having an easier path to passage.

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