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Every eight years, state housing regulators give cities and counties across California an especially dreaded homework assignment: Make a plan for a bunch of new homes.
Gov. Gavin Newsom’s administration assigns localities goals to hit at four different affordability levels. Collectively, the numbers represent the housing department’s best estimate of the number of new homes needed to match any expected population growth and to chip away at the state’s decades-in-the-making shortage of affordable places to live.
With these targets meted out to each region on a rolling basis, this summer, a massive chunk of the state, including all of Southern California, passed its halfway mark.
So in the spirit of a mid-term exam, how are cities and counties doing?
Bad news, California. If this were graded, the state would abound in D’s and F’s.
Less than a third of cities and counties are on track to permit enough “above moderate” units, the category that typically refers to market-rate housing, according to data submitted by locals to the state housing department.
The progress report for more affordable types of housing is even bleaker. Only 32 jurisdictions — less than 6% — are on track to hit their “very low” targets. That refers to housing within financial reach of anyone earning less than half the typical local income.
After years of nudging, political trolling and litigating, most cities and counties now have state-approved plans in place. But as the production numbers show, it’s one thing to plan and another to build. Almost nowhere in the state is actually seeing the new construction necessary “to meet the housing needs of all Californians,” as housing regulators have described these targets.
Only five jurisdictions in the entire state are permitting at a pace to hit all four income targets. Four are the lightly populated unincorporated bits of small, mostly rural counties: Plumas, Napa, Yolo and Mono. The fifth is Placerville, a town of roughly 11,000 people in the Sierra foothills east of Sacramento.
To be “on track,” a city or county needs to issue permits at a clip that, if sustained, would allow it to hit its state targets by the end of its planning cycle. State housing regulators told the city of Irvine in Orange County, for example, to plan for 8,671 market-rate units by 2030. Now halfway there, the city has issued more than 6,000, making it one of the minority of cities to be on pace to reach its target for above-moderate housing.
But for more affordable digs, Irvine, like most California cities, is far behind. The city has permitted just 9% of the very low-income housing needed to reach its target by the end of the decade. For the next most affordable category, which refers to units priced for those earning up to 80% of the regional median, it’s at a mere 3%.
What’s the housing hold up?
For anyone who has been monitoring the pace of new residential development in California over the last half century, the disconnect between housing planned and housing permitted won’t come as a surprise. The state’s total planning target adds up to nearly 2.5 million units over eight years, a reduction of the even more ambitious 3.5 million target Newsom set for his administration during his 2017 election. That 2.5 million figure works out to 312,500 new homes per year. Even during the state’s boomingest boom years in the early 1960s and mid-1980s, construction figures never reached such lofty heights.
This decade, despite a blizzard of state legislation and policy changes aimed at boosting the construction of new homes, the number of new homes built annually is still just north of 100,000.
Critics of the state’s planning process have long stressed that California’s targets are unrealistic and that local governments can only do so much.
“Cities cannot require developers to develop and cities don’t build housing,” said Jason Rhine, a lobbyist with the League of California Cities. You can lead a developer to a rezoned plot of land, in other words, but you can’t make them build.
Pro-development advocates counter that the uninspiring production numbers suggest that cities still aren’t doing enough to welcome more housing.
“Cities can argue that they don’t directly control production, but they do control fees, zoning and permitting,” said Laura Foote, executive director of YIMBY Action. The housing needs allocation process “is only as good as we have the political will to actually hold cities accountable.”
Foote directed some of the blame at state housing regulators for failing to compel cities to adopt more development-friendly policies.
In a written statement, housing department spokesperson Jennifer Hanson said regulators are “actively monitoring and enforcing” the commitments each jurisdiction has made in its housing plans. She also pointed to a couple of recent laws exempting many urban housing developments from environmental litigation and requiring local governments to allow for taller buildings near major public transportation stops. Both have already been used to “advance approved projects representing thousands of proposed homes,” she said.
There are many reasons that developers may or may not choose to build in a particular location. Some are in the power of local and state governments, like zoning and building codes, permitting timelines and fees. But many are not, said Hanson.
“Whether a project moves forward depends on interest rates, construction and land costs, access to capital, insurance and expected rents or sale prices,” she said.