This Policy Brief – an analysis of the Regional Collaborative movement and Proposition 1C -- was prepared by CCRL Policy Research Analyst Elinor Buchen.  The broader research upon which much of the report is based was prepared in satisfaction of the Advanced Policy Analysis requirement at the Goldman School of Public Policy, University of California, Berkeley.  For an electronic copy of the full report, complete with analysis of individual proposals, contact Eli directly at ebuchen@ccrl.org.

While the Federal government has been steadily decreasing funds for affordable housing and local governments have limited development with short-sighted zoning ordinances and insufficient housing approvals, California’s state government and regional agencies have taken a more proactive role in addressing housing, land use, and transportation issues.  This report provides context to these related issues, particularly with regard to the implementation of the $850 million, voter-approved Regional Planning, Housing and Infill Incentive Fund (Proposition 1C).  In addition to analysis of the specific features of the Fund under consideration, this report offers ideas for next steps so that California can continue to provide leadership in strategic infrastructure investment that is both environmentally sustainable and economically sound.

Background
In November 2006, California voters passed $42.7 billion in bonds for infrastructure improvements. The Regional Planning, Housing and Infill Incentive Fund of Proposition 1C offers an opportunity to shape state-directed land-use with $850 million to encourage infill development. Infill development – i.e., development within existing urbanized areas – is a key component of smart growth. Infill housing can help to provide higher density affordable housing closer to jobs, transportation, retail and other amenities, protecting open space, minimizing congestion, and decreasing vehicle-miles-traveled (VMT). Unfortunately, barriers like community opposition, inadequate infrastructure and local zoning make it difficult to develop or redevelop parcels in urbanized areas.

Principles
The report’s analysis of the leading proposals for the distribution of the Infill Incentive Fund relies on a set of guiding principles: strengthen integrated regional planning, implement smart growth principles, increase supply and variety of housing, maximize leverage, deliver funds equitably and include accountability standards.

At the same time, while there is political pressure to turn out as many housing units as possible, as quickly as possible, the analysis cautions against focusing solely on the number of units that the Infill Incentive Fund can produce in the short-term. Given the recent passage of the Global Warming Solutions Act (AB 32), and the connections between housing, land use, congestion and air quality; it is critical that we set the bar higher. The Infill Incentive Fund should be used to create programs that balance the state’s overall needs with regional differences, institutionalize regional planning and solidify inter-agency relationships.

Recommendations
Drawing upon the most favorable aspects of the various proposals, the report recommends that the following features be included in the Regional Planning, Housing, and Infill Incentives Fund:

• A strict definition of infill that focuses investments in the urban core and recommends that infill be defined as a site in a previously developed area or surrounded by development, with water and sewer trunk line service and designated for development in the General Plan.
• Local jurisdictions as eligible applicants, while allowing and encouraging developers as co-applicants in order to leverage the funds as effectively as possible and upgrade areas of disinvestment.
• Funds restricted to housing-related infrastructure development, not directly for housing, in order to spur infrastructure investments that could revitalize urban centers and enable housing projects (market and below-market rate) to be developed for years to come.
• A threshold affordability requirement of ten to fifteen percent, to support mixed-income developments that do not typically get funded through HCD. The Infill Incentive Account should be used to promote a wide variety of model projects that provide housing for all income levels including low and very-low income.
• Consistency with regional blueprints as a threshold criterion with some exceptions allowed for regions and jurisdictions that are not yet in the regional planning process. Regional planning can help overcome many of the barriers to infill development but only if there are some monetary incentives for local jurisdictions to comply.
• Inclusion of RHNA goals as a ranking criterion in order to direct funds to areas with large housing needs but exclusion of past performance as a threshold criterion.
• HCD as the main implementer of the program, however the Department should be mandated to work in conjunction with the Department of Park and Recreation, the Infrastructure Bank and the Treasurer’s Office (CALReUSE).
• Overarching sustainability principles that can be tied to metrics and measurable outcomes for future evaluation of all of the infrastructure bonds.
• A 5% set-aside for rural areas to ensure some geographic equity, while still focusing investment in urbanized areas with existing transit, amenities and jobs.

Next Steps
Long-term, California needs to continue to work to address the interconnected issues related to housing, transportation and land use. The passage of AB 32, the Global Warming Solutions Act of 2006, and the formation of the Governor’s Climate Action team offer an opportunity to connect strategic infrastructure investment and regional planning to greenhouse gas emissions goals. Ongoing efforts by state agencies and key stakeholders are needed to institutionalize mechanisms for better coordination and increased funding.

Suggestions for State Government

• Create an inter-agency task force.  In order to achieve smart growth goals related to land use, transportation, air quality and open space, and facilitate implementation of multi-disciplinary bond issues, there must be better interagency cooperation among the departments responsible for improved performance. The Governor could create a new state task force of multiple agency representatives to work with the Governor’s Climate Action Team to oversee implementation of bonds and develop a common set of metrics for measuring outcomes.
• Coordinate transportation and land use planning with AB 32 goals.  Given the connection between greenhouse gas emissions, transportation, and land use, transportation planning agencies should revise their planning guidelines to show progress in meeting state climate change targets as articulated in law and in the Climate Action Team Report.
• Develop a permanent source of funding for affordable housing.  In order to meet our future housing, a permanent source of funding for affordable housing must be identified. Mechanisms such as developer fees or real estate transfer taxes (used in other States like Massachusetts and Florida, respectively) could create an ongoing source of funds for affordable housing. There is growing interest in Sacramento to address this issue. Options for the Affordable Housing Innovation Fund in Proposition 1C are being considered as pilot projects for setting up a longer-term funding program.
• Track infill housing production.  Legislation regarding the infill fund will create a working definition of infill. This definition could be used to guide regional planning agencies in identifying and tracking infill development. HCD should collect and disseminate data in annual or bi-annual reports similar to its tracking of Redevelopment Agencies’ housing activities. This information would create a baseline from which to evaluate future efforts to encourage more efficient land use.

Suggestions for the Regional Collaborative Network

• Engage in bond implementation process.  Legislation is just one part of bond implementation. HCD and other agencies will need to develop specific guidelines for this and other bond-funded programs in the upcoming year. Regional collaboratives and COGs need to stay engaged in the process of program development. In order for State agencies to understand the barriers facing development at the local level, there must be continued dialogue between state agency staff and local and regional community leaders.
• Ensure accountability.  Regional Collaboratives should engage with the regional agencies and collaboratives to ensure that the principles in Regional Blueprint Plans, Corridor Management Plans and Regional Transportation Plans are being supported by the bond funds and that bond programs are being evaluated and altered on a regular basis.
• Create a coalition of land use, affordable housing, and greenhouse gas emissions reduction organizations.  Broad-based leadership is needed to continue to develop policy around AB 32 and land use. Regional Collaboratives should initiate and facilitate a statewide coalition of stakeholders interested in land use, affordable housing and GHG emissions reduction. The coalition could brainstorm strategies, coordinate campaigns and to help direct efforts to enact statewide policies to encourage land use planning and development that decreases vehicle-miles traveled.