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As Pleasanton residents see housing projects increasing around our city it’s important to know: The state is mandating that Pleasanton produce 6,000 new housing units in this current housing cycle, an inflated and unrealistic number.
In our last cycle, Pleasanton accomplished 300% of our required market rate housing goal. As nearly all California cities we fell short of our affordable housing mandates. Pleasanton made a strong effort to produce affordable housing using a policy that requires private developers to include a percentage of below-market-rate homes within new residential projects.
This is what you should know about the state’s false agenda.
In recent years, residents have heard: housing affordability is simply a matter of “not enough supply”, and if cities like ours deregulate (remove local decision-making) and just build more, prices will fall. Credible economic research shows that supply alone will not deliver affordability particularly in high-cost communities like Pleasanton.
Studies from respected institutions such as the Urban Institute, the Brookings Institution and research economists at the Federal Reserve demonstrate an important reality: new construction primarily produces market-rate or luxury housing. Developers will price units to cover land, materials, labor and profit. In the Bay Area, those baseline costs are extremely high.
Deregulation does not eliminate the cost of land, concrete or labor.
In desirable regions, new units are typically absorbed by higher-income buyers and investors. That may increase total housing stock, but it does not reduce rents to levels affordable for teachers, service workers or young families. The filtering process, where new units eventually become affordable over time, will take decades, if ever.
Here is the critical issue for Pleasanton residents: under current state mandates, our city must plan for approximately 6,000 new housing units, of which 3,000 are income qualified affordable housing units. What is rarely discussed is the cost of required subsidies.
Affordable housing does not become affordable by deregulation; it becomes affordable through subsidy. The average public subsidy required per affordable unit in the Bay Area ranges from $500,000 to $900,000 per unit.
Using a conservative estimate of $500,000 per unit, 3,000 units × $500,000 = over $1.5 billion, costs could approach $2 billion.
The state has set cities up to fail. Pleasanton does not have a $1.5 billion to $2 billion housing fund. Nor has the State of California provided funding at that scale to match its mandates. This creates an imbalance: cities are required to zone and approve units (or receive harsh penalties) but are not provided the funding necessary to make those units affordable to lower-income households.
This is why simply calling for “more supply” is not a solution. Supply without subsidy produces market-rate housing, California has produced a significant number of market rate homes, and developer profits.
To produce affordable housing, we need:
* Dedicated funding sources (regional housing trust funds, expanded tax credits).
* Preservation programs to protect existing naturally affordable units. Not tear down for expensive new construction.
* State legislation that pairs housing mandates with permanent funding streams rather than shifting unfunded obligations to local governments.
Housing affordability is not solved by wishful thinking. It requires billions in state and federal subsidy.
Our goal is a Pleasanton that remains livable, and welcoming, but we must align mandates with fiscal reality to achieve that goal.
Pleasanton can’t continue to absorb the burden of the state’s unconstitutional unfunded mandates. Article XIII B, Section 6 of the California Constitution prohibits unfunded mandates on local governments.
Pleasanton must join together with other cities to challenge the state’s failed housing agenda.
Editor’s note: Julie Testa is in her second term on the Pleasanton City Council, representing District 3.
