CA Treasurer, Governor Hopeful Doubles Down on Housing Affordability
- Oct 12, 2017
In his bid for governor, California State Treasurer John Chiang is pushing his legislature to create permanent funding for affordable housing, citing the state’s 1.5 million-unit shortfall as a hindrance to economic and social prosperity.
Calling on lawmakers in August, Chiang proposed creating a $6-9 billion general obligation bond to remedy the affordable housing shortage that has impeded the state’s progress. Gov. Jerry Brown pushed back, settling in September on a $4 billion housing bond and regulatory reform to stimulate new construction, both measures that will appear on the November 2018 ballot.
In a candid podcast interview with MHN Radio, Chiang describes these strides as a start, but concedes that California still has much work to do to resolve its difficult housing problem.
Mitigating a crisis
According to Chiang, California’s affordable housing deficit threatens to stymie the state’s economic development, and has already compromised the quality of life for millions of its residents. More than one-third of Californians spend at least half of their income on rent, Chiang noted, a stark reality that creates what he sees as an extraordinary struggle. “When you think about spending half your salary,” he challenged, “how are you going to put money away for retirement savings, or for college?”
While some California lawmakers may have downplayed the issue in the past, says Chiang, he simply refuses to do that, recognizing the increasingly negative effects not only on working families but also on large corporations and small businesses.
“Businesses will talk about their economic competitiveness being affected by the fact that the employees they are trying to retain or recruit are having challenges financing and getting access to housing,” Chiang explained, warning that rating agencies might respond to the problem by downgrading California’s credit rating, a move that would throw a wrench into the state’s future financing efforts.
By creating stable sources of funding, Chiang hopes to add at least 60,000 affordable housing units within three to six years, though he hopes to see significant progress within two to three years. While the bond measure is a step in the right direction for the state legislature, Chiang remains concerned by the federal government’s waning support. Going forward, he wants to establish additional resources, such as a redevelopment agency that provides local governments with financing to build affordable housing units.
“We have to have a plan and design to make sure we’re tackling the housing issue on a yearly basis,” Chiang emphasized. As chair of two of California’s four affordable housing agencies—the California Debt Limit Allocation Committee and the California Tax Credit Allocation Committee—Chiang helped to revise the regulations that had resulted in a $4 billion backlog of unused tax credits.
By making it easier for developers to secure funding, the regulatory changes helped in generating an 80 percent increase in newly built (43 percent of total) and rehabbed (57 percent of total) affordable housing units in California from 2014-2016. According to Chiang’s office, most of the rehabs were significant in scope and cost.
“We want to build an infrastructure so that we can sustain that type of housing development,” Chiang voiced. And by partnering with community organizations, he hopes to improve access to local amenities, too, such as public transportation and healthcare.
Following the presidential election and Trump’s announced intention to reform the tax code, uncertainty swept over financial markets, with “huge implications for the investors in affordable housing,” said Chiang. “Where you used to see tax credits being sold for $1 to $1.15, I was hearing from developers that they were being sold for 80 to 95 cents.”
The result was that some groups had no resources to complete tax credit-eligible construction projects, so Chiang’s staff stepped in to offer developers the flexibility to extend their timelines while they sought funding.
“We will see in due course, with the reduction in regulations, what other municipalities are doing to push these projects through their local communities,” Chiang commented. “We are working on how to become more efficient so we can have more effective and meaningful results.”
Transparency has been on Chiang’s political agenda since day one. On his inaugural evening as state treasurer, he addressed his supporters in Sacramento, Calif., reminding them of his duty to hold governments accountable and reduce barriers to information.
To fortify this claim, in November 2015, Chiang launched a website called DebtWatch to track bonded indebtedness of all California government entities over 30 years, totaling $1.5 trillion. “I wanted to make sure that we had elevated transparency, investor confidence and better rates to borrow monies for police, fire, parks and recreation, education, healthcare and public safety.”
More recently, Chiang began advancing the California Business Incentives Gateway (CBIG), an informational portal for businesses across the state and companies looking to relocate there. He believes similar models can be valuable in helping individuals affected by mental illness access the resources they need, or to expedite the planning process for jurisdictions looking to launch environmentally conscious projects.
Ultimately, Chiang is determined to improve the quality of life for Californians. Listen to him detail his plan on MHN Radio.