Jerry Brown's 'Two Legacies' on Housing

Even as Gov. Jerry Brown took his most decisive action to address California's crisis of housing affordability, he did so with a declaration of weariness.

In September 2017, he signed a 15-bill package that aimed to boost housing construction. At the signing ceremony in San Francisco, Democratic lawmakers said the package was just a "down payment" on easing the affordability crunch. Brown hoped otherwise.

"Not so many bills next year, guys," the governor said.

Unlike climate change and criminal justice, Brown never touted housing policy as a top priority for his administration. Even today, he remains skeptical that wholesale changes to California's local housing laws are politically feasible, and whether government action can make a difference in the price of homes.

But housing advocates say Brown's actions in helping craft and eventually signing the historic 2017 bills salvaged a legacy on housing policy that had previously been defined by his killing a vital source of affordable housing funding for California cities.

"There are really two legacies," said Chris Hoene, executive director of the California Budget & Policy Center. "The first of those was the dissolution of redevelopment agencies."

Brown proposed to end redevelopment districts shortly after taking office in 2011. The local agencies captured property tax dollars that would have otherwise gone to school districts and counties, and reinvested them in local development — including $1 billion a year for housing.

But with the state facing a $25 billion budget deficit, and stories emerging about wasteful redevelopment spending, the agencies were a tempting political target.

"A lot of people wanted to see it go, and it did free up almost $2 billion a year for schools," said Brown in an interview with KQED. "And if people want to bring it back they're going to take billions from the schools, and I would assume those people who care about the California public schools will fight that very hard."

Assembly Housing and Community Development Committee chair David Chiu (D-San Francisco) is leading the effort to bring back redevelopment in 2019.

He called Brown's decision to end redevelopment "understandable," but hoped a replacement for the lost housing funds would have emerged after the state Supreme Court put the final nail in the coffin of redevelopment in 2011.

"I think there is a pretty strong consensus that there was a baby that was thrown out with that bathwater," Chiu said. "There was a lot that needed to be rehauled, but certainly some regrets today about what we eliminated, particularly given the housing crisis we're in."

By the beginning of Brown's second term, the state's housing crisis was impossible to ignore. Median home values were the highest in the nation, and most California renters were spending more than a third of their income on shelter. When factoring housing costs, California's poverty rate jumped to tops in the country.

Experts attributed the crunch in part to an explosion of job growth on the coast, where housing construction remained largely flat even during the national housing boom of the early 2000s.

"We added a ton of new jobs without adding the housing, so to some extent there was always going to be a bit of a lag in terms of how much we could ramp up housing production," said Ethan Elkind, director of the Climate Program at UC Berkeley Law School’s Center for Law, Energy and the Environment. "There was really only so much I think Gov. Brown could do."

But advocates for affordable housing thought there was much more Brown could have done to inject dollars for low-income housing into the budget, especially as redevelopment and past bond dollars dried up.

However, a substantial budget investment didn't happen in the first years of Brown's second term, and the governor vetoed a 2015 bill that would have expanded the state's tax credit for affordable housing.

"Gov. Brown was really our primary barrier," said Tyrone Buckley, policy director for Housing California. "Because he didn’t like the fiscal impact on the budget."

That changed in 2017, when Brown worked with Democrats in the Senate and Assembly to piece together a package of bills that both streamlined the approval of housing (an idea Brown had floated a year before) and raised new revenue to fund affordable housing.

The deal required a delicate balancing act, not just between spending and streamlining, but in mollifying Democrats who thought a housing deal should be given the same priority as Brown's top goal: the extension of the state's cap-and-trade market for greenhouse gas emissions.

As tensions mounted, Brown made a trip to Assemblyman Chiu's office, and promised that the housing package would get done.

"It took a little bit of time, but he and his administration spent an incredible amount of time working with us to get that group of bills where it needed to be," Chiu said. "I will always be grateful for that."

Brown's work on these measures gives the governor a "second legacy" on housing, said Hoene, of the California Budget & Policy Center.

Included in that package was Senate Bill 2, which created what was long considered the "holy grail" of affordable housing policy: an ongoing source of revenue for the construction of affordable units, generated from a tax on real estate transfers.

"Senate Bill 2 was very significant," Hoene added. "It makes a significant dent in trying to put a local financing source that cities and local governments can use for housing."

And last year, advocates for California's homeless cheered the inclusion of $500 million in the budget to address homelessness. The money was allocated to help provide shelter and other services.

"It was actually the largest general fund allocation to address homelessness ever," said Sharon Rapport, associate director of the Corporation for Supportive Housing. "We were excited to see it."

Elkind, with the UC Berkeley School of Law, said Brown's administration also deserves credit for reforms pushed from the executive branch, including rules to use the California Environmental Quality Act (CEQA) to penalize sprawling projects that add more cars to California's roads.

It remains to be seen whether the legislature and the incoming Newsom administration will back more substantive changes to zoning laws, the local regulations that govern housing construction.

As Brown prepares to leave office, those local zoning laws and CEQA (often used to block or scale back new projects) have remained largely untouched.

"I don't know how much his heart was truly in the kind of density that you see a lot of the housing advocates pushing for," said Elkind.

In a recent interview with National Public Radio, Brown pointed out the challenges facing any attempt to mandate more dense construction at the local level.

"There's a lot of resistance to changes, to density in neighborhoods that don't want density," he said. "In many ways, I don't blame them."

Brown expressed doubt that the state could do more to address housing affordability, other than wait for the market to cool down.

"I don't think you can mandate lower prices because people want the value in their homes. I don't think you can build housing and pay for it by taxing hard-pressed middle-class people, among others, to pay for it," he added. "If you want to come back and talk to me in four years, I assure you we're going to have the same problem that we have today."