On June 26, the Metropolitan Transportation Commission announced that the Bay Area Housing Finance Authority had voted “to place a general obligation bond on the November 5 general election ballot in each of the nine Bay Area counties to raise and distribute $20 billion for the production of new affordable housing and the preservation of existing affordable housing throughout the region.”
MTC cited BAHFA Chair and Napa County Supervisor Alfredo Pedroza: “The Bay Area’s longstanding housing affordability problems affect all of us, our neighbors, and our family members. This vote is about preserving opportunity for everyone.”
In a CalMatters story posted the next day, Ben Christopher wrote that at $20 billion, the BAHFA bond was “[t]he largest affordable housing bond in California history.”
But now the private real estate industry is moving in the Legislature to leverage the bond’s promise of affordable housing to its own advantage.
The BAHFA bond promise
The BAHFA bond’s proceeds would be partly distributed as follows:
“A minimum of 52 percent for the production of rental housing that is restricted by recorded document to be affordable to lower income households for at least 55 years.”
“A minimum of 15 percent for preservation of housing that is restricted by recorded document to be affordable to low- or moderate-income households for 55 years.”
“A minimum of 5 percent for tenant protection programs for low- and moderate-income households.”
“A maximum of 10 percent for a grant program” to fund among other things, “[p]rograms to enable low- or moderate-income households to become or remain homeowners.”
The real estate industry hustle: Buffy Wicks’ AB 598
On June 10, Assemblymember Buffy Wicks gut-and-amended AB 598 (formerly a bill about “sexual health education and HIV prevention education” in public schools) into the “San Francisco Bay Area Regional Housing Finance Act: Regional and County Expenditure Plans.”
The gist of born-again AB 598 is summed up in the single sentence that heads up the two and a half-page staff analysis for the bill’s July 3 hearing before the Senate Committee on Local Government:
Prevents the Bay Area Regional Housing Finance Authority from imposing restrictions on projects that render them infeasible without changes to local land use policies.[Italics in original]
The exact language in the proposed bill:
Section 64650 (d)(B)(ii)
(I) The regional expenditure plan shall not render projects ineligible for funding based on the presence or absence of any city, county, or city and county land use or housing policies.
(II) Notwithstanding subclause (I), the authority may use project-specific conditions to prioritize projects for funding.
According to author Wicks, as she’s cited in the staff analysis, this means that BAHFA must respect local land use policies:
“BAHFA has the potential to be a game-changer for the production of affordable housing in the Bay Area. This bill helps ensure there is alignment among stakeholders by clarifying provisions of the law to ensure that BAHFA does not overstep its bounds and require local land use and housing policies.”
In my reading, the truth is just the opposite: AB 598 would ensure that local governments do not “overstep” their bounds and require more of housing developers than BAHFA does. With pronouncements such as this, Wicks is on track to surpass the double-speak of the Legislature’s master housing policy demagogue, Senator Scott Wiener.
The smoking gun
Lest I be accused of unjustifiably imputing motives to Assemblymember Wicks, I refer to the smoking gun, Item 8.b. on the July 18, 2024, agenda of the Association of Bay Area Governments [ABAG] Executive Board, “Assembly Bill 598 (Wicks): Bay Area Housing Finance Authority (BAHFA) Funding.”
The background of the item, according to ABAG staff, was as follows:
Assembly Bill (AB) 598 (Wicks) makes changes to BAHFA’s enabling statute at the request of MTC/ABAG staff, following discussions with the Bay Area Council (“Council”) and Building Industry Association of the Bay Area (“BIA”) in May and subsequent direction from BAHFA Chair Pedroza, ABAG President Ramos, and Legislation Committee Chair Canepa pursuant to the MTC/ABAG policies for urgent legislative action.
To wit:
In mid-May the Council and BIA reached out to BAHFA staff with significant concerns about the potential for BAHFA’s funding programs to be used to encourage cities and counties to adopt policies that they believe make market rate housing and development more difficult and costly to build. BAHFA staff met with both organizations and other stakeholders to develop options for addressing these concerns while maintaining the goals and requirements outlined in BAHFA’s Expenditure Plan. [Emphasis added]
On May 22, 2024, the Council and BIA requested the BAHFA Board’s support for proposed bill language to address their concerns (see Attachment A). The BAHFA Board Chair Alfredo Pedroza responded in a letter dated May 24, 2024. The letter committed that the Chair would direct staff to work with the Council, BIA, and other stakeholders on legislation reflecting the proposed language. (See Attachment B.)
The Bay Area Council and Building Industry Association letter helpfully included “our proposed amendment” to AB 598. It added the following language to Sec. 65760(d)(5)9B):
The regional expenditure plan shall not render projects ineligible for funding based on the presence or absence of any city or county or city and county land use or housing policies. Notwithstanding the foregoing, BAHFA may use project-specific conditions to prioritize projects for funding.
This is exactly the language that appears in Wicks’ gut-and-amended AB 598. There’s nothing in her bill, however, about removing challenges to market rate housing and development.
(In January, the Bay Area Council had reported that it had sent MTC comments on the draft BAHFA bond “asking for common sense ideas to be included in the bond and expenditure plan.” Its suggestions included “enabling home builders to access bond funding to defray the cost of local mandates that require them to designate a certain portion of new units as affordable; creating a new loan fund to support the construction of accessory dwelling units; and allowing funds to be used for building shelter for unhoused residents, and converting office space to residential.” In the Council’s view, the implementation of these ideas would “unlock not just a pipeline of new subsidized affordable homes, but [would] also make feasible many thousands of new market rate homes that are currently infeasible,” resulting in “a win-win for all concerned.”)
In his letter, dated May 24, 2024, ABAG Chair Pedroza thanked BIA and BAC and added:
Since passage of AB 1487 (Chiu, 2019), BAHFA has been working hard to demonstrate the added value we can bring to addressing the Bay Area’s significant housing challenges. Our organizations agree that the Bay Area needs to massively increase the number of housing units that are available if we want to be a prosperous, equitable, and environmentally sustainable region long-term. While I am concerned about the last-minute nature of this request, in the spirit of partnership, I am directing our staff to work with you on a legislative fix this session that will address your concerns, consistent with the language in the attached. [Emphasis in original]
Last-minute request indeed, but apparently not too late to oblige BAHFA’s “partners” and the other, unnamed “stakeholders” who were in on this deal. On July l8, with no discussion, the ABAG Executive Board unanimously endorsed the MTC-ABAG Legislation Committee’s recommendation that the Executive Board sponsor “AB 598’s funding.” On June 10, Wicks introduced her revised bill with the new language. On July 3, the Senate Local Government Committee approved AB 598 on its consent calendar, which means there was no discussion.
On July 24, the San Francisco Chronicle reported that the Bay Area Council had not endorsed the BAHFA bond. The article did not mention how BAC had lobbied BAHFA and Wicks about AB 598. But it did indicate ways in which BAC would like to see BAHFA nullify local land use policies.
Louis Mirante, Bay Area Council vice president of public policy and prior legislative director of California Yimby, told reporter Alex Toledo that “voters and elected officials are often behind requirements and mandates that drive up housing costs.” Mirante said that the “bond dollars could be stretched if cities get serious about cutting red tape’” and shortening the development process.
‘‘‘The longer it takes to get through the process,’” said the BAC, “‘the more we have to pay for those projects.’” Mirante noted “well-meaning policy decisions” such as “requiring that affordable homes install solar panels or that construction projects contribute to a city’s arts or parks fund.” Unsurprisingly, he pitched his criticism of such requirements in behalf of affordable housing: “‘The goal right now from policymakers and voters should be to reduce costs,’ Mirante said. “‘I would obviously like to see more bang for our buck on affordable housing’”—and, he did not say, more bang for the bucks of private housing developers and the investors who fund their projects.
