Housing California Capitol Alert #19 [election impacts] fwd

Tom Boland (wgcp@earthlink.net)
Sun, 8 Nov 1998 03:46:47 -0400

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Housing California Capitol Alert #19
November 6, 1998

Democrats Win Governorship, U.S. Senator, Treasurer and the Legislature
What Will Gray Davis Mean for Affordable Housing in California?
HCD Set To Implement Immigrant Verifications
Data From Welfare Monitoring Project Indicates Need For More Housing
Capitol Buzz

Democrats Win Governorship, U.S. Senator, Treasurer and the Legislature

In a stunning victory for the Democratic party, California voters elected a
Democratic Governor, retained a challenged Democratic U.S. Senator, picked a
Democratic Treasurer and increased the Democratic majorities in both houses of
the Legislature. Republican's, after anticipating possible legislative gains
in a non-Presidential election, instead lost ground in the Legislature and now
face a Herculean task to regain a voice in the critical reapportionment
battles that will take place in 2001. Gray Davis will be inaugurated as the
first Democratic Governor since 1982 on January 4th.

Housing advocates are cautiously optimistic that a Governor Gray Davis will be
more supportive of affordable housing, supportive services, fair housing,
tenant rights and housing for the homeless. Hard to believe that they can't do
better than the Wilson administration's record over the last eight years which
provided virtually no funding for affordable housing, rolled back rent
control, repeatedly vetoed funding for emergency shelter and left the
department of Housing and Community Development irrelevant and demoralized.

Phil Angelides will be the new state Treasurer and in some respects his
election is more significant than the Governor's race. The Treasurer
administers the federal and state low income housing tax credit program, the
largest source of subsidy for building affordable housing. Current Treasurer
Matt Fong altered the selection criteria for the heavily oversubscribed tax
credit program to benefit for-profit developers at the expense of non-profit
housing developers. Some say the Treasurer's insistence on rewarding the
lowest cost and the lowest rents has forced too much new rental housing in
exurban and Central Valley communities and provided allocations to projects
which don't pencil out after the first few years. Worse yet, the Treasurer
instituted a lottery tiebreaker that has forced developers to have to reapply
for years on end rather than have a system with an objective tiebreaker. The
new Treasurer is expected to begin a complete reform of the tax credit

The election also strengthened the Democrat's control of the Legislature. In
the Senate the Democrats were able to defend their vulnerable seats in
Sacramento, the North Coast and in Riverside while winning the San Mateo/SF
seat and, surprisingly, winning former GOP Minority Leader Rob Hurtt's Orange
County seat. The Democrats now control 25 seats, two seats short of a two
thirds majority, while the Republicans now have 15 seats.

In the Assembly, the gains were more dramatic. Republicans believed that they
had a shot at the Assembly since the Democrats only had a six seat advantage
and as late as the weekend before the election were still predicting at least
40 Republican seats. But the Democrats not only protected all their vulnerable
seats, but won five seats formerly in Republican control. Democrats won
Republican seats in Santa Barbara, Fresno, San Bernardino, Orange County, and
Long Beach. Two additional seats, won by Republicans on election day by a
combined 500 votes, could fall into Democratic hands pending a count of
absentee and provisional ballots. But even if they don't, Democrats now have
48 votes in the Assembly, the most this decade, with the Republicans having 32

On the initiative front Prop 1A passed meaning that there will be $9.2 billion
for school facilities and repairs and $160 million to reimburse school fees
paid by developers. The California Housing Finance Agency is already working
to develop the program. Prop 7, the $210 million air pollution tax credit
proposal failed by a large margin, which was somewhat surprising considering
there was no real opposition. Prop 7's demise means that the tax cuts agreed
to in the budget now go into effect. Prop 10, the 50 cents a pack tax increase
on cigarettes was ahead by a mere 13,000 votes with an estimated 800,000
absentee and provisional ballots still to count.

What Will Gray Davis Mean for Affordable Housing in California?

On the surface it appears that Governor-elect Gray Davis has no plan for
affordable housing. He rarely, if ever, talked about it in the campaign and
even his public statements on growth focused on "bringing everyone to the
table" sound bites rather than laying out a clear agenda. There are a couple
of reasons for this. One, growth, housing and land use are controversial local
issues and taking strong positions in a campaign leads to voter alienation.
Second, housing is not a "hot button" issue like education, crime or taxes for
swing voters who matter most.

There are signs though that Governor Davis might have a different public
stance than Candidate Davis. Some close to Davis say that he plans on jump-
starting the legacy of Pat Brown and  rebuilding the public school system and
the state's infrastructure, including more housing. Davis wants to grow the
economy but recognizes that without substantially increased public investment,
private investment will go elsewhere.

The question is how can California pay for this investment? The current state
budget only has about a $1 billion surplus and actual revenue collections are
lower than projected. Davis has made it clear that he does not intend to raise
taxes and that seems likely to hold, certainly through the 2000 election, when
Democrats will want to maximize their majorities in both houses in advance of
reapportionment. While the state could find some underutilized federal funds
that the state hasn't taken advantage of yet, this is hardly likely to provide
the kind of funding that is needed.

Given this predicament, is the best path going after substantial governance
and fiscal reform which would hold out the promise of a better functioning
government with slightly loosened purse strings? Perhaps, because unless Davis
thinks that voters will approve billions in new bond financing, it is hard to
imagine where the money will come from to accomplishment his plan.

Another major way that the Davis election will impact affordable housing is
through the appointment of directors and key staff to administrative agencies.
There are several hundred key positions to be filled and in total the Governor
must make more than 3,000 appointments to agencies, boards and commissions not
to mention judge positions. Davis has a reputation for making quality
appointments. Housing advocates have been asked to submit names for
consideration. If you know someone who you think would be good in a key
housing post please let us know. You can call Mike Herald at (916) 447-0503,
fax us at (916) 447-0458, or e-mail us at mikeherald@aol.com.

HCD Set To Implement Immigrant Verifications

The Department of Housing and Community Development (HCD) held a series of
trainings in late October for housing sponsors who may be required to comply
with the regulations and informed participants that they must begin checking
tenants' and applicants' immigration status by November 15th.

Due to vigorous advocacy, the regulations only apply to certain housing
programs, and non-profit housing developers are exempt from having to perform
verifications. The trainings did little to clarify these points and instead
focused on detecting fraud. At several workshops questions were raised about
whether the regulations should apply to migrant housing since it is not means
tested. While the regulations currently do apply, department officials stated
that the issue was under reconsideration. For operators of migrant housing
this is problematic since they are reserving space now for families for next
year's crops and aren't sure what standard to apply. It is also important to
note that any organization which believes it is a non-profit and exempt from
performing verifications must apply to the department for approval. The
department also failed to amend their regulation to grandfather in existing
extended family like aunts and uncles as the California Housing Finance Agency
(CHFA) did in their regulations.

CHFA had their regulations approved by the Office of Administrative Law and,
unlike HCD, will wait for 30 days before beginning implementation. CHFA also
plans to conduct trainings, and department staff have said that until the
trainings are held project sponsors will not be required to perform
verifications. The earliest this is likely to occur would be in January, 1999.

Housing California and the National Housing Law Project were recently awarded
funding by the San Francisco Foundation to prepare materials and conduct
workshops on the immigrant regulations for San Francisco housing sponsors and
legal advocates. Both groups are seeking additional funding to conduct
workshops and provide materials in the rest of the state. HC currently has a
short question and answer piece on the immigrant regulations at our Website,
www.housingca.com. San Francisco workshops by HC and NHLP will be announced

While it is still possible that legal action or a new Governor's intervention
might stop the immigrant verification regulations, neither is likely to happen
by the November 15th start date. HC strongly encourages housing sponsors to
read the regulations and materials provided by the department prior to
implementing to insure that no family or person loses housing that they have a
right to reside in. Until the political and legal morass gets settled we would
urge you to error to the benefit of tenants otherwise qualified for and in
need of housing.

Data From Welfare Monitoring Project Indicates Need For More Housing

People transitioning from welfare to work need housing assistance, according
to information collected from CalWORKs participants in Northern California.
Over the past six weeks, Housing California has been part of a national effort
to monitor the early impacts of welfare reform. The Unitarian Universalist
Service Committee is sponsoring a study in five states to collect personal
stories of people participating in CalWORKs to determine what is working well
and not so well with welfare reform. Of the 120 people surveyed thus far in
San Francisco, Alameda, Sacramento, and Humboldt counties, over two-thirds
have spoken about needing help with housing either because they have been
unable to find housing at their income level and are homeless, or because they
are paying over 50% of their income in rent.  This includes those who have
secured employment and those who have not.

Although some county welfare departments are providing help finding housing,
or making some money available for assistance with move-in expenses, there has
been no statewide policy or resource support behind ensuring that people
moving from welfare to work have stable housing.  Less than 12% of families on
welfare in California receive a housing subsidy.

Other issues identified by CalWORKs participants include the need to:

increase the child support disregard;
provide more child care for very young children;
provide more on the job training;
have more direct transportation from home to work.

People pursuing associate degrees or vocational training are reporting having
a hard time staying in school because they are being told by their caseworker
that they have to quit, or because homework and study time is not being
counted as part of their work activity hours and they are having to work an
additional  15-30 hours on top of classes and homework to satisfy their work
requirements.  This has been particularly stressful for mothers with more than
one child and many demands on their time at home, but who have determined that
an educational credential is necessary to get a job that will pay enough in
wages and benefits to get off welfare and be able to support their family.
The average wage reported has been between $5.00-7.00.

In general, people are encouraged by the prospect of receiving more assistance
so they can get a job and leave welfare.   Participants are reporting having
difficulty contacting their caseworker, or not receiving information from them
about available services.  However, an increasing number are happy with the
services they have received thus far, report having a good relationship with
their caseworker, and are hopeful that these positive things will continue.

Data collection for this phase of the monitoring project will continue through
December.  For more information, please contact  Christina at (916) 447-0531.

Capitol Buzz

That noise you hear from Sacramento is not Democrats still celebrating the
election but the sound of resumes coming out of printers and being fed through
fax machines. After 16 years of Republican control of the executive branch,
former legislators, staffers, lobbyists, advocates and anybody else with a
pulse will be trying to land a job at his or her favorite agency. This in turn
will open up positions being vacated. In short, the fur will be (is) flying.
No solid rumors yet but stay tuned for further details. --- The fallout from
the election has already started. Assembly Republican leader Bill Leonard
resigned from his post in the wake of his caucus's crash and burn in the
election. The front-runners for the job are Rod Pacheco and George Runner. ---
Just when you thought that insurance companies had finally proved that they
were entirely clueless about community reinvestment, they go and do something
smart. Recall that in the last Capitol Buzz we reported that insurers were
dragging their feet over purchasing $100 million in Fannie Mae mortgage backed
certificates composed of California CRA loans. The failure to do so would add
credence to our argument that nothing short of a mandate will ever make
insurers invest. Well, someone from the insurers had a brain wave and now
Farmers, State Farm and Pacific Life have agreed to buy $50 million of the
securities. But the big life insurers (the ones who supposedly want safe,
long-term investments) are still balking because they fear that if they agree
to invest, then they will be asked to do more. Go figure. --- Oh and as one
last slap at affordable housing advocates, Governor Wilson vetoed AB 1697
(Torlakson) which required the Legislative Analyst to do a study of state
housing needs and possible sources for a permanent source of funding for
housing. The Governor vetoed the bill because "legislation is not needed for
LAO to do a study." Adios Pete Wilson.

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