After decades of work, years of near-misses and agonizing moments of frustration in finding funding for affordable housing, our state legislators finally came up with a solution. And Merced's Adam Gray was instrumental in getting it passed.
Senate Bill 2, the Building Homes and Jobs Act by Sen. Toni Atkins, D-San Diego, last week created the state’s first-ever dedicated source of revenue to help build affordable homes. California joins about 40 other states with a recurring revenue stream to meet local housing needs.
An estimated $250 million to $300 million will be generated each year to help local governments and housing developers build, rehabilitate, acquire and preserve affordable housing for working families, the elderly and homeless.
SB 2 was part of a package of 12 bills making up the housing package agreed to by Gov. Jerry Brown, Senate President pro tem Kevin de Leon and Assembly Speaker Anthony Rendon. Supporters included dozens of organizations – organized labor, the California Association of Realtors, California Building Industry Association, chambers of commerce and community-based organizations – from around the state.
The bill puts a $75 fee on recorded real estate documents (excluding home purchases), up to a maximum of $225 per transaction.
It was bitterly opposed by some who argued it would discourage home owners from refinancing, hurt low-income and elderly home owners, or create a burden on county recorders. But proponents argued SB 2 would have a negligible impact on refinancing costs since the fee would typically be paid back over the term of the new loan and be offset by reduced debt service. An amendment exempted lower-income home owners from the fee, and county recorders will be able to recover their costs through the proceeds.
It passed the Senate with two-thirds vote, but there were about a dozen fence-sitters in the Assembly. If all 54 members of the Democratic caucus voted yes, it was guaranteed to pass. But if it didn’t pass, not only would SB 2 be doomed but so would the entire housing package as leadership decided to make it an up or down vote on all 12 bills.
A the center of the effort was Assemblyman Gray. Agreeing to be the floor jockey, he helped cobble together exactly the 54 votes needed at the eleventh hour, gaining the support of all but one Democrat and picking up one Republican, Brian Maienschein of San Diego. If signed by Gov. Brown, as expected, the bill, together with SB 3, will place a $4 billion affordable housing bond on the November 2018 ballot, generate billions to produce thousands of affordable homes and create thousands of jobs.
We owe a debt to Gray for leading the charge.
SB 2, while critically important, is not perfect. In the first year, 50 percent of proceeds will go to local governments as they update their housing plans, and 50 percent will go to help the homeless move off the streets. In subsequent years, 70 percent will go to local governments to address a variety of housing needs. Our concern is that smaller cities and counties get sufficient funds to produce new homes and repurpose funds as housing needs change.
Still, SB 2 is the capstone of probably California’s most prolific legislative session ever, in terms of affordable housing. The combination of new funding and land use reforms to eliminate obstacles to affordable housing won’t solve the entire housing problem. But it will help stimulate supply and new opportunities, making a significant dent in the problem.
We have Adam Gray and other members of the San Joaquin Valley legislative delegation to thank for making this happen.
Alex McCabe is a member of the Livingston city council; Rob Wiener is executive director of the California Coalition for Rural Housing.