Good-governance gag order: Housing authority, Region Builders at loggerheads over ‘conflict of interest’ rule

The local agency responsible for bringing more affordable housing to Sacramento is under fire from Region Builders, one of the most powerful developers’ associations around the Capitol. At issue is a policy proposal that housing officials say would keep big-time builders from exerting improper influence on Sacramento’s council members and supervisors.

Region Builders calls the proposal an illegal, overly-bureaucratic growth-killer that will make the city’s housing crisis even worse.

Elected officials will have to make their own decision on the policy at the start of 2018.

Meanwhile, there is a dark cloud on the horizon that housing officials and developers generally agree about: If the U.S. House of Representatives’ version of the Republicans’ tax bill passes, most affordable housing projects in California will be dead in the water anyway.

Clash of the titans

The latest dust-up in the region’s ongoing housing saga came in late October: The Sacramento Housing and Redevelopment Agency—a joint powers authority tasked with bringing low-income living units to the county—was updating its Multifamily Lending and Mortgage Bond policies. The MLMB programs offer interest-free tax incentives that help developers make affordable housing projects pencil out. SHRA had been directed to revisit the program by the City Council.

In January, the agency began holding workshops to get input from the public. By October, its staff had released an updated draft of proposed changes to the lending policy. In a section of the rules titled “Conflict of Interest / Communication with Governing Bodies,” the revamped policy reads, “Once a full application has been submitted and accepted, the applicant, including their team members, may not contact members of the Sacramento City Council, City staff, Board of Supervisors County staff, Housing Authority boards, SHRA commissioners or consultants retained by SHRA regarding the application.”

The section adds, “SHRA staff may invite the applicant to meet with those listed above as part of the review process. Once underwriting is complete and staff recommendation for financing is finalized, the applicant is free to contact the above-listed individuals or groups.”

Region Builders, a politically muscular trade association of developers, contractors, architects and engineers, took immediate notice. Headed by Joshua Wood, who has cultivated an image as as a lobbying force of nature and self-annointed “smiling assassin,” Region Builders made headlines in 2013 by publicly unmasking Seattle billionaire Chris Hansen as the secret Daddy Warbucks of the effort to block construction of the Golden 1 Center. Wood used the levers of public information law in a way that would make most investigative journalists jealous, eventually proving that Hansen—who wanted to bring the Kings to the Pacific Northwest—had covertly funneled $100,000 to local activists circulating an anti-arena referendum. This big reveal hit public perception like a torpedo, helping pave the way for the arena’s construction downtown.

On October 25, Wood set his sights on SHRA, firing off a letter on behalf of Region Builders to council members, county supervisors and media. In it, Wood called the new conflict of interest clause “a grotesque overreach” and “clearly unconstitutional.” He went on to predict that the move would only intensify Sacramento’s affordable housing crisis.

Wood stood by those statements in an interview with SN&R this week, saying that SHRA is an agency that’s so dysfunctional and self-concerned that developers are often forced to bypass it to get to elected officials in order to get things done. He characterized the proposal as SHRA’s way of “silencing its critics.” And, Wood stressed, there is a bigger issue at play.

“It’s a normal part of the political process,” Wood said of developers communicating with elected officials. “If a council member has questions about a development project that’s being built in their district, now the developer can’t talk to that council member in order to give them updates? Now that elected official can’t make sure their constituents’ voices are being heard? That’s not a rational process. It’s ridiculous, it’s egregious and we’re going to sue them if they go through with it.”

SHRA Executive Director La Shelle Dozier countered that the motive behind her agency’s proposed rule is straightforward.

“We’re always looking at our policies to make sure they are transparent and providing an equal playing field for anyone applying for funding, so there’s not any undo influences or someone who has an advantage over someone else,” Dozier told SN&R. “I think it’s premature for anyone to say we’re trying to block their right to have due process.”

Broader thunderheads

Dozier hasn’t had a lot of time to worry about Wood’s condemnation, though. That’s because if the House version of the federal tax overhaul passes, the whole debate could largely be moot. Unlike their counterparts in the Senate, and House Republicans want to eliminate tax-exempt private activity bonds, a core part of strategies like Sacramento’s MLMB program. Dozier told SN&R that the head of almost every housing authority in the nation, including hers, is furiously making phone calls to Capitol Hill to try to head off that possibility as lawmakers reconcile the Senate and House proposals.

“Those tax credits are the main driver to get affordable housing done,” Dozier emphasized. “If they go, it leaves a huge hole in local funding that no other source could fill.”

That warning was strongly echoed by North San Francisco Assemblyman David Chiu, who recently issued a statement calling the tax plan from his Republican colleagues in the House “a catastrophe” for affordable housing.

On this point, Wood and Region Builders agree.

“I think there is a lack of understanding about how affordable housing financing actually works,” Wood said. “If the Republicans in Congress make that change, it will take away one of the main tools in the toolbox to make those projects a reality. Everyone deserves to have a place that they can afford to live in. There’s a lot of waste in government—but this is not waste.”