A new state program intended to spur housing construction is being watched closely by planners and housing advocates. Supporters of the Jobs-Housing Balance Program believe it could spur cities and counties to approve needed housing developments, but some skeptics wonder if it will simply provide money to jurisdictions that would permit new homes anyway. Even though the program has yet to be implemented, it has already suffered a significant budget reduction. The 2000-01 state budget contained $100 million for the program, money that remains available. The governor's original proposal for the 2001-02 budget contained another $200 million. However, when the electricity situation drained state funds and tax revenues fell below projections, the Davis administration eliminated the proposed $200 million and cut $40 million from the original allocation. This leaves just $60 million, which Department of Housing and Community Development officials intend to start granting during 2002. To be eligible for grants ranging from about $1,000 to $4,900 per unit, a city or county must issue permits for at least 12% more units during 2001 than its annual average from October 1997 through September 2000, and it must have a state-approved housing element. Jurisdictions in counties with the highest job growth (the Bay Area, the Los Angeles area, and San Diego and Sacramento counties) would receive the largest grants. The program contains additional incentives for permitting multi-family units, affordable housing and infill development. "This is the first time that there has been money made available that rewards good behavior. It's a milestone," said Cathy Creswell, HCD Deputy Director. "We think, clearly, that looking at how you incent jurisdictions is critical to improving housing conditions across the state." In the past, the state's primary means of forcing affordable housing construction was to withhold funding from cities and counties for affordable housing projects – a weapon that few people see as effective. To make the Jobs-Housing Balance pot even sweeter, the Legislature this year modified the program to allow cities and counties to use program grants for any purpose. State Sen. Tom Torlakson (D-Pittsburg), the author of the original Jobs-Housing Balance legislation in 2000 also carried this year's legislation, SB 784, which modified the program. Originally, SB 784 was the vehicle for the additional $200 million. Although that money dried up — and the state budget picture for next year already looks grim — Torlakson and the Davis administration maintain that they are committed to this new program, in part because it provides one of the few incentives available to local governments for "smart growth." What sets the program apart from typical HCD programs is that the Jobs-Housing Balance program addresses housing needs within a larger framework that also considers job growth, land preservation and affordability, supporters say. Others, though, are not sure what to make of the program. Tom Jones, executive director of the California Futures Network (a coalition of environmental, neighborhood, business and transportation groups), declined to predict the program's success rate, but added a note of caution. "Our caution about it is that the program tries to address the supply problem — and there is one, no doubt about that — but we don't know what kind of supply this program will yield," Jones said. Julie Snyder, a lobbyist for the nonprofit organization Housing California, said determining whether the Jobs-Housing Balance Program truly induced housing development in job-rich areas will require a "fairly sophisticated analysis." Many of jobs created in the state during recent years pay less than $30,000 annually, which is not enough to live on in most urban areas, Jones said. "The big housing-jobs imbalance is for working lower- to middle-income people who took one of these new jobs that were created and can't find housing," he said. Other people argue that there is not enough money in the program to force cities to provide their fair shares of low- and moderate-income housing. Still, Creswell said that the program's grants — say a few hundred thousand dollars that could go toward a new park – could help local decision-makers overcome typical resistance to affordable housing development. And the requirement that qualifying cities and counties also have an approved housing element "is very consistent with the notion that the state's housing element law is the foundation for planning well in California," she said. Creswell believes there is widespread interest in the program. Through a series of workshops and other means, HCD officials have contacted representatives of more than 200 cities and counties. How far the $60 million will go is unknown. This year's legislation did make the program into an annual one. It appears housing will remain a topic of discussion in Sacramento during the months that lawmakers are on break. A working group is meeting every few weeks to discuss SB 910 (Dunn), which is intended to penalize cities and counties that do not comply with the housing element law. Dunn promises to pursue some form of the bill next year. Also, Torlakson and Democratic Assemblymen Howard Wayne and Alan Lowenthal have convened a Housing and Land Use Working Group that includes about 20 representatives of local government, housing groups, environmental organizations, developers and business. One recent session addressed fiscal and non-fiscal incentives for construction of infill housing. Although the Housing and Land Use Working Group has met only a few times, some participants believe it could produce legislation for 2002. It is probably significant that the lawmakers themselves have attended the meetings. And even a Republican — Assemblyman John Campbell — has shown interest in the working group. Contacts: Cathy Creswell, Department of Housing and Community Development, (916) 445-4775. Sen. Tom Torlakson's office, (916) 445-6083. Tom Jones, California Futures Network, (510) 238-9762. Julie Snyder, Housing California, (916) 447-0531. HCD Jobs-Housing Balance Program website: www.hcd.ca.gov/ca/jhbig/