State-mandated housing policies will never end the monumental deficit of affordable housing. The private market cannot end the deficit either. Only a dramatic shift in federal and state funding policies for affordable housing will bring relief.
North Housing – A Case In Point
The “North Housing” site near Alameda Landing owned by the Alameda Housing Authority is a case in point. This project, which aims to build 586 all-affordable units, is ready to build but lacks the necessary funds.
The 12-acre North Housing site was acquired for free from the Navy and has checked off every conceivable box to become shovel ready. A master plan has been approved by the City. The land has been cleared and is ready to build, with new infrastructure constructed in the surrounding streets. It is in a highly desirable area.
Despite the stellar qualifications of this project, the first phases of the first block are nowhere near full funding. The first two phases on one block that will construct 90 units of supportive housing and support services for those experiencing or facing homelessness is expected to cost $92 million, according to Vanessa Cooper, Executive Director of the Alameda Housing Authority. Currently only $14 million has been committed, along with rental assistance vouchers to cover 60 units. If the housing authority is successful in closing the gap with a state grant, that will still leave almost 500 units unfunded. Is it any wonder why the North Housing master plan anticipates that it will take 10 years to complete the entire project?
Inadequate public funding to meet affordable housing goals
“Typically, the state funds about 25-30% of all eligible and shovel-ready projects in every round of funding,” said Cooper. That leaves about 70 percent unfunded.
Meanwhile, California’s Department of Housing and Community Development, which approves local housing elements, requires the city to commit to permitting, but not financing, half of its housing goals as affordable or moderately priced. The city in its revised housing element must spell out where a total of 3,107 below market rate homes can be built versus 3,114 above moderate, meaning market rate, homes. The unavailable funding makes it an exercise on paper but not achievable in practice.
The for-profit housing industry cannot possibly supply one affordable unit for every market rate unit. And since federal spending to increase the supply of affordable housing is zero, and state spending is still woefully below demand, the bias in the housing market will continue unabated.
The problem of inadequate supply of affordable housing has been festering for decades, while those fortunate enough to own a home enjoy housing stability and, along with real-estate investors, ever-increasing wealth.
Federal policies shortchange low income people on housing
At the federal level, the road to inequality in the housing market began almost 50 years ago. In 1976 the federal government’s budget for the affordable homes administered by Department of Housing and Urban Development was about $50 billion, while tax breaks for homeowners, investors and wealthy buyers amounted to only $30 billion. By 2006, the budget for affordable homes had decreased to about $25 billion while tax breaks for property owners had increased many-fold to over $120 billion, according to a March 2022 report titled “Social Housing for All – A Vision for Thriving Communities, Renter Power, and Racial Justice,” prepared by the Center for Popular Democracy and Renters Rising.
Today, the U.S. government spends far more money annually on subsidizing housing for the rich, to the tune of hundreds of billions, than it spends on housing for low-income people. “The federal government handed the largest corporate landlords at least $470 billion in recent tax breaks and giveaways, including over $170 billion through the CARES Act,” states the “Social Housing for All” report. “It loses as much as an estimated $600 billion annually due to mortgage interest tax deductions which subsidize wealthier homeowners—an amount almost 14 times more than the $43 billion it spent on affordable housing for low-income renters in FY2019.”
Households overburdened by housing costs
Alameda’s draft Housing Element illustrates just how intractable the problem is, given the inadequate funding. According to the most recent data from 2017 on the impact of housing costs on households, there were 3,975 households in Alameda paying more the 50 percent of their income toward housing. Many others pay more than the recommended 30 percent of their income for housing. These are the people who stare crisis in the face every day, one illness or one layoff away from becoming homeless. The Housing Element is powerless to alleviate the problem. Only a massive increase in the supply of publicly-funded deed-restricted affordable housing will offer financially sustainable alternatives to the profit-based real estate industry.
The affordable housing goals set out by the state are unattainable under the current funding system. The Housing Element can facilitate new housing but little of it will be for those in greatest need.
Originally published in the Alameda Sun.
Sources and more info:
“Social Housing for All – A Vision for Thriving Communities, Renter Power, and Racial Justice,” March 2022, by The Center for Popular Democracy and Renters Rising.
Alameda 2023-2031 Draft Housing Element
Private market housing vs socially funded housing
To illustrate the stark contrast in the types of housing being built, compare the North Housing Project for all affordable housing sitting idle, while the for-profit Alameda Landing Waterfront Residential Project, located a block away from the North Housing site, is going gangbusters to construct 357 units with only 39 units being affordable. The Landing Waterfront Project will be a great addition to Alameda when completed. The North Housing Project would be an equally great addition, if only our state and federal representatives would match their rhetoric with funding to build the needed affordable housing.
Alameda Point Environmental Report 