CP&DR News Briefs Feb. 4, 2020: Sacramento Housing Fund; State Population Growth; Oil Well Remediation; and More

Robin Glover on
Feb 3, 2020
Sacramento to Create $100 Million Housing Trust Fund
The Sacramento City Council voted unanimously to create a $100 million trust fund in hopes of unlocking state grants and accelerating construction on both for-sale and rental units. Officials say developers have expressed interest in the Sacramento area, but uncertainty over funds has stymied progress.The fund would issue bonds backed by future revenue from a sales tax approved by voters in 2018, Measure U, to raise grant and loan money for affordable housing projects. In addition, Sacramento would receive matching funds from state grants. To maximize efficiency, the city plans to earmark 30 percent of the money for efficiency housing like modular building, tiny homes, microunits, accessory dwelling units, 3-D printed housing and container unit housing, which cost approximately $100,000 compared to $400,000 for traditional units. In recent years, Sacramento has struggled to fund and approve affordable housing. From late 2013 to 2018, the city issued building permits for just two units of housing for extremely low-income people. Only 7 percent went to low-income housing at any level.

California Population Growth Rate Could Reach Zero by 2060
As cities from San Francisco to Los Angeles strain to accommodate local population growth, demographers predict that California's currently slow growth could grind to a total halt by 2060. Growth rates have been trending downward in recent years: the result of higher domestic out-migration and lower birth rates. Those losses have been offset by international immigration, but immigration rates are declining, too. By 2045, California is expected to add fewer than 100,000 residents a year, and demographers have revised down previous estimates of 50 million residents by 2060 to around 45 million people. State data shows birth rates rather than migration will be the main driver of California's growth in coming years, but will also likely decline. Around 2040, demographers predict, California's aging population in conjunction with declining birth rates will lead to more births than deaths. The ratio of Californians over the age of 65 to those of working age has increased by nearly 85 percent since 2010. (See prior CP&DR commentary.)

State Faces Massive Costs to Clean Up Oil Wells 
Cleaning up nearly 6,000 abandoned oil wells will cost California more than $500 million with the potential for billions more, according to a report released by the California Council on Science and Technology (CCST). Oil and gas companies pay into bonds to "plug" out-of-service oil wells, which if left untended can leak harmful chemicals into the soil. But California has only collected $25 million in bonds - leaving the state liable for the remaining $425 million. CCST, a nonprofit commissioned by state regulators, identified nearly 70,000 additional wells that are at risk of being deserted, a prospect that could significantly add to the initial estimate — up to $9 billion. Fees on active companies, and an assessment on production, continue to fund state cleanup efforts. Recent declines in production suggest costs will far outpace bond revenue without regulatory intervention. A lead author of the report said in a statement that the state has recently taken steps to increase the burden on gas and oil companies. "However, our initial analysis implies that the potential cost to the state still substantially exceeds the value of these assurances.”

Quick Hits & Updates 

Los Angeles Metro is considering a $30 million contract to plan for an extension of South Bay's Green Line in Los Angeles County. The Metro board will vote on whether to award a contract to a consulting firm that would provide both environmental analysis and conceptual engineering services for the extension. If approved, the analysis will focus on two possible southerly routes for the Green Line, which currently concludes at a station in Redondo Beach. The Green Line expansion comes as Metro is planning a massive expansion of transit across the region with an infusion of funds from the passage of Measure M, a 2016 sales tax boost.

San Jose has issued a report addressing displacement and housing in response to the city's burgeoning housing crisis as it has transformed from an agricultural enclave to a tech hub. The report focuses on households earning from $0 to $103,900 per year for a family of four in 2019 (80 percent of Area Median Income). Solutions are organized into three categories: protecting tenants; preserving income restricted, rent stabilized, and naturally occurring affordable housing; and producing new affordable housing.

Palo Alto's planning director is seeking to revive planning community zones, a controversial zoning tool that allows cities to grant regulations exemptions to developers if they contribute public benefits. Repeated public outcry over these developments - the last one ended in a referendum rejecting a proposed project - led city council quit using the zoning tool in 2013. But city leaders see it as one of the few mechanisms that they can use to meet their goal of producing more than 300 housing units per year. Housing, particularly near transit, is expected to dominate the City Council's agenda this year.

The Los Angeles Metro board voted unanimously to move the NextGen Bus Plan - Metro's first major overhaul of its bus system in more than 25 years - forward for public review. Before final board and approval, Metro will hold a series of community workshop meetings throughout the spring to collect and integrate public input.

The San Diego Airport Authority approved a $3 billion redevelopment plan for Terminal 1 at San Diego International Airport. The 53-year-old terminal, which serves 12 of the 25 million passengers that fly out of the airport annually, will feature 30 gates (up from 19), more restaurants and shops, and additional security checkpoints with more lanes. A raft of environmental upgrades are also in the works, including an all-electric shuttle fleet starting service in mid-2020. Pending federal environmental review and consideration by CCC, the goal is to break ground on the new terminal in 2021 and open the first phase (19 gates) in 2024.

Rumors are circulating that Gov. Gavin Newsom's $20 million carve-out for a new state park is for the purchase of a Bay Area wilderness area known as the N3 Ranch near Livermore. The public monies would be in addition to $30 million that has already been secured by national conservation organisations. The owners are seeking $72 million for the 80-square-mile property that is an hour's drive from San Francisco, Oakland, San Jose, Stockton, and Modesto. Eighty percent of the property, including 9,600 acres of the Alameda Creek watershed, captures drinking water for Bay Area residents and millions of Californians.

U.S. Fish and Wildlife will propose listing the Hermes butterfly on the threatened species list. Despite the species' adaptations to fires, the bright orange and black-speckled butterfly has been threatened by longer fire seasons and urban encroachment. Sixty-five percent of the butterfly's habitat is already on protected state-owned land, and state and private environmental groups are working to put safeguards in place for the remaining 35 percent that will likely present legal challenges for large developments that require federal funding or permits.

The Academy of Art University will pay $37.6 million to San Francisco to build affordable housing - replacing units the city said the school illegally removed from the market - as part of an updated legal settlement approved by the Board of Supervisors. The school will also convert nine of its 43 properties back to lawful use, restore 12 historic buildings and pay $20.4 million in fines and fees - including $8.2 million for the city's "small sites fund" to help keep low-income tenants in their homes.

As part of an ongoing effort to restore San Francisco's waterfront, the Port of San Francisco is seeking proposals to redevelop two Port of San Francisco piers. One of the piers is currently vacant and one is used for storage/parking. The port is hoping for public use projects such as retail and recreation, but unless projects can secure philanthropic or public funding, the estimated $130 million repair costs for Pier 38 alone will likely require inclusion of at least some office space to recoup costs. "There are so many pressures on these piers, I think everybody is trying not to go in with a set expectation. What we're hoping is that there will be some sort of multiuse facility," said Alice Rogers, president of the neighborhood association that has kept a close eye on the project.

The San Diego Association of Governments approved $90 million in bonds to build 70 miles of bike lanes by 2024, over the objections of some members who wanted to direct funds and efforts to go toward highway expansion. The project is already $79 million over its initial budget and is expected to cost roughly $279 million in total. Neighborhood opposition to barriers that separate bikes from cars and the complexity of the projects have contributed to rising costs. To date, nearly 9 miles of bike lanes have been completed. Another 16 miles are under construction, with about 45 miles in the design phase.

A labor dispute between developers of the $6 billion mixed-use redevelopment of Concord Naval Air Station and City of Concord officials is threatening the project. Unions say developers promised all union work for the project. Developers say that isn't true, and that the additional $542 million in labor costs from hiring all union workers would kill the project. Now developers have stopped making $37,000 monthly payments meant to pay for city staff working on the project, saying it will withhold money until an agreement is reached with unions.
In its latest effort to seal off public beach access, Hollister Ranch filed a lawsuit against state officials over a new law that would have opened access to the public after decades of legal battles that stretch back to 1976. Public access advocates celebrated the new law, but ranch officials call many of the provisions an overreach of the state's authority. President of the Hollister Ranch Owners Assn. Monte Ward said he wants to continue working with the state, which has been allowed access to the property as officials draw up a public access plan.

Attorney General Xavier Becerra is suing to block permits that would allow oil and gas drilling on more than 1 million acres of public land. Last year, Gov. Gavin Newsom signed a law barring any California leasing authority from allowing pipelines or other oil and gas infrastructure to be build on state property, in order to make it more difficult to drill on federal lands that are adjacent to state lands. The suit contends that the government's environmental review did not adequately evaluate harmful effects on communities and environment in eight California counties, and requests that the court set aside the decision.

Oakland’s housing authority is under scrutiny as stakeholders are demanding answers to why the $9 million dollars collected through an affordable housing impact fee has yet to produce a single new unit. Thus far Oakland has distributed $4.8 million to help fund 160 new affordable units across three housing projects, but developers and nonprofits say they are in a holding pattern as Oakland has not approved any new permits since 2016 and fees collected to date are a little less than half what they were projected to be at this stage. City Council members say they are frustrated. “We have been asking these questions for a year and not getting answers--so we don’t know if it’s a failure to collect, being expended improperly or if the funds are sitting somewhere not being tracked,” said Oakland City Council President. An outside auditor has been hired to investigate.