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VARIOUS GOVERNMENT PROGRAMS HELP <br />CALIFORNIANS AFFORD HOUSING <br />Federal, state, and local governments <br />implement a variety of programs aimed at helping <br />Californians, particularly low-income Californians, <br />afford housing. These programs generally work <br />in one of three ways: (1) increasing the supply of <br />moderately priced housing, (2) paying a portion of <br />households’ rent costs, or (3) limiting the prices and <br />rents property owners may charge for housing. <br />Various Programs Build New Moderately <br />Priced Housing. Federal, state, and local <br />governments provide direct financial assistance— <br />typically tax credits, grants, or low-cost loans—to <br />housing developers for the construction of rental <br />housing. In exchange, developers reserve these <br />units for lower-income households. (Until recently, <br />local redevelopment agencies also provided this <br />type of financial assistance.) By far the largest of <br />these programs is the federal and state Low Income <br />Housing Tax Credit (LIHTC), which provides tax <br />credits to affordable housing developers to cover <br />a portion of their building costs. The LIHTC <br />subsidizes the new construction of around 7,000 <br />rental units annually in the state—typically less <br />than 10 percent of total public and private housing <br />construction. This represents a significant majority <br />of the affordable housing units constructed in <br />California each year. <br />Vouchers Help Households Afford Housing. <br />The federal government also makes payments <br />to landlords—known as housing vouchers—on <br />behalf of about 400,000 low-income households <br />in California. These payments generally cover the <br />portion of a rental unit’s monthly cost that exceeds <br />30 percent of the household’s income. <br />Some Local Governments Place Limits on <br />Prices and Rents. Some local governments have <br />policies that require property owners charge <br />below-market prices and rents. In some cases, <br />local governments limit how much landlords <br />can increase rents each year for existing tenants. <br />About 15 California cities have these rent controls, <br />including Los Angeles, San Francisco, San Jose, and <br />Oakland. In 1995, the state enacted Chapter 331 <br />of 1995 (AB 1164, Hawkins), which prevented rent <br />control for properties built after 1995 or properties <br />built prior to 1995 that had not previously been <br />subject to rent control. Assembly Bill 1164 also <br />allowed landlords to reset rents to market rates <br />when properties transferred from one tenant to <br />another. In other cases, local governments require <br />developers of market-rate housing to charge below- <br />market prices and rents for a portion of the units <br />they build, a policy called “inclusionary housing.” <br />NEED FOR HOUSING ASSISTANCE <br />OUTSTRIPS RESOURCES <br />Many Low-Income Households Receive <br />No Assistance. The number of low-income <br />Californians in need of assistance far exceeds <br />the resources of existing federal, state, and local <br />affordable housing programs. Currently, about <br />3.3 million low-income households (who earn <br />80 percent or less of the median income where <br />they live) rent housing in California, including <br />2.3 million very-low-income households (who earn <br />50 percent or less of the median income where they <br /> www.lao.ca.gov Legislative Analyst’s Office 3 <br />AN LAO BRIEF 8.A - Page 11