John Moorlach: Sacramento has no clue how to solve housing crisis

Sacramento just doesn’t get it. A housing crisis is not solved with new fees, bonds and local government process overrides.

Let’s talk about housing. KQED provides some of the gory details in a recent piece. But, allow me to elaborate. A quick tip, KQED provides the last act first.

For Senate Bill 3 (and 5), I provided the following abbreviated concerns on the Senate Floor:

  1. Let’s review the housing market over the last 11 years. In Orange County, the median price for a home in 1996 was $221,800. Ten years later, after the subprime mortgage boom (for fun, watch “The Big Short”), the median rose to $739,000. With the Great Recession, the median went down to $498,200 in 2011. And, as of June 2017, it is back to $734,200.
  2. Why the recent resurgence?
    • A slow, but steady rise in job growth.
    • Foreign investors. They came in at the market low as a safe haven.
    • Explaining an increase of all-cash transactions; more than 50% in 2013.
    • This has caused a decrease in home ownership and more renters.
    • Difficulty for developers to obtain entitlements and to build.
    • The other usual suspects, like NIMBYism, CEQA and open space demands.
    • For those lucky enough, try working with the California Coastal Commission.

It makes you wonder, what has Sacramento done to address foreign buyers and entitlement restrictions? And, I can see now why SB 714 (Newman) was removed from the calendar this last week, as it doubles down on taking entitled property for building new homes in the city of Brea and requiring total open space. Boy, this bill was so out of touch, the Democrats had to save the author from himself.  But, I digress.

  1. What is the current dilemma?
    • Americans find the home buying process too overwhelming.
    • They find it too difficult to come up with the down payment.
    • More than other generations, millennials value experiences over ownership.
    • Americans change jobs more often than in previous generations.

With SB 2, Sacramento will be adding to the burdens. Within minutes, the Democrats also voted for AB 166 (Salas), which provides exemptions from the new SB 2 fees. You can’t make this stuff up. And those who qualify are not those going through a foreclosure!

Then I warned them about issuing more debt by sharing the following disturbing data from Moody’s Investors Service. Among the 10 largest states in the nation, California joins Illinois and New York as the three worst in all of the following categories:

  1. Debt to personal income – 4.70%, when the median for all states is 2.50%.
  2. Debt per capita – $2,323, when the median is $1,025.
  3. Debt as a percentage of state GDP – 3.94%, when the median is 2.21%

And the state’s own bond credit rating is a measly AA-, just above Illinois, at BBB+. This means that California will be paying higher interest rates than issuing states with top credit ratings.

If this wasn’t enough of a reason to vote against the bond measures, I also gave a lecture on future budget and balance sheet concerns – a “what’s up?” listing:

  1. A $4 billion bond translates into $225 million per year in payments! Where will this come from?  The Senate approved two such bond bills on Friday.
  2. The annual contributions for CalPERS and CalSTRS are also rising.
  3. The Proposition 98 school funding threshold into the General Fund is also rising.
  4. The minimum wage is rising and will impact the budget by $4 billion per year.
  5. The recent voter approved $9 billion bond for school improvements will impact the General Fund by $500 million per year (no wonder the Governor hasn’t released any tranches).

What does all this mean? In a few short years, the General Fund is screwed. But I put it more politely on the Senate floor, stating that “it will be dramatically impacted. Good luck with that.”

Sacramento so much wants California to be like other blue states that are heading for the fiscal precipice, such as Connecticut, Illinois and New York. And quickly. But, this is the wrong race to be in.

You can bet the governor will sign these bills and the monopoly party will pat themselves on the back for once again dealing with a problem with inappropriate solutions. Tragic.

California’s Next Climate Policy That Won’t Help

Global WarmingYou wouldn’t expect a document titled “Vibrant Communities and Landscapes” to make so many people this angry.

“We are writing to express our concern and dismay over the draft ‘Vibrant Communities’ document,” wrote the Los Angeles County Business Federation (BizFed) on behalf of more than 163 business groups, 325,000 employers and 3 million jobs.

“Radical and without precedent in California public policy,” wrote Michael Lewis, senior VP of the Construction Industry Air Quality Coalition (CIAQC).

These comments were sent to Ken Alex, director of the Governor’s Office of Planning and Research, on Sept. 28. That was the final day of the public comment period for the draft of “Vibrant Communities and Landscapes.” It was only two weeks long.

“We strongly object to this inadequate amount of time to process a piece of policy this large and its potential impacts on the business community across not only L.A. County but the entire state,” wrote BizFed.

“We recommend that the document be scrapped,” wrote Lewis.

The “Vibrant Communities” document has cheerful photos of redwoods and sunflowers on the cover, but inside is a five-page plan to “consider land use in the context of California’s climate change policy,” and to ensure “that all Californians have equitable access to housing, health care, jobs, and opportunity.“

What does that mean, exactly?

According to the CIAQC, it’s “a new set of policies to govern every aspect of land use, transportation and air quality planning in California” written by eight state agencies without adhering to legally required procedures for new regulations.

The plan calls for policies that would allow new developments in previously-developed areas while discouraging “conversion” of open land. It envisions toll lanes (“priced express lanes”), fewer parking spaces (“reduced parking requirements for development”), and incentives for using transit in order to reduce “vehicle miles traveled” (VMT).

Driving, it seems, is the enemy of vibrancy.

But how is the government going to control how much people drive?

The answer can be found in a document released by the Governor’s Office of Planning and Research last January. Thrillingly titled, “Revised Proposal on Updates to the CEQA Guidelines on Evaluating Transportation Impacts in CEQA,” the guidelines replace concerns about a project’s impact on traffic speed with calculations about the number and distance of vehicle trips it would generate. …

Click here to read the full article published by the L.A. Daily News

Special Transportation Session Stuck in Legislative Gridlock

road_blockMuch like much of the state’s traffic, the legislative special session on transportation/infrastructure is stuck in gridlock. Democratic legislators have a plan to provide $7.5 billion a year in new tax revenue. The governor’s plan also includes tax increases. Republicans want to use current tax revenue more efficiently, cap and trade funds for roads or direct some of the road related monies like truck weight fees directly into road improvements. Neither side budges.

Could this gridlock be altered by the results of November’s elections?

If the Democrats secure the two-thirds majority that would allow them to raise taxes without Republican support, then its game over, right? The Democrats will pass a tax increase and the governor will sign it.

Not necessarily.

While many Democrats are happy to blame the Republicans for the gridlock over the special session because the GOP won’t okay taxes, the scolding Democrats conveniently overlook a good portion of their own caucus, which is wary of raising gasoline taxes on constituents.

Recall that the piece dropped from the controversial SB 350 last year had to do with cutting gasoline use, which in turn would have increased gas prices, something Democrats particularly representing poorer or inner valley areas of the state did not want to do. Raising gas taxes will also add to the cost of gasoline.

Given the demands of voters to relieve gridlock on roads, the advocacy of the business community to spark the economy with a better transportation system, and the support of labor forces to get good construction jobs, you would think a compromise would be attainable.

But environmentalists and public unions don’t want to give on CEQA reform or restructuring CalTrans as some Republicans have suggested, and Republican legislators are concerned about a backlash if they raise taxes.

In the meantime, there are discussions about the possibility of a ballot initiative backed by the business community modeled after the school-funding plan, Proposition 98, which would dedicate money to transportation infrastructure and the roads.

If nothing comes out of the special session soon, other forces could attempt to deal with this crucial issue.

Originally published by Fox and Hounds Daily

Proposition 54 and the “We Can Do Whatever We Want Act”

TransparencyAmid the ballot initiatives gifting Californians with a 200-plus page voter guide is at least one sensible idea. Proposition 54 targets “gut and amend” (Ganda) bills, which are diametrically opposed to responsible legislative deliberation.

Ganda legislation takes “how a bill becomes law” civics book descriptions, then adds “not” at the beginning. In the race to beat the legislative end-of-session deadline, power brokers take bills that have cleared most legislative hurdles and replace them with completely different bills. Then they rush them through the minimal scrutiny of the last-minute frenzy (e.g., with multiple committee hearings in a single room in an hour).

This year’s appropriation of nearly $1 billion in pollution fee money is one example. Earlier illustrations include transforming a Silverlake Reservoir bill into requiring that gun buyback programs test weapons for criminal involvement (2014), California Environmental Quality Act exemptions for housing projects into increased alternative vehicle technology funding (2013), and pension reform into a fire prevention fee repeal (2012). The last three weeks of 2011’s session included 48 Ganda bills (my favorite: morphing a measure allowing tuberculosis information disclosure into one preventing local government bans of project labor agreements).

Unfortunately, bills sensible enough to command sufficient consensus can pass in daylight. Only legislation failing that test requires Ganda evasions.

That is what Proposition 54 addresses. It would require any bill to be both in print and available on the internet 72 hours before it could be enacted (with a ‘public emergency” escape clause). It would also intensify the sunlight on the sausage-making by mandatory videotaping of all public meetings, to be posted online within 24 hours, and by allowing any citizen to record any public meeting and use it without restriction.

Despite Proposition 54’s potential to protect Californians from legislative back-room bullying, it has opponents, particularly among power brokers. One rebuttal is, in essence, that despite missing deadlines or failing to get approval, sometimes legislatures “just need to act.” But that is not a reason; it simply assumes its conclusion — the powerful must be allowed to circumvent the rules whenever they decide it is necessary. That is why the Democratic Party opposes Proposition 54 with a preposterous rhetorical Ganda, twisting its protections against unwarranted legislative abuses into a claim that it would better allow “special interests” (i.e., those targeted for harm to fund legislative presents for others) to “block timely legislative action.”

The core problem is that for Ganda bills to benefit Californians requires several false things to be true.

The bill would have to be the Legislature’s business. Unfortunately, despite injecting itself everywhere, very little legislation can actually advance our general welfare. Benefiting some at others’ expense is another matter, but such bills deserve destruction, not greasing through.

Only the Legislature must be competent to deal with the issue. Where people can work things out for themselves, no legislation is needed, except repeal of what prevents voluntary private solutions. Those lauded by politicians for their wisdom during campaigns deserve the power to use it in their own affairs.

The problem must be too urgent to wait for ensuing terms. The sponsor must know how to implement an efficient and equitable solution. It must also come as a sudden surprise. But it is laughable to think of our legislators quickly developing real solutions to serious problems unrecognized just weeks before, and still needing to sneak them through.

Gut and amend survives only because it lets urgency insulate legislators from accountability. Capitol power brokers may “need” it for their purposes, but it harms citizens. That is why eliminating Ganda is important and also why all such legislative attempts have been killed. Proposition 54, which the legislature would morph into the “We Can Do Whatever We Want Act” at the last minute, given the chance, deserves support, in order to take such chances away.

Gary M. Galles is a professor of economics at Pepperdine University, a research fellow at the Independent Institute, adjunct scholar at the Ludwig von Mises Institute, and member of the FEE faculty network. His most recent books are Faulty Premises, Faulty Policies (2014) and Lines of Liberty (2016) 

In Search of a Legitimate Labor Movement

UnionSarah has worked for a major grocery store chain for the past 25 years. Adjusting for inflation, she makes less now than she did over a decade ago, especially since her hours were cut in order for her employer to avoid being required to offer her health insurance. Even more difficult, she is “on call” most of the week, without a reliable schedule, which makes it impossible for her to take on a 2nd part time job to help make ends meet. Including benefits, Sarah is lucky to make $30,000 per year. Now in her early 50s, she will need to work for as long as there is strength left in her body to do the job.

George works for a fire department serving an affluent suburb on the California coast. Taking into account the vacation time he earns as a 25 year veteran, he works less than two 24 hour shifts per week before qualifying for overtime. Since five-day weekends are overkill, he often works one or two extra shifts a week, doubling his pay. When he goes on calls, 98 percent of the time they are medical emergencies, not fires. Including moderate amounts of overtime and the employer’s payments for his benefits, George makes about $250,000 per year. Now in his early 50s, he will retire in a year or two and collect a pension and health benefits package worth well over $100,000 per year.

Both of these individuals are hard working, honest and conscientious. Both of them perform jobs that have a vital role to play in our society. Both of them deserve to be treated with dignity and respect. Neither of them wrote the rules. And both of them are represented by unions.

While these individuals and the work they do is beyond reproach, the unions that represent them leave much to be desired. In Sarah’s case, typical of tens of millions of private sector workers, the unions who represent her have ignored economic reality in pursuit of ideological fantasies. Almost universally, to cite a particularly wounding example, these private sector unions have supported immigration policies that increase the supply of semi-skilled workers who compete with Sarah for work hours. Also common are the pragmatic alliances these unions form with extreme environmentalist organizations who have bottled up development of land and energy, driving the cost of living beyond the reach of an ordinary worker. One may cogitate endlessly over what constitutes optimal and humane policies with respect to immigration and the environment. But to agitate for higher wages and benefits in a society awash in cheap labor and artificially inflated costs for basic necessities is a fool’s errand.

In George’s case, which is equally typical, at least in California, the unions that represent him should not even be permitted to exist. Associations of government workers who engage in collective bargaining are not unions in any traditional sense of the word. They elect their own bosses, they take money from taxpayers instead of competing for consumer spending, and they operate the machinery of government which lets them intimidate or co-opt any special interest that might oppose them. They have priced normal government services beyond the capacity of ordinary taxpayers, and bred cynicism about government into the heart of any financially literate American. And government unions have even less interest than private unions in acknowledging the complexity of issues such as immigration or environmentalist overreach. In both cases, policies that harm the aspirations of private workers have the opposite effect on them, enhancing their job security.

A legitimate labor movement is easy to justify in the abstract. If not unions, what sort of movement will speak for ordinary workers in an era when jobs are being relentlessly automated, global competition is tougher than ever, and the cost of living is punitive? What sort of movement can speak for ordinary workers if, along with these challenges, the nation is gripped by a deep recession brought on because interest rates can’t go any lower and stimulative debt can’t go any higher?

The reality today is that much of America’s labor movement has gone astray. Private sector unions often put ideological goals ahead of the economic interests of their members. And public sector unions, which are not unions in any traditional sense of the word, and which represent the economic interests of their members all too well, are an abomination. They have corrupted our democracy, they are a corrupting influence on government workers because they have exempted them from the economic challenges facing private American workers, they are driving our governments at all levels towards authoritarianism, they are bankrupting our cities and counties and states, and the pension funds they control epitomize the most corrupt elements of America’s grotesquely overbuilt financial sector. Maybe what would remain after abolition, still very powerful voluntary associations, could start fighting for CEQA reform, for example, to benefit all workers instead of just themselves. Before unions infested our governments, that’s what public service meant.

Envisioning exactly how the labor movement might best operate in the interests of the American worker is difficult but necessary. It requires balancing libertarian and mixed-capitalist economic world views. But two reforms would be a very good start. First, outlaw collective bargaining in the public sector. Second, the leaders of the private sector labor movement need to starting caring more about American workers, and less about their elitist ideological fantasies.

*  *  *

Ed Ring is the executive director of the California Policy Center.

High-Speed Rail Takes Two More Swipes at CEQA

In his 2013 State of the State address, Gov. Jerry Brown quoted “The Little Engine That Could”: “I think I can. I think I can.”

One thing the California High-Speed Rail Authority, which runs the project, thinks it can do is get around the California Environmental Quality Act. As noted in the first article in this series, it started with two attempts:

  • Attempt 1: During the California Legislature’s closing days in August 2012, the CHSRA tried to pass more lenient measures to comply with CEQA. The Legislature didn’t cooperate.
  • Attempt 2: In June 2013, the CHSRA filed a request with the 3rd District Court of Appeal in the city of Atherton’s suit against the project. The CHSRA wanted the court to recognize the federal pre-emption of jurisdiction, getting around state laws, such as CEQA. The court refused.

Attempt 3

Attempt 3: De-publication. Now, in its third attempt to get around CEQA, on Sept. 22 California Attorney General Kamala Harris asked the California Supreme Court for the de-publication of the 3rd District’s decision in the Atherton case. If granted, it would have meant future cases would have been restricted in using this case for precedent. Harris is representing the CHSRA.   

Basically, what Harris and the CHSRA said was that, regardless of the language in Proposition 1A in 2008, they instead wanted to put the project into federal jurisdiction. And that, any interpretation to the contrary, such as that by the 3rd District Court of Appeal, had “misinterpreted” those facts, and ought to be de-published.

De-publication would have offered a quick way to minimize the damage of the 3rd District Court of Appeal’s decision. If the Supreme Court had agreed to de-publish the decision, it would have blocked that decision from being used as a precedent for other cases.

Stuart Flashman, an attorney for Kings County and two residents who have brought suit to stop the project, filed a brief against the de-publication, arguing:

“If the Attorney General wished to press these points, her proper recourse was to petition for review, and the other agencies could have supported review….

“If the parties seeking de-publication feel that major state transportation projects should not be subject to CEQA review, that argument should be addressed to the Legislature, which clearly knows how to exempt classes of projects from CEQA review when it feels such exemption is warranted.”

On Oct. 29, the Supreme Court denied the de-publication request. Therefore, the 3rd District Court of Appeal’s decision is now final and conclusive.

Attempt 4

Attempt 4: the Surface Transportation Board. Private attorneys Nossaman LLP have a $17 million contract to represent the CHSRA. An Oct. 9 petition by Nossaman asked for declaratory relief, that is, an official declaration of the status of a matter in controversy to expedite a court case.

In this case, the CHSRA is specifically asking the STB to take off the table any request for a injunction against construction for any party suing under CEQA. The CHSRA want federal laws to preempt state laws.

(The STB is a federal agency under the Department of Transportation. A year ago, on Dec. 3, 2013, the STB declared it held federal jurisdiction because California’s tracks would also be used by Amtrak; and the tracks cross state lines.)

The CHSRA wants to prevent the chance of a construction injunction being granted for a Central Valley case represented by  Attorney Doug Carstens from Chatten-Brown & Carstens LLP. He represents  Kings County, Citizens for High Speed Rail Accountability and the Kings County Farm Bureau.

The reason his clients are suing is because of alleged CEQA improprieties in the Fresno-to-Bakersfield segment. The CHSRA said that, if the injunction was granted, it could endanger the start of building the high-speed rail system; and the CHSRA has a tight time frame on the use of $3.5 billion in federal funds.

But there is no emergency. The actual case is not expected to be heard until mid-summer 2015. Moreover, there are six other CEQA cases filed against the project and not one of them is ready to go to court this month.

A decision from the STB is expected soon. If the STB grants declaratory relief, basically preempting CEQA with a federal supremacy claim, the next step will be the U.S. 9th Circuit Court of Appeals.

This piece was originally published at CalWatchdog.com


Kathy Hamilton is the Ralph Nader of high-speed rail, continually uncovering hidden aspects of the project and revealing them to the public.  She started writing in order to tell local communities how the project affects them and her reach grew statewide.  She has written more than 225 articles on high-speed rail and attended hundreds of state and local meetings. She is a board member of the Community Coalition on High-Speed Rail; has testified at government hearings; has provided public testimony and court declarations on public records act requests; has given public testimony; and has provided transcripts for the validation of court cases.