AFFORDABLE HOUSING VERSUS TAX REFORM

The most recent criticism of the ongoing tax reform plan comes from Ray Pearl, Executive Director of the California Housing Consortium, an advocacy group for the creation of affordable housing for low- and moderate-income residents. He maintains the federal GOP tax plan “would take a wrecking ball to the new foundation California has put in place.”

The new foundation he refers to are the State measures enacted over the past several months addressing homelessness. These include Senator Toni Atkins’ SB 2 adding a $75 fee on real estate transactions to raise $250 million to finance low-income housing, Assemblyman Richard Bloom’s AB 1505 allowing cities to force developers to set aside a number of homes in their projects for subsidized residents, together with a $4-billion bond measure to finance affordable housing developments. All were enthusiastically lauded by Governor Brown at the signing ceremony.

In case you wonder how well affordable housing money is spent, Mr. Pearl describes exactly how, as he reports: “In 2016 alone, California created more than 20,600 affordable homes thanks to $2.2 billion worth of federal housing credits and more than $6 billion of private bonds.” His numbers are fascinating; if you divide $8.2 billion by 20,600, you’ll find each affordable unit cost approximately $400,000. If this constitutes “affordable,” I must wonder on which planet Mr. Pearl resides.

Let me inform you of a truly excellent affordable housing plan operating in this country. It’s the Section 8 Housing program in which qualified low-income families occupy commercial rental housing at fair market prices, for which they pay no more than 25 percent of their income, with the government picking up the balance. Instituted in 1965 during the Lyndon Johnson administration, it’s federally funded and locally administered. It works superbly; this is where all low-income housing funds should go.

A final word: The bureaucracy works in strange and mysterious ways, its wonders to perform. Although it continues to throw huge sums of money at every facet of the homeless problem, affordable housing is rarely the result.