What happens when the people who work in the coastal zone can no longer afford to live there? California coastal managers foresaw this as a potential problem in the early 70s and included policies addressing affordable housing in their original legislation. Although this statute was later repealed, the legacy of this directive still lives on today.
Why was affordable housing included in the 1976 California Coastal Act? Peter Douglas, executive director of the California Coastal Commission (CCC) and coauthor of a 1972 citizens' initiative that established the CCC, says that affordable housing was recognized as a "form of public access. Coastal access should not only be for recreational purposes, but also to live."
The commission that put together the plan for conservation and use of California's coast determined that it was easier to set aside about 25 percent of large development projects at affordable housing controlled prices, as they were being built, than later to try to incorporate affordable housing into a coastline that was already developed.
Before the affordable housing language was deleted in 1981, 766 units were built in Orange County, an area that today has one of the lowest home ownership rates in the country. The CCC still manages 416 units through a nonprofit organization, and legislation last year directed the commission to make protecting them a priority.
The Long Way Home
A lack of affordable housing has an impact far beyond the families that cannot find a home in their price range, says Bart Hess, president and executive director of Orange County Affordable HomeOwnership Alliance, a nonprofit organization created by business and civic leaders to increase the availability and supply of high-quality affordable housing for middle-income families.
"Our economic health and quality of life are dramatically influenced by where people live and work," Hess says. "Homeownership to all segments of the population is beneficial for the public and government, as well as to businesses."
This is becoming very clear in Orange County, which is located in the heart of Southern California with Los Angeles County to the north and San Diego County to the south. This area has seen explosive economic growth over the past half-decade, but a housing shortfall has driven up prices and left many families completely out of the housing market.
In the coastal zone particularly, many smaller homes built in the 40s and 50s that might be affordable for people with moderate incomes are being torn down and replaced with much larger houses that carry a bigger price tag, Douglas notes.
While at first blush increasing property values sounds good, the resulting lack of housing for nurses, teachers, fire and police officers, office workers, and others ultimately hits communities in the pocketbook. A University of California at Irvine survey of over 300 Orange County executives cites housing as the number one barrier to doing business in the county. Hess notes that a shortage of skilled workers can prompt employers to move away or choose not to locate there.
In addition, when housing makes up a larger percentage of household budgets, there is less disposable income, Hess says. This means families are more hesitant to make major household purchases, or even to go out for dinner and entertainment. "Ultimately, this can have a ripple effect on the entire economy."
Affordable housing shortages also force workers to commute long distances, which causes traffic jams, increases the risk of accidents, pollutes the environment, and reduces residents' general quality of life.
A Room with a View
The original California Coastal Act gave the CCC the authority to require that, as part of the permit requirements for development, 25 to 35 percent of large residential subdivisions be set aside as affordable housing with resale controls and owner-occupancy requirements. Orange County had the only projects being built at the time.
"Developers grumbled, but they did it, and they still made a huge profit," notes Douglas.
To ensure the continued affordability of the units, says Sarah Christie, CCC legislative coordinator, the Orange County Housing Authority agreed to administer the resale program. Under the agreement, the owners of the affordable units all bought their homes at restricted, below-market prices.
As owners decided to sell, the housing authority could purchase and resell the units to qualified buyers at a controlled price. In some cases, the authority could recapture the difference between the controlled price and the market price and use the income to support the program.
A Change of Rules
In 1978, a state tax policy was passed that discourages the construction of affordable housing, Douglas says. California's Proposition 13 capped municipalities' property tax rates at one percent of the assessed value.
"This created a frantic race for new sources of funding for government," Douglas explains. "One percent of a house valued at $500,000 is much more significant than if the price is controlled at $140,000."
In 1981, the League of California Cities sponsored a bill to repeal the affordable housing section of the Coastal Act. Christie notes, "We fought it and they won."
A Bumpy Road
The Orange County Housing Authority continued to manage the CCC's existing affordable housing units until 1984, when the county withdrew from the program. The administration of the program was then turned over to a nonprofit organization, which managed the housing until 1987.
After that, Christie says, for two-and-a-half years the CCC was unable to find a nonprofit or governmental agency willing to manage the program. The program was almost terminated before the nonprofit Civic Center Barrio Housing agreed to take it over in 1990.
Since then, she says, "the program has been self-sustaining and offers low-interest, revolving loans, as well as incentives to local realtors who find qualified buyers."
Finding the Loophole
While neither the original language of the Coastal Act nor the CCC's permits specified how long the resale controls would remain in effect, the Orange County Housing Authority had added language allowing the units to be released from the program if they did not undergo resale for a period ranging from 20 to 30 years.
"About two years ago, it was brought to our attention that the first of these resale controls was set to expire" in March 2003, says Douglas. Upon expiration, the units can be sold at full market value, with the seller netting the profit.
"It is not right from a policy and legal perspective for the state to give a windfall to people living in price-controlled units," he says. "With the housing crisis in California, the concern was that we were going to lose the units unless special steps were taken to ensure the people who owned them were living by all the rules and restrictions."
Legally, Christie says, the CCC could not "go in and rework the [Orange County Housing Authority's] attachments to the grant deeds." Instead, they were able to get legislation passed last year that "tells the Coastal Commission to do everything legally within its powers to protect affordable housing in the coastal zone, and preserve the program."
"It had the effect of telling us that we need to make it a priority and devote the resources necessary to protect these units, even though this provision is no longer in the Coastal Act." This is an important directive, Douglas says, at a time when the state is experiencing massive budget cuts.
A preliminary investigation of the program indicated that many of the original owners were renting the properties, a violation of the owner-occupancy requirement, which means the clock restarts on the resale controls, and the new agreements will contain no expiration date.
The CCC has given Civic Center Barrio Housing a $230,000 grant to do a thorough investigation and enforce the resale controls.
Running Out of Room
While the majority of the CCC's affordable housing will remain protected, Douglas says time for adding new affordable housing units in the coastal zone is running out because Orange County and other areas of the state have little to no land left for new development.
He says while the need for affordable housing shouldn't outweigh legally mandated natural resource protection, it should at least be on the table with other coastal management issues.
"We see the impact of a lack of affordable housing when people have to drive and compete with visitors to get to their jobs," Douglas says. "We see it in the decline of diversity and character of communities. It continues to be a form of access, and we as land use policy makers and implementers have a responsibility to address this any way we can, even though we may not have a specific mandate."
What managers can do, he says, is "persuade developers that it's in their best interest to include affordable housing. It should be something we as coastal managers bring up, question, and support. I think that's the best we can do in the absence of a legal mandate and the absence of legal controls to require it."
For more information on the California Coastal Commission's affordable housing program, contact Sarah Christie at (916) 445-6067. .
