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In housing, California has been in the throes of what Oakland mayor Libby Schaaf, calls an “affordability crisis.” This year governor Jerry Brown signed a batch of bills designed to end the crisis and, as Assemblyman Richard Bloom put it, “make housing affordable again.” Those currently priced out of the market might recall past government efforts in the housing field.
Established in 1975, the California Housing Finance Agency (CalHFA), bills itself as the state’s “affordable housing lender,” with “financing and programs so more low to moderate income Californians have a place to call home.” Board members include state treasurer John Chiang and bosses from a number of housing authorities around the state. By all indications, nothing CalHFA has done for more than 40 years was able to prevent California’s current housing affordability crisis.
During the 1980s, California’s Department of Housing and Community Development launched the California Home Ownership Assistance Program with 345 loans at rates in the neighborhood of 12 percent. This deal included an “equity share” demand for homeowners “to pay as much as half of the amount a house has appreciated since its purchase.” Robert Frugoli bought a prefabricated house for $58,500 but decades later in 2015, when the value rose to $140,000, the DHC claimed that Frugoli, living on a disability payment of $1,800 a month, owed the state a $40,000 balloon payment. By any standard, that is predatory lending, and nothing the DHC has done since the 1980s has averted the current affordability crisis.
The bills Brown signed in September center on a new state tax on real estate transactions and another bond issue. As Dan Walters observed, the bills fail to address “underlying problems” such as California’s draconian environmental laws. So the bills merely “shift the day of reckoning to the next political generation,” when everybody will wonder why the bills “didn’t have the promised outcomes.” The other government housing schemes certainly didn’t, and there’s a back story here.
The prime mover of CalHFA, the state’s “affordable housing lender,” was Robert Klein a rising real estate tycoon. Klein was also the force behind the California Institute for Regenerative Medicine (CIRM), the $3 billion state stem-cell institute that has produced none of the cures and therapies it promised California taxpayers in 2004, and now seeks another $5 billion