This is Part B of the second installment of the “Facebook money and California housing” series, which delves into the Chan Zuckerberg Initiative’s multi-million-dollar funding of the pro-growth shadow government that’s reshaping California housing policy. The first installment focused on the cabal’s push for Senator Nancy Skinner’s SB 330. This second installment tracks Chan Zuckerberg’s efforts on behalf of Assembly member David Chiu’s AB 1487.
AB 1487, a complex regional housing bill, is driven by tech and development interests with no concern for out-of-control office growth.
Next step: CASA
A 40-page report seems like a poor return on a $500,000 investment. Not to worry: the Chan Zuckerberg Initiative’s grant to Enterprise Community Partners yielded much more than “The Elephant in the Region;” it also facilitated the push for a Bay Area regional housing finance authority at the staging ground for many of the key housing bills introduced in the Legislature this year: CASA, the Committee to House the Bay Area.
Secretly convened and managed by then-MTC Executive Director Steve Heminger (and not also, as the CASA website states, by ABAG), the Committee to House the Bay Area formally existed from July 2017 to December 2018. It had an ambitious goal: to formulate and lobby for pro-growth housing policies that would be embodied in state legislation, some targeting the Bay Area but most applying to all California.
CASA’s proceedings exemplify the furtive character of the shadow land-use government. The group had two formal subdivisions, a Steering Committee, which was steered by Heminger; and a Technical Committee, which, with the ample aid of consultants and MTC resources, did the policymaking work. The rosters of these groups are posted on the CASA website. Not so the names of the participants of the Technical Committee’s three working groups, other than each entity’s two coordinators.
The meetings of the two main committees were noticed online, but numerous other events occurred behind closed doors and in secret, including the working group sessions and a 42-person trip to New York City. Even the two big committees’ public meetings, save the first, lack minutes. The only way to learn what transpired is to watch the videos posted on the CASA website—unless you’re looking for documentation of the Steering Committee’s April 25, 2018 meeting, which focused on taxes and housing finance. Documentation of that event has been expunged from the CASA meetings schedule and MTC Legistar records (I have a hard copy of the agenda and notes I took on the disappeared video of the meeting.)
48hills had to sue MTC to get the agency to release documentation of the money it had disbursed for CASA. According to documents finally obtained by 48 hills, as of March 6, 2019, the figure appears to be at least $3 million. It’s hard to say exactly, because in some cases, CASA expenditures are lumped together with other costs.
CASA also exemplifies the makeup of the shadow government. Dominated by representatives of the real estate industry, its 50-odd-member roster also included representatives of tech, equity advocacy groups, organized labor, environmental advocates, and philanthropy, as well as a handful of the Bay Area’s 101 cities and nine counties. The Chan Zuckerberg Initiative had a seat; so did Facebook and ten CZI grantees. (For more details, see the first installment of the “Facebook money and California housing” series.)
Enterprise did not have a regular seat at CASA but was deeply involved in the group’s proceedings. Documents obtained by 48 hills include a February, 28, 2018, letter from Heminger to CZI Chief of Staff and CASA Technical Committee member Caitlyn Fox and San Francisco Foundation CEO and CASA co-chair Fred Blackwell regarding “Cross-Sector Partnership on Select MTC/ABAG Housing Initiatives.”
“This letter,” wrote Heminger, “follows up on our telephone conversation before the holidays.” He identified three of his agency’s housing initiatives that “lend themselves to cross-sector partnerships with non-governmental funders/partners:”
— Regional Infrastructure Bank: would provide a low-cost financing tool to local jurisdictions to accelerate construction and delivery of infrastructure projects and that could serve as a model for “a similar tool that could potentially be used to support housing projects.
— Housing Incentive Pool, a $76 million challenge grant program that “will reward jurisdictions that build and preserve the most [very low, low, and moderate-income level] housing units between 2015 and 2020, based on the Regional Housing Needs Allocation (RHNA) for the 2014-22 cycle.
— Regional Housing Trust Fund: would pool resources from multiple sources to fund affordable housing projects in Priority Development Areas and Transit Priority Areas, helping to fill the funding gap left by the dissolution of redevelopment agencies.
Heminger invited Fox and Blackwell to contact Bay Metro Planning Director Ken Kirkey for more information, suggesting that “we could meet after the next Technical Committee meeting on March 28.”
Another document obtained by 48 hills is a letter dated March 22, 2017—is the 2017 date a typo that ought to be 2018?—on ECP letterhead from Hood and Rao to “Ken Kirkey and Team, Metropolitan Transportation Commission” re “Scope for Bay Metro to Support CASA with Research.” The letter begins by thanking its recipients
for entrusting us to be a thought partner as your team advances a variety of housing solutions….We would glad to support you in this important work. We estimate the total cost for the following work to be $50,000 and can contribute $25,000 of that time and materials in kind (paid by grants we have already secured).
Presumably “grants we have already received” refers to the CZI award.
Hood and Rao list six “Topics Enterprise’s Northern California office can assist MTC on research and analysis, and potentially explore policy options for CASA:” “Regional housing trust fund,” “Redevelopment 2.0, “Infrastructure Bank,” “Tax on Vacant Units/Parcels,” “Numeric Targets for CASA,” and “Research Priorities for Incentives and Tools”— the last specifically addressing “Public and surplus lands.” They offer to produce “3-10 page summaries for each topic, along with many meetings.”
48 hills also obtained a contract in which MTC agreed to pay Enterprise Community Partners $25,000 “for the performance of professional services in connection with research and analysis support on CASA” to be provided between May 30 and July 31, 2018. Along with project management and coordination, the scope of work involved developing a fact sheet and action plan for four topics, to be reviewed by the CASA Technical Committee:
— Redevelopment 2
— Regional or sub-regional housing trust fun
— Regional tax on vacant parcel
— Publicly-owned surplus lands
EPC staff did the assigned work, apparently in concert with the other future co-sponsor of AB 1487, the Non-profit Housing Association of Northern California. The agenda of the Technical Committee’s May 16 meeting included a proposal from the Affordable Production Sub-Work Group to “Support the Creation of a Robustly Resourced Regional Housing Fund” and to “Capitalize on the oversupply of vacant and/or underutilized commercially-zoned properties across the Bay Area” via new state legislation creating “an emergency, 15-year zoning overlay which makes housing an allowable use on sites zoned for commercial, retail, and institutional uses.” The accompanying attachments were produced by NPH.
The agenda for the Technical Committee’s July 18 meeting included proposals to “Recreate Redevelopment Agencies with a Focus on Affordable Housing” and to “Promote the Creation of Affordable Housing Authorities in Each County and at the Regional Level,” both presented by NPH staff; and proposals entitled “Modify State Housing Element Law to Require Public Land Identification and Incentivize its Development with Affordable Housing” and “Regional Actions to Support, Incentivize, Enforce Housing on Public Land,” both presented by Hood and BART Transit-Oriented Development Program Manager and CASA member Abby Thorne-Lyman.
ECP staff made one more public appearance at CASA. At the end of the Technical Committee’s long meeting on September 19, 2018. Hood spoke for five minutes about the need for a regional housing trust fund, focusing on possible funding sources and the legal status of a Bay Area fund.
The agenda for that meeting included a two-page recommendation to “Create an [sic] Regional Housing Trust Fund that collects revenue, creates programs, and disburses funding at a regional level” and to “[p]air it with the incentive and capacity building work of a proposed regional housing entity.” The document mentions “a recent forum hosted by Enterprise Community Partners and Nonprofit Housing Association of Northern California, a forum of practitioners that included MTC and ABAG staff, as well as Michael Anderson from the Center for Community Change (an organization that hosts the national initiative to help track the challenges and successes of HTFs).” To my knowledge, that forum was never publicly noticed, nor was a record of its proceedings posted by either of the two public agencies in attendance.
The agenda of the Technical Committee’s September 19 meeting included the first draft of what would become the bundle of proposed state legislation known as the CASA Compact. The Compact’s initial iteration comprised seventeen “elements,” each a proposal for state housing legislation. Element 6, “Significant Regional Revenue Streams,” and Element 17, “Creation of a New Regional Housing Entity,” contained rudiments of AB 1487.
Enterprise hosts the secret CASA junket to NYC
Hood’s presentations to CASA were warmups for Enterprise’s star turn, a performance that took place thousands of miles from the Bay Area. Documents obtained by 48 hills show that in early December 2018, ECP teamed up with MTC and the San Francisco Foundation to co-host a three-day trip to New York City for a 42-person delegation that included Hood, Rao, Fox, Non-Profit Housing Association of Northern California Executive Director Amie Fishman, Facebook Policy Programs Manager Maya Perkins, Assembly member Chiu, and his then-Chief of Staff Judson True (shortly after returning from New York, True was appointed Director of Housing Delivery by San Francisco Mayor London Breed). True had addressed the CASA Steering Committee at its April 25, 2018, “Tax and Fiscal Policy Workshop.” Chiu’s and True’s travel expenses were paid by MTC.
An entry in the Enterprise blog described the trip as “a learning session on New York’s housing funding and finance system.” The agenda for the trip, never posted by CASA or MTC, was obtained by 48 hills (a partial version appears in the Enterprise blog piece). It shows that the visitors were greeted at ECP’s New York office by Hood, Rao, and Enterprise’s then-CEO, Terri Ludwig. The CASA delegates also hobnobbed with public and private notables in the city’s housing finance industry. Back in the Bay Area, none of them publicly shared what they’d learned.
“Elephant” hints at the curriculum. The ECP report cites New York City as “a great example of how to create a range of housing from preservation to new construction, from extremely low- to moderate-income, and from small-to large-scale” that could be emulated by “high-cost, coastal regions that face similar affordable housing needs, funding challenges, and a comparable political climate.” It showcases the New York City Housing Development Corporation (NYCHDC), “a supplementary and alternative means of supplying financing for affordable housing independent from the City’s capital budget” that
issues bonds and provides subsidy and low-cost loans to develop and preserve a variety of housing types and scales, including home-ownership. Its authorizing statute includes flexibility for NYCHDC to amend its programs and goals in response to changing economic climates.
The 50-year-old agency has availed itself of that flexibility and created “several subsidiaries and new bond programs,” to the extent that it’s “become the leading local finance agency in the nation, outperforming many of the country’s largest banks in terms of volume and dollar amount of bonds issued.” As of 2014, NYCHDC’s Multi-Family Housing Revenue Bond Resolution, established in 1993, had “over $4 billion of bonds and more than $62 billion in multi-family loans, reserves and other assets.” Since 2003, the agency “has provided over $1.4 billion in 1% subordinate loans funded from its corporate reserves since 2003.” (Subordinate loans rank below other loans with regard to claims on assets or earnings. If a borrower defaults, creditors who own subordinated debt won’t be paid out until after senior debt holders are paid in full.)
In New York, the CASA delegation attended a panel moderated by ECP staffer Judi Kende that included NYCHDC CEO, Executive Vice President, and General Counsel Richard Froehlich and NYCHDC Executive Vice President for Development Anthony Richardson.
As “the most recent example” of the “ambitious affordable housing programs” that have been enabled by “[t]he existence of an independent finance entity like NYCHDC,” “Elephant” offers New York Mayor Bill de Blasio’s “ten-year, 200,000-unit housing plan,” Housing New York, that was unveiled in May 2014. As of December 2017, NYCHDC had issued “roughly” $4.5 billion in bonds to support Housing New York. The ECP report links to the city document describing the plan, “Housing New York: Three Years of Progress,” a predictably roseate account.
NYCHDC was cited as a model for a “Bay Area Regional Housing Enterprise” on an item that appeared on the September 19, 2018, agenda of the Technical Committee. The entity “would be structured to implement the CASA Compact advancing Protection, Production and Preservation” of affordable housing—the so-called 3Ps. The same citation also appears in the second draft of the CASA Compact, posted on the November 13, 2018, agenda of the Technical Committee, and the final version of the Compact, published in mid-December 2018.
Housing New York debunked
To state the obvious, space does not permit an in-depth look at New York City housing. But given ECP’s and CASA’s commendation of Housing New York as a model for the Bay Area, it would be remiss to ignore the incisive assessment of the program made by planning scholar and community activist, Hunter College and CUNY Graduate Center Professor Emeritus Tom Angotti.
Writing in June 2014, Angotti characterized HNY as two plans, one for new housing development and the other for “keeping rents down and preserving neighborhoods.” The problem,” he said, is that the two plans contradict one another, and it looks like the development plan will be the priority.”
On the one hand, Housing New York is “a giant development scheme” that would promote “the creation of 200,000 new affordable housing units…over the next 10 years, 40 percent of them in new construction,” plus “promises of new opportunities for luxury development.”
The city would rezone in strategic areas to promote new building, allow for taller buildings, let landowners transfer their development rights to hot locations, continue tax and infrastructure subsidies to developers and streamline land use, environmental and building regulations. It’s no wonder that Crain’s reported that the city’s largest real estate developers are gushing with praise for the plan. Construction unions are also satisfied.
Like Enterprise Community Partners, Housing New York takes an elastic approach to affordability:
The new plan would shuffle definitions of affordability, making a larger proportion of units available for people in low-income brackets without changing the way “low-income” is defined (50-80 percent of the Area Median Income, which can be up to $67,000 a year for a family of four).
The preservation plan, by contrast, “speaks to the widespread frustration and anger of renters and homeowners who were and are victims of the speculative real estate fever that forces them to move out of neighborhoods they have lived in for decades and generations,” promising “that new housing, better services and community involvement will allow more residents to stay” and “tak[ing] a step away from using homeless shelters and toward creating decent housing opportunities for people in greatest need.” But as always, the devil is in the details, and “when you get down to the details,” Housing New York offers “only small steps forward and vague promises.” Ultimately, “creating new housing remains the overriding mission, not saving neighborhoods.”
As we shall see, fostering new development rather than saving neighborhoods is also the overriding mission of AB 1487 and other bills emanating from the CASA lobby. It follows that as an aid to understanding that lobby’s agenda, Angotti’s critique is most valuable when it debunks the supply-side position at large. The “trickle-down approach,” he writes, conceals a fundamental truth: the market driving everything is the land market, not some mythical housing market. Developers and investors choose areas where future land values are higher than current ones and try to build on this land so they can make a profit from rising land values….[That is] why “dislocation” or “displacement” is a virtually inevitable companion to new development. It is the reason our neighborhoods need better means for controlling land use, not just more housing.
Angotti homes in on “de Blasio’s outspoken commitment to public-private partnerships as the basic underpinning of city housing policy.” Aiming to “’leverage markets,’” the mayor “expects that the vast majority of the funds, $30 billion, will come from the private sector, which is of course in the game to build more, make money, and produce affordable housing whenever it helps their bottom line and buys community support.” Shades of Enterprise Community Partners’ playbook.
Angotti concludes by urging “progressive individuals, groups, and coalitions” fighting for affordable housing to resist the impulse “to accept power of developers as inevitable,” an acquiescence that
"leaves us to negotiate for what we can get from the development plan—more “affordable” housing or other community benefits. This defeatist notion forces us to accept the bedrock neoliberal philosophy that private power is not only a given but the only legitimate power. Government, therefore, must follow the lead of private capital."
The CASA “learning session” panel entitled “Protecting People in Place” included a presentation by ANHD Research and Policy Associate Lucy Block. I’d love to know what she said and how she was received.
From the CASA Compact to AB 1487
The only members of CASA’s New York City delegation directly associated with the state Legislature were Assembly member Chiu and his chief of staff. On February 22, Chiu introduced AB 1487, the Bay Area Regional Housing Finance Act. Since its introduction, the bill has been amended six times. The most substantial version, containing amendments made on July 3, reflected key recommendations put forward by the ECP report and the Compact.
Stating that “a regional entity is necessary to help address the housing crisis in the San Francisco Bay Area by delivering resources and technical assistance at a regional scale,” the July 3 draft authorized the establishment of “a regional financing mechanism for affordable housing development and preservation” that could, among other things
-–“Raise revenue and allocate funds throughout the San Francisco Bay Area;
— “Assemble parcels and lease or acquire land for affordable housing development;
— “[M]onitor progress on meeting regional and state housing goals;” and
— “Provide support and technical assistance to local governments in relation to producing and preserving affordable housing.”
Dubbed the Housing Alliance for the Bay Area, the new regional entity would be authorized to raise revenue through a parcel tax, gross receipts tax, sales tax, employee head tax, commercial linkage fee, and bonds. It would also have the authority to “[a]ssemble parcels and lease or acquire land for affordable housing development” and to “collect data on housing production and monitor progress on meeting regional and state housing goals.”
The July 3 draft bill favored production over both tenant protection and the preservation of existing affordable housing, as indicated by the following requirements for allocating revenue:
— A minimum of 60 percent of production of housing units affordable to lower income households;
— A minimum of 5 percent and a maximum of 10 percent for tenant protection services;
— A minimum of 15 percent and a maximum of 20 percent for preservation of housing affordable to low- or moderate-income households;
— A minimum of 5 percent and a maximum of 10 percent for general funds awarded to a local government that achieves affordable housing benchmarks established by the entity, good for staffing costs to help accelerate the production of housing in a jurisdiction; infrastructure needs associated with increased housing production, including, but not limited to transportation, schools and parks; and homeless shelters.
The new entity could change these allocation percentages “if it adopts a finding that the region’s needs differ from those requirements.”
Meanwhile, another policy championed by the ECP report, embedded in the CASA Compact, and ancillary to the proposed regional housing entity—eased privatization of public land for “affordable” housing—was incorporated into San Francisco Assembly member Phil Ting’s AB 1486. Like AB 1487, AB 1486 is moving forward in this session of the Legislature. Both bills have been endorsed by Enterprise Community Partners and the Chan Zuckerberg Initiative.
The July 10 evisceration
As noted above, on July 10, the Senate Government and Finance Committee gutted most of the text in the July 3 version of the bill and sent a skeletal measure to the Senate Appropriations Committee. Consistent with the housing cabal’s secretive style, a backroom deal had been negotiated by Chiu, his office, and an ad hoc ABAG-MTC AB 1487 Committee. Gone were
— definitions of lower income and low or moderate income household;
— a procedure for reviewing the implementation of an initial ballot measure that would fund the new regional entity;
— specifications of the authority’s powers;
— the entire section on revenues measures that the authority could enact; and
— rules governing the authority’s expenditures.
Absent this drastic surgical procedure, which shrank the bill from sixteen to two and a half pages, AB 1487 likely would have died on July 10, done in by pushback from Bay Area cities and counties. By stripping out the bill’s most controversial sections, the dealmakers hoped to quell local opposition and move a bare-bones measure to the Senate Appropriations Committee before the Legislature went into its month-long summer recess on July 12. “All the things that gave folks heartburn about the original AB 1487,” Heather Hood told the ABAG Ex. Board on July 18, “have been taken away.”
At the same time, according to an MTC ABAG staff report dated July 12, Chiu agreed to add amendments sought by the Joint MTC Legislation Committee and ABAG Legislation Committee
— Exclude sales tax from revenue option;
— Ensure no new responsibilities are assigned to MTC or ABAG without a guaranteed source of ongoing funding and bill includes a provision allowing dissolution of HABA (now renamed Bay Area Housing Finance Authority), if not enough revenue is generated to be meaningful;
— Authorize ABAG and MTC “to determine whether to place [revenue measures] on ballot and set tax rates, thereby determining what level of revenue is ‘meaningful’”;
— Budget at least $25 million to ABAG for ‘flexible housing planning work”;
— Ensure the bill doesn’t require MTC staff to report to a newly structured board but instead split up new entity’s duties between MTC and ABA;
— Develop a distribution formula that distributes more than 25 percent of any employer-based revenue to a regional pool; and
— “[P]rovide that ‘at least 50 percent’ of head tax shall be distributed to counties, with up to 50 percent for regional pool.”
The July 12 MTC-ABAG staff report included an attachment dated June 28, 2019, detailing recommendations from the ABAG-MTC AB 1487 Ad Hoc Committee. Again, the request was not to create a new regional entity but “to rely upon the existing governance structures, strengths, and areas of expertise of MTC and ABAG.” The ad hoc group further proposed that the ABAG Executive Board and MTC share decision-making responsibilities for
— “Developing ballot expenditure plan (including setting tax rates and revenue sources, setting minimum; shares for 3Ps, criteria, potentially minimum shares at county level)”;
— Project selection/programming of funds for specific purposes; and
— Commercial linkage fee nexus study and expenditure plan.
Responsibility for “placement of measure on ballot” and “Financial administration (including collecting revenue, authorizing payments and issuing bonds)” was delegated to MTC.
The Ad Hoc AB 1487 Committee recommended three changes to the revenue allocations specified in the July 3 draft:
— Lower production allocation from 60 to 50 percent;
— Eliminate caps; and
— Retain flexibility in bill now to modify the region wide 3P shares (subject to board action and 30 day notice), but require a 55 percent vote requirement of both bodies to make changes.
The Ad Hoc AB 1487 Committee further recommended drawing a distinction between distributing monies from an employer head tax and from the other taxes in the bill, asking that at least 50 percent of head tax revenues remain in the county of origin based on revenue, leaving up to 50 percent available to be spent region wide. Other taxes in the bill should be distributed so that at least 75 percent of the revenue goes to the county of origin based on revenue, leaving at least up to 25 percent for a regional fund. The Ad Hoc Committee wanted to “broaden where the [commercial linkage] fee revenue can be spent, not just in [the] local jurisdiction where it was imposed), consistent with whatever [the] legal nexus study determines.”
Furthermore, county share funds should be administered at the county level—“with one big exception—big cities.” The details of that exception are worth citing in full:
For the first five years, the four biggest cities in the region [Fremont is Number Four] should get a direct allocation of their county’s share based on their share of the county’s RHNA their share of the county’s RHNA. This can be extended at the option of the ABAG EB and MTC. Counties may want to also use RHNA in some manner for distributing within their county, but the bill should not mandate a formula distribution for smaller cities, as this could result in funds not being put to use as efficiently as on a first-come, first-served basis for qualifying projects within each county.
In other words, the four biggest cities would be guaranteed funding; the others would have to get in line.
Finally, the Ad Hoc Committee recommended removing the land acquisition and assembly authorization from the bill, “since neither MTC nor ABAG have experience or skill set in this regard. The regional funds can instead help support local agencies which do have such expertise.” Goodbye, regional land bank.
July 18: Professedly seeking to check MTC’s power, ABAG Ex. Board supports AB 1487 if further amended
On July 18, the ABAG Ex. Board voted 22-3-1 to support AB 1487, if amended as recommended by the two Legislation Committees and the Ad Hoc Committee, and as follows:
— Change the Ad Hoc Committee’s recommendations to direct automatic allocations to the three, rather than the four, biggest cities in the region;
— Add language to the findings portion of the bill acknowledging the severe imbalance between jobs and housing and the intent for the funding in the bill to address this problem; and
— Modify the governance portion of the bill to require that ABAG be the “lead” agency by requiring that where action of both ABAG and the Metropolitan Transportation Commission is required, the ABAG Executive Board acts before MTC acts; and, should there be any difference in the subsequent action by MTC, the ABAG Executive Board would have to confirm that change through affirmative approval action; and, if the actions are in alignment, no subsequent action by the ABAG Executive Board is required.
These amendments, particularly the last, reflect ABAG’s effort to check MTC’s mission creep. Indeed, readers may have been wondering what business the Metropolitan Transportation Commission has in formulating housing policy in the first place. Good question.
MTC is a state agency created by California Legislature and, as the region’s Metropolitan Planning Organization, the designated conduit for federal government’s designated conduit for federal transportation funds. It administers more than $2 billion a year in mostly public funds, including more than $600 million in bridge tolls, for the operation, maintenance, and expansion of the Bay Area’s surface transportation network. Its 21-member board is dominated by the three biggest cities of the region.
ABAG is a voluntary association of the Bay Area’s cities and counties. It is the poor relation of the duo, subsisting on its members’ voluntary donations, grants, and MTC’s largesse, such as it is.
In 2016, with the collusion of ABAG Executive Board leadership, MTC engineered a hostile takeover of ABAG that resulted in the merging of the two agencies’ staff. That seizure signaled MTC’s ambition to become a one-stop regional planning agency that oversees transportation and land use planning for the region. Since then, ABAG has gotten its services from MTC staff via a contract with the MTC board. MTC’s surreptitious convening, oversight, and funding of CASA, the Committee to House the Bay Area, a process in which ABAG had virtually no say, was a second major offensive in the transportation agency’s quest for dominance. As the ABAG Executive Board tacitly recognized, AB 1487—itself a product of CASA—could further extend MTC’s sway.
The July 11 version of the bill retains language from the July 3 draft that arguably puts MTC in the driver’s seat of the Bay Area Housing Finance Authority. The text says “[t]he authority shall be governed by the same board that governs the Metropolitan Transportation Commission” and “staffed by the existing staff of the Metropolitan Transportation Commission or any successor agency, with the understanding that additional staff with expertise in affordable housing finance will be needed to administer the funding authorized in this chapter.”
At the same time, however, the July 11 version of AB 1487 also says that the Authority’s projects shall be “review[ed] and “approve[d]” by its “executive board….prior to review, approval and allocation by the authority”; and that “’Executive board’ means the executive board of the Association of Bay Area Governments.” Huh?
The ABAG Ex. Board’s third amendment sought to untangle the governance conundrum and make MTC the subordinate partner in BAHFA. Curiously, nobody on the Ex. Board said anything about removing the passage in the bill about the regional housing finance authority being governed by the same board that governs MTC.
Moreover, as per the Ad Hoc Committee’s recommendations, Chiu presumably agreed to give MTC the “responsibility”—translation: the authority—to place revenue measures on the ballot, to collect revenue, authorize payments, and issue bonds, all in behalf of housing. Whoever holds the purse strings holds the real power. Here’s another question that didn’t come up, at least not publicly: If MTC alone is authorized to place revenue measures on the ballot, will ABAG have acquired taxing authority? And something else that nobody remarked at the ABAG board meeting: MTC currently lacks the authority to directly fund housing; ABAG 1498 would give it that authority. That would be a major step in the agency’s drive to oversee transportation and housing for the Bay Area. Perhaps that’s why on July 24, the MTC board approved the amendment without discussion.
The other two proposed amendments more subtly express ABAG resistance to MTC encroachment. The MTC board is dominated by the region’s three biggest cities; automatically guaranteeing allocations to the region’s four biggest cities, as recommended by Ad Hoc Committee, would extend Big City dominance; cutting the number to three counters, albeit weakly, that extension. Requiring that AB 1487 acknowledge and address the Bay Area’s severe job-housing balance tacitly recognizes that the region’s tech towns, including San Francisco, have approved enormous amounts of new office space but nowhere nearly enough housing for the people who will work—indeed, thousands of whom are already working—in such offices; and the resentment of other cities that are being asked to compensate for that dereliction by approving housing to accommodate those office workers.
Chiu refuses to make AB 1487 a two-year bill
In the story being purveyed by Chiu, his office, the CZI/ECP operatives, and the leaders of both MTC and ABAG, the Assembly member appears as a collaborative legislator eager to hear out local Bay Area officials and to amend AB 1487 accordingly. At the ABAG Ex. Board’s July 18 meeting, Clayton Councilmember Julie Pierce gushed, “This is one of the most gratifying experiences we’ve had. Our Assembly member has been willing to hear every concern that we’ve had.” As a member of the Ad Hoc Committee and the ABAG Legislation Committee, Pierce had been deeply involved in negotiations with Chiu.
The local officials on the MTC and ABAG boards in turn come across as conscientious defenders of their constituents’ interests and the prerogatives of the regional agencies that purportedly represent those interests.
Both characterizations are questionable. For all his purported tractability, Chiu has dug in his heels in opposition to a key issue: making AB 1487 a two-year bill that the Legislature would take up again in 2020. The MOU that instituted MTC’s 2016 administrative takeover of ABAG left the question of governance unresolved. The agencies’ two staffs have been consolidated, but the two boards proceed as independent entities operating under different statutory terms. The MOU requires the governance issue to be decided by next July.
AB 1487’s Section 605410(e), which survived the July 10 gutting, hints at this volatile situation: “It is the intent of the Legislature that the entity be staffed by the existing staff of the Metropolitan Transportation Commission and the Association of Bay Area Governments, or any successor agency…”
Beginning this spring, and continuing through the most recent meetings at Bay Metro, numerous Bay Area city officials have argued that since the governance of ABAG and MTC may well be profoundly altered in a year, seeking state authorization for a major new regional entity is ill-timed. Why not delay the final revisions to and passage of AB 1487 until 2020, when the governance arrangements between MTC and ABAG will have been decided?
Here’s why: Chiu and the rest of the CASA cabal see the 2020 general election as a signal opportunity to put a revenue measure, if not two—one for housing and a companion for transportation—on a regional ballot. Indeed, the campaign for a 2020 $100 billion regional transportation revenue measure, “Faster Bay Area,” has already been kicked off by the Bay Area Council, the Silicon Valley Leadership Group, and SPUR. Both measures require state legislation giving a regional agency taxing authority, just as Regional Measure 3, levied by MTC in 2018, had to be authorized by SB 595; and Measure AA, levied by the San Francisco Bay Restoration Authority in 2016, had to be authorized by AB 746.
Chiu says that waiting until 2020 to pass AB 1487 would be too late to mount an effective campaign. But that doesn’t seem to have fazed the corporate power brokers pushing “Faster Bay Area.” According to the Chronicle, the “initial bill” enabling the transportation measure “would have to pass early next year;” no such bill was introduced in the Legislature’s current session. Why, then, the rush to enact AB 1487 in 2019?
Technically, there’s no good reason, so the rationale has to be political. We can assume that a 2020 regional transportation revenue measure would be levied by MTC. If the measure turns out to be a 1 percent sales tax, as the Chronicle suggests it might, there’s likely to be opposition from local officials. But the governance issue would not be contested by MTC. On the contrary. By contrast, governance of MTC and ABAG itself remains a contentious matter.
In light of that contentiousness, the sooner a law authorizing the creation of a Bay Area housing finance authority is enacted, the better—and all the more so, given signs that the economy is softening, a development that augurs poorly for voter approval of new taxes. Go for certainty, at least in the legislative sphere.
Free lunch or poisoned carrot?
The leaders of ABAG, for their part, are also going for certainty—the certainty of housing funds for at least some Bay Area jurisdictions. At the July 10 hearing at the Senate Governance and Finance Committee, ABAG Vice President, member of the Ad Hoc AB 1487 Committee, and Berkeley Mayor Jesse Arreguín joined Enterprise’s Geeta Rao as one of the two supporters of AB 1487 seated at the table before the Senate committee. Arreguín put the money issue front and center. “The medium- and small-sized cities in the Bay Area,” he said, “desperately need additional resources to preserve existing housing, protect tenants from displacement, and build new affordable housing. That’s why AB 1487 is so important…”
Following up on Arreguín, Rao said: “Right now, we rely on local jurisdictions to solve the regional housing crisis.” That’s not realistic. Rendered “anemic after the dissolution of redevelopment,” cities and counties lack the requisite funding, staffing, and expertise—all of which AB 1487 would provide. And, not the least of the bill’s attractions: “It’s all carrot.”
At the May 16 meeting of the ABAG Ex. Board, Rao elaborated on the bill’s free lunch aspect:
This bill is all carrots: It’s money, it’s funding, it’s help with land assembly and data tracking. There is no sticks of land use authority or eminent domain. So many of you know that your housing departments have been gutted post-redevelopment. And we know this, because we [Enterprise Community Partners] spend so much time with your housing departments trying to help…with building a pipeline of affordable homes and creating protections, and so what this bill does is provide those resources.
Just in case the ABAG reps needed a bit more reassurance about their authority, Rao wheedled further:
The author has made so many amendments around the governance issue. It’s been punted until 2020, so you can still work on merging your boards, and you can create HABA, the Housing Alliance for the Bay Area, it can go away, once those board structures have been merged. [Note: it’s unclear whether those board structures will be merged or whether the MTC and ABAG seek such a merger.]
This sounds too good to be true, and as with most things of this sort, it is. The price of acquiescence is already apparent in the retention of the MTC board as the finance authority’s governing board and as the entity holding its purse strings. What remains to be seen is what else the newly amended AB 1487 will exact from local jurisdictions in return for the promise of money.
Much of the talk at the ABAG Ex. Board about amending various revenue options suggested that the revenue sections of the bill, which were wholly deleted on July 11, are going to reappear in some form in the draft that the Senate Appropriations Committee will consider in August.When Hayward Mayor Barbara Halliday asked if “the distribution” issue would “be in the final bill,” ABAG President and “The bill in front of us is a work in progress,” said ABAG President and Sonoma County Supervisor David Rabbitt at the ABAG Ex. Board’s July 18 meeting. “It’s going to change until the last minute.”
If certain provisions in the July 3 text of the bill—provisions that were not publicly flagged by ABAG-MTC staff, the Ad Hoc Committee, the ABAG MTC Joint Legislation Committee, the ABAG Ex. Board or the MTC board—are reinstated and enacted into law, they will further erode local authority over land use.
The governance sticks
Commenting on AB 1487 at SPUR’s July 16 lunchtime forum on “The State of Housing at the State,” Chiu asserted, “We’re not talking about changing land use or zoning.”
Really? It’s true that AB 1487’s Section 64522, deleted on July 11, stated that “the authority shall not…[r]egulate or enforce local land use decisions” (Section 64522). But in my reading, that section authorized the regional housing finance entity to enact and implement region wide zoning, which is to say, to override local land use prerogatives.
On June 5, I emailed Chiu’s staff, noting that passages in AB 1487 seem to grant the entity regulatory, if not enforcement, authority over land use decisions. Under “Chapter 3. Expenditures,” for example, Section 64650(a), also deleted on July 11, along with the rest of the “Expenditures” chapter, stated that revenues allocated by HABA (now BAHFA) would serve “as an incentive to achieve affordable housing benchmarks established by the entity.”
Establishing benchmarks sounds like regulatory authority to me. Housing benchmarks presumably refers to the state-mandated Regional Housing Needs Allocations; RHNAs are all about zoning for housing. And jurisdictions that are not meeting their RHNAs—and virtually none are—will presumably be ineligible for funding. Doesn’t that fall under enforcement?
Section 64650 also listed the allocations by percentage according to which the housing finance entity “shall distribute the revenues” it gets from “any special tax…and the proceeds of bonds” for five years after revenue is approved by voters. Section 646509(a)(2), also deleted on July 11, stated that “[t]he entity shall change distribution requirements…if it adopts a finding…that the region’s needs differ from those requirements.” How, I asked Chiu’s office, does that not fit the definition of regulatory authority?
The reply I received was promotional boilerplate.
On June 16, I asked Chiu’s office how HABA would determine that the region’s housing needs had changed. What would be the criteria? That query yielded no reply at all.
Watch to see if these passages reappear in the amended bill that the Senate Appropriations Committee hears on August 19.