Analysis: How California Can Solve Its Housing Crisis

The Bee this week ran a fairly interesting article where they compiled a group of political and business leaders across the political spectrum and asked them how to solve the state’s housing crisis.  As the governor’s advisor on housing, Tia Boatman Patterson put it: “The state is taking a multi-pronged approach to address the housing crisis.”

For the governor this appears to involve “providing resources and incentives for local governments to plan for their fair share of housing; integrating housing and transportation planning and investment; working with locals to reduce regulatory barriers to production; making state excess property available for affordable housing; and providing financial assistance to developments to ensure long-term housing affordability.”

Speaker Anthony Rendon focused on the need to build affordable housing, arguing it “is connected to nearly every other issue California faces.”

Scott Wiener focused on the housing shortage – the need for “3.5 million homes and growing.”  He argued: “This shortage pushes people into poverty and homelessness, leads to evictions, and pushes out working families.”

For him, “One of the most important strategies is making it legal to build enough housing. Right now, multi-unit buildings – such as apartment buildings and condos – are illegal in 80% of California, since, through zoning restrictions, most cities limit new housing to single family homes only. This restriction ensures that housing remain very expensive and perpetuates our housing shortage.”

Across the aisle, the Republican Senate Leader, Shannon Grove, said, “Ultimately, it comes down to the nuts and bolts of the situation. We know building homes is an expensive business in the Golden State. The majority party has created barriers to housing construction such as overburdened regulatory policies. Continuous fees and delays also add tens of thousands of dollars to the cost of a new home. Republicans have supported expanding tax incentives for below market rate housing construction to help those who find it hard to own a home.”

League of California Cities executive director, Carolyn Coleman, focused on addressing “the housing supply shortage” as well as providing “more affordable housing for California’s working class.”

She focused on: “We need to replace redevelopment with a more tightly defined and accountable tax increment financing tool that is specifically focused on subsidizing affordable housing and the infrastructure necessary to support that housing.”

Moving on the business and building industry…

Dan Dunmoyer – President and CEO, California Building Industry Association – not surprisingly focused on building the 3.5 million homes that Governor Newsom proposed.  He also added, “Stop adding costs to the home-building process…  Roll back the out of control building fees because $150,000 to $200,000 per home is simply unsustainable.”

So, build more houses and remove barriers to building.

That was the same for Perry Pound from LA County, Greystar, who said that “more housing must immediately be built at every level – from market-rate to affordable. Housing supply must be brought into balance with housing demand. Only then will rental prices decrease.”

Cesar Diaz from the State Building and Construction Trade Council of California focused on the jobs-housing gap.  He said: “The primary cause of the affordable housing crisis in California is that workers’ paychecks have not kept pace with housing prices. Even when we make it easier to build through streamlining of the local approval process, the market reality is that developers do not choose to include affordable, or pay higher wages, unless we give them a reason to.”

Therefore, he argued, “the most important step is to bridge the divide between income and rents, at the same time scaling up the production of affordable housing to meet the needs of the working class.”

Amanda Eaken from the Natural Resources Defense council: “California has an affordable housing problem. We don’t build enough of them to the tune of a 100,000-unit deficit every year. And the shortfall is even bigger around affordable rental homes — about 1.5 million units less than the low-income families who need them. This shortage drives up prices and puts vulnerable residents at risk of displacement.”

Her fix: SB 50.

Lisa Hershey from Housing California: Affordable housing.  She writes, “The vast majority of Californians earning the least are forced to spend more than half of their income on rent, with little left over for necessities like food, transportation to work and school, and health care.”

Curt Pringle: “Political will is the most important element in creating affordable housing for California’s working class families. Housing for our economically diverse workforce should be a priority for every city leader in California. Every city should seriously deploy strategies to encourage and support development of ‘workforce’/’affordable’ housing locally.”

Jennifer Svec from California Association of Realtors acknowledged that “there is no silver bullet to solving the state’s housing crisis.”  She noted, “Realtors strongly support and encourage the construction of new and much needed, workforce housing units.

“(We support) AB 1568, by Assemblyman Kevin McCarty, will reduce vehicle miles traveled by incentivizing local governments to appropriately plan for housing. AB 1568 restricts access to some transportation grant funds should a local government fail to plan for their fair share of their local housing need.”

Richard Bloom, Chair of the Assembly Committee on Resources and Transportation said “we must couple innovative financing and construction tools with protections for current tenants who are at risk of being evicted from their homes due to exorbitant rent increases.”

Rob Lapsley from the California Business Roundtable: Supply and demand.  He said, “Basic economics proves that increasing the housing supply is the only real long-term solution to bringing down costs and providing stability to housing and rental prices.”

He writes that “the most important step is for large and small property owners to come together and define a workable policy that stimulates new construction while ensuring the greatest access to affordable units in the shortest amount of time possible.”

Jon Coupal – President, Howard Jarvis Taxpayers Association – looked at housing being affordable and stated, “An often overlooked remedy would be a significant increase in the Homeowners Exemption.”

He concludes: “An increase in the exemption from $7,000 to $32,000 will save every homeowner in California an additional $250 per year. This may not seem like a lot, and probably won’t be noticed by wealthy homeowners, but will be a welcome boost to the poor and middle class homeowners struggling to make ends meet.”

Maria Salinas, the CEO of the LA Chamber: “Policy makers and stakeholders need to recognize there is no magic bullet or one piece of legislation that will solve for our housing affordability crisis.”

She recommends: “We need to pursue increased density and update zoning where it makes sense, allow housing developers access to the same type of expediting process we give athletic venues when specific benchmarks are met, and reduce impact fees that add to the financial burden. With these steps, the cost to build housing other than market-rate housing pencils out.”

Finally, Carl Guardino from the Silicon Valley Leadership Group: “$255,000. That’s the household income needed to even qualify for the median priced home of $1,250,000 in San Jose, the city in which I was born. My blue-collar, working class father and stay-at-home mother raised four sons, on one construction worker’s income, in a home my parents purchased in San Jose for $17,000. That is not a typo.”

Some of his suggestions included an RHNA “process that actually lead(s) to the production of homes rather than the production of plan,” meaningful reforms to CEQA, investments to fix the rail transition system, put densities for home within transition stations ala SB 50, and “we need to support local elected leaders wiling to cast tough yes votes by standing with them at city and town council hearings across our state.”


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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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14 Comments

  1. Rik Keller

    [edited]
    Dan Schnur’s list in the Sac Bee is heavy on government officials and building industry types, with affordable housing, tenant, and equity advocates notably absent. In other words, it’s exactly the type of list one would expect from a long-time Republican Party communications person.

    1. Craig Ross

      There are two ways to deal with things you don’t agree with – perhaps more.  One way is what Rik has done – basically attack the messenger but not provide any real insight.  The other is to introduce some additional ideas or discuss what is wrong with a given argument.  One way incourages discussion and learning, the other way, just creates negativity and animosity.

  2. Jim Hoch

    “Speaker Anthony Rendon focused on the need to build affordable housing, arguing it “is connected to nearly every other issue California faces.””

    He is right but probably not the way he intended. More housing means more traffic, water, sewage, power, pollution, etc.

    1. David Greenwald

      There’s another way to look at it.  Less housing means the same because poeple live somewhere, and have to commute to their place of work if the housing isn’t available.

        1. Bill Marshall

          May God forbid!  Let’s ban all new life! (or at least ban the poor)[and forget about immigrants!]

          Less pressure on resources… eventually, no need for schools and school taxes!

          Great concept!

        2. Todd Edelman

          “Affordable” housing needs to be a more holistic concept, inclusive of affordable transportation, school, health care,  cultural and integration opportunities, well-paying jobs and an improving social safety net. Citizens, experts and policymakers need to demand this Affordable Living, but about housing it needs to disproportionately target the needs of those who have been wronged by the jobs-with-housing-scarcity-clusterf*ck of the last decade — it’s why SB50 is not a good solution.

        3. Mark West

          “More affordable housing means more people.”

          The people are already here. More affordable housing means that more of them will be able to find an appropriate place to live. Artificial scarcity in housing is a poor policy.

           

        4. David Greenwald

          It means people closer to work which means less traffic and environmental impacts.  As Mark points out – the people are here – there is a reason why there is a shortage of affordable housing.

        5. Jim Hoch

          There is a steady outflow of people, primarily in the low-mid salary range, due to the price of housing. Building more affordable housing may lower the outflow and raise the population.

  3. Ron Oertel

    ” – the people are here – there is a reason why there is a shortage of affordable housing.”

    The people that are here already live in housing, for the most part.  Additional housing and jobs bring more people, simple as that. I guess some believe that California should continue to encourage this, well-past (and continuing beyond) the 40 million residents that are already here. One might ask, “how will that work”?

    The following quote (from above) is rather interesting, considering its source:

    Cesar Diaz from the State Building and Construction Trade Council of California focused on the jobs-housing gap.  He said: “The primary cause of the affordable housing crisis in California is that workers’ paychecks have not kept pace with housing prices.”

    Of course, lower-wage workers are also being displaced by higher wage workers, in some areas.

     

  4. Rik Keller

    Here’s some analysis from the Council of Community Housing Organizations (SF) [my emphasis in bold]:

    https://www.sfccho.org/in-the-news/2018/10/13/eye-on-the-state-housing-crisis-tied-to-income-inequality

    “EYE ON THE STATE: HOUSING CRISIS TIED TO INCOME INEQUALITY – SF Examiner, February 3, 2017

    Here on our San Francisco island, struggles over affordable housing and land-use policy have for decades absorbed much collective energy. Now, beyond our shores, there is a statewide “housing crisis,” and ideas about how to “solve” it are flying around the Capitol. Eye on the State will examine the local implications of proposals brewing in the Capitol from the perspective of community, housing, labor and environmental advocates representing everyday people.

    To start, let’s get some clarity on the problem: California’s “housing crisis” is, at heart, an affordable housing crisis. Yes, housing production plummeted statewide after the 2008 financial crisis and has yet to recover. But the core question about the need for increased housing supply is: “supply for whom?”

    Let’s also be clear that this affordability problem is as much related to income inequality as simply affordable housing “production.” While the dramatic rise of the tech sector with its high paying jobs is widely reported, less talked about is the up to six lower paying support and service jobs created for every tech job, driving up the need for low- and moderate-priced housing. Yet the reality is that the real estate market tends to only cater to the top-end earners.

    In areas of the state where housing production has increased over recent years, it’s predominantly on the upper end of market-rate, creating an ever-widening gap for housing affordable to Californians earning less than the state median income. We know this all too well in San Francisco, where new market-rate housing is at nearly untouchable prices for even well-paid, white-collar workers, let alone The City’s majority of everyday low- and moderate-income people in need of housing.

    What this top-end focus of new development has resulted in is a tremendous imbalance in the affordability of housing supply. Some California cities are “performing” quite strongly on the housing goals the state sets for them for market-rate housing, but falling far short when it comes to housing affordable to low- and moderate-income people. For example, the regional Association of Bay Area Governments reported that 99 percent of the projected market rate/above-moderate-income housing need was accomplished across the region’s 101 cities in recent years, while only 28 percent of all other needs for very-low, low- and middle-income housing were achieved.

    While some cities like San Francisco are working hard to address affordable housing, many others are failing to build their “fair share,” exacerbating the load put on the Bay Area’s “Big Three” — San Jose, Oakland and San Francisco — which have absorbed more than a third of the entire region’s development in recent years (and are expected by regional planners to take on up to 45 percent of Bay Area development between now and 2030!). We must seek “regional equality” in meeting our future housing needs with policies that even out development across the region.

    It is important to remember the housing market is different here than in Fairfield, Vacaville or Palo Alto, or farther afield in cities like Costa Mesa or Bakersfield. If there is such a thing as “naturally affordable” housing for the middle class, it might happen in some places with the right market conditions, but not others with hot real estate markets. As former State Sen. Mark Leno poignantly said in response to last year’s sweeping “by-right development” proposal from Gov. Jerry Brown, “one size does not fit all.” New, innovative policies must be devised at the state level, focused on higher density development in mature suburbs close to suburban employment centers. Evening out development patterns is a challenge, but with smart policies targeting the right places it can be done.

    Solving the housing affordability crisis is not simple or easy. The California legislature has tried a variety of bills over the last three years, from protecting tenants, to strengthening “inclusionary” housing law and securing permanent state funding for affordable housing. But heavyweight interests, namely the realtors, the apartment association and the building industry, have fought these solutions tooth and nail.

    Instead, the real estate industry is pushing the concept of development approvals “by right” — the idea that if local review processes are eliminated or “streamlined” then market-rate development will happen faster, more bountifully and with lower costs, all of which might result in more affordability for everyday Californians, everywhere. For a city like San Francisco where development is blazing and approvals are flipped out like pancakes at the Planning Commission, stripping away local public review for market-rate development is a power grab putting developers’ “right” to expect development approvals over the city and community’s “right” to push for more affordability or better environmental or labor standards in new development. Last summer Governor Brown ran a by-right development proposal up the flagpole, and it was blasted by a statewide array of community, housing, labor and environmental organizations. And this year new by-right bills are already being introduced again in the legislature.”

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