Beth Mullen

The California Assembly and the State Senate have passed a package of affordable housing bills that will—at least start—to combat the affordability crisis growing throughout California. While there are several bills in the package, the staple bills are SB 2, SB 3 and SB 35. We sat down with Beth Mullen, national director of CohnReznick's Affordable Housing Industry Practice, to talk about the bills, how they will help combat the affordability issues and how the development community is responding—especially in the wake of Measure JJJ and a new linkage fee that the development community is opposing.

GlobeSt.com: There are a number of affordability bills that have recently passed, but the main bills seem to be SB 2, SB 3 and SB 35. Can you tell me about each, and how they will help combat the affordable housing issues?

Mullen: SB 2 is the most exciting of the bunch, at least from my perspective, because that is bring fresh dollars to the preservation of affordable housing. It is a permanent source of financing, and is basically a document recording fee of $75. The affordable housing industry has been working on this for 10 years at this point, and it has been a long road to come up with a permanent source of housing. That is expected to bring in $250 million a year to create affordable housing. That is pretty exciting, and it really helps to fill the gap when the redevelopment agencies were abolished.

SB 3 is a $4 billion bond issue that will be put on the November 2018 state ballot. Those bond proceeds will be used for a variety of different things. $1 billion will be used to provide assistance for veteran housing. These are to fund programs that have existed in the past but that are now out of money. The proceeds will also be used for multifamily housing and various smaller amounts will be used for other programs, like farmworker housing, transit-oriented design, housing innovation and Cal Home programs. This is really focused on funding programs that exist and are working.

SB 35 is really focused on streamlining planning and zoning, and making it easier to develop affordable housing. There are another 10 bills that are related to zoning and housing elements, and all of them are currently sitting on the governor's desk. These bills are designed to help make the process quicker and hold local jurisdictions responsible and give legal cover to local jurisdictions. The industry is breathlessly waiting for these bills to pass. We have reached the tipping point that this is a really serious problem, and if we don't start making some inroads, we won't have a place to live.

GlobeSt.com: Do you think that these bills do enough to help the affordability crisis?

Mullen: I think that we are going to need a multi-pronged approach. We are never going to come up with enough federal or state dollars to solve this problem, but some of the bills that ease some of the regulatory burdens will help developers build units faster. Some of these developments take years to get approvals and entitlements, and if you can shave time off that process without harming the environment, that makes it easier to build units. The challenge is that we need 1.5 million units in California, so none of these projects by themselves is going to make a dent in that. You have to take as many steps as you can and get resources from all directions, whether it is local programs or state initiatives. The goal is to make the process easier with zoning and plan approvals, and we are going to need all of that to solve the challenges that are facing us in the future.

GlobeSt.com: How does the private sector play a role here? Affordable housing is often viewed as a supply issue. Have the development community been supportive of these bills?

Mullen: Yes, they have. The community that builds affordable housing is often for-profit, and they want to be able to build more units. This is really a supply issue and the rents will continue to creep up. Normal economics would say that we need to create more supply to meet the demand. The challenge is finding affordable land. One of the bills that is out there is asking local jurisdictions to survey the available land so that developers can find land that is suitable for building more residential units. That is a great idea.

GlobeSt.com: When will these bills go into effect?

Mullen: Obviously SB 3 goes onto the ballot, so we won't know until the end of next year. A lot of the bills are effective January 1, 2018, so almost immediately. The bills only need to be signed from the Governor, and we don't have any concern that won't happen. He has recognized that housing is a serious issue for the state, and housing advocates have been working on these for some time. This is really a victory. They won't completely solve the problem, but we need all the tools in the toolbox to make inroads.

Beth Mullen

The California Assembly and the State Senate have passed a package of affordable housing bills that will—at least start—to combat the affordability crisis growing throughout California. While there are several bills in the package, the staple bills are SB 2, SB 3 and SB 35. We sat down with Beth Mullen, national director of CohnReznick's Affordable Housing Industry Practice, to talk about the bills, how they will help combat the affordability issues and how the development community is responding—especially in the wake of Measure JJJ and a new linkage fee that the development community is opposing.

GlobeSt.com: There are a number of affordability bills that have recently passed, but the main bills seem to be SB 2, SB 3 and SB 35. Can you tell me about each, and how they will help combat the affordable housing issues?

Mullen: SB 2 is the most exciting of the bunch, at least from my perspective, because that is bring fresh dollars to the preservation of affordable housing. It is a permanent source of financing, and is basically a document recording fee of $75. The affordable housing industry has been working on this for 10 years at this point, and it has been a long road to come up with a permanent source of housing. That is expected to bring in $250 million a year to create affordable housing. That is pretty exciting, and it really helps to fill the gap when the redevelopment agencies were abolished.

SB 3 is a $4 billion bond issue that will be put on the November 2018 state ballot. Those bond proceeds will be used for a variety of different things. $1 billion will be used to provide assistance for veteran housing. These are to fund programs that have existed in the past but that are now out of money. The proceeds will also be used for multifamily housing and various smaller amounts will be used for other programs, like farmworker housing, transit-oriented design, housing innovation and Cal Home programs. This is really focused on funding programs that exist and are working.

SB 35 is really focused on streamlining planning and zoning, and making it easier to develop affordable housing. There are another 10 bills that are related to zoning and housing elements, and all of them are currently sitting on the governor's desk. These bills are designed to help make the process quicker and hold local jurisdictions responsible and give legal cover to local jurisdictions. The industry is breathlessly waiting for these bills to pass. We have reached the tipping point that this is a really serious problem, and if we don't start making some inroads, we won't have a place to live.

GlobeSt.com: Do you think that these bills do enough to help the affordability crisis?

Mullen: I think that we are going to need a multi-pronged approach. We are never going to come up with enough federal or state dollars to solve this problem, but some of the bills that ease some of the regulatory burdens will help developers build units faster. Some of these developments take years to get approvals and entitlements, and if you can shave time off that process without harming the environment, that makes it easier to build units. The challenge is that we need 1.5 million units in California, so none of these projects by themselves is going to make a dent in that. You have to take as many steps as you can and get resources from all directions, whether it is local programs or state initiatives. The goal is to make the process easier with zoning and plan approvals, and we are going to need all of that to solve the challenges that are facing us in the future.

GlobeSt.com: How does the private sector play a role here? Affordable housing is often viewed as a supply issue. Have the development community been supportive of these bills?

Mullen: Yes, they have. The community that builds affordable housing is often for-profit, and they want to be able to build more units. This is really a supply issue and the rents will continue to creep up. Normal economics would say that we need to create more supply to meet the demand. The challenge is finding affordable land. One of the bills that is out there is asking local jurisdictions to survey the available land so that developers can find land that is suitable for building more residential units. That is a great idea.

GlobeSt.com: When will these bills go into effect?

Mullen: Obviously SB 3 goes onto the ballot, so we won't know until the end of next year. A lot of the bills are effective January 1, 2018, so almost immediately. The bills only need to be signed from the Governor, and we don't have any concern that won't happen. He has recognized that housing is a serious issue for the state, and housing advocates have been working on these for some time. This is really a victory. They won't completely solve the problem, but we need all the tools in the toolbox to make inroads.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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