Regulation bottlenecks impede state’s infrastructure grants
by Sarah Downey | June 26, 2025
Editor’s Note: While the Free Cities Center advocates for regulations that encourage market-rate construction rather than affordable-housing subsidies, it’s useful to look at the status of the myriad grant programs that the state government is offering—and the regulatory obstacles that impede even publicly funded housing projects.
As California debates allocating more subsidies for affordable-housing goals, many local governments—often with several viable developments in the pipeline—are still waiting on funds that would help get them all the way across the finish line.
A recent video from the San Francisco Mayor’s Office states the Balboa Reservoir mixed-use development is now on track, while the city’s new PermitSF program is also designed to speed up approvals for commercial and residential properties.
Though it’s not yet clear if the long-awaited Balboa Reservoir groundbreaking will take place by the June deadline, which had been a stipulation for receiving millions in state and federal subsidies, the project also has received additional gap funding to ensure it keeps on schedule.
And in Sacramento—residential leasing has just started at the extensive infill Railyards redevelopment, which has earned accolades from the American Planning Association.
Even with grant money, completing projects still can be difficult. In Vallejo, long delays for a Project Homekey development on Broadway almost derailed it, and the city voted to come through with bailout funds. Meanwhile, Berkeley has floated diverting funds designated for affordable housing to balance the city’s budget.
Long delays to get housing built have been prevalent across the state. A recent RAND study found it costs roughly double and takes 22 months longer to build new multifamily housing in California compared to Texas and Colorado.
And a recent Legislative Analyst Office report, which estimates that the state spent $37 billion on housing and homelessness since 2019, recommends restraint on additional encampment resolution grants until more program data is reported by the California Department of Housing and Community Development (HCD). Gov. Gavin Newsom proposedchanges to homelessness and affordable-housing programs in the May 2025 revised budget to make such construction less cumbersome.
In another effort to streamline the process, local officials from the Bay Area to western Riverside County are making use of an objective design standards toolkit, as directed by state law.
While the city of Riverside has received funding as part of its pro-housing designation from the state, it is still tough to fully lean in with so much competition from other regions. The Western Riverside Council of Governments (WRCOG) has produced progress maps for its part of the Inland Empire, where more “missing middle” housing—medium-density housing that falls between single-family houses and large apartment buildings—can get built in California.
“We see affordable housing projects moving forward in many of our jurisdictions including Corona, Jurupa Valley, city of Riverside, Moreno Valley, Lake Elsinore, Murietta and Temecula,” Chris Gray, the deputy executive director for WRCOG, told the Free Cities Center by email.
However, as the state has been allocating much more money to other areas, the California Housing Partnership shows the amount to Riverside has decreased.
© WRCOG Affordable Housing Pipeline (LINK)
“(T)he state imposes a significant number of regulations on affordable housing,” Gray added. “A market rate apartment in our region might cost $400K to build including materials, labor, land, developer fees and other costs. An affordable-housing unit in our region costs an average of $700-$800K, more than doubling that cost. I realize that many state regulations and policies are well intended but it should be looking at the cumulative impact of these regulations and seeing how difficult they make it for affordable housing developers.”
The county housing authority was instrumental in securing necessary funding for Rancho Los Bolsas in Temecula. The first occupants of Tres Lagos Apartments in Wildomar are expected to move in later this year. The WRCOG maps show more housing opportunities aren’t so far off. National Community Renaissance (National CORE) expects to finish Phase One of Oak View Ranch in Murietta this spring. The wait list for the 119 available units is already full. An occupancy date for the new Vine Creek Apartments in Temecula isn’t yet known.
The state has made any higher-density infill a priority, with a number of grants that aim for healthy communities. Mulberry Gardens in Riverside, for example, recently broke ground on a former office building site. There are other ways the state can facilitate the construction of affordable housing.
“(T)he State should be actively working with private industry to encourage the use of new building techniques like pre-fabricated or manufactured homes, 3D printing and other cutting-edge technologies which have the potential to significantly reduce the cost of new units,” Gray said. “I believe that we have some real opportunities for the state to take a leadership position in these areas and encourage/facilitate rather than regulate.”
Pointing to the “significant gap between the price of homes and the incomes in our region,” Gray added that state officials should “ask how they could help rather than continue to impose additional regulations.” Having honest conversations with affordable-housing developers to learn what they need could help boost housing supply across the board.
