What the project lacks is money. 

Having quilted together a financial patchwork of local government and corporate grants, private debt, and a plot of land donated by a foundation, it remains just shy of the total needed to break ground. 

Six years and 13 funding applications after it was first proposed, the Morris Village project sits ready, but waiting.

An estimated 39,880 affordable units across California are stuck in financial purgatory, according to a new report by Enterprise Community Partners, a national nonprofit that funds, consults and advocates for affordable housing. That’s 461 “shovel-ready developments” that, like the one on East Morris, are fully designed, legally green-lit and backed with a significant — but still insufficient — amount of money.

Many have “been sitting for a year or two waiting for funding,” said Justine Marcus, policy director for Enterprise’s Northern California office and one of the report’s co-authors. “There’s no exit route right now. It’s a bottleneck.”

For many developers and affordable housing advocates, that bottleneck represents an especially frustrating inconsistency of California public policy. Lawmakers are desperate to see the state build more homes — of all kinds, but especially for people with the least ability to pay the state’s exorbitant rents. State housing regulators have ordered local governments to plan for the construction of an additional 2.5 million units by the end of the decade. One million of those are supposed to be for people making less than 80% of each region’s median income. 

As a general rule, that’s a population of hard-up renters that the private market has been unable to profitably serve at scale. To fill that gap, non-profit low-income housing developers typically turn to taxpayer-funded support. At the moment, according to the report, there isn’t enough of that to go around.

Enterprise took publicly available but hard-to-parse applicant lists from seven subsidy programs administered by various wings of California’s state government going back three years. With a combination of number crunching and a little inference, the report estimates that clearing the current backlog would require an extra $4.1 billion, split between state administered grants, low-cost loans and tax write-offs.

Once awarded, this final layer of state subsidy has to be spent in relatively short order. That means this list of 39,880 units comprise a group of affordable housing projects that are all but ready to go, said Marcus. “They kinda have to have their (stuff) together.”  

Case in point: Two-thirds of the projects on the list have already received support from at least one other state program. Those dollars aren’t awarded to just any developer, said Betsy McGovern-Garcia, vice president of Self-Help Enterprises, one of two non-profits behind Morris Village.

“These are all projects that are close to amenities,” she said. “These are all projects providing resident services. These are all projects that are financially feasible…They are all meeting the bar for what we want to see as a state out of our affordable housing community.”

In February, McGovern-Garcia and her colleagues applied for a final round of financial support from the state “to close the gap” and finally start construction.

“We are optimistic this might be our round,” she said in an interview, her fingers crossed. 

A moving bottleneck

California has seen gridlock in affordable housing production before, but the precise location of the traffic jam has changed over time. 

When Nevada Merriman was leading a team of affordable developers in Silicon Valley a decade ago, she said local approval was the major hold-up. Getting the legal okay to build low-income housing on a particular site in a particular town required developers to run a gauntlet of planning department and city council meetings, win over hostile neighbors with costly concessions, community meetings and design revisions and to fend off the ever-present possibility of litigation. Because relatively few projects survived that ordeal, the competition for funding on the other side wasn’t especially stiff, said Merriman, who is now policy advocate for MidPen Housing, an affordable developer in San Mateo County. 

That began to change earlier this decade. California lawmakers began passing laws overriding these local impediments — especially for affordable projects. All of a sudden more projects were clearing those early regulatory hurdles and competing for Low-Income Housing Tax Credits, the federal government’s signature affordable housing construction subsidy. The bottleneck moved further up the road.  

But then that too began to change late last year. Buried in President Donald Trump’s signature tax bill from 2025 was a significant boost to the tax credit program. (Specifically, the law increased the total supply of one type of credit while allowing another kind to be spread out over twice as many projects).

Which brings us to the latest bottleneck. 

Now projects can get through local approval. They can more easily acquire the final and most important layer of federal financing. But project sponsors typically can’t apply for that until all other financial holes are plugged. 

“We’re looking for state sources to fill that gap,” said Merriman. “We want to make sure we don’t leave those federal sources on the table.”

MidPen currently has 1,198 units spread across seven developments waiting for that last bit of funding, she said. “Should there be a source…there’s a pipeline that is ready to go.” 

California’s last major infusion of public affordable housing dollars came in the form of a voter-approved bond in 2018. That well has run dry. A hodgepodge of funding streams remain.

Adding together funding that has already been approved by legislators but not yet spent and a variety of other state and federal sources, California’s Housing and Community Development department says at least $1.8 billion should be available for affordable developer applicants this year. Gov. Gavin Newsom’s budget proposal for the coming fiscal year doesn’t include any new discretionary spending beyond that.

Boosters of more funding have reasons to be optimistic. Newsom has taken such an austere posture in early budget negotiations before only to have the Legislature successfully pour hundreds of millions of dollars of affordable housing subsidies back into the final budget agreement.

California lawmakers are also considering a record-breaking $10 billion affordable housing bond for the 2026 ballot. If a majority of voters go for that, “we’d be off to the races,” said Merriman. 

Cutting costs

One way to get more affordable housing built is by spending more money. The other is trying to make the existing money go further by cutting costs. 

The cost of affordable housing construction is notoriously high in California: A 2025 study estimated that tax credit-financed projects here cost two- to four-times the amount of comparable projects in Colorado and Texas. There is no single reason for this disparity. Land costs in California are significantly higher. So too, often, is the cost of labor. Regulatory barriers like restrictive zoning, slow permitting and stiff impact fees are frequently named as culprits. Sometimes old-fashioned construction methods and materials get blamed.

But there’s also the cost of just waiting around.

A typical affordable development in California will have two or three public funding sources, with some drawing on six or more. Many of these sources are awarded on their own timelines. Each has its own program-specific requirements that can take time to meet. Some are conditional on the receipt of another. As time goes by, developers still have to make payroll, pay interest on pre-construction loans and watch as inflation drives construction costs up further. As delays compound, funding sources that have already been secured might expire, setting things back further. 

Each additional funding source delays the start of construction on a project by an average of four months, adding an extra $20,460 per unit, according to an analysis by the Terner Center for Housing Innovation at UC Berkeley.

The Newsom administration is currently tinkering under the hood of California’s affordable housing finance system in an effort to speed things up.

Last year, the governor proposed the creation of the state’s first ever cabinet-level housing agency. The California Housing and Homelessness Agency is scheduled to take over the state’s disparate housing loan and grant programs. The governor’s office also proposed legislative language that would force the new agency and the Treasurer’s Office to operate in tandem, giving affordable housing developers a single place to apply for the state’s various funding programs — and to cut out some of the time they spend stuck in line.

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It comes from an unlikely source.

Buried deep among the cuts to social services in President Donald Trump’s signature spending package, the One Big Beautiful Bill, is an increase in support for the Low-Income Housing Tax Credit that affordable housing advocates have sought for years. Those tax credits are the most important federal funding available for affordable housing, and they’re used in low-income projects throughout California. 

Exactly how much difference this boost will make in the Golden State depends on many factors, including tariffs, labor costs, state funding, and more. But experts agree the change could help California build thousands more affordable homes each year. 

“It’s a very big deal,” said Matt Schwartz, president and CEO of the affordable housing nonprofit California Housing Partnership. “These provisions are a huge shot in the arm for an affordable housing field that has been suffering under exhausted state resources.”

It’s no wonder those provisions haven’t gotten much public attention. The federal law, which Trump signed on July 4, extends and expands tax cuts that disproportionately benefit the richest and adds trillions to the federal debt while imposing historic spending cuts to Medicaid, other patches of the social safety net and clean energy programs over the next decade. For California’s Democratic leadership and its liberal-leaning electorate, there isn’t much to love and plenty to hate.

“From a California perspective, there have certainly been a lot of concerns with that bill,” said Ray Pearl, executive director of the California Housing Consortium, which advocates for affordable housing development. 

But the spending package gives affordable housing boosters something to celebrate, even if many in blue California are reluctant to do so publicly. 

Because the expansion to the tax credit program, part of a preexisting bill, was folded into the broader package, “the federal government has given us a green light to double production,” said Pearl. 

Last week, the state committee that oversees these credits approved changes to its application process that incentivize developers to take advantage of the new federal policy.

What exactly do tax credits have to do with affordable housing? 

Rather than fund public housing construction directly like it used to, the federal government rerouted most of its affordable housing funds through the tax code beginning in the 1980s. These tax credits are issued by states to affordable developers, who then sell them on to deep-pocketed banks, insurance companies and other financial behemoths, trading tax cuts for ownership shares in affordable housing projects.  

It’s a financial Rube Goldberg machine, and it’s everywhere. If there’s an apartment project designated for unhoused people or low-income tenants in your neighborhood, chances are tax credits helped get it off the ground. 

The credits come in two basic flavors. Both are getting a major boost under the new federal law.

One credit lets its owners write roughly 9% of the cost of construction on a project off their tax bill each year for 10 years. Those 9% credits are doled out by the federal government to the states, who then turn around and award them to developers. There are always more qualifying projects than there are credits to fund them, especially in California. The Trump-backed spending package boosts the total number of these credits by 12% each year indefinitely. 

The other type of credit, the 4% credit, doesn’t come with a cap, which means it is technically available to any developer who qualifies. How a developer qualifies is the rub. Historically, an affordable project needs to cover half of its costs with particular tax-exempt bonds — which, like the 9% credits, are in short supply — to make full use of the 4% credits. The federal bill reduces that requirement, so that a project only needs to cover a quarter of its cost with the bonds. 

“The bottom line is the federal government is making additional tax credits and bond capacity available,” Pearl said, “which is one of the biggest things you need to produce affordable housing nationwide, and especially in California.”

The state receives more requests for bond financing each year than it can grant, said Marina Wiant, executive director of the California Tax Credit Allocation Committee. Her committee last week voted to change its application to line up with the new federal requirements — reducing the percentage of a new project that must be financed via bonds, and allowing projects already approved to reduce their bond financing. That lower threshold means there will be more bond money to go around, and more projects will get funded, she said. 

“There are a lot of projects still in the queue that are waiting for bond financing,” Wiant said. “So this immediate change will have a pretty immediate impact this fall.”

How did this affordable housing boost get into Trump’s spending plan in the first place?

Schwartz’s group and others have been fighting for this tax credit increase for years, garnering bipartisan support along the way, he said. Republican lawmakers tend to view tax credits as a “good kind of subsidy,” he said. Because they are used by corporations, they are more palatable than food stamps and other direct assistance that are viewed as handouts.

Just how much could these new tax credits help? That depends on who you ask. 

The changes in policy could fund the construction of an extra 1.22 million affordable rental units nationwide over the next 10 years, according to an estimate by the accounting firm Novogradac. That works out to roughly 20,000 extra units per year in California.

But many things could get in the way. If the cost of building goes up because of tariffs, increased labor costs or interest rate hikes, developers might decide not to use the tax credits. Trump’s spending package also keeps corporate tax rates low, which could reduce the value of the housing tax credits.

And, because housing is so expensive to build in California, most projects can’t rely solely on tax credits — they need other local and state funding, too. But that funding is in short supply. Extra money given out during the COVID-19 pandemic has dried up. A regional $20 billion affordable housing bond was set to go before Bay Area voters last year, but it was pulled off the ballot amid fears it would fail. 

As a result, Schwartz estimates California will see closer to 10,000 new low-income homes built per year as a result of these extra tax credits, not 20,000.

“I think it’s going to take us a couple of years to ramp up,” he said.

Another potential obstacle: The cuts Trump’s spending package imposes on other areas — including the cuts to Medicaid that are expected to result in 3.4 million Californians losing coverage over the next 10 years — could exacerbate poverty for many people and undermine the benefits of the tax credits. 

“It’s a tremendous irony,” Schwartz said, “that (the tax credit increase) was in this incredibly harmful ‘big ugly bill,’ as we call it.”

For the record, a previous version of this story mischaracterized the scope of the housing bond that was pulled off the ballot last fall. It was a Bay Area regional bond.

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The forces of housing won. 

With the passage of a state budget-related housing bill, the California Environmental Quality Act will be a non-issue for a decisive swath of urban residential development in California. 

In practice, that means most new apartment buildings will no longer face the open threat of environmental litigation. 

It also means most urban developers will no longer have to study, predict and mitigate the ways that new housing might affect local traffic, air pollution, flora and fauna, noise levels, groundwater quality and objects of historic or archeological significance.

And it means that when housing advocates argue that the state isn’t doing enough to build more homes amid crippling rents and stratospheric prices, they won’t — with a few exceptions — have CEQA to blame anymore.

“Saying ‘no’ to housing in my community will no longer be state sanctioned,” said Assemblymember Buffy Wicks, an Oakland Democrat who introduced the CEQA law as a separate bill in March. “This isn’t going to solve all of our housing problems in the state, but it is going to remove the single biggest impediment to building environmentally friendly housing.”

Unlike most environmental laws, which explicitly mandate, monitor or ban certain environmental behavior, CEQA is just a public disclosure requirement. The 54-year-old statute requires state and local governments to study and publicize the likely environmental impact of any decisions they make. That includes the permitting of new housing. 

But for years, the building industry and “Yes in my backyard” activists have identified the law as a key culprit behind California’s housing shortage. That’s because the law allows any individual or group to sue if they argue that a required environmental study isn’t accurate, expansive or detailed enough. Such lawsuits — and even the mere threat of them —add a degree of delay, cost and uncertainty that make it impossible for the state to build its way to affordability, CEQA’s critics argue.

With today’s vote, the Legislature is putting that argument to the test. Gov. Gavin Newsom, who spent much of last week cajoling the Legislature to pass the bill as part of his budget package, signed it on Monday evening.

Now the question is whether this monumental political and policy shift will actually result in more homes getting built in California’s cities.

Many of the bill’s backers are optimistic.

“I think when we look back on what hopefully is California finally beginning to confront this housing crisis, this year — 2025 — and this bill will be viewed as a turning point,” said Matt Haney, a Democrat who represents San Francisco in the Assembly where he chairs the housing committee.

On paper, the new law, unlike most that deal with housing approvals and environmental regulation, is actually pretty straightforward.

Urban “infill” housing developments — housing built in and around existing development — are no longer subject to CEQA.

There are some exceptions and qualifiers, but development boosters say they are relatively minor. 

The exemption is “the most significant change to the California Environmental Quality Act’s effect on housing production since CEQA was passed,” said Louis Mirante, a lobbyist for the Bay Area Council, a business coalition that regularly pushes for legislation that makes it easier to build.

The bill is limited to projects under 20 acres, but that cap is only relevant to the biggest multi-block-spanning mega developments.

A certain level of density is required, but it really only precludes using the policy for single-family home construction.

Before any project can move forward, any affiliated tribal government will have to be notified first, but the consultation is put on a short timeline.

In order to qualify for the exemption, a proposed project must also be consistent with local zoning, the regulations that determine what types of buildings can be constructed where. But thanks to another CEQA-chopping bill authored by San Francisco Democratic Sen. Scott Wiener that exempts many changes to zoning rules from CEQA and which is also packed into the budget, that appears less likely to be a real constraint. 

To buy off the ferocious opposition of the State Building and Construction Trades Council of California, a construction union umbrella group, the bill also includes some higher wage requirements. 

But those rules are not likely to apply to most potential residential development projects. “The lion’s share of housing being built” in California will no longer be governed by CEQA, said Mark Rhoades, a planning and development consultant in Berkeley.

Take a massive five-story apartment building spanning a full city block, said Bill Fulton, a longtime urban planner and professor at UC San Diego. 

“You don’t have to worry about labor and you don’t have to worry about CEQA? That’s a big deal,” he said.

CEQA seachange

What a difference nine years make.

Consider how things went back in 2016 when then-Gov. Jerry Brown tried to ram a CEQA fix for California’s rising housing costs through the state budget process. Brown’s big idea was to “streamline” the housing approval process, allowing developers to make an end-run around the California Environmental Quality Act, so long as they set aside a certain share of units for lower-income residents.

A coalition of construction labor unions, environmental interests and local government groups torched the idea. The proposal didn’t even get a vote.

Nearly a decade later, once again a Democratic governor opted to stuff a CEQA-trimming policy package through the budget process in the name of cheaper housing. 

The measure passed overwhelmingly in both the Senate and Assembly — and this time it didn’t even include an affordability requirement.

Wicks’ proposal is somewhat narrower than the 2016 version, exempting only infill. New suburban-style subdivisions carved from farmland or undeveloped sagebrush will not qualify. 

That infill focus has made it easier for the Democratic-controlled Legislature to swallow such a significant scaling back of California’s signature environmental law. Promoting denser urban development generally means using less land, constructing new housing that uses less energy and setting up new residents to do a lot less driving. 

“When you are building housing in an existing community, that is environmentally beneficial, it is climate friendly, that is not something that should be subjected to potentially endless CEQA challenges and lawsuits,” Wiener said on the Senate floor on Monday just prior to the vote, when the measure passed 28 to 5.

Even so, Wicks’ proposal always looked like a long shot. 

Since Brown’s failed gambit, lawmakers have managed to pass a raft of bills giving housing developers an escape route around CEQA. But those laws have always contained a trade-off. Developers get to skip CEQA, but in exchange they have to pay state-set “prevailing wages” (which typically work out to union-level pay), hire union workers outright, set aside a certain share of units for lower income residents, or some combination of the three. 

These conditions were born of political necessity. A CEQA lawsuit — or even the suggestion of one — makes for a powerful negotiating tool. Organized labor groups, most especially the building trades council, have not been keen to give up that leverage without getting something in return.

As housing developers proved less willing to use the new streamlining laws than those bills’ sponsors and supporters had hoped, many pro-building advocates, academics and commentators began calling for environmental streamlining with no strings attached.

Wicks answered that call earlier this year. Under her proposal, infill developers would be allowed to ignore CEQA, full stop. That marked a major break from recent legislative precedent, and one that seemed a stretch, even with so many Democratic lawmakers carting around copies of Abundance.

The deal that almost wasn’t

Just last week, Wicks’ proposal seemed on the verge of collapse.

A version of the bill introduced last week included what amounted to a minor wage hike for the lowest paid construction workers, who are virtually all non-union. While the state’s carpenters’ union supported it, the trades council emphatically did not — with one of the groups’ associated lobbyists likening it to Jim Crow. The trades objected so strenuously — arguing that it set dangerous precedent and undercut apprenticeship programs — that lawmakers removed the proposed wage change. 

Instead, developers working on projects that are entirely designated to be affordable would now be required to pay prevailing wages in order to take advantage of the new law. 

Developers of any projects over 85 feet tall would be required to hire a certain share of union workers. There are added restrictions for construction in San Francisco specifically.

By the standards of prior housing streamlining bills, those are relatively modest concessions. Most developments over 85 feet use concrete and steel frame construction, which require a higher skilled labor force that is often unionized anyway.

Most entirely income-restricted housing projects make use of public subsidies that require paying union-level wages.

“Affordable housing is forced to play by different rules because the state has decided that if you are receiving public funds a certain wage should be attached to it,” said Ray Pearl, executive director of the California Housing Consortium, which advocates for affordable housing construction. The addition of a prevailing wage requirement for affordable housing “is a head scratcher,” he said. “But it really is reaffirming existing policy.”

That leaves every other type of housing project: Market rate and mixed-income apartment buildings under seven-or-so stories. For that type of construction, which defines the bulk of urban development in California, CEQA is soon to be entirely optional — no strings attached.

That this is the new trades-endorsed deal has been met with a perplexed kind of glee from some corners of the “yes in my backyard” movement. The new version of the bill “is now *even better,*” UC Davis law professor Chris Elmendorf marveled on Twitter.

Will it matter?

What will urban housing construction look like in California without CEQA?

There are no shortage of reasons not to build housing in California. Labor costs, even without regulatory requirements, are high. So are interest rates. Tariffs and aggressive immigration enforcement are more recent sources of uncertainty. Developers are always happy to complain about slow permitting, high local fees and inflexible building codes. 

“It’s not the CEQA costs that are holding up housing,” said Rhoades, the Berkeley consultant. 

“I don’t think this is going to make more development happen,” he said of the budget bill. “It’s going to make development that is already happening a little easier.”

Critics of the half-century-old environmental law can and do point to specific projects — housing for students, housing near public transit, affordable housing built upon city-owned parking lots — that have been sued in the name of the environment as examples of “CEQA abuse.”

Under the new laws, such litigation will largely go away in California’s cities.

“The one thing we do know is that CEQA is a time suck,” said Ben Metcalf, managing director of UC Berkeley’s Terner Center for Housing Innovation and the former head of the state’s housing agency under Brown. “If you can just get out of that six months, nine months, twelve months of delay, that takes a whole cohort of projects and gets them in the ground sooner. In a state that’s facing a housing crisis, that’s not for nothing.”

But the more important consequence of CEQA, many of its critics regularly argue, has been its chilling effect. 

How many new units of housing would have been built, but for concerns that they might become ensnared in environmental litigation? How many developers, anticipating a possible legal challenge, have preemptively pared back their plans? How many financiers of housing projects pulled out or demanded higher interest rates over such concerns?

California may soon find out.

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many California residents, buying a home is simply out of reach. With the state’s median home price at more than $880,000, only 16% of households can even afford one. 

So it’s unsurprising that many Californians have accepted their status as lifelong renters. And as the share of renter households continues growing every year, more companies are capitalizing on renters’ deep desire to get something out of their often astronomical monthly payments. The programs they’ve introduced — among them a points-earning credit card, multiple rewards programs and a property loyalty program — are enough for some people to even boast about their renter status.

Bilt Rewards is the most well-known renter rewards program. Anyone can sign up to earn points for rent payments, exchange those points with airline or hotel partners like United and Hyatt and utilize a slew of other perks the company offers. Renters can take it one step further with the Bilt Mastercard, which waives the transaction fee for paying rent by credit card and also features several other perks offered by similarly popular credit cards. Perhaps most importantly, it doesn’t matter if your landlord won’t take a credit card payment for rent — the company mails a check for you directly to your landlord. 

Qualifying for the Bilt card requires a good credit score (at least 700, reports say) but for those who meet the requirements, the card seems almost too good to be true. And for the company itself, it might be. With no annual fee and a majority of users who reportedly pay their bills on time (which means they avoid paying the interest fees most credit cards make money from), the card is reportedly costing Wells Fargo $10 million a month in lost revenue. The bank has denied losses that big, but with a contract that won’t end until 2029, it’s unlikely to admit shortfalls, since the program won’t disappear anytime soon. 

Michael Miraflor, 42, is a Los Angeles renter who has been taking advantage of credit cards for rewards points for years. When he heard about Bilt, he said he felt like a problem had finally been solved for him. He’s been a renter for more than 20 years and currently lives in a “high-amenity, luxury apartment building,” so he spends quite a bit on rent. He doesn’t want to be a lifelong renter — he said he’d love to own a home one day — but for now, he loves that paying rent via Bilt feels like an advantage. 

He’s used the credit card for about a year, and he said he finds himself reaching for it more often to pay for everyday expenses like dining out, even more so than the credit cards he pays high annual fees for, like the American Express Platinum and the Chase Sapphire Reserve cards. Those can be great for certain rewards, he said, but they otherwise feel more “Boomer-corporate-coded” as opposed to the Bilt program, which feels “more modern and pragmatic.” He frequently uses the Bilt card to get free SoulCycle classes. 

Other programs, like Piñata, a rewards system that doles out points for paying your rent through its platform, operate more like a subscription service and cost $5 a month. Piñata’s marketing is mostly targeted to people who want to increase their credit scores, as the company will report on-time payments directly to the three major credit bureaus. It says a user’s credit score could increase by more than 100 points using the service. But in the meantime, points earned on Piñata can be exchanged for gift cards to businesses like Starbucks and Walmart or to buy household goods and other products directly from Piñata’s store. 

Nate Rodriguez, a 25-year-old Piñata user in Chico, said he thought the program sounded like a scam when he first heard about it from his landlord. But after almost four years of using it, he’s thrilled with how much his credit score has increased and he loves that he also gets “free stuff.” He estimates he’s received more than $300 worth of rewards over the years, between Amazon gift cards and a camera to watch his cat. 

Natascha Verhaert, a marketing spokesperson for Piñata, said not being connected to a credit card is important to the company, as it doesn’t want any barriers to joining the service. She said some customers save up on Piñata to earn bigger rewards like a Samsung TV or an Apple watch, while others spend their points on everyday supplies. 

“At the end of the month, you feel a difference in your financial health,” Verhaert said. “For the cost of a cup of coffee, you can make big progress.” 

Piñata has been available to landlords since 2020, but launched in May for any renter, not just those whose landlords offer payment through the system. Landlords can customize the program to incentivize certain initiatives, like offering additional points for early lease renewals and referring friends, or small tasks like changing air filters in the unit regularly, Verhaert said. 

Verhaert declined to share how many California users the company has, as did Bilt, but said the product is most popular in San Diego, Sacramento and Los Angeles. The company has agreements with property management groups in many California cities, she said. 

And it’s those large metropolitan areas that have the biggest rentership rates in the country, with San Jose taking the top spot in the U.S. at 52% of households, according to a recent Redfin report. Los Angeles came in second at 50.8% of households, while San Diego (48%), Fresno (47.4%) and San Francisco (42.2%) all made it into the top 10 cities with renter households, out of the country’s 75 largest metropolitan areas.

For those whose dream is to live in a Southern California mall, renters at Caruso properties can earn rewards by paying their rent through the company’s own loyalty program, Caruso Signature. Paying rent on time and signing or renewing a lease can earn users “Caruso Coins,” which renters can spend at Caruso-owned retail, dining or hotel properties. Examples include free tickets to the Grove’s AMC theater, a $25 gift card to a steakhouse in the Americana mall or even a one-night stay at Rosewood Miramar Beach, the swanky Montecito hotel. About 80% of renters at Caruso properties are members of the loyalty program, a Caruso spokesperson told SFGATE, and dining rewards are the most popular redemption item among residents. 

Caruso CEO Corinne Verdery said it was worth it for the company to build its own program so it can stay closely aligned with its customers. The company surveyed residents to determine which perks and rewards to offer and learned that existing residents would be more likely to refer new residents if they got rewarded for it. The loyalty program benefits the company, too — every time a renter uses it, Caruso gains a better understanding of how its residents spend their money at its properties and can tailor resident experiences based on that data. Points redemption is going up every year, Verdery said, which is a signal to her that the program is working.

“It is unique and one of a kind,” she said.

Similar to Piñata, Incentco, another rewards platform, works with landlords to provide incentives to renters, who then earn points. Co-founder Gerry Wiatrowski told the Wall Street Journal in August that “roughly a million renters get rewards through Incentco.” The points renters accumulate may seem like a lot, but they’re a small fraction of a rental payment. Still, that hasn’t stopped Incentco’s business from growing.

“It’s the psychology of points,” he told the WSJ. “The perceived value is higher.”

For Joe McReynolds, a 38-year-old national security researcher who uses the Bilt credit card to pay for an apartment he rents in New York, these programs are “a metaphor for modern consumer capitalism.” He said he earned around 300,000 points from Bilt last year, which he transferred to airline miles, earning him several round-trip tickets to Tokyo, where his partner lives.  

“My parents have always been skeptical of this stuff, saying, ‘There’s no such thing as a free lunch,’” he said with a laugh. “But there are all sorts of free lunches if you figure out the system to take advantage of the generosity of mega corporations.”

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The future’s looking grim for affordable housing projects across California.

Housing developers and advocates hung their hopes on Proposition 5, a measure rejected by voters that would have made it easier to raise local funding for affordable housing and public infrastructure projects. Meanwhile, as President-elect Donald Trump prepares to take office, no one expects the federal government to dole out more money for subsidized housing.

“We can’t sugarcoat the fact that this is a significant setback,” said Susannah Parsons, director of policy and legislation at All Home, a Bay Area housing justice advocacy group. “We are running low on public funds for housing. We are facing significant headwinds.”

Housing took center stage in state and national elections this November as more Americans feel the pinch of rising rents and a shortage of affordable housing. However, the results of the election have California affordable housing developers concerned that a shortage of public funds will put a stop to some of their projects.

According to a May report from the Metropolitan Transportation Commission, almost 41,000 affordable homes and apartments in the Bay Area are in the pre-development phase, meaning developers still need a certain amount of funding — collectively, about $9.7 billion — to start construction. Without that money, the projects sit idle as other funding sources, sometimes contingent on each other, disappear.

Proposition 5 could have unleashed more funding by lowering the threshold for approving local bond measures for housing and infrastructure from a supermajority of 66.67% to 55%.

Sarah Karlinsky, research director for the UC Berkeley Terner Center for Housing Innovation, likens the complicated funding structures for affordable housing to a layer cake.

“There are many different sources of funding for affordable housing at the state level and different departments and parts of the government that control different pieces, and then affordable housing developers kind of have to knit all of them together,” she said.

Karlinsky said there will be increased competition for what funding is still available, while projects that can’t get enough will be pushed further into the future.

“We know it’s going to be extremely challenging because it’s been hard enough as it is,” said Noni Ramos, CEO of Housing Trust Silicon Valley, an affordable housing development financing organization. “Now we’re in a position where it’s going to be even harder to do this work.”

The defeat of Proposition 5 was a particularly big blow because it was one of the only large-scale funding efforts put to voters after a Bay Area-wide $20 billion housing bond and a statewide, billion-dollar housing bond both failed to get to the ballot.

Still, there were some successes at the local level. San Francisco voters overwhelmingly approved Measure B, a $390 million bond that includes funding for homeless shelters. Los Angeles voters approved Measure A, a sales tax initiative that would raise an estimated $1.1 billion per year for housing and homelessness efforts.

As proponents and opponents seek to understand why Proposition 5 failed, they agree that the measure’s complicated nature was its biggest setback.

When voters don’t understand a measure and how it would impact them, they are more likely to vote against it, according to Mark Baldassare, statewide survey director for the Public Policy Institute of California.

“The people who put it on the ballot really did not promote what it was in a way that connected the dots for people,” he said.

Proponents fear that the opposition campaign may have swayed voters at a time when people are concerned about high costs. While Proposition 5 would not have increased taxes, it would have made it easier for bond measures to pass locally, potentially meaning higher property taxes. Opponents said the proposition was “deceptive” and that it would “trick voters into approving the tax-hike measure.”

“I think voters vote for measures that benefit the social good when they feel more flush,” Karlinsky said. “They may not feel like they have anything left over for others.”

Susan Kirsch, a Proposition 5 opponent and the director of the Catalyst Institute for Local Control, an organization focused on local control in housing development, was relieved that voters rejected the measure. She feared its passage might have meant higher taxes for people like her, a home-owning senior living on a fixed income.

“We know that there’s already more people moving out of the state because of California’s high taxes,” she said. “I would feel much more vulnerable in terms of how those taxes would keep coming in.”

As for future elections, affordable housing developers and advocates are regrouping and debating whether to reintroduce a regional or statewide bond measure or a version of Proposition 5.

Heather Hood, the vice president of affordable housing advocacy group Enterprise Community Partners, said the onus is on local agencies and organizations like hers to plan for future funding.

“In the face of the federal administration, we’re going to need to be more efficient with our dollars and mightier with our will,” she said. “It seems to me that we’ve collectively managed to be divided and nit-pick at each other, and we don’t have time for that anymore.”

The post California Housing Projects Face ‘Financing Drought’ After Proposition 5’s Defeat appeared first on The Hemet & San Jacinto Chronicle.

When the government announced it would give rent vouchers, Aguilar, who wears her hair in a loose knot, felt relieved. But her landlord asked for cash instead.

Worried she would lose the home it had taken her a few years to find after she moved to the United States from Mexico to earn money to be able to pay for the education of her five children whom she had left behind, Aquilar contacted Catholic charities for rent vouchers. But the landlord would not accept those either.

Instead, she told Al Jazeera that the landlords’ employees stood in the building hallway, shouting insults and making it hard for her to pass through to her apartment.

At first, she slept with a stick, afraid they would break in and of the rats that scurried around her apartment. When she felt the landlords’ employees looking through the broken keyhole in her apartment door at night, Aguilar stopped sleeping. By November 2021, fear and sleeplessness got to her, and she moved out.

It began a three-year-long journey to find affordable housing in the city. Aguilar started living in her car by the city’s Dolores Park when she couldn’t find another place she could afford to rent. “I didn’t know any laws then, or I would never have left my house, whatever the situation,” Aguilar said.

Later, she learned that once she vacated her apartment, the landlord could charge a new tenant a much higher rent, according to a California law called Costa-Hawkins, which was passed in 1995.  It exempts single family homes, condominiums and post 1995 construction from local rental control laws which would limit the extent and frequency of rent increases. The law also allows landlords to charge higher rent from new tenants when rent-controlled tenants, like Aguilar, vacate the place.

The repeal of this act, to allow more expansive rent control, will come up in the November 5 ballot. Those opposed to it, mainly large developers and landlords, have raised more than $124m in the last year until October 28, California’s Secretary of State figures show, to fight this ballot measure. This is more than twice as much as the funds raised by the campaign to continue having rent-controlled housing.

An Al Jazeera analysis of campaign finance records found that much of the $124m was raised by large corporate real estate companies, such as the Blackstone Group, the Essex Property Trust, Equity Residential and Avalon Bay, which have investments from the California Public Employees Retirement System, the California State Teachers Retirement System and the San Francisco city employees’ retirement fund.

This fund flow from real estate companies allowed increased spending on flyers and advertising, skewing the battle for rent control in an election season where polls show that the cost of housing is the second-most important economic concern for voters after inflation.

Both presidential candidates have announced plans to tackle the housing crisis, including building more homes and making home buying easier. Vice President Kamala Harris has said she will bring laws to fight abusive corporate landlords whom she blames for rent increases.

Given that nearly half of all California residents and some other states are renters and often burdened by the costs, the battle over Costa-Hawkins will suggest whether supporting builders to make more homes or helping tenants stay in rent-controlled housing will be more beneficial to the average US resident.

The ballot measure to bring in rent control comes at “a difficult moment in many cities, with many people experiencing homelessness and housing insecurity”, said Mathew Fowle, a postdoctoral fellow at the University of Pennsylvania’s Housing Initiative.

This is particularly prevalent in California, “which has more renters than any other state,” said Maria Zamudio, the executive director of the Housing Rights Committee, a tenants’ rights organisation. “And this law leaves them at a razor’s edge,” she added.

Those who defend the law believe that prohibiting rent control will encourage developers to build and maintain more homes. A possible repeal would “hamper the construction of affordable housing, exacerbating California’s housing crisis”, say pamphlets opposing the proposition, dubbed Proposition 33.

The ballot measure also came up in 2018 and 2020 and was defeated. Fundraising by landlords this time has outstripped that on previous occasions when $76m and $95m were raised, respectively. On those occasions, too, the California Apartment Association Issues Committee, which is raising funds to oppose the proposition, outraised those supporting rent control by far, thanks to large real estate groups that get funds from California public employees and teachers’ pension funds.

“This is a very conflicted situation for pension funds,” said Eileen Appelbaum, the co-director at the Washington DC-based think tank Center for Economic and Policy Research (CEPR). While retired public school teachers and employees are likely experiencing high rents, their pension funds are invested in real estate companies that fund the campaign against rent control, she said.

Bankrolling the opposition

Of the $124m raised by the lobby against the ballot measure, more than $88m was raised by a committee funded by the California Apartment Association Issues Committee, according to the California Secretary of State’s website. It got $32m from Essex Property Trust and $22.3m from Equity Residential, two of the largest corporate landlords in the state.

The Blackstone Group, the country’s largest private equity real estate company, gave $1m. It gave another $1.88m through Air Communities, a company it recently acquired. Avalon Bay, another large corporate real estate company, gave $20.135m. Carmel Partners, another private equity real estate company gave $1.48m.

Three other committees together raised $36m to oppose the ballot measure. Large real estate companies also funded some of these.

All of these companies have investments from Calpers, the California Public Employees Retirement System, a review of the Calpers 2023 portfolio showed. They also have investments from CalSTRS, the California State Teachers Retirement System. While the San Francisco Employees Retirement System does not publish its investment portfolio online, press releases said it had recently invested in Blackstone and Carmel Partners.

Spokespeople for Calpers and CalSTRS told Al Jazeera they had nothing to say on the issue. The other organisations did not respond to Al Jazeera’s request for comment.

In essence, the private equity funds used the pension funds of California public employees, public school teachers, San Francisco municipal employees and state public employees to bankroll the opposition to rent control.

This funding allowed the campaign against the ballot measure to put out flyers against Proposition 33 across the state as well as advertisements claiming that a repeal of Costa-Hawkins would lead to cities setting rent boards that would “dictate what you can charge to rent out your own home”.

Dean Preston, a city supervisor in San Francisco and former tenant rights lawyer, told Al Jazeera that while the campaign against rent control “talks of small landlords, there is a range of landlords. We have seen corporate landlords being much more aggressive in evicting tenants.”

The ballot measure has come at a time when Unlawful Detainers, notices asking tenants to vacate homes within days, doubled, Preston said. More than 2,800 such notices were sent in the fiscal year 2023, up from 1,428 the previous year, according to city data, after a statewide moratorium on evicting residents for non payment of rent during the pandemic period ended. These were expected to rise further in 2024.

“We had set off an alarm to say that the health pandemic should not become a housing crisis,” Preston said in an interview at his San Francisco City Hall office. The city began a large rental assistance programme. “But we did see a wave of evictions.”

Susie Shannon, the policy director for Housing is A Human Right, the group that has sponsored the ballot measure to repeal Costa-Hawkins, told Al Jazeera the group sponsored it again because “wages have been stagnant for a while and rents have been going up. People are struggling. Some are couch surfing and others are homeless.”

Her campaign to support Proposition 33 raised a little more than $50m, funded largely by the Los Angeles-based AIDS Healthcare Foundation (AHF). The Foundation works in healthcare worldwide, including selling low-cost drugs, which are sourced through government discounts and sold at its pharmacies. It has also expanded into housing, buying single-room occupancy hotels to rent out to the unhoused. However, the Los Angeles Times has reported that these homes often have faulty plumbing, heating and electricity.

The battle over rent control has led to large landlords and real estate companies backing and funding a proposition requiring AHF to spend its revenues from discounted drug sales on patient care rather than funding rent-control measures. The California Apartment Association Issues Committee gave more than $40m to support this proposition to curb the AHF.

Evictions a tool to ‘raise rents’

One night, when Aguilar was sleeping in the backseat of her car near Dolores Park, she was awakened by policemen shining flashlights into her face. They searched her car and checked her papers. They left after finding her to be above board and unable to make rent.

After nearly a year of living in her car, Aguilar’s car was towed for illegal parking and she began living on a street by the park. She stayed up all night to keep an eye on her belongings and made sure to stay out of fights and more police trouble. “I was so scared,” she said, recalling those months.

Three months later, in January 2023, she found a shared room in South Francisco’s Daly City. It cost her twice as much as her old apartment had.

Aguilar regretted leaving her apartment in San Francisco City, thinking she should have suffered for a roof over her head.

“Some landlords have made it a business practice of evictions to raise rents,” Preston said about the Costa-Hawkins provision allowing landlords to charge higher rents from new tenants. Aguilar later believed this had led to her being forced out of her house.

The California Apartment Association, which opposes Proposition 33, says in its pamphlets that not allowing rents to rise when a new tenant comes “would dramatically reduce the flexibility to adjust rents between tenancies. Imagine never being able to bring your rents to market rates.”

But tenant activists believe allowing landlords to charge higher rents from new tenants encourages them to push out older ones, such as Aguilar.

“If people are evicted, all they have left is sidewalks and underpasses,” said Carol Fife, a city supervisor in Oakland. Fife had received an Unlawful Detainer notice, threatening to evict her within days for not paying one month’s rent. While she was able to fight against the notice and stay on, not all tenants are able to do so.

Alexander Ferrer, a researcher with Debt Collective, an organisation that created the Tenant Power Toolkit to help tenants fight eviction cases in court, found that such notices were being issued with less than two months rent due, threatening to force many residents out of their homes.

Living under a battery light

It has also meant that tenants cling to rent-controlled homes when they have them, as Aguilar wishes she had.

Valente Casas was out one December night last year when he heard that there had been a fire in the home below his in Oakland. The electrical fire in the double-storied house led to the power and gas going out in both storeys, never to return.

Casas works as a cleaner for businesses, but many of the offices he used to clean have shut down as employees work from home, cutting his income and hurting his ability to rent a new home. So, Casas has stayed in his unit, devising an elaborate system to live without power or gas. He has one battery-powered light he charges at work, buys small amounts of groceries every day since the fridge does not work, cooks on a camping stove, accumulates gas cans to light his stove, and watches shows on his mobile phone for as long as the battery holds out.

Then he sits on his bed in the dark until he can fall asleep.

At these times, “I think about what a stressful life this is,” Casas told Al Jazeera. He has lived in the apartment for 15 years. “But if I leave and look for a new place, my rent will go up at least 100 percent.”

Christian Dominguez, who lived in the apartment that caught fire, slept in his car for nearly three months after the fire. With the light of his mobile phone, he walks through the burned unit his family moved into the day he was born, two and half decades ago. The house had a beautiful fireplace, his father had fixed new flooring and cabinets, and Dominguez received his own bedroom. The fire gutted it all.

Dominguez and his father Narciso, who sells hot dogs at the Oakland Coliseum, have rented another place while this one stays ruined, even as Dominguez continues to spend time there. The landlord offered them no help other than to encourage them to move out, Dominguez and Valente said. They believe if they do, the landlord can fix the place and get a new tenant at a higher rent, making the repair worth the money. They have not had any interaction with city inspectors either.

Not far from Dominguez’s and Casas’s home, Marco Cajas’s apartment block also had a fire one January evening. The power did not come back for a month and a half, during which time Cajas showered at a relative’s place and shared meals with them. While power has now returned to his unit, it still is not back in some of the others, which get electricity through a generator parked in the compound. It spews smoke that has made the children sick.

Cajas and other residents have sued their landlord but stayed in the building because they know an affordable new place would be hard to find.

Aguilar, meanwhile, has begun volunteering for tenants’ rights groups, including the South East Tenants Association and Housing Rights Committee, to support tenants such as herself. She visits low-income tenants in San Francisco and helps organise them into unions. She photographs their broken windows, doorbells, faucets with no running water, and elevators that do not work. She sends them to building managers, asking for them to be fixed.

She is also part of a volunteer army that tenants’ rights organisations hope will help reach voters to counter the other sides’ extensive funding in the fight to repeal Costa-Hawkins.

Aguilar thinks it is possible that many people with decision-making power do not know about the Costa-Hawkins rule and how it hurts people. “I wish the authorities knew about Costa-Hawkins,” she said. “It would reduce families having to live on the street. Police treat them so badly, like criminals.”

Fiduciary responsibility

CEPR’s Appelbaum, who has written a book called Private Equity At Work, said there is not much pension funds can say to influence the investments of the private equity funds in which they are invested.

“Pension funds are told they have a fiduciary responsibility to maximise returns for retirees. Doing anything else would hurt that,” she said.

However, in 2018, state law was amended to expand the meaning of fiduciary duty of Calpers, the state’s largest public pension fund, allowing it to “take into account harmful external factors when determining the overall return of an investment”. In other words, pension funds had to keep in mind harmful factors and not just returns.

Jordan Ash, the housing director at the Private Equity Stakeholder Project, said an earlier analysis by the group had found that aside from California’s public employees and teachers’ pension funds, several city utilities’ pension funds – including the Los Angeles Department of Power and Water Employees Pension Fund and San Diego and Santa Barbara county employees retirement systems – have also invested in Blackstone funds that contributed to opposing the repeal of rent control in previous years.

Since then, several cities across the state, including Pasadena, have voted to expand rent control.

Shanti Singh, the legislative director for Tenants Together, a statewide tenants’ rights group, said more cities would look to expand rent control because she believes having volunteers such as Aguilar in communities helps reach out to voters, even without as much money as the opposition.

Aguilar lived in her shared room in Daly City for more than a year, commuting to organise tenants in city apartments and working as a cleaner in a city gym. She struggled to find a place in the city she could afford and still be able to send money to her children, whom she had not seen since she left home 18 years ago. They were children when she left, she said. Now, they have their own children.

“I came here to support my children in their careers,” Aguilar, who almost only speaks Spanish, said. The thought of them had kept her going through her hardest times. “That is what it is to love as a mother.”

Earlier this year, Aguilar had an accident that restricted how much she could work and made the long commute into the city harder. Recently, she moved back to the city but pays more in rent than she earns every month, leaving her in a growing pool of debt as well as the constant worry of being evicted again.

The post Rent control battle in California heats up, opposing investors pump money appeared first on The Hemet & San Jacinto Chronicle.

ADUs are one of the few bright spots for the state’s housing market at a time of rising construction costs, high interest rates, and continued local resistance to greater housing density. These unassuming units, often basement apartments, backyard cottages, and converted garages, are far more affordable to build than other housing options and have become a politically palatable infill alternative to apartment complexes.

With median construction costs of about $150,000 in California, ADUs cost less than a third of traditional, federally subsidized affordable housing. As a result, the median ADU in the San Francisco Bay Area and Central Coast is affordable (costs less than 30% of income) for a low income family, 31% of ADUs in Los Angeles County are affordable, and large numbers of ADUs are affordable in other regions, as well.

Over the past eight years, ADU construction has skyrocketed. California went from about 1,000 ADU permits in 2016 to 5,000 in 2017 to 25,000 in 2022.

This boom did not come easily. Many local governments have resisted ADUs, fearing they would overcrowd single-family neighborhoods. While some of these concerns are legitimate, the state’s housing crisis has persuaded state lawmakers that cities must allow more housing construction, even in built-out areas — and ADUs are one way to achieve that.

California lawmakers have worked for decades to limit local governments’ authority to block construction of these units. The effort began in 1982 when the legislature prohibited cities from categorically barring ADUs. Local governments responded by placing what a report from the Furman Center at New York University called “cumbersome and unpredictable discretionary  review requirements on applications for ADUs.”

Local resistance prompted the state in 2002 to mandate ministerial (rather than discretionary) local approval of ADU permits. Yet ADU production remained low.

Reforms in 2016 finally made inroads. That year, the legislature adopted two bills, AB 2299 and SB 1069. These required cities to allow ADUs on single-family lots. They also prohibited them from requiring design features such as direct pathways to the street and setbacks for garages converted into ADUs. These laws also eliminated parking requirements for ADUs near transit stops and for ADUs attached to existing houses; prohibited cities from requiring new water, sewer or utility connections for ADUs, or from charging utility fees for ADUs; and required ministerial permitting of ADUs to occur within 120 days.

More state laws followed, as legislators and advocates identified and removed other barriers to ADU construction.

Suddenly, ADU production surged across the state. According to the California Department of  Housing and Community Development, ADUs will meet 3% of the state’s housing needs for the period from 2021-2028.

Yet this growth has been uneven. In a recent study, the Rose Institute of State and Local Government analyzed differences in ADU production in Long Beach, San Diego, Anaheim, Pomona, Ontario, and Corona in light of the state’s assessment of these cities’ housing needs. In  Long Beach, the state’s per capita ADU leader, these units have met 5% of housing needs. By  contrast, ADUs make up only 2.6% in Anaheim. Within the Inland Empire, only 1% of housing needs are met in Ontario, 1.1% in Corona, and 2.2% in Pomona.

The report found that variations in ADU production can result from several factors, including the local housing market. For example, Ontario, like other cities in the Inland Empire, is still developing outward into greenfield sites, potentially reducing the demand for ADUs due to the availability of new single-family homes.

Familiarity with ADUs also matters. Planners in Long Beach, a leading producer of ADUs, describe these units as part of the fabric of their city, and say the knowledge they have gained processing ADU applications helps them approve permits faster than in some other cities. By contrast, other cities have less experience with this form of housing.

Local policies can affect ADU production, as well. Although the state has limited local control over ADUs, standards can still vary on several important dimensions. This is where local governments can most make a difference.

To help meet housing production goals, cities should assess where their regulations may be holding back ADU production and consider loosening standards in those areas. In particular, local lawmakers should look closely at three factors: parking requirements, structural setback requirements, and fees.

Parking requirements can add significant costs to new development, making them infeasible for homeowners without access to large capital flows. Structural setbacks can make larger ADUs geometrically infeasible, limiting the variety of options available to would-be buyers and renters. Finally, fees place high up-front costs on ADU developers, who often are individual homeowners,  further dissuading them from realizing their property’s potential.

Giving homeowners a little more wiggle room in how they build their ADUs could make the difference between catching up to statewide ADU production levels and missing out on a powerful tool to meet housing needs.

The post ADUs can help the Inland Empire meet housing needs appeared first on The Hemet & San Jacinto Chronicle.