The increase comes as public frustration is mounting over California’s struggle to curb homelessness despite unprecedented billions spent in recent years to get people off the street.

Experts and advocates say that while drugs and mental health play a significant role, the homelessness crisis will persist until the state can reverse its intensifying affordable housing shortage. Between 2000 and 2021, California’s typical rent swelled 38% while renter income rose only 7%, according to researchers with the nonprofit California Housing Partnership.

“California’s homelessness crisis is being driven by the same factors that are driving the crisis in the rest of the country, but driven to the extreme,” said Alex Visotzky, senior California policy fellow with the nonprofit National Alliance to End Homelessness.

The U.S. homeless population increased by 12% between 2022 and 2023 to more than 650,000 people — the highest total since the Department of Housing and Urban Development began collecting the data in 2007. The bump in the state and nationwide numbers followed rising housing costs across the country and the expiration of pandemic emergency programs, including expanded unemployment assistance, rental aid and eviction moratoriums.

In the Bay Area, homelessness increased just 1% in Santa Clara County, 4% in Contra Costa County, and declined 4% in San Francisco, according to previously released local data. Officials there said building more affordable and supportive housing, coupled with pandemic aid, helped prevent a surge. Emergency eviction protections in California also lasted longer than in most of the rest of the country.

“The common factor in all of those places where they’ve flattened the curve is they’ve invested in resources and affordable housing,” Visotzky said.

Alameda and San Mateo counties, however, saw their homeless populations jump by around 20%. Across the five-county region, the estimates identified roughly 31,000 homeless people.

Most counties nationwide tallied homeless estimates over a handful of nights in January before sending them to the federal government. Volunteers with flashlights and clipboards set out to identify everyone living in tents, encampments, vehicles and shelters. (Twenty-two counties, including Alameda, San Mateo and San Francisco, submitted their latest counts from 2022, meaning those estimates are not as up-to-date as the counts for Santa Clara and Contra Costa counties.)

Officials caution the “point-in-time” counts do not reflect a precise census, and advocates have raised concerns about the accuracy of the estimates. Still, the counts help cities and counties plan their homelessness response and determine how much state and federal funding local governments receive.

While California, the most populous U.S. state, counted the most homeless residents of any state, it was nowhere near the top in terms of the largest percentage increase this year. New Hampshire saw the biggest spike at 52%, followed by New Mexico at 50%, and New York and Colorado at 39%.

California also had the fourth-highest rate of homelessness, with 46 unhoused people for every 10,000 residents. The state trailed New York with 52, Oregon with 51 and Vermont with 48. The national figure was 22.

But the Golden State had the largest share of homeless people living outdoors or in vehicles at 68%, with the rest in shelters or temporary housing. Meanwhile, New York — home to the nation’s second-largest homeless population — reported just 5% of homeless people were unsheltered.

Part of the reason for the disparity is New York City’s court-enforced “right to shelter,” which requires officials to offer homeless residents a roof over their heads. Massachusetts has a similar requirement, and other cold-weather cities and states have prioritized building emergency shelters to shield unhoused people from frigid winter conditions.

In California and the Bay Area, some officials are pushing to rapidly scale up shelter capacity over objections from advocates who say cities should instead focus on building permanent supportive housing. Without more housing, they argue, shelters can only help so many people out of homelessness.

The debate is playing out in San Jose, where officials aim to erect hundreds of new tiny home shelters, in part to gain the legal authority to clear more encampments. Santa Clara County, which includes San Jose, had the highest rate of unsheltered homelessness of any major metro area in the U.S., with three-quarters of its more than 9,900 homeless residents living in places not meant for habitation.

To create more shelter and housing for homeless people, California officials in 2020 launched a $3.75 billion program dubbed Homekey, which has so far funded the creation of more than 14,600 units statewide. That’s on top of billions in additional state and federal funding being funneled to local governments for homelessness services and programs.

But it’s clear those efforts haven’t been near enough to get a handle on the crisis.

Vivian Wan, chief operating officer with Abode, which manages homeless housing and services across the Bay Area, acknowledged the public’s exasperation over putting so many resources toward fixing a problem that doesn’t seem to be improving.

“People are saying, ‘Why didn’t you solve it?’” she said. “It’s because we didn’t solve the housing crisis.”

Now, a state assemblymember from San Jose is pushing a novel proposal he believes could finally jump-start affordable housing development by allowing the state government to get into the homebuilding business.

Alex Lee, a 27-year-old Democrat, has written a bill that would create a state agency to develop “social housing” — publicly owned housing that would be affordable for people with a range of income levels.

While skeptics may dismiss the idea as a progressive pipe dream doomed to repeat the failures of underfunded federal public housing programs, Lee points out that California agencies already hire developers to build housing at universities and other public property across the state.

“Wouldn’t it be cheaper and more effective if we just did development ourselves?” Lee asked in an interview.

With its own development agency, Lee argued, the state could save costs by taking a more unified approach to the process of planning, financing and constructing housing. And by removing any profit motive, he said the agency could focus its mission on building affordable multifamily properties while being less affected by swings in the economy.

Unlike most public housing in the U.S., Lee’s proposed social housing would be available to low-, middle- and even high-income residents, who would pay no more than 30% of their earnings to rent or buy units leased out by the agency. Two in five Californians already spend more than that on housing, classifying them as “cost-burdened,” according to the independent California Budget and Policy Center.

Central to the plan is that the rates paid by higher-income residents offset the cheaper prices charged to lower-income households. That, backers said, should cover the costs of managing and maintaining social housing properties, and eliminate the need for ongoing public subsidies such as housing vouchers.

Another benefit, experts and backers argued, is that such mixed-income housing — unlike subsidized public housing projects that have historically been relegated to poorer neighborhoods — can encourage more community investment, lower crime rates and better access to good schools and jobs.

Lee, the youngest member of the state Legislature who lives with his mom in San Jose when not in Sacramento, first learned about social housing a few years ago by reading a policy paper while riding Amtrak. Having seen many in his community struggle to find homes they could afford, the idea of the state taking a more active role in housing appealed to him — as it has other younger elected officials and voters who increasingly view government as a solution to society’s most pressing issues.

“We should have a whole new public developer dedicated to this purpose,” Lee said.

Social housing has long been popular in Asian and European countries, including Austria, where well over half of Vienna’s 1.8 million residents live in government housing. While many large post-World War II social housing developments in Europe degraded into slums in large part due to underinvestment and poor design, Vienna’s model, which prioritizes housing residents of all incomes and integrating projects into the fabric of the Baroque metropolis, is often credited with making the capital city one of the most affordable and livable on the continent.

Here in California, a local public agency in Sacramento has built three apartment projects on state-owned land with over 280 market-rate and affordable units, which Lee cited as an example to follow.

But even if Lee succeeds in creating his new agency, it would still face the main challenge confronting any developer seeking to build affordable housing, said Dan Dunmoyer, president of the California Building Industry Association: “The question is: Who pays for it?”

In the most expensive parts of the state, such as the Bay Area and Los Angeles, building a single unit of affordable housing can cost as much as $850,000, often double the expense of a similar market-rate unit, Dunmoyer said. He attributed the jarring disparity to state and federal building requirements, construction wage standards and the drawn-out process of applying for a patchwork of increasingly oversubscribed affordable housing grants and financing programs.

To find the money to build social housing, Lee pointed to separate state and regional affordable housing bonds, together potentially worth up to $30 billion, that could come before voters in 2024. The proposed development agency could also be allowed to issue its own bonds and potentially take out loans from the state treasury. As for running the agency, Lee estimated that it would start out costing around $1 million each year, with most of that money going toward a dozen staff members.

Lee’s bill, AB 309, passed out of the state assembly last week and will be sent for approval to the state senate, where an earlier version stalled out in committee last year. A competing bill, SB 555, calls for developing a statewide social housing plan, but is shorter on specifics. It’s authored by Aisha Wahab, a Democrat from Hayward.

While support for social housing is growing — the influential pro-housing group YIMBY Action is sponsoring Lee’s bill — both proposals face an uphill battle in this year’s legislative session, said Louis Mirante, vice president of public policy at the Bay Area Council, a pro-business group. Lawmakers are considering a slew of other housing bills. And facing a budget deficit, there may not be an appetite for creating a new program that could compete for state housing dollars.

“It’s easy to get lost in the din of all things going on in housing,” Mirante said. “As with any housing program, our ability to deliver homes with that program is constrained by its support.”

One organization opposing the bills is the California Association of Realtors. It says the proposals are a bad idea because they could allow the state to buy single-family homes to convert to social housing instead of focusing solely on building new projects, making it harder for “working Californians to achieve homeownership,” the association said in a statement.

But the main challenge for Lee in seeing his bill across the finish line could be convincing enough fellow lawmakers social housing isn’t simply another welfare program, but rather a cost-effective solution to providing Californians of all backgrounds with a “universal good” that’s in dangerously short supply.

“I think that’s the most American way,” he said, “true equality as much as possible.”

The demographic and household shifts, highlighted in newly released U.S. census data, could have major implications for the local economy and workforce while underscoring the region’s deepening housing affordability crisis.

The data, comparing census results from 2010 and 2020, comes with a caveat: It doesn’t fully capture the sweeping societal changes brought on by a once-in-a-generation pandemic. That includes a roughly 3% drop in the region’s population since the onset of COVID-19.

Even so, the data sheds new light on how the Bay Area is changing and what challenges it could face in the future. Here are four of the main takeaways:

1. The Bay Area is graying 

The region saw a 38% spike in the number of residents 65 or older, with those over the retirement age comprising 15% of the population in 2020, up from 12% in 2010, according to the data.

During that time, the total population of the six-county Bay Area grew by 9% to almost 6.7 million people. The data includes results from Santa Clara, San Mateo, Alameda, Contra Costa, Marin and San Francisco counties.

An aging population is not unique to the Bay Area and has been a long-term trend, said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. But as more residents grow older and retire, Levy said, they will continue to put pressure on the health care system and strain the local workforce.

At the same time, the Bay Area saw a nearly 12% decrease in residents under 5 years old, reflecting declining birth rates that have caused drops in school enrollment and forced campus closures across the region.

What can be done to ensure these two trends don’t drag down the Bay Area economy?

“Both of them speak to the need for more housing so we can attract people who can afford to live here,” Levy said.

2. White residents no longer the largest racial group

Asians became the Bay Area’s largest racial group in the last decade, growing from almost 26% of the region’s population in 2010 to just over 33% in 2020, according to the data. That surpassed White residents who comprised 32.9% of the total population, down from 40% in 2010.

Levy said the shift wasn’t surprising given the surge in highly-skilled Chinese and Indian workers immigrating to the region in recent years.

“When you look at who’s in the tech sector here, there’s a huge Asian percentage of the workforce,” Levy said, adding that more international migration will likely be needed as the local workforce ages.

The Bay Area’s Black population, meanwhile, declined from over 6% of the region’s total population to less than 5%. That was likely a consequence of Black residents being displaced from historically African American neighborhoods in cities such as Oakland and East Palo Alto as rents and home prices surged.

The Latino share of the population, which had surged in past decades, stayed roughly the same at 23%.

3. Many residents struggle to afford homeownership

In 2020, nearly 53% of all occupied homes in the Bay Area were owner-occupied, while renters lived in 47%. In 2010, 55% of occupied homes were owner-occupied, while roughly 45% were renter-occupied.

The decline was greater in the Bay Area than in California. According to the California Association of Realtors, just one in five Bay Area residents can comfortably afford the region’s median single-family home price of about $1.1 million. That’s compared to 40% of people nationwide able to afford the U.S. median price of $371,200.

California had the second-lowest homeownership rate behind only New York.

To boost homeownership — a key stepping stone to generational wealth — the state should prioritize policies making it easier to build less expensive townhomes and condominiums following decades of sluggish development, said Michael Lane, a housing policy director with SPUR, a regional public policy think tank.

“That’s really going to be the key in these higher-cost coastal areas,” Lane said.

4. Homes are more crowded 

The share of homes with at least two residents ticked up over the last decade, while the share of people living alone declined. That was likely a reflection of more people living with roommates and family to share the burden of high housing costs — a trend that shows signs of reversing as people have sought out more living space in the wake of the pandemic.

Starting Monday, some fees will rise for homebuyers with higher credit scores, while buyers with lower scores will see a fee reduction. In the Bay Area, the change could shift total mortgage closing costs by thousands of dollars.

The move is part of a broader effort by the federal government to “increase support for borrowers historically underserved by the housing finance market.” That includes people of color who have long faced discrimination in homebuying. Still, borrowers with lower credit scores will, for the most part, still pay much larger fees than those with higher scores.

Felicia Mares, a real estate agent in Oakland, said the change is a net positive. She said many of her clients with lower credit scores struggle to pay the steep closing costs that come with the Bay Area’s exorbitant real estate market.

“If anything, this is just an overdue balancing act for making it a little more affordable for those who need the help the most,” Mares said.

Many factors beyond credit scores go into determining closing costs, which can make up between 3% and 6% of a home loan. The updated fees are just one of those costs, and lenders can structure home loans in different ways to balance out the higher charges.

Even so, real estate experts say many buyers will feel the impact of the increases in one way or another. And they are coming at the same time that typical mortgage rates have risen to more than 6% over the past eight months, spiking monthly payments.

“I have a feeling it’s going to be passed on more to the consumer, which kind of sucks because everybody’s getting squeezed at the moment,” said Brett Nicoletti, a mortgage loan officer with Academy Mortgage in Los Gatos.

The updated fees — meant to offset the risk of borrowers going into default — will apply only to mortgages backed by Freddie Mac and Fannie Mae. The quasi-governmental entities buy and sell the majority of home loans in the U.S. Their “conforming loans” generally come with lower interest rates than those not backed by the two entities.

In all Bay Area counties except Sonoma, Napa and Solano, conforming loans can’t exceed $1,089,300 for a single-family home. With the Bay Area’s median home price hitting $1.23 million in March, conforming loans aren’t an option for many local buyers and therefore new fee rules won’t affect them.

How much could mortgage fees shift?

A buyer who makes a 20% down payment with a credit score of 660 — considered a “fair” score — would see their fee dip from 2.75% to 1.875%, for example. For a $1 million home loan, the change provides a $8,750 discount, reducing a fee of $27,500 to $18,750.

Another buyer, also making a 20% down payment, who has a credit score of 740 — considered a “very good” score — would see their fee climb from 0.5% to 0.875%. For a $1 million home loan, the fee would increase by $3,750 to $8,750.

The more money a buyer puts down, the lower the fee. A buyer with a 660 credit score making a 30% down payment, for instance, would see the fee drop to 0.75%. With a 40% down payment, they wouldn’t pay a fee at all.

To reduce the higher charges for some buyers, lenders can raise the mortgage rates they offer and cover some of the upfront costs themselves. But that still increases the overall cost of a loan. “You have to take into consideration how much leeway lenders have in eating some of that,” Nicoletti said.

In Washington D.C., some lawmakers are pushing back on the change. In a letter to the head of the Federal Housing Finance Agency, Republican Reps. Patrick McHenry of North Carolina and Warren Davidson of Ohio demanded the agency reverse the new rules — which they argued “amount to a tax on all creditworthy … homebuyers to subsidize borrowers with riskier loans.” They threatened legislation to repeal them.

In response, agency Director Sandra Thompson denied the move is a subsidy. She said the agency is instead aiming to “more accurately align pricing with the expected financial performance and risks of the underlying loans.”

Whatever ultimately comes of the brewing fight, maintaining good credit will still give buyers a leg up on owning a home.

“The fact remains true that the better your credit is, the better your rate is going to be,” Mares said.

At a ribbon-cutting ceremony Tuesday, local officials and project backers touted the 240-unit “navigation center” east of Highway 101 as a cost-effective and “dignified” model for solving the Bay Area’s worsening homelessness crisis.

“Let’s all celebrate today this opening, with the hope that other communities in the Bay Area will follow the lead of San Mateo County and the city of Redwood City to end homelessness throughout our region,” said billionaire Silicon Valley developer John Sobrato, who helped plan the project.

The center, at 275 Blomquist St. in a commercial and industrial area near Redwood Creek, will provide residents with private rooms and bathrooms, as well as onsite medical, mental health and addiction services. At the same time, caseworkers will help them find permanent housing. Residents are expected to move in within the next few weeks.

The facility, consisting of 200-square-foot prefabricated apartments resembling shipping containers stacked three stories high, cost about $57 million to build. That comes to around $240,000 per unit in a region where building affordable housing can cost more than three times that amount.

The bulk of the construction was paid for by California’s Project Homekey program, which launched during the pandemic to help local governments, tribes and nonprofits fund new homeless housing. Complete with a basketball court, dog run and garden area, the Redwood City project was finished in just under a year.

In addition to the relatively low cost and speedy construction, officials on Tuesday highlighted the facility’s individual rooms — where couples can stay together and residents can bring their pets — as more welcoming alternatives to dormitory-style emergency shelters with strict rules and little privacy.

“It’s always been such a challenge to recognize the difficulties in convincing people to accept housing,” said County Board of Supervisors President Dave Pine. “The barriers can be very overwhelming.”

Despite a flood of recent homelessness spending, San Mateo County didn’t come close to reaching its goal of achieving “functional zero” homelessness by the end of last year. That would have meant every unhoused person who wanted it had access to either a shelter bed, temporary housing or a permanent home.

The new navigation center should help by boosting the county’s shelter capacity to more than 780 units. But as of last year, there were roughly 1,100 homeless people living on the street and about 700 in shelters, according to the latest “point-in-time count.” That was a 20% increase in the county’s total homeless population from 2019.

Santa Clara County, meanwhile, counted more than 10,000 homeless residents last year, a 3% increase from 2019. Alameda County counted about 9,700 people, up 22%. Contra Costa County saw the biggest jump in the Bay Area, up 35% to nearly 3,100. All three counties also have a shortage of shelter beds.

With the navigation center now finished after months of construction delays, San Mateo County officials and shelter providers said they’re confident they can make significant progress toward moving everyone off the street.

“We’re opening doors to realizing that where there is a will, and believe me, it takes a lot of will, there is a way to achieve functional zero homelessness,” said Aubrey Merriman, chief executive of Menlo Park-based LifeMoves, which developed and will operate the shelter.

Still, officials and experts have acknowledged ending street homelessness within the next few years is an “aspirational” goal, conceding that more affordable housing, shelter beds and other resources are necessary. But several factors are working in San Mateo County’s favor. It has a smaller homeless population than other Bay Area counties, and it’s won outsized state homeless housing grants.

While experts agree that such interim housing sites are needed to alleviate homelessness, the shelters can only be so effective when there’s a severe shortage of affordable housing in the Bay Area. Residents are often allowed to stay just three to six months, and less than half typically find permanent homes, according to regional data.

Also this week, U.S. Representatives Zoe Lofgren, Anna Eshoo, Ro Khanna, and Jimmy Panetta — Democrats who represent Silicon Valley —  announced Santa Clara County had won more than $11 million in federal housing grants to support various homelessness efforts. The money will go toward street outreach, rental assistance, housing placements and a working farm and affordable housing project in Santa Clara.

“Homelessness in Santa Clara County is a serious problem, caused and/or exacerbated by the astronomical home prices in the area and the COVID-19 pandemic,” the representatives said in a statement. “Addressing homelessness requires action from all levels of government.”

The sprawl has allowed people to live closer to nature and buy homes in more affordable parts of the state where it’s cheaper and easier to build. But it’s also left millions vulnerable to catastrophic wildfires and flooding.

And as destructive natural disasters have become more frequent in recent years, state and local officials have felt increasing pressure: How does California find ways to ease a dire housing shortage without ignoring the harsh reality of climate change?

Now, an unlikely coalition of environmentalists and housing advocates is backing a bill that seeks to slow growth in many parts of the state at high risk of fires and floods while encouraging more multifamily housing in existing population centers.

The proposal wouldn’t outright ban new housing in regions at risk of fires and floods — or prevent people in those areas from rebuilding their homes after disaster strikes. But advocates say it would rein in the kind of large master-planned developments that in recent decades have popped up in the Oakland hills, Tassajara Valley in Contra Costa County, and Morgan Hill and Gilroy in the South Bay.

Chris Ward, a Democratic assemblymember from San Diego who introduced the legislation, Assembly Bill 68, said the goal is “to try and limit, and as a last resort suspend, further sprawl into areas that are putting families in harm’s way.”

Since 2018, devastating wildfires in Lake Tahoe, Wine Country, the Sacramento Valley, the Santa Cruz Mountains and other parts of the state have burned thousands of homes and killed dozens of people. And this year, severe flooding has hit the San Joaquin Valley and Central Coast, damaging hundreds of homes in the Monterey County farm town of Pajaro.

Across California, roughly a quarter of all residents now live in areas at risk of catastrophic fire, according to state officials. One in five of the state’s residents live in areas vulnerable to floods, according to the Public Policy Institute of California.

Margie Freedman, who lives in the Monte Vista Villas townhome development in the Oakland Hills, is one of them. Freedman, who has struggled to find affordable homeowners insurance as insurers have become increasingly reluctant to cover properties in fire-prone areas, thinks market forces, rather than legislation, will ultimately control where housing is built.

“The reality, as I see it, is that the lack of affordable insurance (if one can get it at all) will be what limits building new homes in high fire-risk areas,” Freedman said in an email.

But housing advocates blame policies restricting denser development in cities and suburbs for pushing new housing farther into wooded foothills and open floodplains where land is less expensive and space is plentiful. That’s not only put more people in danger, advocates and environmentalists say, but distressed local ecosystems and boosted climate-warming vehicle emissions.

“We have to deprioritize building homes in hazard zones and instead prioritize housing closer to jobs and services, so people can spend more time with their families – and less time in polluting traffic,” Melissa Breach, chief operating officer of California YIMBY, said in a statement.

The legislation — co-sponsored by California YIMBY (short for “Yes In My Backyard”) and the Nature Conservancy — would create defined “hazard areas” across the state. It would then require local officials wanting to approve more homes than their general plans allow for in those locations to first show the same number of units couldn’t be built elsewhere in the city or county.

While maps of the proposed hazard areas are still being determined, they could cover wide swaths of the Bay Area, from the East Bay hills to the Santa Clara Valley and much of the Peninsula.

The bill would also require officials to streamline and approve larger “naturally affordable” multifamily homes in specific areas within walking distance of jobs, schools, transit, parks and shopping centers.

The building industry, however, appears poised to push back hard on the bill.

Dan Dunmoyer, chief executive of the California Building Industry Association, said the bill would drive up land values by limiting where new housing is allowed, making construction in rural and urban areas alike even more costly.

“It’s disappointing to have a YIMBY group come out in favor of a bill that says YIMBY, but only in certain places,” Dunmoyer said.

He said building homes anywhere in California comes with an inherent risk, pointing to the threat of earthquakes. But just as newer housing is built to better withstand violent tremors, updated building codes have also made homes more fire resistant, he noted.

And when it comes to large subdivisions, Dunmoyer said, developers can build roads, parks and golf courses around tract homes to shield them from wildfires. “I will contend we can master-plan a community not to burn,” he said.

Despite such assurances, California Attorney General Rob Bonta last year released stricter guidelines for how and where developers should be allowed to build in fire-prone areas. His office has also been part of several lawsuits to block large projects in areas with a history of wildfires.

Still, recent efforts to add more far-reaching restrictions have fallen flat. In 2021, a state bill to ban development in high fire-risk areas stalled out amid heavy opposition from the building industry. Before that in 2020, Gov. Gavin Newsom vetoed a measure that would have mandated more evacuation routes, vegetation management and strict building codes for new developments in fire-prone regions.

Newsom said he shot down the bill because it would have created “a loophole for regions to not comply with their housing requirements.”

Ward, the state lawmaker, said bringing together environmentalists and housing advocates — who have long been on opposing ends of development fights — should go a long way toward mustering the political support to secure a different outcome.

“It’s a really strong starting point,” he said, “for the success of this legislation.”

Newly constructed apartment buildings across the northern half of the state are sitting empty for months as Pacific Gas & Electric Co. drags its feet connecting them to the power grid, according to developers and housing advocates. They say they utility’s increasingly slow pace is also driving up building costs, creating yet another challenge to solving the state’s worsening housing crisis.

This month, Scott Wiener, a Democratic state senator from San Francisco, crafted a bill to force PG&E and other utilities to install power hookups at residential and commercial construction sites no more than eight weeks after projects receive the necessary permits. Otherwise, utilities would be required to pay developers to compensate for the wait.

“We want to send a strong message that the lights need to go on fast,” Wiener said at a news conference announcing the bill. “And no more delays by PG&E.”

Power connections historically have taken about six to eight weeks. In recent years, however, it’s been taking much longer, as many as 28 weeks, to get power, said the Construction Employers Association, one of the labor unions behind the new bill. PG&E says it’s average wait time for multifamily projects is just over eight weeks, but acknowledged there have been delays.

In a written statement, the utility acknowledged the “real-world impacts that delays have on our customers” and said it is working with the construction industry on improving and streamlining its process and “accelerating timelines” for energizing new buildings.

But passage of Wiener’s bill would leave it no choice but to increase customer’s utility rates, PG&E said. Customers’ bills soared this winter as natural gas prices skyrocketed.

In an interview, Wiener said PG&E officials have blamed the delays on staffing shortages and the increased resources diverted to upgrading the utility’s aging equipment.

But Wiener was hardly convinced by that explanation. Like other politicians across the state, he has taken a hard line with PG&E since its electrical lines have sparked deadly wildfires and triggered power shutoffs over the past decade.

“You can’t decide we’re going to become a dominant corporate goliath with a huge monopoly and then make excuses for why you can’t provide service,” he said. “They need to figure it out. Period.”

Last month, 134 construction-ready projects — compromising hundreds of new housing units and other types of development — had been waiting on PG&E power hookups for longer than eight weeks, according to state data compiled by Wiener’s office. Of those, 95 had been delayed for over 12 weeks.

San Francisco-based Mission Housing was one of the developers left waiting on PG&E to provide power to recently completed accessory dwelling units for seniors in the city.

“There are high quality, 100% affordable housing units for families and seniors sitting vacant right now because PG&E won’t turn on the lights,” Sam Moss, Mission Housing’s executive director, said at the news conference.

In some rural parts of the state, meanwhile, PG&E has effectively paused new power hookups because of limits on transmission capacity. The utility blamed the cannabis industry in Humboldt County for boosting electricity demand there and overloading the local grid.

Corey Smith, executive director for the Housing Action Coalition, a pro-housing group sponsoring the legislation, Senate Bill 86, said the growing wait times are only the latest among the challenges slowing housing construction in notoriously bureaucratic California.

Developers have long spent an inordinate amount of time planning how to secure the plethora of city approvals, construction permits and financing agreements before getting shovels in the ground, Smith said. Any setback in that process can trigger further delays, driving up costs and jeopardizing the financial viability of projects.

Housing advocates also cite high development fees, lengthy environmental studies and local zoning rules restricting where multifamily housing can go as barriers to building more homes. That’s to say nothing of the increasing costs of land, labor, materials and taking out construction loans, or the severe lack of funding to subsidize low-income housing.

Since 2016, lawmakers have signed nearly a hundred housing bills to help streamline parts of the local planning and permitting process. But backers say even more reforms like SB 86 are needed for California to meet its goal of adding roughly 2.5 million more homes for people of all incomes by 2030. That would mean building an average of about 300,000 more units each year. The state currently only produces about a third of that amount.

Smith said the sense of urgency is mounting to alleviate the “human cost” of not building enough housing in the state, where more than a quarter of renters spend over 50% of their income on housing costs and the homeless population has grown to over 170,000 people.

“All of the work and the effort we’re doing is to try and find homes for people,” he said.

Nonprofit developers are now scrambling to find financing for projects after the bank — a key affordable housing lender in the Bay Area — told them it couldn’t move forward with plans to issue new loans. Others are left asking whether the Santa Clara-based bank will honor its outstanding loan agreements and investments in their properties.

Across the Bay Area, at least nine developers are in varying states of limbo over 11 low-income projects in cities from San Jose to Petaluma, according to the California Housing Partnership, a nonprofit that supports affordable housing developers.

In the wake of the failure this month, federal regulators said they would reimburse all companies and nonprofits that lost deposits with Silicon Valley Bank. But the move doesn’t apply to loans or investments made by the bank.

Micaela Connery, chief executive of The Kelsey, a San Francisco-based developer planning a 112-unit affordable project near city hall, was set to finalize a $52 million construction loan from Silicon Valley Bank to start construction on the project this month.

Then, just a few hours before the loan was about to close, news broke the bank had gone under.

“Everything kind of stopped, and we knew we’d have to find a replacement lender,” Connery said.

That will likely delay construction on the project — co-developed with San Francisco-based Mercy Housing California — for around a few months. Any delay comes with a “cost risk,” Connery said, but she doesn’t expect it to be significant enough to jeopardize the project to house people with and without disabilities. The Kelsey’s 115-unit Ayer Station project north of downtown San Jose wasn’t impacted by the failure.

Other developers said officials with Silicon Valley Bank, once the 16th largest lender in the U.S., have told them they will continue processing loan disbursements during construction and follow through on all investments. But when the Federal Deposit Insurance Corporation (FDIC) — which has taken emergency control of the bank — eventually sells what’s left of it, it’s unclear whether new ownership will honor those commitments.

Matt Schwartz, chief executive of the California Housing Partnership, said that while the bank appears to be making every effort to keep money flowing to ongoing projects, he’s worried that could end abruptly once a sale goes through.

“How much can anyone outside rely on anyone’s word or intent within the bank right now?” he asked.

In an email, an FDIC representative would say only that Silicon Valley Bank is now a “full-service bridge bank,” meaning it’s still fully operational while seized by federal regulators.

Silicon Valley Bank has long been one of the region’s major financiers of affordable housing, committing $2.7 billion in loans and investments to build or rehab nearly 10,000 affordable housing units in the region between 2002 and 2021. The bank was also planning to invest more than $1 billion in residential mortgages in low- and moderate-income areas in Massachusetts and California by 2026.

Developers said if the bank ultimately decides to pull back its presence in the local affordable housing market, it could make it even harder to secure already scarce funding for low-income apartments, townhomes and supportive housing — at a time when the need has never been greater.

The Bay Area must add more than 180,000 affordable homes over the next eight years to keep up with demand, according to state officials.

“For a few decades now, Silicon Valley Bank has been a really great investor,” said Matt Franklin, chief executive of MidPen Housing in Foster City. “We’re worried and sad to see them potentially exiting the marketplace. That would mean less competition for our business.”

MidPen has three affordable projects that may be impacted by the failure. It’s vulnerable to losing up to $158 million in loans and investments, the latter of which the bank made through a federal tax credit program. But after assurances from bank officials, Franklin said the developer is moving “full steam ahead” with construction.

Those projects include the planned 108-unit Immanuel-Sobrato facility near San Jose City College for formerly homeless residents, a 135-unit teacher housing development in San Francisco and a 45-unit complex for people with developmental disabilities in Livermore.

Shortly after the collapse, Silicon Valley Bank also declined to move forward with financing a 50-unit affordable project in Petaluma being developed by Santa Rosa-based Burbank Housing. Burbank officials told the Bay Area News Group they’re “extremely confident” they will find a new loan. Burbank still has a loan from the bank for a 64-unit project under construction in Santa Rosa.

Despite the uncertainty, Silicon Valley Bank’s demise is spelling some good news for developers. The financial turmoil wrought by the collapse has pushed down the cost of financing projects, with interest rates on development loans dropping a full percent to around 4.5%, according to Schwartz.

Mortgage rates for homebuyers also dropped, sliding slightly to about 6.6% for a typical home loan Thursday, according to Freddie Mac.

And going forward, analysts expect the Federal Reserve could stop raising the federal funds rate in hopes of calming fears of a widespread financial meltdown, further keeping borrowing costs in check.

Connery with The Kelsey hopes to take advantage of the lower rates, but noted construction loans are only one piece of the funding puzzle for nonprofit developers. If the Bay Area hopes to add anywhere near enough affordable homes to solve its housing crisis, public officials must dedicate additional money to building them, she said.

“We need more funding for affordable housing, more vouchers for people who are extremely low-income and with disabilities, and more tax credits available to fund more low-income projects,” she said.

Short for the California Environmental Quality Act, the state’s landmark environmental protection law affects a wide range of land-use decisions, from which low-income apartments win approval to where oil well permits are issued.

Environmentalists and neighborhood groups champion the law as fundamental to preserving natural habitats and protecting public health. But developers and housing advocates have long maintained it is weaponized to kill or delay new home construction — exacerbating the state’s chronic housing shortage.

After a state court last month ruled UC Berkeley violated the five-decade-old statute in its plans to build student and homeless housing at People’s Park, familiar calls for CEQA reform made headlines and sparked renewed discussion in Sacramento.

Gov. Gavin Newsom blasted CEQA for allowing the state to be “held hostage by NIMBYs” and vowed to help change the law. Scott Wiener, a Democratic state senator from San Francisco, told the Bay Area News Group he plans to introduce a bill “to deal with the specific problems this court case has created.”

Major CEQA reform efforts haven’t gone far in the past, but the political landscape could be shifting. Wiener cited recent state laws exempting certain types of housing. He said court decisions like People’s Park are increasingly convincing lawmakers and the public that “maybe this is a deeper problem that needs a more structural fix.”

Here’s the history behind CEQA (pronounced “see-kwuh”) and what’s behind the latest fight over the state’s signature environmental law.

Q: What is CEQA, and why are people so mad about it?

A: Signed into law in 1970 by then-Gov. Ronald Reagan, CEQA requires public agencies to follow a complicated process for studying and disclosing how proposed projects could affect the environment and surrounding communities. In many cases, an agency must ensure plans address any “significant impacts” — from air quality and water supply to traffic.

Importantly — and controversially — the law also allows private residents and organizations to sue to force additional project analysis. Over the decades, state courts have issued rulings broadening the scope of the reviews. Sometimes, addressing the issues raised makes projects too expensive to continue.

Studies have found CEQA lawsuits are often filed by those seizing on precedent to stall multifamily housing projects. That can include environmental advocacy groups, competing developers, labor unions and residents concerned about new homes in their neighborhood.

Developers and housing advocates say the lengthy reviews and lawsuits often add crushing costs and delays. They contend CEQA, while well-intentioned, has become one of the main hurdles to building desperately needed homes for people of all incomes.

“It’s a lead weight around the ankle of an otherwise important endeavor,” said Louis Mirante, vice president of public policy with the pro-housing Bay Area Council.

Since its passage, CEQA lawsuits have popped up in nearly every corner of the Bay Area. Recently in Livermore, a lawsuit to stall a 130-unit affordable housing complex lost on appeal, but delayed the project.

Some environmentalists and neighborhood groups, citing their own studies, say those complaints are overblown. They argue the full scope of the law is necessary to ensure homes aren’t built in areas at high risk of wildfires and to limit gentrification, among other concerns.

“It’s an incredibly important moment and opportunity and place for informed decision-making and democratic engagement for how California is going to grow,” said Aruna Prabhala, an attorney with the Center for Biological Diversity.

Q: What happened with People’s Park?

A: The state appeals court sided with two nonprofit groups that argued UC officials didn’t adequately analyze how much noise could be caused by the roughly 1,100 students who would move into the project planned for the school’s historic public park.

While maintaining CEQA should not be used as a “redlining weapon by neighbors who oppose projects based on prejudice,” the judges decided the school ignored the impacts of “loud student parties in residential neighborhoods near the campus.”

The school plans to appeal the ruling to the California Supreme Court.

Housing advocates argue the decision could become exactly the “redlining weapon” the court warned against. To avoid similar lawsuits, advocates worry planning officials may start considering how specific groups of people — low-income residents, for example — could impact a local community.

Some CEQA backers are skeptical of such arguments by housing groups and politicians, accusing them of being beholden to powerful development interests with little concern for low-income residents and communities of color.

“Those who defend CEQA, who do they represent? And those who attack CEQA, who do they represent?” Prabhala asked.

Q: What reforms have occurred in the past? 

A: In recent years, state lawmakers have passed legislation that exempts some housing projects from CEQA, including certain types of affordable housing, student housing and homeless shelters.

But opponents can file lawsuits challenging whether those projects meet the often-strict standards for exemption. That’s a big part of why housing advocates argue CEQA needs to be fundamentally reformed.

“What is needed is a wholesale look at whether having it this easy to kill a project and set it back three years can be maintained as a general rule,” said Daniel Golub, a real estate attorney with San Francisco-based Holland and Knight.

Q: What could happen next?

A: This isn’t the first time Wiener has introduced a CEQA bill. Last year, he pushed for successful legislation exempting student housing from CEQA, partly in response to a separate lawsuit filed against UC Berkeley.

That lawsuit attempted to limit how many students the university could enroll each year, putting the People’s Park project in jeopardy. The project isn’t exempt from CEQA because it started before the student housing bill passed, and is also a historical site.

Wiener declined to go into specifics on his upcoming legislation. But he said it could afford new protections for many types of housing development.

“It’s not a narrow bill,” he said. “Let’s put it that way.”

Many experts and officials say constructing more homes — and a lot of them — is the only way to meet the region’s increasingly dire housing needs for people of all incomes.

Between now and 2031, state regulators are insisting the Bay Area add over 441,000 new homes of all kinds — a roughly 15% increase in the region’s total housing stock.

“The homelessness crisis that’s confronting many people is the clearest evidence of the fact that there’s a shortage of housing,” said Daniel Saver, an assistant director with the Association of Bay Area Governments, a regional agency that helps set local housing goals.

Every eight years since 1969, California has required cities and counties to submit detailed plans for how they would accommodate a specific number of homes across a range of affordability levels. But during recent housing cycles, most local governments haven’t come close to hitting their low- and middle-income homebuilding targets. Meanwhile, rents and home prices in the Bay Area exploded, stoked by the region’s rapidly growing economy and a flood of new high-paying jobs.

To reverse that trend, state officials and housing advocates have made clear they intend to hold cities and counties accountable for their new homebuilding goals. And local governments are already feeling the repercussions.

Here’s what’s behind the push to build significantly more apartments, condos and single-family homes across the Bay Area, and how officials and experts believe the region should follow through on that effort.

“We’re playing a large game of musical chairs,” said Louis Mirante, vice president of public policy at the pro-business group Bay Area Council. “When you have 10 people who want to live in a city, and you only have nine chairs, the competition … is only going to get steeper and steeper.”

How did the state come up with the new homebuilding target?

State regulators set the Bay Area’s homebuilding target of 441,000 new units based on a complicated formula meant to determine how much more housing is needed for the region’s current and future population. The Association of Bay Area Governments then divvied up that number among local cities and counties.

Ahead of the current housing cycle, which started Feb. 1, state lawmakers passed legislation that doubled the Bay Area’s total goal compared to the previous eight years. Specifically, the increase was required to account for the number of people living in overcrowded homes, which experts agree has been exacerbated by a severe shortage of affordably priced housing.

That, in turn, has boosted how many homes most local governments must prepare for in housing plans dubbed “housing elements.” The bulk of the new homes are set for the region’s population centers near jobs and transportation — including in San Jose, Oakland and San Francisco. But suburban and rural areas also must plan for more housing.

What happens to cities and counties that fail to plan for enough homes?

The state has launched new housing enforcement teams, and is threatening fines, withholding affordable housing funding and the loss of permitting authority for local governments that skirt their housing responsibilities.

Housing advocates have also sued 11 local cities and Santa Clara County for failing to submit adopted housing element plans to the state by a Jan. 31 deadline. One of the goals of the lawsuits is to ensure those jurisdictions are subject to the so-called “builder’s remedy” — a provision in state housing law that could enable developers to override local zoning rules and push through projects of virtually any size in areas without a state-approved housing plan.

As of Tuesday afternoon, just 38 of the region’s 109 cities and counties had submitted adopted plans. And only four of those plans — from San Francisco, Emeryville, San Leandro and the city of Alameda — had received final approval from the state.

What about strains on water infrastructure, traffic impacts and wildfire risk?

Planning officials and experts say that by focusing new housing in areas with existing water infrastructure, cities can manage concerns about sewer capacity and drought. But the region must also bolster water conservation technology in homes while finding sustainable ways to increase supply.

As for traffic, plans to build housing near transportation hubs should reduce congestion, as well as greenhouse emissions, officials and experts say. And prioritizing denser housing in city centers means less sprawl into high-fire-risk areas. But with large Bay Area cities among the slowest to recover from the pandemic anywhere in the country, concerns remain about how many people will want to move to those urban areas.

Isn’t the Bay Area’s population shrinking? Do we really need more homes?

Experts and advocates say the fact that the Bay Area’s population shrunk by around 2.5% between 2020 and 2021 could actually be evidence the region should be building more housing, not less. They argue that the high cost of housing is among the main reasons people are picking up and leaving. And the best way to bring down costs? Add more homes for people of all incomes.

How many homes did the Bay Area build in the last housing cycle?

Between 2015 and 2023, the Bay Area permitted about 190,000 units, according to state housing data. While the region soared past its goal for residents with “above-moderate” incomes, it approved just 44,000 homes for low- or middle-income residents, well under half the combined target for those groups.

How many affordable homes does the region have to plan for?

The Bay Area must plan for over 180,000 homes for people with low or very-low incomes. That comes to 41% of the region’s total goal. In Santa Clara County, for example, a low income is defined as less than $101,100 a year for a family of four. A very-low income is less than $84,250 for a family of the same size.

How can the Bay Area make sure it meets its housing targets?

Experts and advocates have long maintained cities must reform the often years-long planning and approval process for new housing, which can add crushing costs to affordable and market-rate homes. They also want to see local zoning rules relaxed to allow denser housing in more areas.

And to boost chronically underfunded affordable housing? Advocates and officials are working toward bringing an unprecedented Bay Area affordable housing bond worth up to $20 billion before voters in 2024.