A Northern California town inhabited by billionaires is facing a financial crisis, due in part to the state’s strict affordable housing policy.
California’s housing policies have contributed to higher rental costs and slow housing buildout in towns such as Portola Valley, experts told the Daily Caller News Foundation. Portola Valley’s financial strain largely resulted from mandates requiring it to build 253 low-income housing units if the town wants to continue receiving government funds, according to Realtor.com.
“California has one of the strictest affordable housing policies in the country,” Joel Griffith, an economic policy research fellow at the Heritage Foundation, told the DCNF. “The 85% of individuals that are not going to qualify for affordable housing, they are going to have to pay even higher rental costs to make it possible for 15% of the population to get that big discount. So this affordable housing policy actually made housing less affordable for Californians, particularly in Portola Valley.”
Compliance with California’s housing requirements has contributed to Portola Valley’s growing list of expenses, with the town spending approximately $1.7 million this fiscal year on consultants and legal fees related to revising its housing plan, according to The Mercury News. The town had previously considered declaring a fiscal emergency amid its dwindling monetary reserves, according to The Almanac.
Portola Valley is home to various billionaires and other high-profile residents, including LinkedIn Co-founder Reid Hoffman and former Nike CEO John Donahoe, according to SFGate. Housing prices in Portola Valley have remained high amid the town’s financial struggles, with a median list price of $5.82 million as of September, according to Realtor.com.
“If they do end up being forced to put in low-income housing, I’d expect that it will not only steer away buyers, but we’ll also see an increase in housing supply as people want to get out of there,” Northern California real estate agent Sam Fitz-Simon said, Realtor.com reported.
Wernikoff recently introduced the idea of leasing town property to the county in an attempt to help alleviate her town’s financial pressures, according to The Almanac. The Portola Valley Finance Committee reported in October that the town has $1.5 million remaining in reserve, according to The Almanac.
“This is really just liberal policies doubling down on each other,” Griffith told the DCNF. “On the one hand, they are stoking demand by implanting these affordable housing units, and on the other side, they are constricting supply by not allowing any type of high rises to be built. It’s a recipe for disaster, it’s a big part of the reason why housing there is some of the least affordable in the country.”
Portola Valley was previously dubbed the wealthiest community in the U.S. in 2016, according to California Real Estate Blog. California has allocated nearly $24 billion to housing and homelessness services over the past five years.
“California state legislature has for years increased the cost of building anything, including housing, commercial properties, and industrial opportunities,” Lance Christensen, vice president of Education Policy and Government Affairs at the conservative think tank California Policy Center, told the DCNF. “And because of that, when they engage and try and make things more affordable, it’s way more expensive, and the affordable housing mandate is one of those things.”
Democratic California Gov. Gavin Newsom has signed various bills aimed at increasing affordable housing in his state. Newsom previously pledged to build 3.5 million new homes in California by 2035 in the hopes of addressing housing shortage concerns in 2017, however, the initiative has been marred with various slowdowns.
“Having all those mandates together and requiring certain communities to build a number of houses in those communities, called the Regional Housing Needs Assessment, is a determination that’s made by some bureaucrats that has no real bearing on reality.” Christensen told the DCNF. “Portola [Valley] is a victim of this, as are many other cities, where they are told to build a certain number of affordable housing units, except that the mandates are so expensive.”
“If we don’t have a housing policy that works for people, we are going to end up with a lot of people that can’t afford housing and are either on the street or living with their family, or other situations that are untenable,” Christensen added.
Vice President Kamala Harris previously proposed to make housing more affordable during her failed campaign. Some swing-state voters have criticized the high housing costs under the Biden-Harris administration.
Portola Valley’s town council did not respond to requests for comment from the DCNF.
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