Abstract
In 2011, Governor Jerry Brown proposed a budget that cut redevelopment agencies (RDAs), a large provider of funds for affordable housing in California’s urban centers. Many groups opposed his proposal, but was RDA use of the Low-Moderate Income Housing Fund affecting the affordability of housing in California? This thesis uses a regression analysis to link two measures of housing affordability to supply and demand variables to determine if RDAs were making effective use of their funds. Data for this thesis came from the Department of Housing and Community Development, and the 2010 U.S. Census. I used two measures of housing affordability, median housing values and percentage of households paying over 35% of income towards rent, and attempted to link them to supply and demand variables. The primary explanatory variables were the number of affordable housing units divided by the number of housing units in a city, and total expenditures divided by total housing units in a city. The explanatory variables were designed to explain the supply and demand of affordable housing. My results indicate that RDAs were not affecting the affordability of housing in California. RDA expenditures did not significantly affect median housing values. There was a significant effect on percentage of households paying over 35%, however the coefficient was very small. RDA LMIHF was not the only funding available for creating more affordable housing in California, but was one of the largest in the state, contributing about $1 billion annually. However, as the recession grew longer, fewer sources were available for creating affordable housing. Other studies have shown, and this study concurs, that funds were not used to their full effectiveness at all agencies; therefore, I would recommend that future policymakers make not only data reporting mandatory, but also effectiveness reporting, and create a system of data that is accessible and easy to use. Regular audits should further ensure the validity of data. HCD has collected data for years, but lacks the staffing to analyze the information, and therefore could not determine which agencies or types of expenditures were most effective. The agencies need to assure decision makers, recipients, and citizens that affordable housing spending is effective and efficient. The dissolution of the RDAs and consequently the need for a new agency to control affordable housing funds is an opportunity to create a more effective program with better outcomes, and a more successful approach. The RDAs were not doing a sufficient job of increasing housing affordability in California. Their demise creates an opportunity to put affordable housing money to much better use.