The lack of affordable housing in the U.S. is one of the most intractable problems facing communities across the country, one that draws ample attention, but without generating solutions. In California, where approximately 28% of the U.S.'s unhoused population (181,000 people) live, a new pathway toward affordable housing exists after the passage of new laws meant to make the construction of such units easier and quicker. One law in particular, designated SB 4 and sometimes known as the Affordable Housing on Faith Lands Act, was signed into law back in November and allows religious institutions and nonprofit colleges to now build affordable housing on their own land while streamlining procedures that typically slowed such construction to a multi-year crawl.
Because stable housing, whether rented or owned, is a pathway out of poverty and a ladder into the middle class, SB 4 has potential ripple effects for the entire nonprofit sector. To get an idea of how deep the housing problem runs, consider that in 2022 new single-family residences were, on average, twice as expensive as typical U.S. families could afford. Government rent assistance in the form of the Housing Choice Voucher Program, also known as Section 8, is currently accessed by 2.3 million families and has grown budgetarily nearly 20% in the last two years alone.
SB 4 aims to get housing up fast. It removes the requirement for certain reviews, as well as zoning and variance obligations. But important restrictions remain. The property slated for development must be in an urbanized area, can't be on an environmentally sensitive site, can't bring about the demolition of rental housing or be placed on a site where rental housing has been demolished within the last ten years, and can't be located within 3,200 feet of oil or gas extraction or refinery facilities. An estimated 76% of property owned by California religious institutions and nonprofit colleges—an area almost five times as large as the city of Oakland—is potentially eligible for SB 4 development. Within the compact city limits of San Francisco, as many as 80 acres of land may be available.
SB 4 also contains provisions requiring the developers of the housing to be nonprofit corporations, limited partnerships in which managing general partners are nonprofit corporations, or limited liability companies in which managing members are nonprofits. Workers on these projects must be paid prevailing wages, and, on projects of more than fifty homes, workers and their dependents must be offered healthcare.
Religious institutions and nonprofits across Southern California have teamed up to take advantage of the new legal landscape. In San Diego, a group called YIGBY (Yes In God's Back Yard) is building affordable housing on a 7,000 square foot plot it owns, the non-denominational Jewish group Ikar is planning to add affordable units to a headquarters expansion in central Los Angeles, and the Neighborhood Congregational Church is proposing housing in Laguna Beach.
Joining these ranks is the Archdiocese of Los Angeles, the largest organization of its type in the U.S., with 288 parishes and more than 250 schools. It's partnering with the nonprofit Our Lady Queen of Angels Housing Alliance to open six stories of housing near Los Angeles City College for community college attendees and former foster care youth. Twenty-five percent of the latter group experience unhoused conditions in their teens or early twenties. According to the nonprofit Los Angeles news website LAist, the Archdiocese has indicated that housing will be a growing part of its charitable mission.
SB 4 has inevitably generated resistance. Such resistance—the dreaded “nimby” (not in my backyard) effect—arises not only from lack of compassion but also from financial pragmatism. Real estate is the way most Americans have a chance to build wealth. Those who own property find themselves inside a construct in which solving housing issues is subordinated to the various industries orbiting the market itself. Insurance companies and banks value property based partly on what is located near it. The public perception is that low-income housing drags down adjacent property values.
Another barrier to affordable housing is commercial real estate companies that progressively freeze ordinary people out of rental and ownership due to price increases. In recent years, big investment firms like Avanath and Blackstone have gravitated toward low-cost housing, and for the most pragmatic of reasons—as a consistently needed yet inadequately available resource, it's incredibly lucrative. Yet their pricing practices contribute to housing scarcity. In Southern California, from 2018 to 2022 the average median price of detached homes went up 46.3%, which is a rate of increase that few people can pace. Unhoused people are caught in a complex web of economics, insurance, zoning, profit-seeking, public perception, and homeowner aspirations to build equity and security.
But what most homeowners probably haven't considered is that churches own large amounts of land that is itself unhelpful to adjacent real estate values, such as parking lots, closed buildings, and neglected open land within urban environments. Some churches don't even know precisely what they own. SB 4, at the least, may encourage church leaders to take a closer look at their holdings and consider how such property could be put to better use.
California's housing situation is routinely referred to as a crisis. It's certainly an area in which the nonprofit community performs a substantial percentage of its work. SB 4 looks on paper as if it could boost efforts to mitigate the problem and create positive social impact community wide. Other states where homelessness is a serious problem—and that would be nearly all of them—will likely be paying attention to results in California, but only time will tell whether SB 4 is ultimately deemed a solution, a stepping stone toward a better idea, or something that requires a rewrite due to unintended consequences. In any case, at least some people in need will benefit.