In his first budget proposal Thursday, Gov. Gavin Newsom proposed an unprecedented series of carrots and sticks that would attempt to both induce and force local governments to plan for – and produce – more housing. The proposals could potentially have a wide-ranging impact on the state’s system of planning and development, but the budget contained little detail on how these ideas would be implemented.

The biggest carrot is $750 million to local governments -- $250 million to up their game on housing elements and $500 million as a reward for building more housing. In the budget summary, Newsom said the state would revamp the Regional Housing Needs Allocation process and give the Department of Housing & Community Development a more significant role in enforcing regional housing goals.

The biggest stick – but one that will be difficult to achieve – is his proposal to withhold transportation funds from local governments that don’t achieve housing production goals. In his freewheeling budget press conference Thursday, Newsom said: “If you’re not hitting your goals, I don’t know why you get the money.” (Although Liam Dillon’s Los Angeles Times article on Friday is good source for the overall picture, his live Twitter feed from Thursday gives a vivid real-time account of how Newsom talked about housing at the press conference.

Though the budget summary does not include details on how Newsom will implement his proposed new carrots and sticks, it does lay out a sweeping set of changes in general terms. These include:

  • The $750 million for local governments on housing, including $250 million for planning.
  • A complete revamping of the state’s RHNA and Housing Element process under the direction of HCD. Maybe the most important words in the budget summary on this topic are these: “HCD will be taking a more active role in housing element reviews. Moving from an advisory role, HCD will now oversee and enforce regional housing goals and production. HCD will determine a methodology for allocating housing needs to regions and local jurisdictions, with local input.”
  • $500 million for the development of moderate-income housing.
  • A vastly expanded state low-income housing tax credit program.
  • An ambitious proposal to use the state’s own surplus property for affordable housing especially since development on such land does not require local approval.
  • Modest changes to the Enhanced Infrastructure Finance District program, including eliminating the voter requirement and pairing EIFDs with federal Opportunity Zone investment opportunities. Newsom stopped short, however, of a proposing a new or expanded tax-increment program to benefit housing.