Proposed California bill imposes real estate fee for affordable housing fund
A California lawmaker believes the state can combat a lack of affordable housing by passing a bill that would set funds aside for the financing and development of affordable housing.
California Senate Bill 1220, or the Housing Opportunity Trust Fund Act of 2012, proposes the creation of a fund that would raise revenue by imposing a $75 fee on all real estate instruments recorded at the county level.
Revenue from the fee would then be sent to the Department of Housing and Community Development to be deposited in the trust to help finance affordable housing initiatives across the state.
Sen. Mark DeSaulnier (D-Concord) proposed the bill, saying in a press statement back in March that a lack of affordable housing around areas containing jobs is impeding the state's economic growth.
But Mark Calabria, director of financial regulation studies at the Cato Institute, sees California's affordable housing problems in a different light.
Calabria believes the state's housing market struggles with affordability issues because "they have too much housing in the wrong places," and not enough housing in the Coastal areas that are crowded with people.
"It's really a supply constraint," Calabria said. "I think the thinking that a trust fund will fix everything is wrong. They should look at trying to deregulate their land markets. In a relatively competitive market, you could build affordable housing without massive subsidies," he added.
The legislation suggests affordable housing development would be a boon for the state's construction industry, which lost approximately 700,000 jobs in the recession, according to the proposed bill. The bill claims "restoration of a healthy construction sector will significantly reduce the state's unemployment rate."
Calabria submits the bill may be more about getting construction workers back to work than fixing long-term supply and demand issues when it comes to affordable housing.