Commentary: Lots of Opposition to SB 50, Few Alternatives Offered

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Veteran columnist George Skelton has an excellent analysis, pinning down key opponents of SB 50 – Senator Bob Hertzberg and Holly Mitchell in particular.

Like many, he acknowledges problems with SB 50, calling it “a bit heavy-handed, utopian and unrealistic, asking too much of Californians who love their ranch-house culture.

“There were credible arguments against the bill,” he acknowledged, citing “loss of local control to the state and the prospect of cramming apartment buildings into single-family neighborhoods.”

The problem that he notes and we agree is “the status quo is unsustainable.”

Here he writes: “We should be building at least 250,000 housing units a year and we’re producing fewer than 100,000. When demand exceeds supply, prices soar. Urban housing is increasingly unaffordable for middle-class families, let alone the working poor.

“With 40 million people already packed into California, we can’t keep shoving homes into the hinterlands, forcing two-hour, freeway-clogging, greenhouse gas-emitting drives to work.”

George Skelton is an icon.  He is a political columnist who has covered government and politics for nearly 60 years and has been with the Times since 1974.

Mr. Skelton notes that the legislation which would have required cities and counties to allow for denser housing near transit and job centers was “complex and scary.”  That was especially true for many local governments and particularly in Los Angeles.  He noted that ten LA County Senators voted “no” or didn’t vote, while only one, Lena Gonzalez of Long Beach, voted yes.

Said Senator Hertzberg: “While there may be some merit to this notion in limited circumstances, this sweeping generalization both oversimplifies the problem and unnecessarily demeans people who have done nothing more than make homes for themselves, raise a family and play by the rules.”

Mr. Skelton took issue with the words and added that no one defended sprawl, which he called “a dirty word.”  Instead, “They rallied behind local control, always a popular position.”

Mr. Hertzberg, for his part, blamed the tax system for local governments, “ignoring housing in land use decisions.”  He did not criticize Prop. 13 by name, “but noted that the primary source of local revenue became the sales tax.

That’s why local governments “say yes to auto malls, say yes to big-bucks retail stores, but say no to housing,” the senator asserted. “That is the single biggest reason we are where we are.”

He has a point there.  Look at Davis – we rely on auto malls and we can downplay housing as a revenue source because the collection of property taxes lags behind actual home values.

One big problem said Senator Steve Glazer of Orinda, who voted against the bill, the problem isn’t cities, it’s building.

“In my neck of the woods,” the senator also says, cities “are not bad apples. We’ve approved thousands of new housing [units], but it’s not being built.”

George Skelton quotes Dan Dunmoyer, president of the California Building Industry.

He argues that 550,000 housing units have been approved but not built across the state.

“The cost to build them is greater than the market,” he claims.

He puts the blame on government fees like sewers, schools, and parks, as well as labor costs.

He argues: “It’s not profitable to build right now.”

Writes George Skelton: “It’s complicated.”

I agree with that.

One of our readers thinks that Mr. Dunmoyer is wrong.  He believes that the problem is that developers under Prop. 13 can simply hold vacant land at a low cost until the market prices rise sufficiently, where they can achieve their return on investment.

Personally, I think they are both right.  Prop. 13 as cited not only by our readers, but also by Mr. Hertzberg, has played a role in creating a lag on property value for tax purposes, which has reduced the incentive to use housing for local revenue.

At the same time, we have seen the fiscal analysis of the downtown, for example, in pro formas from various consultants that show indeed that fees, along with construction costs and material costs, are a huge factor in the all-important return on investment.

But I think it comes back to the early point by Mr. Skelton – a point I made this week in my commentary: the status quo is not sustainable.  And minor tweaks are not going to work.

So far I see no proposals that can fix this problem.  It is easy to kill an imperfect solution, but it is hard to find an answer that will work.

As Senate Leader Toni Atkins put it in her statement, “I want them to tell me what it is they’ll support.  Where are they willing to compromise?”

To which Mr. Skelton adds: “Yes, L.A. legislators. What exactly do you have in mind? Hopefully not more sprawl.”

—David M. Greenwald reporting


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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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45 thoughts on “Commentary: Lots of Opposition to SB 50, Few Alternatives Offered”

  1. Don Shor

    He argues that 550,000 housing units have been approved but not built across the state.

    “The cost to build them is greater than the market,” he claims.

    He puts the blame on government fees like sewers, schools, and parks, as well as labor costs.

    He argues: “It’s not profitable to build right now.”

    How much do those costs add to the construction of new homes?

    https://eyeonhousing.org/2018/06/regulation-over-30-percent-of-the-cost-of-a-multifamily-development/

    Regulation imposed by all levels of government (whether local, state or federal) accounts for 32.1 percent of the cost of an average multifamily development, according to a new study conducted jointly by theNational Association of Home Builders(NAHB) and theNational Multifamily Housing Council(NMHC).  The study is based primarily on a survey of multifamily developers from both organizations.

    1. Bill Marshall

      Don… thank you for the cites… will drill down further, later, but it looks sound.  I believe a few categories would be higher (percentage) in CA.

      I recommend folk read the cites, to understand cost drivers, particularly related to the challenges in providing ‘affordability’.

    2. Richard McCann

      I have a couple of questions about this study. First is whether this includes or excludes land costs? This would be interesting for California where the added development costs are likely higher in absolute dollars but may be a smaller % measured against land costs.

      The second question is what were the costs previously and have they increased substantially. One category is “cost increases” related to building codes, but the other categories are not so clearly labeled. In addition, there appears to be double counting of “fees” in the table in the study.  I was surprised that the cost of delay is so low, at 0.7%.

      There also appears to be some categories that hinder the “race to the bottom” that has characterized MF housing in the past. Going beyond “ordinary” development requirements raises the question of what is “ordinary”? And code changes likely are creating savings for residents in energy and water use.

      So this study requires more unpacking than I have time to do, but it may be a starting point for this discussion.

      1. Bill Marshall

        Richard…

        It appears acquisition of land is not in there… a driving factor, and depends if the land is “raw” (no streets/utilities) or ‘infill’…

        Energy/utility savings are difficult to ascertain, as the additional costs are not just capital, but generally part of mortgage interest (SF), and capital costs not recovered in MF, unless built into rent…

        Good questions, no answers here… multiplicity of ‘variables’… but the cites are good primers.

         

  2. Ron Glick

    “With 40 million people already packed into California, we can’t keep shoving homes into the hinterlands, forcing two-hour, freeway-clogging, greenhouse gas-emitting drives to work.”

    The Davis version is a microcosm:

    With forty thousand people already packed into Davis, we can’t keep shoving homes into the hinterfarmlands, forcing 20 minute, street clogging, greenhouse gas emitting drives to work.

  3. Alan Miller

    Everyone has it wrong.  The problem is they are trying to force more housing onto transit systems that aren’t sufficient and the masses don’t want to ride.  Building a giant apartment building 1/4-mile from a bus stop is not a solution because:  people don’t like riding buses, there is Uber/Lyft, it takes twice as long, the buses don’t run at all hours, etc.

    The solution is an extremely robust intercity rail system.  This connecting to Uber/Lyft/Microtransit/Share Bikes-Scooters/Bus Trunk Lines.  The problem is, our rail system is anemic.  Even some systems that are built are often slow and/or infrequent and/or scary.  We need to invest tens of billions, and we need to do it right.  The housing will come when the infrastructure is in place, and then you actually can have parking maximums instead of minimums.  Until then, all this green talk is mostly giveaways to developers.  And it’s not working.

    1. Richard McCann

      Alan

      I agree. And there’s a pot of money already available–the high speed rail bonds. Instead of building a “road to nowhere” (being overly euphemistic) those funds would be much more effective to spend in the current job centers of the Bay Area and LA to better connect peripheral communities like Davis to the job core. Davis can work to attract jobs that match a specialized theme, such as sustainable food tech, but as the Brookings study I posted a couple of days ago points out, jobs are and will be accumulating around a small number of centers. Travel between SF and LA is an important factor to address, but we will get a much bigger bang in both GHG reductions and economic returns by focusing first on regional interurban lines. It would be good to see a study comparing the relative cost effectiveness of HSR vs interurban.

    2. Bill Marshall

      The housing will come when the infrastructure is in place, and then you actually can have parking maximums instead of minimums.

      To an extent, it is a chicken/egg thing… planning for both housing and transit, in tandem is most logical…

      Locally, my concern is that ‘planning’ staff does far more ‘processing of applications’ than ‘planning‘…

      On Amtrak, apparently BART is “planned” to reach down to San Jose… but hasn’t happened yet…

      San Jose (Dirion station) is funky (structure) and cool (concept)… Amtrak, CalTrain, VTA (bus and light rail)… once BART gets down to there… very cool.

      Have traveled to SJ 4 times since September… combination of car (house to Amtrak, and yeah, you’d better be early), Amtrak to SJ, then VTA (combination of light rail and bus), then a less than 1/4 mile walk to my destination… takes longer, but unless it was an emergency, I really don’t plan to drive to anywhere on the Peninsula… between traffic, parking costs, etc., I prefer to spend some ‘delay’.  Much more relaxed.

      I could get to my childhood home in San Mateo easily by some combination of Amtrak/BART/Caltrain/SAMTrans, etc. (and a half mile walk).

      But Alan is right… still a lot of Amtrak lines need to be ‘brought up to speed’, as to track condition.  That and sharing many lines with freight, doesn’t help towards ‘time’.  [and then there are the ‘suicides by train’ incidents, but that is the rare problem].

      We definitely need to improve transit opportunities… but there will be trade-offs, to be sure.  Requires real planning, financial commitment, not theoretical, or “wouldn’t it be nice” policies…

  4. Ron Oertel

    What exactly do you have in mind? Hopefully not more sprawl.”

    SB 50 did nothing to prevent that.  As long as people can get cheaper, more spacious housing farther away, a significant number will continue pursuing that.

    It is truly “weird” that those who advocate market-rate solutions seem to have a “problem” with allowing the market itself to “correct” the situation (e.g., the net migration out of expensive areas).

    And if you don’t want to make the problem “worse”, then stop encouraging even more jobs than what a given community needs.

    1. Richard McCann

      Ron O

      As I pointed out with posting the Brookings study (which confirms other studies I’ve seen), jobs are NOT migrating to other areas, but instead continue to concentrate further. Jobs will NOT follow housing–it is the other way around. Phoenix and Las Vegas discovered the fallacious reasoning of “build houses and they will come” in the Great Recession collapse.  We can’t fight the ocean, but we can ride the wind and surf. The market is telling us that we need to build more housing near job centers, not the other way around.

      1. Ron Oertel

        I’ve posted articles which show just the opposite.

        To some degree – so have you (e.g., Pittsburgh, Detroit).

        How stupid it would be, to not encourage job growth in areas that actually need it (e.g., through tax incentives), vs. those communities which already have an excess-supply of good jobs.

        Regardless, this is a choice that a given community can make – if they’re allowed to do so. It’s immoral to purposefully make the situation worse.

        But again, the “market-rate” people have yet to explain why they (apparently) “oppose” letting the market take care of itself (e.g., via net outward migration). Hopefully, while maintaining Affordable housing (and possibly rent control) for those “left behind”.

        1. Ron Glick

          Having come from a place where if they give you doughnuts it means the mill is closing I can’t disagree more about the importance of adding jobs. I would add them to infinity if I could. The more jobs the better the economy, the healthier the population, the fewer opioid deaths. Jobs give people self esteem, a positive identity, the ability to support families, pay taxes for the common good and give to charity. Having a job also helps people gain skills to get a better job.

          Arguing that Yolo County, an area with a high poverty rate, should turn away jobs is a pretty extreme position in my humble opinion.

    2. David Greenwald Post author

      “SB 50 did nothing to prevent that. ”

      Prevent it? No, it wasn’t designed to prevent it. It was designed to encourage densification.

      “It is truly “weird” that those who advocate market-rate solutions seem to have a “problem” with allowing the market itself to “correct” the situation”

      One of the problems cited is Prop 13 which interferes with the market.

      It’s hard for the market to correct the situation without taking Prop 13 into account.

      I also think you’re making a lot of assumptions here about who supports what exactly, but that’s for another time.

      1. Ron Oertel

        Well, if SB 50 wasn’t intended to prevent “sprawl”, why is that subject mentioned several times in the article (and elsewhere I assume – regarding SB 50)?

        If you “get rid of” Proposition 13, you’re going to end up pricing people out of their own homes.

        1. David Greenwald

          Let’s look at what the sponsor of the legislation has said.  He wanted to encourage housing near transit and jobs rather than sprawl.

          For some reason you are having difficulty understanding the difference between preventing sprawl and encouraging housing that isn’t sprawl.

        2. Ron Oertel

          Again, if the legislation actually contained any actual disincentive to discourage sprawl, then I would acknowledge it.

          It doesn’t.

          If anything, it might encourage more sprawl, as folks escape newly-created “Wienervilles” (and more growth resulting from the resulting pursuit of even more economic development).

          It’s time to get off the “merry-go-round”.

           

        3. Ron Oertel

          I will re-word my question:

          There seems to be a “dearth” of articles on here, regarding the views of social justice/equity groups toward SB 50.  Why is that, given David’s apparent interest in that subject at other times?

        4. David Greenwald

          Ron: The legislation didn’t include a disincentive for sprawl, it attempted to create an incentive for densification.

          On your other question – no idea.

        5. Ron Oertel

          Regarding my “other” question – kind of a weird response, given that you determine what the focus of your ongoing series of articles consist of.

          It seems like your concerns regarding “social justice” usually take “second place” in regard to development.  (Same thing occurred regarding WDAAC, and perhaps to some degree – Affordable housing.)

          “Teaming up” with development interests generally hasn’t helped address the issues that you claim to be concerned about.

          Again, there’s lots of article on the Internet, regarding opposition to SB 50. If I had to guess, I’d say that the concerns from “social justice” groups are ultimately what caused it to fail. And yet, you write very little, about this.

        6. David Greenwald

          So here’s an interesting exercise for you – find me an argument against SB 50 that I will find compelling from a social justice point of view.  I’m somewhat moved by the affordable housing argument – which is why I argue for bringing back redevelopment.  I’m somewhat moved by the gentrification argument – which again is why I favor bringing back redevelopment.  I’m not moved by the we don’t need 3.5 million new homes argument.  So I’m all ears as to what is missing here.

        7. Ron Oertel

          Here’s one – the first thing that popped up.  Pretty sure that you can easily find a lot more. Perhaps you should be more than “somewhat moved”:

          ?The bill “fails to address our most serious concerns and will exacerbate the housing challenges experienced by low-income people, people of color and other vulnerable people, the very populations being hit hardest by California’s affordability crisis,” the groups wrote in a letter to state Sen. Scott Wiener (D-San Francisco), SB 50’s author. “It fails to meet these communities’ housing affordability needs and has the potential to create new pressure and incentives for displacement.”

          https://www.latimes.com/california/story/2020-01-23/housing-senate-bill-50-scott-wiener-opposition-gentrification-holly-mitchell

        8. David Greenwald

          Those are points I’ve addressed and I also don’t believe are insurmountable problems if we have the funding for affordable housing.  I also view those points as a bit of the perfect being the enemy of the good.

        9. David Greenwald

          If you look at the bill text, it is an inclusionary requirement.  Although it goes up to 25% above 351 units in the project.  At the lowest level it is also at the standard 15%.

          So you can strengthen the affordable requirement.  I would introduce it concurrent with the reinstatement of redevelopment.

        10. Ron Oertel

          I’ll take your word for it, that anything below 351 units would “require” 15% Affordable housing.

          Advocating for a bill that doesn’t exist is an interesting exercise, at least.

        11. Ron Oertel

          I tried editing my comment, but was cut-off again.

          In any case, it might be interesting to explore how the 15% – 17% was “divided” between various levels of income (e.g., very-low, low, etc.).  Which I assume would have been based upon the location.

          There’s a reason that this was opposed by a significant number of “social equity” groups. And again, I didn’t see any significant amount of discussion (or articles) on here, regarding that. You’ve probably provided more information in response to my comments (alone), regarding what the actual requirements were.

        12. Ron Oertel

          As a side note, didn’t California voters recently approve one or two multi-billion dollar bills to assist with Affordable housing?  Where is that money going?

          Regarding redevelopment funds, is that something that (perhaps) companies like Google and Facebook might pay for?  (Why do I “doubt” that?)

          Also, don’t redevelopment funds have a pretty “checkered” past, regarding displacement of low-income people, and/or outright corruption? (Including the bulldozing of entire neighborhoods?)

          Regarding the actual corruption, I’ve just seen that periodically “mentioned”, without discussing what actually occurred. I am not familiar with it.

        13. Ron Oertel

          David:  It appears that the article you’re using (to base your article upon) notes that there would have been an exemption from Affordable housing requirements for anything below 11 units.

          And of course, this guy makes the same unsupported assertions that you imply in your article (but even more strongly), in regard to the prevention of sprawl from SB-50.

          Perhaps you should consider including a link to the actual articles/sources that you’re referring to, in the future.

          https://www.latimes.com/california/story/2020-02-03/

        14. Ron Oertel

          That’s right.  However, this fact wasn’t in this (or any other article that you’ve written, recently – to my knowledge).

          One wonders how many 10-unit dwellings would be created, as a result.

        15. Ron Oertel

          BTW, if the local ordinance is stronger, the local ordinance supersedes it.

          My understanding is the SB 50 would preclude local ordinances, but I’m not sure of that.  Certainly, there would be something to “prevent” local ordinances from “requiring” an unrealistic number of Affordable dwellings, so that they don’t bypass the supposed intention of the legislation.  Or, one would “hope”, I suppose.

          Certainly a lot of 4-plexes that would replace single-family dwellings, as a result. But hey, it’s the “fault” of those single-family homeowners in the first place, for “getting in the way” of expansion from tech companies in the first place 🙂

          And while you’re at it, price them out of their own homes, by repealing Proposition 13. That ought to “speed the process along”.

        16. David Greenwald

          “ The Bill exempts multi-family developments from specified zoning restrictions if the project is located either (a) within a half mile of a rail transit station; (b) within a quarter-mile of a high-frequency bus stop; or (c) within a “job-rich” neighborhood. In these special zones, parking minimums would be sharply reduced and zoning codes could not impose height limits lower than 45 or 55 feet, depending on local factors. In exchange, developers who use this incentive will be required to designate an as-yet-undefined portion of new units as affordable housing.”

        17. Ron Oertel

          I’m not sure what a “job-rich neighborhood” is, but these other requirements would impact a large area.

          I also saw some mention of the “elimination” of single-family zoning, beyond what you’re stating.

          You’ll forgive me if I note that you actually never wrote an article regarding what the requirements were, and how it would impact various cities and neighborhoods.

          Hell, you hadn’t even noted that a 10-unit building would be exempt from the Affordable housing requirements, until I brought it up.  (And yet, I haven’t even been following this issue very closely in the first place.)

          I suspect that (if anything), this proposal is “most sincerely dead”, to paraphrase a quote from the Wizard of Oz. It’s failed 3 times now, under various guises. I’m sure that there will be some kind of effort to resurrect it, but not to the degree to which it had been proposed.

  5. Tia Will

    I have an honest question for anyone who cares to respond.

    We talk incessantly about where to locate permanent housing. Yet I hear very little discussion about “out of the box” housing, such as a city providing more space for innovative housing such as “tiny homes” that could be owned or rented and even possibly moved to meet future needs. We seem to be content to bemoan our inability to provide conventional housing for all, yet loathe to consider anything that does not fit a standard model of “the American dream”.

    Anyone have any studies to share? Thoughts?

    1. Alan Miller

      One problem with tiny homes in Davis is tiny homes are one story.  Fine in a place with lots of cheap land, but not in land-locked (due to Measure R) Davis, where land and rents are climbing faster than a metaphor I can’t think of at the moment.

    2. Don Shor

      I think we need more sites with rented parcels on which people can put manufactured housing; i.e., mobile home parks. But in general when I’ve suggested that, it hasn’t gained a lot of traction here.

    3. Ron Oertel

      Alan M.  ” . . . Davis, where land and rents are climbing faster than a metaphor I can’t think of at the moment.”

      Another commenter recently noted that Davis prices have been rising less-quickly than other places in the region (despite their much higher pursuit of development).

      Davis prices don’t fall as quickly, nor do they rise as quickly as the “boom-and-bust” towns in the region.

      Could be that folks are just going to have to get used to higher market-rate prices (which didn’t rise much at all, during the extended recession). It’s unfortunate that wages haven’t kept up.

      And for those folks who decide that it isn’t worth it, there is another option. Many are already pursuing that (net outward migration).

    4. Josh Pollich

      I’ve never understood the big fuss about ‘tiny homes.’ They already exist: realistic, desirable tiny homes are mobile homes. But I can only imagine the NIMBY reaction to a serious proposal for a new trailer park in the city.

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