By Mark Stivers
Director of Legislative & Regulatory Advocacy
With Governor Newsom’s signature on Senate Bill 469 (Allen and Wiener) on September 8th, no longer will affordable housing developments financed with funding from the Department of Housing and Community Development, the Strategic Growth Council, or the Tax Credit Allocation Committee need to demonstrate compliance with Article XXXIV of the State Constitution, which requires voter approval for the “development, construction, or acquisition of a publicly funded low-rent housing project.”
Article XXXIV is an antiquated relic of the pre-Civil Rights Era that is based in discriminatory attitudes against low-income households, particularly black and brown families. Article XXXIV was added to the California Constitution in 1950 after the passage of the federal Housing Act of 1949. The Housing Act of 1949 banned explicit racial segregation in public housing, which left segregationists scrambling to find alternative ways to keep people of color out of white neighborhoods. Unable to stop the passage of the Housing Act of 1949 at the federal level, these segregationists sought to slow and stop its implementation with Article XXXIV’s public vote requirement.
Sponsored by the California Real Estate Association (CREA, the predecessor of the California Association of Realtors), supporters of the initiative argued that a vote in favor of adding Article XXXIV to the California Constitution was simply a way to give communities the right to say yes or no to proposed low-income housing. Not surprisingly, however, campaign materials and internal documents produced by CREA indicate that the constitutional change was about much more.
According to the Los Angeles Times, newspaper ads paid for by CREA blamed “minority pressure groups” for new proposed public housing. At the time, the CREA Code of Ethics included a provision barring real estate agents from integrating neighborhoods on the basis of “race or nationality” if doing so would be “clearly detrimental to property values.” The Los Angeles Times found that by 1969, California voters had rejected nearly half the public housing that had been proposed in Article XXXIV elections – 15,000 units – and many housing agencies simply chose not to hold elections, fearing that their plans would be rejected.
The racist impacts of Article XXXIV were made even worse by a mistaken interpretation that led to its application not just to new public housing but also to privately developed housing that benefitted from state funding. State public agencies provide financial resources for affordable housing but neither “develop, construct, or acquire” them. In almost all cases, private entities own, design, construct, and operate state-funded affordable housing developments.
SB 469 corrects this misinterpretation by clarifying that state financing of privately developed affordable housing does not trigger Article XXXIV’s requirements. In doing this, the bill expands on previous legislation that exempted developments financed by the Homekey Program, the California Housing Accelerator Program, Portfolio Restructuring Program, and Veterans Housing and Homelessness Prevention Program.
While the passage of SB 469 is an important victory that frees most of California’s affordable housing developments from our racist history, Article 34 still imposes a racist public vote requirement on new public housing and must ultimately be repealed from the State Constitution. Voters will have a chance to do just that in 2024.
In the meantime, SB 469’s exemption for state-financed developments will affirmatively further fair housing and reduce unnecessary costs, delays, and uncertainty in the development of desperately needed affordable homes. The California Housing Partnership, along with our partner the California Rural Legal Assistance Foundation, is proud to have suggested and co-sponsored this important measure, which takes effect January 1, 2024.