Local Government
Commentary: The Myth About New Housing Laws

Commentary: The Myth About New Housing Laws

By Timothy L. Coyle.

Recently, a prominent periodical hailed last year’s housing legislation as a marvelous thing – that with it will soon come the end of California’s housing crisis.  Similar statements have been made in the few months following the Governor’s signature – including by the Governor himself – on the passage of several new “housing” bills.

“In my mind, this is a really historic day,” said one prominent state senator after her new tax on real estate, a central feature of the housing package, was passed. “Together, we are lifting more of our residents out of poverty,” she added.  Similarly, a leader in the Assembly hailed the passage of the numerous housing bills as “a tremendous accomplishment.” Said he, “we are once again showing that here in California we are stepping up and getting the job done.”

But, for purposes of affecting the state’s housing woes, the legislation doesn’t live up to its hype – far from it.

For some, it was the same old thing.  Said one Assembly Republican, “we’re not talking about zoning – we’re talking about throwing more money at it (the problem).”  For others – particularly those who’d read what the Legislature’s non-partisan Office of Legislative Analysis had to say about the state’s crisis – the package fails to address the underlying problem.

Indeed, the LAO said the housing problems California is having stem from a fundamental lack of supply, and to solve them means an immediate reduction in laws and regulation.  On that basis alone, the new laws are folly at best and troublesome, at worst.

Take SB 540, a seemingly benign bill to streamline the local approval process.  In fact, SB 540 is optional and its workforce housing opportunity zones (WHOZs) only applies to those areas following the tortured SB 375 regime – containing approved sustainable communities strategies (SCS) or alternative planning strategies (APS).  More bureaucracy.  More regulation.

Similarly, AB 73 also requires the adoption of a WHOZ, but the plan must be approved by the state.  Further, the AB 73 WHOZ mandates a 20 percent low-income housing set aside (like AB 1505:  statewide inclusionary zoning), a subsidy payment to locals and the payment of 25% or 40% more in construction costs to satisfy a prevailing-wage requirement.

AB 879 simply adds new local reporting requirements.  Meanwhile, AB 72 and AB 1397 give the state the ability to impose penalties on localities whose housing plans are inconsistent with state standards.  SB 167, AB 678 and AB 1515 are equally punitive and are likely to place local housing decisions with a judge or jury instead of the duly elected officials of city councils.  None of these bills address the LAO’s assessment – that more regulations won’t do the trick.

Last year’s real Trojan Horse, though, is SB 35 which purports to be a “housing incentives” bill.  But, it isn’t.

Disguised as legislation to streamline the local permitting process, SB 35 actually severely restricts the location of a project eligible for streamlining.  It also imposes both inclusionary zoning and prevailing-wage requirements.  It does, for certain projects, reduce state requirements and consequent hovering over the local planning process by state bureaucrats – which are good things.  But, add in the other limitations on housing construction and the measure is hardly an incentive to build.

To be sure, the two funding bills are consequential.  SB 2 is estimated to generate roughly $250 million per year through the enactment of a fee on public forms and notices – a notable sum.  SB 4 places on the 2018 statewide ballot a $4 billion general obligation bond – $3 billion of which is dedicated to affordable housing construction – which, if approved by voters in the Fall will more than double such funding for largely rental projects.

In fact, if the Legislature only enacted SB 2 and SB 4, the state would be better off.  Inadequate supply and overregulation are, as the LAO told us, are the twin housing problems facing California right now.  Regrettably, you can add last year’s housing laws to the list.

Originally posted at Fox & Hounds Daily.

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