The CASA Compact underlying SB-50

Touted as balanced compromise, Compact faces criticism from cities and offers no assurance of cohesive legislation

March 2, 2019 – Palo Alto Matters

SB-50 is perhaps the most prominent in a slew of proposed state legislation to implement an ambitious regional housing plan known as the CASA Compact. The Compact was designed as an interdependent package to address all three legs of the housing stool: production, preservation, and renter protection. Supporters describe the Compact as a necessary, if imperfect, compromise and they hope that controversial elements will have a better chance of passing if they all advance together to the state Capitol. However the Compact itself has been met with strong criticism and there is no certainty or commitment that every piece will move forward. 

What is the CASA Compact?

The CASA Compact was created by the Committee to House the Bay Area, a coalition of developers, business leaders, elected officials, labor interests and tenant advocates convened by the Metropolitan Transportation Commission. Recently endorsed by the MTC and the Association of Bay Area Governments, known as ABAG, the CASA Compact consists of an ambitious ten-point planto: 

  • Spur housing construction through minimum zoning near transit; streamlined approvals and exemptions from the California Environmental Quality Act; property tax breaks for developers; use of public lands for affordable housing; and further incentives for accessory dwelling units. “Sensitive communities” with a high percentage of low income residents, would get a grace period of up to 5 years to propose community-driven alternatives to meet state performance standards (i.e., housing production goals).
  • Protect renters through just-cause eviction rules and relocation assistance; access to emergency rent assistance and legal help; and a temporary cap limiting the size of annual rent increases.

The Compact calls for $1.5 billion in local and regional “self-help” funding (through taxes, fees, bonds and revenue set-asides) to implement the plan including: $1 billion from taxpayers, property owners and local governments; $400 million from employers; and $400 million from developers. At least 60 percent of that funding would go towards housing production, ten percent would go towards renter protections, and 20 percent would go toward preservation. 

Notably, the CASA Compact also calls for state legislation to create an independent Regional Housing Enterprise board comprised of MTC and ABAG representatives and the stakeholder representatives who developed the Compact itself. The unelected RHE would have authority to collect and disburse fees, taxes, and other revenues, allocate funding, and issue debt.

Competing interests of small and big cities 

The Mayors of San Francisco, Oakland, and San Jose were all on the CASA Steering Committee and voted to approve the final CASA Compact. However, numerous other cities and towns have been strongly critical and objected that the interests of their cities were not represented. The Cities Association of Santa Clara County, representing 15 cities, argued that the Compact’s one-size-fits-all solutions neglect the diversity of needs in each city and threaten to leave cities “without adequate funding for the infrastructure that makes our communities whole – schools, transportation, etc.” Similarly, they argued that the failure to engage cities of all sizes in the plan’s development could lead to significant unintended consequences both locally and regionally.

In addition to the Cities Association, the cities of Berkeley, Cupertino, Los Altos, Los Gatos, Palo Alto, Santa Clara, and Sunnyvale all logged objections to the CASA Compact. Chief among their concerns were:

  • The intrusion on local land use decision-making (and the associated exclusion of community interests).
  • The diversion of property tax revenues that are vital to local General Funds and could result in cuts to core services in every Bay Area city; and the redistribution of those funds to counties (perceived as likely to benefit big cities at the expense of smaller cities with lesser voice in county decision-making).  
  • Undermining of effective and promising ongoing local strategies to confront jobs/housing imbalances and finance and support the availability of affordable housing.

Sunnyvale Mayor Glenn Hendricks likened the proposed funding mechanisms and changes to land use authority to “a direct assault on cities” and Mayor Steven Scharf of Cupertino described the Compact as “a product that 97 percent of Bay Area cities think is a terrible idea.” Palo Alto’s then-Mayor Liz Kniss wrote that “[i]t would be problematic for MTC, as an organization representing local governments, to advocate the sweeping legislative proposals embodied in the CASA Compact without clear and robust engagement opportunities for Bay Area communities.”

Selective enactment could subvert the “compromise.”

Without legislative action toward all three goals of production, preservation, and protection, the so-called compromise embodied in the CASA Compact falls apart. Although SB-50 is a fairly fleshed out bill, not every Compact element has received as much attention. And there is no mechanism to ensure cohesion among the bills seeking to implement various elements of the Compact. While housing production incentives have picked up steam, both in Sacramento and locally, they focus mostly on “missing middle” populations earning up to 150 percent of medium income or more. Efforts to expand low-income housing, renter protections and anti-displacement policies have faired more poorly. 

Perhaps indicative of the fragile promise of the CASA Compact’s “compromise,” the California Apartment Association, which represents landlords and participated in the CASA planning process, has already said it “will oppose any [CASA Compact] related legislation aimed at implementing the rent control and just cause eviction elements.”

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