Affordable Housing Financing Puddle

The pool of funding for affordable housing received a damaging blow when redevelopment was dissolved, and it continues to gradually dry up. Before long, we will all be fighting over a puddle of funding while the cost of housing in California continues to rise.

Could inclusionary housing programs help to save the day? Nearly 170 cities have some type of inclusionary zoning or inclusionary housing program. Are they leveraged to the best that they can be? Have all the appropriate nexus studies been completed? Should more communities look to adopt inclusionary ordinances?

Inclusionary housing policies provide a nexus between the development of market-rate housing and commercial development based on the increased demand the latter places on the creation of affordable homes for low- and moderate-income households. Expansion of the supply of affordable housing helps promote social and economic integration. To meet the housing needs of lower-income families and individuals, it is critical to produce affordable homes and keep them affordable over the long term. While there are many programs, it is important to continue to look for ways to generate funding for affordable housing development.

The California Building Industry Association (CBIA) vs. San Jose Case further supports the state’s commitment to building affordable housing and the ability for cities to require developers to build or pay an in-lieu fee for affordable housing. San Jose passed an ordinance requiring builders of developments with 20 homes or more to set aside 15 percent of the new units at below-market prices or pay an “in lieu” fee of $122,000 for each of the below-market units that would otherwise have to be supplied. Although the CBIA challenged San Jose’s ordinance, the California Supreme Court upheld it. The City of Los Angeles City Council responded by directing staff to study “policy options and a framework for a potential inclusionary housing ordinance in the City of Los Angeles.” Could this be an option for even more communities that have been hesitant to adopt such policies?

RSG supports the development of affordable housing. We understand that it is impossible to sustain a viable economy without it, and we hope that more communities will look for ways to help facilitate affordable housing development.

Written by Tara Matthews, a Principal at RSG.