Put the Money Where the Homes Are: Rewarding Cities That Practice “3 P’s”

How do we build a more affordable, sustainable, and inclusive Bay Area? The Non-Profit Housing Association of Northern California (NPHANC) has some ideas outlined in a new paper, The Road Ahead: A 21st Century Housing Strategy for the San Francisco Bay Area. The bottom line: we have to get serious about the “3 P’s” of housing policy: 

• Protection of existing tenants and vulnerable residents; 
• Preservation of naturally-affordable and deed-restricted affordable housing stock; and, of course, 
• Production of new homes to satisfy unmet demand for housing, and plan for future growth. 

NPHANC lays out detailed proposals for how to implement ambitious housing goals.

The key takeaways:

1. We need carrots and sticks. NPHANC recommends tying funding from newly-created entities such as the Bay Area Housing Finance Authority (BAHFA) to explicit anti-displacement and racial equity goals.
2. By the same token, regional planners can tie transportation funding to regional housing preservation goals to strengthen anti-demolition policies and other strategies to preserve existing affordable housing.
3. The region should also prioritize and reward localities that are meeting their housing production goals at all levels of affordability.

Last year, after years of community input and public meetings, the Metropolitan Transportation Commission (MTC) sent the CASA Compact to the state legislature. The compact outlines priorities and strategies for ending the root causes of the Bay Area’s housing shortage, centered around the “3 P’s”: Protection, Preservation, and Production. The state legislature passed some legislation to marginally protect tenants and preserve affordable housing, but it has still fallen short on production goals. NPHANC outlines bold, concrete strategies for how to advance this holistic vision.

Most of these strategies center on the MTC’s authority to distribute $862 million in federal transportation funding under the One Bay Area Grant 2 program (OBAG 2). NPHANC recommends explicitly conditioning this transportation funding for the 2021-2022 fiscal year on localities enacting strong anti-displacement measures to protect the region’s estimated 300,000 low-income tenants at high risk of eviction. To name just one example, the paper urges the MTC to: “Ensure that the county-level portion of OBAG funding encourages congestion management agencies to prioritize jurisdictions with [areas] that adopt tenant protections and anti-dis-placement strategies over and above state programs.”

The same approach can be taken to preserve over 30,000 units of affordable housing, most of it “naturally affordable” market-rate housing that current residents can still afford. The paper recommends that regional planners model their anti-demolition policies and 1-to-1 replacement standards after the 2019 state bill SB-330, the Housing Crisis Act. 

To ensure that these policies come to fruition, NPHAC recommends that the MTC “create minimum regional standards around base-line preservation ordinances by conditioning transportation funding, including: condo conversion ordinances, single room occupancy (SRO) preservation ordinances, demolition controls, short-term rental regulations, and tenant and non-profit right of refusal to purchase rental units being removed from the rental market.”

NPHANC also recommends that the MTC coordinate with transit operators to ensure that these policies are enacted within these agencies’ Transit Oriented Development plans. 

Currently, OBAG funding does evaluate the need for housing as a criteria, but it is not explicitly tied to the production of housing. That can change. “MTC should prioritize the vast majority of transportation funding directly to cities and counties who actually meet housing outcomes,” the paper says, because “counties that produce zero housing can still receive a significant proportion of the total county-level funding if their population is large and they have significant unmet RHNA goals.”

NPHANC notes that the MTC can also use funding from its Regional Transportation Improvement Program, and $800 million in funding for Priority Development Areas (PDAs), to incentivize and reward increased housing production, especially for counties that meet affordable housing goals. 

“MTC and ABAG have an exciting opportunity to embark on a courageous policy-making process that will guide private and public transportation investments for the next generation,” the paper notes. What’s left unspoken, of course, is that this opportunity has always existed, and so far, it’s been the path not taken.