Note: This blog post describes the content and status of these bills as of July 11, 2023. You can follow new updates and amendments on the California legislative information website.
California policymakers are showing new interest in using social housing to tackle the state’s housing crisis. While there is no single definition of social housing, it is generally described as publicly financed, affordable housing that is developed and owned by either government or a mission-driven nonprofit, but differs from existing U.S. public housing and non-profit affordable housing in some key respects. Most social housing is not restricted to low-income households, and residents are involved in decision-making. It is often regulated to be permanently affordable to families with low or moderate incomes, while many of the affordability restrictions on non-profit affordable housing have expiration dates.
In recent years, policymakers and advocates across the country have explored how a social housing approach could work in the U.S. context–with the aims of boosting housing production and protecting residents from market forces. Advocates have argued that it is time for housing policy to focus on the value of housing to the people who live in it, rather than its profit potential. During this year’s legislative session, California legislators have considered three different social housing proposals:
- The Social Housing Act (AB 309, Asm. Lee) builds on social housing bills proposed in previous sessions. The bill would create the California Housing Authority, a new state entity that would build and acquire housing in order to meet the state’s housing production targets.
- The Stable Affordable Housing Act (SB 555, Sen. Wahab) outlines general principles for social housing and sets goals for the number of social housing units to be built or acquired over the next ten years. The bill requires the Department of Housing and Community Development to study the best way to meet those goals.
- The Laborforce Housing Financing Act (SB 584, Sen. Limón) would establish a statewide tax on short-term rentals like AirBnBs. The bill would use the proceeds to fund the creation of “laborforce housing,” which has a similar definition to social housing.
Below, we summarize some key similarities and differences among the three proposals.
The three proposals have a lot in common. All three policies take aim at the failure of our current housing system to provide affordable housing for Californians. They explicitly seek to address the dysfunction of the private market and the limitations of tax credit-funded affordable housing programs.
All three bills define social (or laborforce) housing in California law, and these definitions overlap significantly: the housing is permanently protected from private ownership, includes units affordable to a mix of household incomes, and includes residents in decision-making. All three proposals would use funds both to build new housing and to acquire existing housing, which can preserve affordability and prevent displacement.
Prioritizing scale or deep affordability? While they have similarities, the three proposals are not solving exactly the same problem. The Social Housing Act is more focused on broadly increasing housing supply. The goal of the program is to eliminate the gap between housing production and the development targets set by the state’s Regional Housing Needs Allocation (RHNA). While affordability is one of the program’s priorities, that goal would be weighed against other objectives, such as increasing overall supply and taking in sufficient revenues to cover the program’s costs.
The Stable Affordable Housing Act has a stronger focus on deep affordability. It sets a five-year goal of 200,000 new homes that are affordable to households making less than fifty percent of the area median income (AMI). Both the Stable Affordable Homes Act and the Laborforce Housing Act require that every social housing unit have a deed restriction that guarantees affordability in the future.
Who builds it, who owns it? The proposals also differ in how they see the role of nonprofit, mission-driven developers and owners. The Social Housing Act focuses on the public sector: the state would lead housing development and acquisition, and the social housing units would remain in state hands. On the other end of the spectrum, the Laborforce Housing Act does not propose to expand state development capacity. Instead, the program would primarily provide grant funding to governments, local housing authorities, and mission-driven nonprofits.
The Stable Affordable Housing Act incorporates both nonprofits and public entities in a broader “social housing sector” approach. Social housing would include homes owned by government entities, but also include small-scale collective ownership models, such as Community Land Trusts (CLTs) and Limited Equity Housing Cooperatives (LEHCs).
How is it implemented and funded? There are also notable differences in how the bills would implement their vision of social housing in California–including administration, labor requirements, and where the housing would be located.
Funding is a core issue. Any viable social housing program will need a source of funding that can sustainably cover the long-term costs of building, maintenance, and operations, and that is protected from political fluctuations. The Social Housing Act envisions a program that would be self-sustaining. It would jumpstart operations through a combination of General Obligation (GO) bonds and revenue bonds, but ultimately seek to achieve revenue neutrality by using higher-income residents’ rents to cover the costs of affordable units.
Neither of the other two proposals discuss revenue neutrality. The Laborforce Housing Act comes with a specific funding mechanism: a statewide tax on short-term rentals like AirBnBs, which the proponents argue exacerbate the housing crisis. The Stable Affordable Housing Act does not identify a source of funding, though it directs the Department of Housing and Community Development to study potential sources.
The table below displays some of the key provisions of the three proposals.
| California Social Housing Act (AB 309, 2023), Asm. Lee | Stable Affordable Housing Act (SB 555, 2023), Sen. Wahab | Laborforce Housing Financing Act (AB 584, 2023), Sen. Limón | |
|---|---|---|---|
| What the proposal does |
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|
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| How it defines “social housing” | Social housing:
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Social housing:
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Laborforce housing:
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| Scale of the proposal | Goal is to “eliminate the gap between housing production and acquisition and regional housing needs assessment targets,” an estimated 2.5 million homes statewide by 2030. |
10-year goal: 1.2 million units 5-year goal: 600K units, with no less than 200K affordable to ELI and VLI households |
STR tax is roughly estimated to take in $150 million annually, but no publicly available estimate was found for how many units this would create. |
| Who creates and owns the housing | A new state entity (The California Housing Authority) would purchase lands (or receive gifts of surplus land from the state) and contract to construct and rehab housing. All housing developed by the program would be required to remain in state ownership. |
Directs HCD to make recommendations about creating new development and property management capacity at the state, including by establishing a Social Housing Authority. Contemplates a “sector” of social housing that would include units owned by co-ops, CLTs, and nonprofits. |
HCD would manage the program by establishing a process to solicit applications and award funding. Public entities, local housing authorities, and mission-driven nonprofit housing providers are eligible to receive funds. The tax would be collected by the Department of Tax and Fee Administration. |
| Funding and financials |
Short-term: Establishes the Social Housing Revolving Loan Fund; establishes the intent of the Legislature to issue GO bonds (would require voters to approve). Appropriations staff estimate this would cost in the “low billions” for capital costs. Longer-term: Program is required to “seek to achieve” revenue neutrality, while striving to ensure that residents don’t pay more than 30% of their income through cross-subsidization. CHA is also authorized to issue revenue bonds. |
Requires HCD to make recommendations about potential revenue sources for a future social housing fund. |
Imposes a statewide tax on occupancy of short-term rentals at a rate of 15% of the rental price. Appropriations staff estimate that the tax would take in “in the range of” $150 million per year. They project significant administrative costs in collecting the tax. |
| Target residents |
Mixed income for households of all income ranges. CHA would determine annual development targets that are the number of units to meet Regional Housing Needs Assessment targets for units affordable to low-income, median income, and above-median-income households. CHA would “strive to ensure” that residents do not pay more than 30% of their income in rent. Residents must live/work in California. |
Mixed income for low-income and moderate-income (up to 120% of Area Median Income) households who can’t afford market rents. All units would be deed restricted affordable, meaning that the household would pay no more than 30% of their income in housing costs. | Mixed income for low-income and moderate-income (up to 120% of Area Median Income) households who can’t afford market rents. All units would be deed restricted affordable, meaning that the household would pay no more than 30% of their income in housing costs. (language is very similar to SB 555) |
| Community ownership and participation | Requires each development to have a resident governance council to represent the interests of residents, though their role appears to be mostly advisory. |
Would include units owned by co-ops and CLTs. In definition of social housing: “Residents have the right to participate directly and meaningfully in decision-making affecting the operation and management of the housing units in which they reside.” |
In definition of laborforce housing: “Residents have the right to participate directly and meaningfully in decision-making affecting the operation and management of the housing units in which they reside.” (no other details) |
| Tenure type | Includes both a rental model (one-year leases) and an ownership model (99-year lease limited equity) | Not specified, but social housing sector would include CLTs and limited-equity housing co-ops. | Not specified. |
| Role of acquisition and preservation | Requires CHA to prioritize acquiring properties that have expiring affordability restrictions or that are at risk of becoming unaffordable. | Requires HCD’s action plan to explore how to prevent the expiration of affordability covenants. | Limits the money available for acquisition and rehabilitation to 30% of funds in a given year, with at least 65% to be used on new construction. |
| Where is the housing? Who decides? |
Prioritizes vacant/underutilized parcels, surplus public property, parcels near transit. For acquisition, prioritizes units at risk of losing affordability status. Requires that CHA accept local govs’ preferences for project parcels (within limits) and seek input from local governments on design issues. Requires CHA to conduct an analysis on “the effects of its developments on gentrification” each year. |
Not specified. | Requires HCD to endeavor to allocate funding across the state proportional to how much revenue is collected from that county. |
| Tenant protections | Guarantees residents all protections afforded tenants in privately owned housing at a minimum. The resident participation process would potentially lead to further tenant protections. | In definition of social housing: Residents shall be afforded due process and “full protections” against termination without just cause. | Includes just cause tenant protections with no waiting period; a cap on rent increases below the cap set in state law; anti-displacement protections; and explicit right to form tenant unions. |
| Labor requirements | As public projects, housing built by CHA would be subject to prevailing wage and other labor protections. A “skilled and trained” workforce/project labor agreement requirement was amended out of the bill in the Assembly. | Not specified; directs HCD to study labor standards. | Requires projects to use either a “skilled and trained” workforce or a project labor agreement with prevailing wage. |
What’s next? All three proposals passed through the first chamber and moved to the second. In order to stay alive, the three bills must get support in their policy committees by July 14 and their fiscal committees by September 1. You can follow their progress, read analysis, and sign up to receive updates on the California legislative information website.
Further reading:
- Lessons From a Renters’ Utopia – The New York Times Magazine. Reported story about Vienna’s social housing model and the advocates who want to emulate it in the US.
- How a New Generation of Activists Are Reinventing Housing – Nonprofit Quarterly. Social housing in the U.S. as “institutional bootstrapping.”
- A Plan to Solve the Housing Crisis Through Social Housing – People’s Policy Project. The case for social housing in cities across the country.
- California Housing Corporation: The Case for a Public Sector Developer – East Bay For Everyone. White paper that formed the basis of AB 309.
- Social Housing For All: A Vision For Thriving Communities, Renter Power, and Racial Justice ― Center for Popular Democracy. Report proposing comprehensive social housing in the US.
For information or inquiries, please contact equitablehousing@berkeley.edu.
