Newsom Vowed to Build Housing on State Property. 99% of the Land Will Stay Vacant

Before Gavin Newsom became governor of California, he campaigned on a promise to make surplus state-owned land available for affordable housing.

Shortly after he entered office, he made good on that promise, issuing an executive order that directed state agencies to assess more than 44,000 parcels to determine their suitability for development.

“We have to use every tool in our toolbox to deliver more affordable housing for low-income and middle-class Californians,” he said in 2019 when he announced the first project to be built under his executive order. “State government is stepping up and getting creative to address the cost crisis that is devastating working families across the state.”

But as it turned out, only 46 of those 44,000 parcels were developable.

Of those, 19 have concrete plans for development, and one has finished construction. Last week, Newsom announced the most recent project under his executive order: a 372-unit apartment building that will be built on top of an outdated San Francisco DMV office. Once construction is complete, the DMV office will be renovated and will continue to operate as it did before, but with tenants living above.

Together, the properties propose adding an estimated 4,200 units of new housing — a not insignificant amount that is nonetheless dwarfed by the state’s goal of planning for some 2.5 million new homes by 2031.

A map of California’s excess sites. (California Department of General Services)

The vast majority of the state’s surplus land was disqualified for housing because it’s located in forests, on beaches or far from cities and existing infrastructure required for people to live there.

“Where you have ‘vacant land’ that folks refer to, that land is not [actually] available,” said Ana Lasso, director of California’s Department of General Services. “It doesn’t have the utilities or the infrastructure to accept housing.”

For affordable housing developers, the dearth of buildable surplus land underscores a point they’ve long argued with state leaders: Quick-fix solutions to the housing crisis are usually neither quick nor a real fix.

JT Harechmak, policy director of the Non-Profit Housing Association of Northern California, said finding available land is only one part of the problem. The bigger issue is getting the funding to construct housing on it. While the state has invested an estimated $40 billion in affordable housing, most of that funding represents one-time allocations as opposed to ongoing support.

“Many of our developers have a backlog of projects — many of them are shovel-ready and ready to go,” he said. “They just lack the final amount of funding that they need to cross the finish line.”

Sonrisa, a 58-unit apartment building in downtown Sacramento, is the first project to be completed under Newsom’s 2019 executive order and offers housing to people earning up to $56,000 annually. The project broke ground in June 2021, and tenants moved in last year.

Danielle Foster, executive director of the Capitol Area Development Authority (CADA), said Newsom’s executive order helped speed construction. By allowing CADA to lease the land for practically pennies, the state helped her organization reduce construction costs.

“It’s a great help to have parcels that are primed for affordable housing development,” she said.

The property, located on just a quarter of an acre of land, also forced her organization to think more creatively about building infill housing — new homes and apartments built within an existing city — so CADA sought to maximize the number of units it could build.

Sonrisa’s 58 apartments are micro-units: small studio apartments that fit within 267 square feet. Each unit has a small kitchenette with a stove and fridge and an area that doubles as both a living room and bedroom. A Murphy bed folds into the wall so tenants can prop a couch against the wall during the day. Tenants receive a free local transit pass and access to onsite bike storage.

“We showed how we could create livability in small spaces,” Foster said. “We have private developers also building like this now. It’s fun to see how this work contributes to the affordable housing stock.”

State Sen. Scott Wiener said projects like these are not a silver bullet for the housing crisis but rather one piece of the puzzle.

“Historically, we’ve not had nearly enough money, and many cities have made it impossible to zone for and approve this kind of housing, so we’ve been methodically resolving permitting and zoning issues,” he said.

But he reiterated affordable housing developers’ concerns that freeing up surplus state land isn’t the biggest piece of that puzzle: “The funding issue remains.”

Some housing experts have likened the budget for an affordable housing project to a lasagna, with many layers often overlapping to hold up the project. Developers have long complained that without a permanent statewide source of funding, financing affordable housing will continue to be convoluted and inefficient.

Many affordable housing developers relied on two multibillion-dollar bond measures to fund their projects — a $20 billion Bay Area-wide bond and a $10 billion statewide bond. Both failed to make it to the voters this November. Proposition 5, which would make it easier for local governments to pass bond measures for affordable housing and public infrastructure, is seen by some developers as the best bet to secure future funding.

Welton Jordan, chief real estate development officer for affordable housing developer EAH Housing, said his company has submitted a proposal for one project on an excess state-owned site. Though EAH’s proposal was not ultimately chosen, the nonprofit is interested in submitting proposals for other sites in the future.

But as construction costs soar and demand grows, it only becomes more expensive to build, Jordan said. He hopes the state can dedicate more subsidies to actually build affordable housing.

“It’s never enough,” Jordan said. “While every little bit helps, and you don’t want to sound ungrateful, you really need a permanent source at the state level for affordable housing, and that hasn’t happened quite yet.”

There are 26 surplus sites the state identified as suitable for housing that have not yet been offered to developers, though state officials have promised to open those sites “soon.”

It’s unclear, however, how buildable they will all be; some are in high-fire risk zones, regulatory floodways, or on steep slopes. Others are within a quarter-mile of hazardous waste sites.