How Gov. Newsom Could Fix the California Housing Problem

In recent times, the Legislature has passed several bills to deal with the state’s vexing housing problem – to no avail.  The California Department of Housing (HCD) is simply a toothless advocate so long as the Department of Finance (DOF) is calling the shots.  The state’s housing finance agencies – the Treasurer’s Tax Credit Allocation Committee (TCAC) and the California Housing Finance Agency (CalHFA) – lacking the capital haven’t done much to help, either.  

And Governor Newsom – who, when he was campaigning, set a housing production goal for California – has done next to nothing to improve the state’s troubling condition.  Indeed, he will fall woefully short of meeting that objective. When it comes to housing, his behavior since he was elected has been shameful.  

So, lawmakers and policy-makers throughout the state – in Sacramento and locally – have been virtually ineffective at working out California’s premier crisis.  All the while things are getting worse. Take newly passed legislation, for example. AB 1482, enacted this year, is a horrible bill. So is SB 330. Yet, both are being heralded as solutions to California’s housing affordability dilemma.  

AB 1482, by San Francisco Democrat David Chiu, establishes statewide rent control – set at five percent plus inflation.  The law also calls for the creation of a much more permissive eviction process than the one currently allowed. If anything, AB 1482 means housing developers will turn their backs on California with its new limits on the returns they can earn, worsening severe supply shortages.  In addition, the new law almost guarantees regular rent hikes as landlords try each year to catch up to lost margins suffered in the past.

SB 330, by another Bay Area Democrat – Nancy Skinner of Berkeley – simply maintains the status quo, which is how California got into this mess in the first place.  The law ceremoniously waves at builder bugaboos like local growth control and permit caps by prohibiting their future enactment but does nothing to roll back any existing bad policies.  

Moreover, the legislation goes out of its way to preserve – now and in the future – constraints like California Environmental Quality Act (CEQA) and Coastal Commission challenges to new housing proposals as well as hostile policies like inclusionary zoning, height limits and urban limit lines.  I guess we should at least give Senator Skinner credit for acknowledging the many constraints that have been dogging builders for decades.

Meanwhile, besides signing these and other bills the only thing Governor Newsom has done “to expand affordability” is to sue the City of Huntington Beach for its recalcitrance in adopting an adequate housing element as part of its general plan.  Curiously, there are dozens of other cities who are also out of compliance with state housing law. Why Huntington Beach? It couldn’t have anything to do with the City’s “sanctuary cities” lawsuit against the state, could it?

None of what’s been done in the past several years has improved the housing landscape in California.  Undeniably, recent actions in Sacramento have only made matters worse. Lawmakers and policy-makers should have seen it coming, too.  Ever since the enactment of CEQA in 1970 they’ve repeatedly been piling more and more costly and often extraneously duties on housing.  And, it was game over in 2011 when legislators did away with redevelopment. 

In fact, it was only in 1995 – when the Legislature enacted the Costa-Hawkins Rental Housing Act – that lawmakers came up for air.  As good as it was though, that law only served rental housing.  All the while, for-sale housing suffered, mercilessly. During the past 25 years, local land-use has been seriously corrupted, development fees have skyrocketed and affordable housing mandates have spread like wildfire.  

To fix California’s housing problem is simple, really.  Although, getting a majority of lawmakers and policy-makers in Sacramento to learn to rely more on private markets – and what happens in them – is a necessary but nearly an impossible task.  Nevertheless, here are some suggestions to get started:

  • Restore redevelopment, to provide a steady and reliable source of cash for affordable housing construction and rehabilitation;
  • Scrap the state’s housing element law and replace it with large financial/infrastructure payments for locally approved housing;
  • Abolish local inclusionary zoning and replace it with a per-project charge which, coupled with redevelopment funds, will more equitably create affordable housing opportunities;
  • Consolidate and cap local fees development-impact fees; and
  • Repeal CEQA and replace it with a process for one and only one locally performed and much trimmer environmental review of a project.

Doing these five things – and nothing more – will go a long way toward solving the state’s current housing mess.

Timothy L. Coyle is a consultant specializing in housing issues.

This article was originally published by Fox and Hounds Daily.

Comments

  1. Gotta Gedada Displace says

    First erroneous assumption – that Gruesome has ANY interest in FIXING the problem vs (Rahm Emmanuel) “crisis” cover for political “opportunity” to advance his own agendas, political and otherwise. (example – State usurping Local Zoning control) Am I the only one NEVER TO FORGET this creep ran WITHOUT ANY KIND of a Candidate Statement an event immaterial to the OBLIVIOUS MORONS who inflicted him on the rest of us ?
    The absurd call for Redevelopment’s return as a panacea just displaces a current “problem” with SEVERAL KNOWN past ones- the corruption and immunity from local reform (ReDe agencies were STATE LEVEL needing STATEWIDE votes to alter policy and practice once established) and their basic financial flaw that the tax baseline above which their funding was diverted from, was in most cases FIXED FROM INCEPTION, slowly starving the former funding recipients as growth and inflation increased their COSTS against revenue now FIXED under the baseline. Extinguishing a fire with gasoline.

  2. And in L.A. they fleeced the taxpayers out of a bundle recently with a “homeless” shelter build. It was estimated to cost $600K per UNIT!! And the stupid people keep voting these a$$holes in. Our only hope is to recall Pretty Boy Newsom.

  3. let’s start at the top. why do we need 40+ million here?

  4. Restore redevelopment, to provide a steady and reliable source of cash for affordable housing construction and rehabilitation;

  5. Ralph Harder, M.D. says

    This, obviously, wasn’t written by Steve. Replacing one faulty State program with another will not improve anything. Let the market work.

  6. How to solve the housing problem tomorrow. Deport the illegals. One million units available.

  7. I find it interesting that Mr Coyle does not address the number one impediment to producing ” subsidized affordable housing”, being California “super” prevailing wage under the California Public Contracting Code. Pay off to Unions by liberal legislature. Cost per unit of housing at least 33% more, plus compliance costs.

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