California governor signs into law measure to fight housing crisis

© Reuters. FILE PHOTO: Construction begins on a residential housing development called 3 Roots by Lennar in San Diego, California, U.S. June 3, 2021 REUTERS/Mike Blake

By Kanishka Singh

(Reuters) - California Governor Gavin Newsom has signed legislation aimed at combating the state's housing crisis by expanding housing production and aiming to streamline housing approvals.

Newsom's office said on Thursday California will put $1.75 billion into what his administration is calling a new California Housing Accelerator, which he claimed will accelerate building 6,500 affordable multi-family units that were stalled for lack of tax-exempt bonds and low-income housing tax credits.

"Governor Newsom's California Comeback Plan will lead to over 84,000 new housing units and exits from homelessness, including today’s announcement of $1.75 billion in affordable housing funding for the new California Housing Accelerator", his office said in a statement.

The median home price in California rose 144% between 2000 and 2019 to $591,866, according to data by the California Association of Realtors cited in the Wall Street Journal.

Among the measures Newsom signed into law include Senate Bill 9, also known as the California Housing Opportunity and More Efficiency (HOME) Act, which would make it easier to build additional housing in areas zoned only for single family homes.

Newsom also signed Senate Bill 10, which takes aim at the issue of zoning. Under SB 10, local governments can access a streamlined zoning process for new multi-unit housing near transit or in urban infill areas, with up to 10 units per parcel. The legislation also eases the need to undergo the California Environmental Quality Act (CEQA) process.

The signing of the legislation came two days after Newsom handily beat back a Republican campaign to oust him from office and claimed a resounding victory in a special recall election.

California risked an escalating spiral of wildfire catastrophes and rising housing costs unless it completely revamped how it rebuilt after fires and found ways to discourage building in high-risk areas, according to a study released in June.

The study by the University of California Berkeley Center for Community Innovation and the research institute Next 10 also warned of an impending insurance crisis unless laws are changed.

Building in already established communities that are largely protected from wildfires is more expensive, so developers continue to encroach on dry, hilly terrain that is more affordable.