As a booming economy continues to drive up housing prices, California's top officials are placing a higher priority on housing issues in the year 2000. But with Democrats firmly in charge in Sacramento, the state's efforts appear likely to focus on providing more public assistance for housing, rather than pushing for a dramatic reform on policy issues such as the housing element law. Gov. Gray Davis appears ready to give higher priority to housing issues in his second year in office than he did in his first. Business, Housing, and Transportation Secretary Maria Contreras-Sweet stated last fall that, with water and parks bonds already placed on the March ballot, the administration would focus this year on putting housing and transportation bonds on the November ballot. And in December, Davis received praise from housing advocates across the political spectrum by appointing former Assemblywoman Julie Borenstein as director of the Department of Housing and Community Development. Meanwhile, legislative leaders also are likely to move on housing issues. Senate Housing Committee Chair Richard Alarcon, a Democrat who represents the San Fernando Valley, held a special "housing summit" at UCLA earlier this fall and declared that if the issue of affordable housing for working and middle-class Californians is not solved, "it will undermine our future." New Census Bureau statistics suggest that California's housing construction is not keeping up with either job growth or population growth. The Census reported in December that California had added 854,000 new housing units between 1990 and 1998 — a 7.6% increase and, in actual units, the second-highest total in the nation behind Florida. But the number of new homes was behind the state's increase in new households, which totaled more than 1 million during this period. Furthermore, California's percentage increase in housing construction lagged far behind all neighboring states, including Nevada, which led the nation with a 47.8% rise. Several reports have concluded that the state is now adding approximately three jobs for every housing unit constructed, The ratio is as high as 9:1 in economically booming Santa Clara County, where home prices have doubled in the last three years. And the California Building Industry Association recently reported that 15 of the 25 most "unaffordable" metro areas in the nation are located in California, including several in the Central Valley. Furthermore, even as the economy continues to boom, housing starts actually declined last summer. While there is little question that housing is a problem, it remains to be seen what steps — besides a housing bond — Davis and the Legislature are willing to take to improve the situation. The Legislature approved $22 million in appropriations for housing programs last year — up from virtually nothing under Gov. Pete Wilson — and housing advocates say they will aim for $100 million in the 2000-01 budget. "It wasn't a bad start after 15 years of drought," said Marc Brown, a housing lobbyist for California Rural Legal Assistance. Virtually all parties also hope to increase California's low-income housing tax credit program from $35 million to $50 million per year. As for the housing bond, both advocates and legislative leaders seem to be angling for a bond on the November ballot that would provide somewhere between $750 million and $900 million. Housing bond negotiations bogged down late last year, in part because Davis's office wanted to focus more on providing funding for single-family home ownership opportunities while legislative leaders, such as Alarcon, wanted to concentrate on rental housing instead. But with housing a higher priority, it appears likely that all sides will work harder to put aside their differences and get a bond on the ballot. "Our position is, we support what's going to pass with the voters," said Timothy Coyle, senior vice president for governmental affairs for the California Building Industry Association. "In today's market, you're going to have to provide some public assistance. In either case [focusing on single-family or multi-family], you're not going to come close to meeting the need with the bond." And without committing the administration to a particular position, Borenstein indicated that even single-family assistance can aid renters. "If you help people who are renters to buy houses, then you can free up rental units," she said. The question of housing policy reform is much more up in the air. Both the administration and legislative leaders seem relatively uninterested in pursuing a wholesale reform of housing element policy – especially if it might harm the chances of getting a housing bond on the ballot. "That's fairly consistent with the governor's point of view," Borenstein said in an interview. "The housing bond is one of the most direct ways to get citizens involved in the discussion and also to get housing built." Reforms in housing policy, she suggested, are more "indirect" and take longer to have an impact. But administration officials, legislators, and lobbyists are all talking about the possibility of housing policy reforms that promote more housing construction near job centers, thus promoting "jobs-housing balance" or "Smart Growth" principles. Assemblyman Tom Torlakson, D-Martinez, and chairman the Assembly Select Committee on Jobs-Housing Balance, is expected to promote some kind of jobs-housing balance legislation. The issues might get worked into the transportation bond, which is being heavily promoted by Senate President Pro Tem John Burton. Meanwhile, CBIA is aggressively promoting infill housing close to job centers, at least rhetorically. In listing his organization's priorities for 2000, Coyle mentioned construction defect liability reform first, but then added a series of infill — or, as he called them "urban-centric" — policy reforms. These include reform of redevelopment housing law, more work on brownfields cleanup, and limitations on litigation against infill sites under the California Environmental Quality Act. He also said CBIA would strongly support the transportation bond and other infrastructure funding proposals. "What we're trying to do is get to the connection between job growth and housing supply," Coyle said. Meanwhile, Smart Growth advocates such as State Treasurer Phil Angelides continue to promote the idea of requiring state housing and infrastructure funding programs to incorporate "Smart Growth" principles in their criteria. Angelides has already introduced such criteria into the low-income housing tax credit allocation process. He is attempting to do the same for the state's infrastructure bank, though he is running into resistance. Angelides has promised to push for Smart Growth criteria in allocating the housing bond money — and he may have considerable leverage because he is actively raising funds for the housing bond campaign. Angelides and other Smart Growth advocates are also expected to place such criteria on the allocation of money from the transportation bond, though this is likely to meet with considerable resistance. It is difficult to say how much impact all this activity will have if the Davis Administration chooses not to pursue housing element reform. Wholesale changes in housing element policy are always on the legislative agenda, but the interest groups are deeply divided over how to proceed. Housing advocates want the state to play a stronger role in dictating local housing policies, while local governments usually want to weaken the state's leverage over their local planning processes. A great deal is likely to depend on Borenstein, Davis's new housing director. A former law professor, Borenstein represented the Coachella Valley in the Assembly for one term. She was defeated by Republican Jim Battin, who still holds the seat. More recently she worked for State Controller Kathleen Connell as deputy controller for external affairs. Housing advocates were united in their praise of Borenstein "She's got great political skills," said CRLA's Brown. In dealing with local governments, Borenstein may choose to focus on implementing existing housing element law and redevelopment housing law, rather than seeking to reform them in the Legislature. As a legislator, she was involved in the ongoing controversy between Indian Wells and neighboring communities over Indian Wells's desire to turn housing obligations — and redevelopment housing money — over to other, poorer cities. Most recently, the city of Coachella rejected $1 million in low-income housing money that Indian Wells offered. Contacts: Timothy Coyle, California Building Industry Association, (916) 443-7933. Julie Borenstein, Department of Housing and Community Development, (916) 445-4775. Marc Brown, California Rural Legal Assistance, (916) 446-9241. Office of Assemblyman Tom Torlakson, (925) 372-7990. Office of Senator Richard Alarcon, (916) 445-7980.