“We just haven’t been building enough housing – not just low-income or affordable housing, but housing of any kind,” Uhler said Angela Hart, Sacramento Bee, Sept. 21, 2017
Developers and the newspapers they advertise in will have had you believe that more housing construction is the answer to all California economic woes from the end of the Gold Rush to Kingdom Come.
But, what one sees all around are developments, final mapped with curbs and wires sticking up beside empty lots. Why not build on those first?
But no. The developer and presumably his financial backers always want new land and in this case, the chance of a better development deal than they were able to get before 2008, when their plan for universal prosperity in California took the biggest dive since the Great Depression.
And these great entrepreneurs, seen in their most natural attitude -- begging, buying and bullying the state Legislature or a county or city government -- have a problem they did not have back when Gray Davis was elected governor in 1998: cheap Central Valley pasture land isn't cheap anymore, if you can find any not already covered with nut orchards. Developers do not like to have to compete with a high priced agricultural commodity. And they especially don't like to deal with people who are not small, family ranchers but large Wall Street insurance companies, hedge -fund owners and other agribusiness corporations as big or bigger than the developers are. It unnerves them.
Nevertheless, the Developer Whine is sounding through the corridors of the state Capitol again -- "Gimme-Gimme-Gimme: Kah-ching-ching-ching!"
When the dust of off campus projects invades the sensitive nostrils of our UC Merced faculty and administrators, we will have a demonstration on what PhDs or proximity to them do to human memory.
Every day is a New Day!!! And in our New Days to come, the work that has improved our air quality will be neglected and the problems of the declining water table and soil subsidence will be discussed by resource-agency staff, corporate agribusiness representatives and some academics as the big wells keep on pumping.
Who said there is no progress in history?
California exodus? Poll finds voters consider moving due to sky-high housing costs
More than half of California voters say the state’s housing affordability crisis is so bad that they’ve considered moving, and 60 percent of the electorate supports rent control, according to a new statewide poll.
The findings from UC Berkeley’s Institute of Governmental Studies reflect broad concerns Californians have over the soaring cost of living. Amid an unprecedented housing shortage, rents have skyrocketed and tenants have faced mass evictions, especially in desirable areas.
“It’s an extremely serious problem,” said poll director Mark DiCamillo. “People are being forced to consider moving because of the rising cost of housing – that’s pretty prevalent all over the state.”
Of the 56 percent of voters who said they’ve considered moving, 1 in 4 said they’d relocate out of state if they did.
About half of the state’s voters – 48 percent – said they consider the problem of housing affordability “extremely serious.” Concerns are more prevalent in areas seen as ground zero for the crisis, including the Bay Area, where 65 percent of voters described the problem that way.
The issue has led to an intensifying debate over rent control in California. In Los Angeles County, 68 percent of voters said they support stronger limits on rent increases, while 63 percent in the Bay Area said so.
The majority of support for rent control is among renters, who have seen prices grow nearly 4 percent since last year, according to data compiled by the real estate listing service Apartment List. California’s median rent for a one-bedroom is now at $1,750, while a two-bedroom is $2,110, Apartment List found. Among the most expensive cities are San Francisco, San Jose, Los Angeles, San Diego and Sacramento.
Of the voters who have considered moving, most are renters and fall in the 30 to 39 age group, followed by voters age 18 to 29.
The poll comes as the state Legislature last week sent to Gov. Jerry Brown a broad package of bills aimed at shoring up funding for affordable housing and spurring construction, especially of low-income units.
Leaders of the state Senate and Assembly touted the housing package as the greatest move in a generation to address California’s skyrocketing rents and the historically low production of new homes.
“The Assembly and Senate have made real progress in solving a crisis that has been a shadow on California for years,” said Assembly Speaker Anthony Rendon in a statement.
Assembly Speaker Anthony Rendon discussed passing a package of housing funding and regulation bills late Thursday night.
Missing from the package is a bill from Assemblyman Richard Bloom, D-Santa Monica, that sought to rescind a state law that for two decades has blocked cities from adopting stronger rent control measures. Bloom put the bill on hold earlier this year, citing political pressure from powerful real estate interests. Meanwhile, local rent control battles are erupting across the state.
“This whole housing package falls dismayingly short of what’s needed to keep tenants from paying an arm and a leg to keep a roof over their head,” said Omar Medina, president of the North Bay Organizing Project based in Santa Rosa, which lost a rent control fight in the city earlier this year.
The Legislature’s housing package includes a bill that, if signed by Brown, will put a $4 billion housing bond before voters next November.
The Berkeley IGS poll shows 51 percent of voters would support a “multibillion-dollar” housing bond. Roughly a quarter – 27 percent – said they would oppose a housing bond and 22 percent were undecided.
Most of the support for the housing bond is among Democrats, with 69 percent saying they’d vote for it.
Where rent control battles are emerging in California
As housing costs soar across California, rent control fights are erupting in cities seen as ground zero for the state’s affordability crisis.
In 2016, voters in the Bay Area cities of Richmond and Mountain View enacted rent control, coupled with companion measures that make it harder for landlords to evict people. Tenant advocates hailed their success at the ballot box as a demonstration of “renter power” building throughout the state.
The wins dealt a significant blow to the California Apartment Association, which has pumped millions of dollars into anti-rent control campaigns. It worked in Alameda, Burlingame and most recently, Santa Rosa, where opponents pumped nearly a million dollars into the campaign committee against rent control.
Defeating rent control, as proposals pop up in cities small and large, is seen as crucial by groups representing landlords. In their view, every successful campaign fuels growing statewide momentum for stronger renter’s protections.
They argue that rent control discourages new construction and diminishes the quality of housing because landlords would have less money to make repairs.
“We are taking all of this very seriously,” said Tom Bannon, chief executive officer of the Apartment Association.
Tenants and housing activists say rent control helps stabilize neighborhoods, preserves their diversity and retains affordable housing in communities where prices are rapidly increasing.
California’s rent control movement, strongest in the late 1970s and early 1980s, is again gaining steam as the state faces an extreme housing shortage that has led to skyrocketing rents and rampant tenant displacement. State officials call it an unprecedented crisis, exacerbated by the erosion of state and federal funding for low-income housing development.
Activists are launching new rent control campaigns up and down the state, from Sacramento to Pacifica to Glendale.
They are also pushing state lawmakers to repeal a 1995 law that limits the type of housing covered under rent control.
“We’re in the middle of a housing crisis, and again and again the state has failed to act, when it should be taking action on the displacement of renters and addressing the funding gap created by the gutting of redevelopment agencies,” said Aimee Inglis, associate director of the advocacy group Tenants Together.
“Once again, we’re faced with this narrative that’s really just a version of trickle-down economics, that you can just build a ton of market-rate housing and somehow that’s going to solve this crisis,” she said. “The Legislature needs to be challenged on what kind of state this is going to be – is this just a playground for the rich?”
So what is rent control and what does it do?
▪ Rent control laws freeze the amount a landlord can charge per unit the date local ordinances are adopted. After that, rents can be raised minimally each year. If a tenant moves, the rent can then be raised to market rate, re-adjusting the baseline for rent control when a new tenant moves in.
▪ Some cities that were early adopters of rent control, like San Francisco and Santa Monica, actually have fewer units covered under local laws than cities that later adopted it. That’s because a state law called Costa-Hawkins said rent control can only be applied to housing from the date a local ordinance is adopted and prior. For example, San Francisco’s law covers only units constructed in 1979 and earlier.
▪ The Costa-Hawkins law, enacted in 1995, limits the ability of local government to enact stronger rent control laws. It says only units built before 1995 can be covered in new ordinances, and rent control will never apply to a large supply of housing stock, including single-family homes and duplexes.
Activists want to remove the 1995 limit and allow cities and counties to enact stronger rent control laws.
Since rent control only applies to older units, why would it have a “chilling effect on new construction,” as Bannon put it?
“The moment you start talking about rent control, it creates this pause, and that affects where people are willing to invest their capital,” he said. “Rent control has never built a new unit. My other big concern is you lose focus, and that should be on increasing supply. If California wants to continue to be a vibrant state and attract new jobs, we need to focus on building.”
Cities that currently have rent control:
Beverly Hills: passed in 1978
Los Angeles: passed in 1979
San Francisco: passed in 1979
Santa Monica: passed in 1979
San Jose: passed in 1979
Hayward: passed in 1979
Palm Springs: passed in 1979
Berkeley: passed in 1980
Oakland: passed in 1980
Thousand Oaks: passed in 1980
Los Gatos: passed in 1980
East Palo Alto: passed in 1983
West Hollywood: passed in 1985
Richmond: passed in 2016
Mountain View: passed in 2016
How California’s housing crisis happened
California’s high housing costs are driving poor and middle income people out of their housing like never before. While some are fleeing coastal areas for cheaper living inland, others are leaving the state altogether.
Homelessness is on the rise. California is home to 12 percent of the U.S. population, but 22 percent of its homeless people. Cities that have seen dramatic rent increases, such as San Francisco and Los Angeles, attribute their spikes in homelessness directly to a state housing shortage that has led to an unprecedented affordability crisis.
Housing experts trace the problem back to the 1970s. Backlash began to arise – in coastal communities, in particular – from neighbors who opposed new housing in their neighborhoods.
“It started then and it’s still true today – people, just as a matter of human nature, are anxious about change and accommodating new people in their communities,” said Brian Uhler, who leads housing research for the nonpartisan state Legislative Analyst’s Office, which tracks housing trends and identifies possible solutions for the Legislature.
“California communities are vested with significant authority over land-use decisions, about how much can be built, and when and where. They have used that authority to create significant barriers for the construction of new housing,” he said. “Shrinking Rust Belt cities are the only kinds of places that are building as little housing as our coastal areas did in recent decades.”
To meet current demand, from market-rate to low-income housing, California needs roughly double the housing it currently has, Uhler said. In the Bay Area, that’s more like triple.
“We just haven’t been building enough housing – not just low-income or affordable housing, but housing of any kind,” Uhler said.
On average between 1980 and 2010, the state built about 120,000 new housing units per year, when up to 230,000 were needed to keep pace with growing population and changing demand, such as the desire to live in cities near jobs and transit. That demand has risen sharply over the past 10 years. The state now needs 180,000 new housing units per year, according to state housing officials, and it is building less than 80,000 annually on average.
It has hit poor people especially hard. There is a 1.5 million unit-shortfall between the number of low-income families who live here and the number of rentals they can afford, according to state officials.
“It would take several hundred billion dollars to address the overwhelming magnitude of the problem,” Uhler said.
So how did California get here?
Major cuts to fund affordable housing
In the aftermath of the recession, Gov. Jerry Brown in 2011 pushed the Legislature to eliminate more than 400 city and county redevelopment agencies across the state that allowed local government to use a portion of their property tax growth to build affordable housing. Agencies often fell short in meeting that goal, but statewide the cut amounted to more than $1 billion per year.
“We lost that source of ongoing revenue,” said state Sen. Toni Atkins, D-San Diego, who has proposed through her Senate Bill 2 establishing a $75 to $225 fee on real estate transactions that would generate an estimated $250 million per year for affordable housing. “You can’t underestimate the impact of that money ... if we don’t have some subsidies for low-income housing, it doesn’t get built.”
Affordable housing money from two state housing bonds, approved by voters in 2002 and 2006, totaling roughly $5 billion, has also dried up. Since 2008, the state has lost millions of dollars per year from federal grants for housing construction and rental assistance. Federal tax credits for low-income housing remain relatively stable, but state tax credits have shrunk.
Proposition 13, enacted in 1978, also reduced the amount of property tax revenue cities and counties have to build new housing. It creates incentives for commercial development – not residential – because cities and counties can benefit more from increased sales tax revenue from businesses than they can from property taxes on homes.
A $3 billion housing bond under Senate Bill 3, sought by state Sen. Jim Beall, D-San Jose, would help to stem the losses, he said. He mentioned support for past housing bonds, including Proposition 1C in 2006, which generated $2.85 billion and received nearly 58 percent voter approval.
“We said ‘Why don’t we repeat that, and do another $3 billion?’ ” Beall said.
Cost of building has risen dramatically
Buildable land in California is like gold.
The state has some of the most expensive real estate in the country, especially in desirable areas with booming economies like San Francisco. And its value continues to rise.
Residential property is valued at a staggering $150,000 per acre or more in California’s coastal regions, compared to $20,000 per acre, on average, in other large metropolitan areas of the country.
Land prices in cities like Oakland and San Diego are twice as expensive as other U.S. metropolises, and more than four times as expensive in San Francisco, according to a 2015 report from the Legislative Analyst’s Office. Restricted by the ocean and mountains in many regions, the places where most people want to live is limited, further driving up costs.
Developers, housing advocates and some state lawmakers say it makes sense to build higher-density housing in cities, to accommodate more people, restrict suburban sprawl and preserve sensitive environmental areas. But community opposition often kills large-scale projects and leads to less dense housing.
“Traditionally, California housing has been left almost entirely to local communities, with minimal participation from the state. Even when the state has passed laws, there’s been no teeth,” said state Sen. Scott Wiener, a San Francisco Democrat who has proposed a law that would give developers more power to build, restrict the ability of local government to stall or block projects and reduce the cost of construction. “We’re in a crisis. Communities can no longer blow off their responsibility to allow housing.”
Permit and development impact fees, helping local governments offset costs of public services like schools, police and fire, and safe water, have also increased as cities have seen their populations rise.
“Local government has pushed more and more of the cost of local infrastructure and housing-related services onto residential development, and that gets passed onto individual renters and purchasers of new homes,” said Richard Lyon, a consultant who formerly served as vice president of public policy for the California Building Industry Association, a trade group. “Those fees are getting higher and higher. It has kind of reached a crisis point. ... Fees and charges can account for 20 percent of constructing a home.”
Costs vary widely depending on size of the housing project and where it’s built, but on average it costs $300,000 to $400,000 to build an affordable apartment in California, said Robin Hughes, policy chair for the California Housing Consortium, an interest group.
That cost has risen as building supplies have become more expensive and the price of labor has gone up. Many housing projects that involve taxpayer dollars include so-called prevailing wage requirements, which mandate construction contracts pay workers higher wages that keep pace with the cost of living.
A bricklayer in San Francisco, for example, earns more than $74 per hour, state labor figures show. A tile setter earns $87 an hour and marble mason earns $99 per hour. A carpet layer in San Diego earns $47 an hour, while a plumber earns $76 an hour. A bricklayer in Sonoma County earns $74 an hour, while an electrician makes $55 an hour.
Wiener’s Senate Bill 35 would mandate prevailing wage in all affordable housing projects with more than 10 units.
“It’s important for our construction workers to not make poverty wages,” Wiener said.
State housing laws aimed at spurring development have fallen far short
State law requires cities and counties to set aside land for housing at all income levels, and create plans to allow developers to build on that land. By 2025, state housing officials say California needs 1.8 million more housing units to meet projected population growth. Building industry estimates are higher, as much as 3.5 million.
Critics say the state has not enforced laws requiring cities and counties to set aside land for market-rate, middle- and low-income housing, allowing local elected officials to cherry-pick which laws they follow. When a project does fit within local zoning and land-use rules, neighborhood opposition can delay a project, leading to lengthy and expensive appeals.
Multiple levels of project reviews can further drive up costs, delay development and reduce the number of units per development.
Sometimes projects are simply killed.
“We have seen, in many places, a lack of political will to produce new housing,” said Ray Pearl, executive director of the California Housing Consortium. “Local jurisdictions need to be held accountable, and to do more than just put out a piece of paper saying we have an approved housing element. We’ve seen strong (Not In My Back Yard) opposition from those who view housing as an evil. That leads elected officials to making a political calculation to not cross those loud voices, and they just throw up their arms.”
Lawmakers acknowledge the problem.
“I do think it’s been local opposition,” said Assembly Speaker Anthony Rendon, behind an effort in the Legislature to put forth a housing deal this year to address rising costs and short supply. “There’s plenty of blame to go around, but ... we haven’t addressed housing in a generation.”
Building industry representatives and housing advocates also point to abuses of the California Environmental Quality Act, a broad environmental law passed in 1970 that requires state and local agencies to consider a project’s impact on the environment.
“Some local ‘NIMBY’ groups do everything in their power to stop a development, so they turn to CEQA and file a lawsuit,” Pearl said. “It’s used to force a developer to do what you want them to do. It’s a huge and expensive obstacle and unfortunately is no longer about the environment.”
Lyon, the building industry consultant, said environmental lawsuits lead not only to smaller-scale developments, but higher end housing.
“You’ll have a CEQA lawsuit in an urban area, and it’ll increase the cost of that housing project,” Lyon said. “Once you’ve been through litigation, if you’re lucky enough to get your project approved, you’re now looking at a luxury type of project where maybe before it was aimed at moderate incomes. But because the costs have risen so much, a luxury product is the only thing that will pencil out.”