LA County Cities Could Have Funds Withheld Under Newsom's New Housing Plan

Local governments within Los Angeles County, including the city of L.A., might see some of their transportation funding withheld if they fail to meet housing goals mandated by the state.

California's new governor, Gavin Newsom, threw out that surprising proposal during a briefing Thursday on his first budget plan.

"You don't reach those goals, we're going to take S.B. 1 money from you," Newsom said.

Under Senate Bill 1, approved in 2017, the state increased gas taxes by 12 cents, and hiked registration and other driver fees. This raised about $5.4 billion a year for maintaining and improving state highways, local roads, bridges, transit and walking and biking infrastructure.

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Newsom proposes tying those funds to how well cities and counties plan and approve new housing to accommodate their population and economic growth.

Most California communities have failed to build enough new housing, worsening the housing affordability crisis. So far, there's been little accountability for localities that haven't met their goals.

In Los Angeles County, only four of 89 jurisdictions have accomplished the housing goals laid out in their general plans.

Although the state's latest assessment showed L.A. was among the cities that fell short of its goals, a spokesperson for Mayor Eric Garcetti said he supports the governor's proposal. Garcetti believes the city can work with the governor and hopes the proposal will inspire cities to do more to address the housing crisis.

But some local government leaders, who have been among the biggest champions of S.B. 1 and helped defend the gas taxes and fees against a repeal measure last November, are worried about the governor's new proposal.

"I think the biggest problem with linking housing production and these dollars is that we do not control the housing market," said Jason Rhines, legislative director with the League of California Cities, whose members are concerned they would be penalized for factors that are out of their control.

Many more elements play into housing construction than whether a city or county approves plans, said Chris Lee with the California Association of Counties: "We have building codes that are set at the state level that have requirements that increase costs, we have materials issues related to tariffs and other things that are driving costs."

The goals for affordable housing are often difficult to meet, even for cities that approve a lot of new development. Construction is so expensive that there's little incentive for developers to plan units with lower returns on investment.

Rhine favors more of a carrot than a stick approach to the problem.

"There's a lot that the state can do to incentivize the behavior that they would like to see," he said, pointing to about a billion dollars in new affordable housing funding the governor included in his proposed 2019-2020 budget.

Both Rhine and Lee worry that voters could react negatively to any meddling with the transportation funds. They've already fought back an attempt to repeal S.B. 1 and they approved a constitutional amendment to keep the funds in a "lock box," protected from diversion to any other purpose besides transportation.

But Newsom argued something has to be done to keep communities on track toward addressing the state's mounting housing crisis.

"Look, this is a crisis and everybody's in this together. The issue of housing is the poverty issue in the state," he said. He pointed to data that show California's high poverty rate and increase in homelessness are directly tied to the escalating cost of housing.

The map from the state Department of Housing and Community Development shows which cities have failed to meet their housing mandates under a new state law, S.B. 35. The measure requires those jurisdictions that have fallen behind to fast track approvals of proposed developments.

See if your city has met its housing goals on the interactive map below. The gray areas of the map are cities that have met housing goals and are exempt from S.B. 35 requirements to streamline development approvals. Blue areas represent jurisdictions that have fallen behind on all housing and must fast track developments that have at least 10 percent affordable units. The orange areas have fallen behind in below-market rate affordable housing and must streamline approval of developments with 50 percent or more affordable units.

Source: State Department of Housing and Community Development