Three Major Hurdles to Fixing California’s Housing Crisis

Earlier this summer, Governor Gavin Newsom signed a $214.8 billion state budget that included $2 billion in new spending to address California’s housing and homelessness crisis. While Governor Newsom and the state legislature should be applauded for their efforts, we must also acknowledge that California cannot spend its way out of the housing affordability crisis that has engulfed the state.

There are no quick fixes when it comes to alleviating the state’s housing woes. California’s housing crisis is the result of decades of legislative and regulatory actions at both the state and local levels which have constrained, and in many instances outright stopped new home construction. If measurable progress on housing affordability is to occur, there are several key legal hurdles which must be overcome.

First and foremost, there needs to be a serious effort by Governor Newsom and the state legislature to mend – not end – the California Environmental Quality Act (CEQA). Signed into law in 1970, CEQA was created to ensure that certain environmental protections were in place with new development projects, such as housing. Despite its original intent, CEQA has evolved from a tool into a trap, ensnaring practically all new housing, regardless of how locally necessary or environmentally friendly.  

From senior retirement communities to homeless shelters, hundreds of CEQA lawsuits have crushed sorely needed new housing proposals. CEQA abuse has become so widespread that based on a study by the law firm Holland & Knight, between 2012 – 2015, close to 14,000 housing units in the Southern California region (minus San Diego) were targeted by CEQA lawsuits. 

Along with the need to reform CEQA, the state must also make significant changes to prevailing wage requirements for new home construction. Prevailing wage is essentially the average hourly pay for construction work within a specific geographic region, and it applies to a wide variety of trades including carpenters, electricians, and plumbers. 

Under state law, home builders are required to pay prevailing wage on most low-income housing developments receiving public financing, thus leading to a substantial increase in costs. A report from the California Homebuilding Foundation found that prevailing wage requirements can mean as much as a 37 percent increase in construction costs, which equates to about $84,000 for a typical new home. 

To avoid adding additional hurdles to housing growth, it’s imperative that any new prevailing wage requirement fully recognizes, with metrics, the economic realities of each geographic region throughout the state.

Finally, there needs to be an increased opposition against overly restrictive local land-use laws often adopted as a result of pressure by residents intent on stopping new housing. According to the California Building Industry Association, approximately two-thirds of cities and counties in the state’s coastal metropolitan areas have adopted growth control laws which severely limit new housing opportunities. 

In those cases where new housing developments are approved, residents will often seek to curtail new home construction by placing “slow growth” or “no growth” measures on the ballot. Cities including Costa Mesa, Thousand Oaks, and Redondo Beach are among several Southern California municipalities that have passed voter-approved initiatives which effectively limit new housing.

It’s because of these types of legal impediments that the Building Industry Association of Southern California formed the nonprofit Building Industry Legal Defense Foundation, which has worked tirelessly to protect the home building industry from laws and regulations aimed at preventing new housing.

There is only one way out of California’s housing crisis, and that’s to ensure that home builders can do business in a legislative and regulatory environment where actual construction can take place. 

Jeff Montejano serves as CEO of the Building Industry Association of Southern California. Headquartered in Irvine, the Building Industry Association of Southern California is a leading advocate for thousands of building industry leaders who are committed to a better future for California by building communities, creating jobs and ensuring housing opportunities for everyone.

This article was originally published by Fox and Hounds Daily

San Bruno pressured by state to approve housing project

The May decision of state Senate Appropriations Chairman Anthony Portantino, D-La Cañada Flintridge, to kill a sweeping bill making it far easier for developers to build four- or five-story condominium and rental projects near mass transit led many disappointed pundits to complain that the Legislature still hadn’t done enough to spur housing construction. Senate Bill 50, by Sen. Scott Wiener, D-San Francisco, was seen as crucial to getting local communities to meet housing needs.

But officials and residents of the San Francisco suburb of San Bruno don’t want to hear that the state hasn’t done enough to pressure local governments. Thanks to a 2017 housing law – also crafted by Wiener – and another bill recently signed by Gov. Gavin Newsom, the city of 43,000 residents could eventually face fines of as much as $600,000 a month for failing to meet housing mandates, according to a report in the San Francisco Chronicle.

At issue is the San Bruno City Council’s July 10 decision to reject a 425-unit housing project proposed by the Signature Development Group. Zachary Olmstead, a deputy director at the state Department of Housing and Community Development, warned city officials in a letter last week that under the 2017 law, they were legally compelled to approve the project since it met all planning and zoning requirements without imperiling public safety or health. Olmstead noted that state law compels San Bruno to approve construction of 1,155 new housing units by 2023, but so far it had approved just 118 units – with none for low-income families.

Gov. Newsom sees lawsuits as way to fight local NIMBYs

The formal notice from the state clears the way for the Newsom administration to eventually sue San Bruno if it doesn’t reverse its decision on the project or otherwise approve new housing. The governor already made it clear he considers such lawsuits as a powerful tool to force housing construction, suing Huntington Beach in January because the Orange County city had made little progress toward the requirement that it add 533 low-income housing units by the end of 2021.

Huntington Beach officials, who believe that their state constitutional protections as a charter city are being violated, are suing the state over its housing edict.

San Bruno officials have reacted with much less defiance. That may be partly because as a general law city, San Bruno can’t claim constitutional cover. It’s also because there is far more support for the 425-unit project in San Bruno than there is for low-income housing in Huntington Beach.

According to the Chronicle, the Signature Development Group worked to firm up support for its project by accepting city officials’ request that its plan add 64 more low-income units and include a grocery store, among other concessions. But while four of the five council members backed the project, two of those members recused themselves because of perceived conflicts of interests, since they live within 1,000 feet of the proposed project site. That meant there weren’t the necessary three votes for approval.

Unlike Huntington Beach, San Bruno is conciliatory

Even before the state’s warning arrived, San Bruno City Manager Jovan Grogan posted a statement on the city’s website about the controversy late last month that acknowledged the City Council’s decision might not stand. 

Grogan’s conciliatory remarks presented a sharp contrast with Huntington Beach officials’ reaction to the state’s pressure. There, City Attorney Michael Gates blasted Newsom and suggested that Huntington Beach’s history as a Republican stronghold was why it was singled out first instead of the 50-plus other cities in California that also failed to meet state housing mandates.

Meanwhile, there were reports this week that the San Bruno City Council would meet soon to review its limited options. An opinion from the city’s legal advisers saying the two council members who recused themselves from conflicts could vote because of the unusual circumstances could be a tidy way out of the problem.

This article was originally published by CalWatchdog.com

High Fees for Developers Ratchet Up California Home Prices

A long-awaited study detailing how much cities and counties charge developers to build housing in California found that such costs are often hidden, vary widely across the state and have slowed growth.

The report, released this week by the state Department of Housing and Community Development, comes as Gov. Gavin Newsom and state lawmakers continue to search for ways to lower construction costs to help remedy a shortage of available homes. The study recommends that legislators push cities and counties to make public their fees, set standards for services so that costs will be more predictable and take into account how they affect housing production.

“While fees offer a flexible way to finance necessary infrastructure, overly burdensome fee programs can limit growth by impeding or disincentivizing new residential development, facilitate exclusion and increase housing costs across the state,” said the report by researchers at UC Berkeley’s Terner Center for Housing Innovation. …

Click here to read the full article from the Los Angeles Times

California housing market officially now ‘weak.’

The once red-hot California housing sales market is officially now “weak,” state analysts say, but the year-long flattening does not necessarily suggest the state is headed toward an economic downturn.

In a brief report issued Monday, the state Legislative Analyst’s Office weighed in on the latest California home sales trends, noting that homes sales statewide in June were down from the same month last year, and notably lower than historic norms.

“Home sales were on a clear downward trend during the second half of 2018 and the beginning of 2019,” analysts wrote. “Sales seem to have stabilized in recent months and are no longer declining from month to month. …

Click here to read the full article from the Sacramento Bee

Looking Forward on Affordable Housing

With the state budget mostly concluded, now is a good time to look at future reforms to bring Californians more housing, affordable or otherwise.

It’s called a housing crisis, yet you can buy a 282-square-foot kit home on Amazon.com for $18,800, instructions included. If you need something bigger, there’s a 1,336 square foot kit home for $64,650.

So perhaps it should be called a property crisis. While building a house can be cheap, in California the property under it is the expensive component, requiring builders to meet all sorts of state and local regulations. State and local governments refuse to make it easier to erect any kind of housing.

Just Google “land entitlements” for a rude awakening on how complex property regulations are. This traditional approach needs a review.

The way not to do that is Assembly Bill 72 from 2017, by Assemblyman Miguel Santiago, D-Los Angeles. It ran roughshod over local governments’ control with their own housing regulations.

AB 72 is the weapon Gov. Gavin Newsom used in January in his unjust attack on Huntington Beach, which is in my 37th Senate District. Surf City allegedly failed to meet its affordable-housing goals mandated by state calculations for zoning to accommodate various income levels. Ironically, Huntington Beach is one of the major housing-approving cities in Orange County.

Gov. Newsom justified the lawsuit with a statement that “due to the rising house prices, it would prove to be a threat to the economy as well as deepen inequality.”

At the time, I called that “strong-arm tactics.”

Piling on, the state budget enacted last month included fines to cities of up to $600,000 a month for supposedly violating state housing goals. Cities don’t pay fines, citizens do. So, that’s effectively a tax increase.

Additionally, there is a problem with what is called the Not-In-My-Back-Yard (NIMBY) movement. 

As Carson Bruno of the Pepperdine School of Public Policy described it, “Considering that the housing affordability problem is less a local issue and more a regional problem, until municipalities collectively begin opposing the movement, actual progress on solving the affordability crisis will continue to be delayed and blocked.”

Next, there are the state’s unreformed environmental laws.

A 2015 report by the Legislative Analyst found California housing prices were only 30 percent higher than the national average in 1970. Considering the mild climate and lower heating and cooling costs, that was a tolerable divergence. Soon after, housing prices began to soar to 80 percent above the national average in 1980. By 2015, prices were 250 percent higher!

The report found a major cause of the higher prices was the California Environmental Quality Act (CEQA), enacted in 1970. CEQA reports often caused cities and counties to deny “proposals to develop housing or approving fewer housing units than the developer proposed,” according to the LAO report. “CEQA’s complicated procedural requirements give development opponents significant opportunities to continue challenging housing projects after local governments have approved them.”

In May this year, the Senate postponed to next year consideration on Senate Bill 50, by Sen. Scott Wiener, D-San Francisco. A crucial part of the bill would “establish a streamlined ministerial approval process for neighborhood multifamily projects, thereby exempting these projects from the CEQA approval process.”

The reasoning is, by encouraging more housing closer to workplaces, people would drive fewer miles, reducing vehicles’ use of carbon fuels and the production of greenhouse gases. Thus, California would meet CEQA’s goal of improving the environment. I’m hopeful the Legislature will pass this component of SB 50 when it returns in 2020.

Another positive development I voted for is Assembly Bill 101, by the Committee on the Budget. Among other things, it would require the Department of Housing and Community Development to come up with a “methodology that promotes and streamlines housing development and substantially addresses California’s housing shortage.” The bill was approved without opposition in both houses and now is with the governor.

Finally, instead of punishing cities and counties with fines for allegedly not following state housing laws, how about rewarding them with more state aid to deal with the housing and homelessness crises? A carrot is a better incentive than a stick.

Rather than stigmatizing cities like Huntington Beach, an incentive approach would encourage all cities to work with the state to provide more housing.

John M.W. Moorlach, R-Costa Mesa, represents the 37th District in the California Senate.

This article was originally published by Fox and Hounds Daily

After Decades of Red Tape, Some Developers Seeing Their Projects Through

Building homes in California requires a significant investment of time, money, and other resources, leading many developers to avoid construction projects. But in northwest Los Angeles County, one builder has stayed the course since 1994. On completion in 2021, the 15,000-acre Newhall Ranch — billed as one of the world’s first large-scale planned communities — will feature roughly 22,000 homes that follow the curves of the Santa Clara River in the Santa Clarita Valley. Owned by Orange County’s FivePoint Communities, Newhall Ranch is expected “to be ‘net-zero,’ meaning no greenhouse gas emissions, by implementing several mitigation efforts including solar panels and open space,” according to local radio reports. Some developers and environmentalists regard the development as a “new benchmark in the fight against climate change.” Homes will be outfitted with sun-driven power and charging stations for electric vehicles, and FivePoint plans to offer subsidies to “residents, schools, and bus services” to encourage them to buy zero-emission vehicles.

Though the developer tirelessly met environmentalist demands and generated “green” credibility, the project has endured more than a quarter-century of roadblocks and red tape, courtesy of California’s mammoth bureaucracy — including “lawsuit after lawsuit after lawsuit,” says Wendy Devine, who oversees a website focused on Newhall Ranch news. The litigation primarily addressed environmental issues, as is typical for California, where the California Environmental Quality Act (CEQA) has delayed housing development, reduced it in scope and size, and even shut it down. The developer produced more than109,000 pages of documents, navigated the review of 25 government agencies, appeared at 21 public hearings, and attended over 700 meetings. Finally, the project broke ground last year.

Newhall Ranch’s saga makes one wonder how anything gets built in California. In San Francisco, Bob Tillman waited six years and spent $1.2 million in legal fees to obtain approval for a 75-unit apartment complex on his own property. As early as 2013, “Tillman thought he was good to go,” writes Hoover Institution scholar Lee Ohanian. “His location was zoned for multifamily residential housing. He was not displacing any existing residents, because he was converting a commercial enterprise into a residential building. And because his proposed development was high-density housing, the project qualified for streamlined approval.” Yet everything went wrong anyway. The city planning agency’s powerful political appointees turned “what should have been a pro forma approval process” into a nightmare. Last fall, Tillman finally saw daylight, after deputy city attorneys met with the San Francisco Planning Commission to discuss the lawsuit that Tillman had brought against the city.

What happened to Newhall Ranch and Tillman is common across California. On occasion, entire projects get abandoned because the cost of delays and other government-imposed expenses leave little or no profit for developers. While several impediments bottle up home construction, none is enforced more severely than CEQA, signed into law by then-governor Ronald Reagan in 1970. Housing, notes the law firm Knight & Holland, is “the single-largest target of CEQA lawsuits.”

It’s not just hard-core environmentalists who use CEQA to block development. CEQA is also a favored tool of businesses that use it to try to handicap competition (the Parking Spot sued LAX a few years ago over plans to connect a rail line to the airport, for instance); developers who attempt to hinder rival projects; NIMBYs who don’t want anything new built near them; and unions that try to force developers to exclude nonunion workers from construction projects. Yet while CEQA deters housing construction, the policymakers manage to carve out exemptions or secure fast-track approvals for projects important to them, such as basketball arenas and football stadiums.

One would think that the Golden State would be an attractive market for homebuilders, due to its critical housing shortage of as many as 4 million units. California housing should be the next gold rush. Instead, today’s California rush is made up of residents fleeing the state because they can’t find affordable housing.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute. 

Who Killed Zoning Reform in California?

For a moment, it seemed like California policymakers were ready to pass legislation capable of putting a serious dent in the state’s housing-affordability crisis. But in May, the state senate shelved Senate Bill 50, which would have eased restrictions on housing density along public-transit corridors and in job-rich areas. SB 50’s sponsors had built a broad bipartisan coalition of support, and polling indicated that a majority of Californians supported key provisions. State Senator Anthony Portantino, chairman of the appropriations committee, took the steps that blocked the bill, but, according to Liam Dillon of the Los Angeles Times, suburban homeowners were the real force behind SB 50’s demise. Portantino, after all, represents wealthy Los Angeles suburbs like La Cañada Flintridge, which haven’t built a single apartment in decades.

For all the disturbing media coverage of homelessness and displacement in the Bay Area and Los Angeles, the housing crisis has mostly been a boon for California homeowners. The planning-induced scarcity—coupled with soaring tech-sector salaries and a steady flow of billion-dollar IPOs—has sent house values skyrocketing. Even shacks now command bids well north of seven figures. Houses that might have sold for $40,000 in the 1970s can easily go for $2.5 million today.

Compounding the trouble, California is constitutionally unable to tax much of this wealth. In most states, rising house values would mean higher property taxes. But California’s Proposition 13, a 1978 ballot initiative that sets real estate taxes at 1 percent of a property’s sale price and limits annual increases to 2 percent per year, means that property-tax revenues don’t rise proportionately with home values. With house prices increasing many multiples since 1978, Prop 13 has produced one of America’s most arbitrary state tax systems. Its terms reset only when a home is sold or rebuilt, so it’s common for neighbors in identical houses to pay dramatically different tax bills. Property owners have no incentive to sell, downsize, or host additional housing units as costs rise.

California homeowners’ opposition to new housing construction is entirely consistent with the behavior predicted by urban economist William Fischel’s “home-voter hypothesis.” Fischel’s work suggests that homeowners—or “home voters”—will make use of the state and local political process, particularly zoning, to prevent any development that might devalue their homes, which are usually a household’s primary source of wealth. For instance, if a multifamily building is proposed in a municipality otherwise characterized by single-family housing, we may expect a homeowner to resist the development on the premise that an influx of new families could overburden public schools or worsen traffic congestion, or express fears that new rental housing might threaten “community character”—thereby lowering home values. As SB 50 would greatly enhance the freedom of property owners to build multi-family housing, it is easy to see why it would be unpopular in low-density suburbs like La Cañada Flintridge.  

Short of repealing Proposition 13, which is unlikely, one way around the home-voter quandary would be to weaken the bond between home values and school quality. If families were freer to pursue higher-quality schooling options untethered from their place of residence, we would expect to see fewer bidding wars for homes in top-tier school districts, leaving home voters less defensive about the risk of newcomers. School vouchers, charter schools, and an open-enrollment policy that lets students attend public schools outside their district of residence could decouple housing costs from school districts. The state could achieve similar results if its selective public universities placed greater weight on the economic integration of an applicant’s high school in their admissions criteria, giving homeowners in prestigious school districts a reason to welcome new multifamily housing that improves the “adversity scores” of local schools.

At the federal level, phasing out hefty tax subsidies for homeowners would also reduce resistance to housing growth in supply-constrained California. Fischel suggests eliminating the preferential treatment of capital gains on sale of a primary residence, which allows for the exemption of hundreds of thousands of dollars of profit. This would reduce the benefit that homeowners derive from exclusionary zoning, while discouraging the unhealthy practice of concentrating wealth in housing, which, again, drives excessive risk-aversion to changes in local land use.

Eliminating the state and local tax deduction (SALT) would work to similar effect. The Tax Cuts and Jobs Act of 2017 took a positive step in restraining the SALT deduction, but full elimination would further reduce the benefits of restrictive zoning practices by ensuring that homeowners pay more of their property taxes as home values rise.

Beyond education and tax policy, weakening home-voter impulses could also require some concessions on local control. Christopher Elmendorf proposes a compact between state and local governments in which the state would set quotas for housing growth, but the municipalities would choose their own zoning reforms to meet them. Once a municipal plan gets certified by the state, it would supersede the adoption or enforcement of any contrary zoning provisions. Any municipality that fails to comply with its own plan would face financial penalties. Some affluent suburbs may choose to opt for penalties over compliance, but the option of paying for exclusivity might prevent richer communities from blocking passage of the proposal.

In the end, SB 50 is no more dead than its predecessor bill, SB 827, which similarly sought to permit multifamily housing near transit lines. Neither the coalition built by the bill’s sponsor, State Senator Scott Weiner, nor the crisis that it aims to address are going away. But if housing reformers are serious about addressing the root causes of the home-voter impulse, they’ll need to plan for contingencies. SB 50’s foes are already rallying to introduce a ballot initiative aimed at entrenching local control of land use in the state constitution—an amendment that would all-but ensure that California’s housing crisis becomes permanent.

Brandon Fuller is Deputy Director of New York University’s Marron Institute of Urban ManagementNolan Gray is a city planner and a contributor to Market Urbanism.

This article was originally published by City Journal Online

What’s Blocking Housing Reform? Special Interests or Public Opposition?

The belief that California has a profound housing crisis took hold in the state’s media and political establishments in recent years after Census Bureau statistics showed the Golden State had the highest effective rate of poverty once cost of living was included.

The view was amplified by stories about four-hour commutes forced by housing costs and about shocking numbers of poor college students who struggled to pay for food.

That’s why the decision last week by state Senate Appropriations Chairman Anthony Portantino, D-La Cañada Flintridge, to kill Senate Bill 50 – the latest attempt to spur housing construction by limiting local control of approvals 
– came as a surprise to many. That included the bill’s sponsor, Sen. Scott Wiener, D-San Francisco. His push to ease rules to allow four-to-five-story apartment buildings near public transit centers and to allow construction of such units in many zones previously reserved for single-family homes had won support from not just developers but construction labor unions, several large-city Democratic mayors and some activist groups. Many were skeptics of Wiener’s and Gov. Jerry Brown’s previous attempts to limit local control.

Stories about Portantino’s decision focused on the fact that leaders of cities in his district, starting with Pasadena, had been vociferous opponents of Senate Bill 50. Reports also focused on the formidable influence of environmental groups, which prefer strict zoning rules to give them more clout to block development.

These arguments are common. In August 2016, when Brown’s attempt to sharply streamline the approval process for housing projects died in the Legislature, Shamus Roller, executive director of Housing California, blasted “the political gamesmanship of powerful interests.”

Californians ‘must be convinced of benefits’ of adding housing

But another view is that then-state Legislative Analyst Mac Taylor knew what he was talking about in March 2017 when he issued a report on the failure of local governments to meet housing mandates that said major change was unlikely “unless Californians are convinced of the benefits of more home building.” Instead of seeing the failure of housing reforms as a result of special-interest machinations, Taylor argued that elected leaders who backed such measures hadn’t cultivated the public support necessary to enact major changes.

Taylor’s thesis was supported by a USC Dornsife/Los Angeles Times poll of Californians released in October that found little belief that the housing crisis was due to a lack of building. It was the sixth-most cited reason, falling far behind the top two: the lack of rent control in much of the state and inadequate “affordable housing” programs. Two-thirds of those surveyed supported local control of housing approvals even if cities or counties weren’t meeting state mandates for new housing construction.

Still, Wiener said he wasn’t daunted by Portantino’s decision. He said he would bring another housing reform measure to the state Senate in 2020. The former San Francisco supervisor, a Harvard law graduate, also said he thought Senate Bill 50 had a chance of being resurrected this summer, even though appropriation chairs of the Senate and Assembly have a long history of making their decisions stick.

“We’re either serious about solving this crisis, or we aren’t,” he told reporters in Sacramento last week. “At some point, we will need to make the hard political choices necessary for California to have a bright housing future.”

This article was originally published by CalWatchdog.com

Guess What? California Needs More Housing

The major findings of a recently released report came as no surprise to most of us:  California needs more housing – lots of it. This, by the way, comes on the heels of enactment of a package of bills to, presumably, solve the problem.  That’s what we were told, anyway, by state legislators after they passed the legislation – recently and two years ago.

Yet, despite these laws and new funding to boost housing construction, the report by the legislatively created “California Housing Partnership” (the Partnership) says the state still needs much more, including 1.4 million rental units affordable to lower-income households.

The purpose of the study was to examine the extent to which poor households in California are cost-burdened – spending more than half their incomes on rent.  Naturally, the study found that of the state’s more than two million very low-income renter households – roughly two-thirds – are severely cost burdened, meaning they need to spend less on housing.  But, the study reached the same conclusion that’s true for all of California: we need to increase supply. Quickly.

That, says the study, can’t be easily accomplished in this day and age – with so many local obstacles.  Although the report calls for the state to give $1 billion annually to cities and counties to fund more housing and more tax breaks to help low-income families, this state spending would almost surely be squandered.  Land costs are through the roof, zoning restrictions are pervasive, fees have gotten out of control and NIMBY groups – backed by an insidious and ever-present California Environmental Quality Act (CEQA) – can be counted on, lurking around every corner, to oppose each new project.

The housing is still desperately needed, though – something that, by now, should be understood by every state lawmaker.  Besides being smart people, a sizeable portion of legislators are – according to a recent survey – landlords themselves. The survey showed 30 of them – 25 percent of both houses – own at least one unit of rental housing.  So, supply and affordability – and leaving housing markets unfettered by frivolous rules – should be well-known to most lawmakers.

Alas, this year, again, that’s not the case.  Instead of working in a concerted, cooperative way to help free up housing markets, policy committees are becoming bogged down by dozens of housing bills that aren’t helpful at all.  Some of those bills were outlined in this space recently but the really bad ones – involving rental housing – bear repeating:

  • AB 36 (Bloom) – would change state law to allow rents to be capped on properties ten years or older.  Existing law currently prohibits government-imposed controls on properties built after February, 1995.
  • AB 1110 (Friedman) – would require prior notice (90-day to 120-day) to residents for rent increases of 10 percent or more.
  • AB 1481 (Bonta) – would prohibit a landlord from evicting a resident without cause.  Currently, non-payment of rent can end a tenancy.
  • AB 1482 (Chiu) – would create a statewide limit for rent increases – right now pegged at the Consumer Price Index (CPI).
  • AB 1697 (Grayson) – another “just cause” impediment when the resident has occupied the property for 12 months or longer.
  • SB 529 (Durazo) – would declare that residents have the right to form, join, and participate in the activities of a tenant association, and withhold rent for any purpose they deem needed.

A dozen or so of introduced bills affecting zoning and land use are just as bad.  Indeed, these are just a few of the measures making up the left-leaning California legislature’s “package” of this year’s legislation designed to ease the state’s housing crisis.  Rather than displaying their intelligence or documented “on the job” experience, with these bills state lawmakers reveal that more government strictures and controls imposed on housing markets makes for good housing policy.  They don’t.

It seems like all the experts, pundits and academicians all agree that California needs vastly more housing.  If only our state legislators could acknowledge this and act accordingly.

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

This article was originally published by Fox and Hounds Daily

Desperation Growing in Bay Area’s Housing Market

Fears that heavy housing costs could undercut Silicon Valley and the Bay Area’s economy have grown steadily in recent years as gains in wages have been outstripped by soaring rents and home prices.

Now a poll of 1,568 registered voters in the region done on behalf of the Silicon Valley Leadership Group and Bay Area News Group paints one of the starkest pictures yet of public dissatisfaction.

Those polled were nine times as likely to say life in the Bay Area and Silicon Valley had gotten worse over the past five years than to say it had gotten better. Forty-four percent of respondents said they wanted to move out of the region because of housing costs, bad traffic and declining quality of life; 6 percent intended to leave in the next year. African-Americans and Latinos were those most likely to want to move elsewhere.

But even 64 percent of homeowners – normally much more content than others in surveys on life satisfaction – said their lives had gotten worse.

The results produced yet another warning from the Silicon Valley Leadership Group, which has cautioned for years that the region will struggle to attract workers for tech and blue-collar jobs alike unless housing costs stop spiraling upward. The group’s CEO, Carl Guardino, told the San Jose Mercury-News that “not working at our weaknesses will come at our own peril.”

School districts launch own projects

Most of the cities in the region haven’t come close to meeting state goals for either affordable or market-rate housing. Recent new state laws meant to spur more housing construction have yet to pay off.

Meanwhile, school districts in and near San Francisco and Silicon Valley are increasingly impatient with the status quo and open to new approaches. Three districts which struggle to keep teachers from leaving for cheaper communities are going into the housing business to ensure teachers have affordable rents.

In Mountain View, the city plans to meet its state affordable-housing mandates by working with Los Gatos-based developer FortBay to build a 144-unit subsidized apartment building for use by Whisman School District teachers and other employees.

The Whisman district’s board backed a $56 million agreement that commits the district to lease the building for at least 55 years. The project could be finished by the end of 2021, depending on the pace of city approvals and other factors. Long-term funding options include bonds or certificates of participation (bond-like measures that don’t require voter approval).

District Superintendent Ayinde Rudolph has also voiced the hope that substantial gifts from philanthropic groups could reduce the cost to Whisman.

In Daly City, the Jefferson Union High School District is using a $33 million voter-approved bond to build 116 apartments for teachers and other employers.

The Palo Alto Unified School District is evaluating how to fund a 120-unit project for its employees.

Legislation signed by Gov. Jerry Brown in 2016 allows the districts to give housing preferences to their employees. It also gives them access to state and federal low-income housing credits.

Can districts afford housing subsidies?

A recent UC Berkeley study of teacher housing issues in Berkeley Unified showed strong support from employees for a similar approach in their district. More than half reported difficulty paying rent.

But to date, no study has examined the long-term financial feasibility of having districts provide subsidized housing, as is contemplated by the three districts pursuing construction plans.

Employee compensation already consumes 85 percent or more of most school districts’ general fund budgets. With districts’ pension contribution rates more than doubling from 2014 to 2020 as part of the bailout of the California State Teachers’ Retirement System, dozens of districts are pleading poverty.

This article was originally published by CalWatchdog.com