Newsom walks back plan to withhold dollars from cities that don’t meet housing goals

Governor Gavin Newsom is pulling back on one of his most radical solutions to the state’s growing housing crisis.

On his third day in office, Newsom said he planned to withhold state transportation dollars from municipalities that fail to hit state-sanctioned housing goals. He’s now shelving that plan for at least four years, according to the Los Angeles Times.

It took just two months for enough political pressure to build against the idea for the new governor to rethink it, in a state that is suffering under a housing shortage.

Many of Newsom’s fellow Democrats in Sacramento were not fans of the strategy because the governor wanted to withhold funds from a hard-fought gas tax increase.

He announced his decision Monday, while unveiling a bill to earmark $750 million to help municipalities plan for more housing. Two-thirds of the money is for payments to municipalities that have demonstrated progress toward increasing housing production, to be awarded by the Department of Housing and Community Development.

Instead of penalizing municipalities for failing to meet goals, the state will now reward them for meeting those goals.

On the campaign trail, Newsom made hefty promises to tackle the state’s housing crisis, and in his first weeks in office, he announced the state would launch the “Marshall Plan for affordable housing.”

In January, he announced a plan to boost the pool of funds for workforce housing with $500 million in low-interest loans from deep-pocketed Silicon valley tech companies. [LAT] —Dennis Lynch