Tag Archive for: affordable housing

Fixing California – Part Five, Affordable Market Housing

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Everyone’s heard it by now. California’s got a housing shortage, with prices within 50 miles of the coast among the highest per square foot in the world. The median price of a mid-tier single-family dwelling in Santa Clara County—better known as the Silicon Valley—is now $1.4 million. Statewide, the median price of a home in March was $759,000, up nearly 20 percent from just one year earlier. According to Zillow, the national median price of a mid-tier single-family dwelling is $287,000, barely more than one-third what the same home costs in California.

There’s a perfect storm of factors causing this imbalance, which is rapidly spreading across the rest of the country. Santa Clara County’s foreign-born population is an astonishing 38.5 percent. In California overall, 27 percent of the population is foreign-born. These millions of immigrants are bidding up the prices of housing in California.

At the same time, and with increasing voracity, major hedge funds are buying homes. It’s a savvy diversification strategy. Home prices go up because people are buying them, and investment portfolios chasing yield can ride the bubble for as long as demand exceeds supply, depending on inflation to give them a soft landing if and when the market finally cools. According to a real estate consulting firm based in Southern California, one in five homes sold in 2020 were purchased by investors. In Orange County, 3.5 percent of all residential parcels are owned by corporations with portfolios of 200 or more properties.

But this is only half the story.

Also driving the storm is a supply chain strangled by regulations, mandates, permit delays, and excessive fees. Developers and members of builders associations in California all tell the same story: a subdivision that takes two months to get approved in Texas, and might incur a few thousand dollars in permitting fees, can take two decades to get approved in California, if it gets approved at all, and will incur millions in permitting fees.

Further catalyzing the storm are special interests, all lined up to benefit from unaffordable housing. Politically influential hedge funds have perfected the art of doing virtual inspections and can outbid individual buyers with huge down payments and pre-arranged financing. They can continue to expand their share of existing stock and exploit the benefits of buying at scale. They have no interest in seeing supply drive down prices.

The public sector as well is well served by a property bubble. When properties turn over, their values are reassessed at market rates, and property tax revenues soar. As long as building is confined to “infill,” and new construction is limited, local property taxes grow commensurately. People who bought in before the run-up in values are protected by Prop. 13, which makes them relatively indifferent to the price bubble. Property owners also appreciate the opportunity to use their home equity as collateral. But the upshot of all this is people of modest income cannot afford to live in California.

How Policymakers Get Everything Wrong

To cope with unaffordable housing, California’s policymakers are doing absolutely everything wrong. Their biggest mistake is to not confront the central moral argument used to justify artificial scarcity of housing, which stems from environmentalism run amok. Not one state legislator is willing to challenge the core premises of the environmentalist lobby, which are that California is running out of open space, and that new suburban developments create excessive “greenhouse gas.” Both of these premises are false.

To begin with, California is a huge state, with tens of thousands of miles of undeveloped land. There are 25,000 square miles of grazing land in California, and only 8,200 square miles of urbanized land. The math is almost unbelievable, but the math is simple and immutable: If you built homes for 10 million new Californians on quarter-acre lots, and those homes were each occupied by families of four, and if you allocated an equal amount of land for roads, parks, retail establishments, and industrial parks, you would only consume 1,953 square miles. That equates to 1.2 percent of California’s total land area; it equates to 7.8 percent of California’s grazing land; it increases California’s urban footprint from 5.3 percent to 6.5 percent.

The idea that greenhouse gas emissions are increased when suburbs are built is based on biased analysis, paid for by agenda-driven activist organizations. Telecommuting, job-creating businesses migrating to new suburbs, and new, clean and sustainable modes of automotive and aerial transportation all debunk that narrative. A density delusion possesses California’s policymakers, and it must be broken.

In the name of stopping urban “sprawl,” a cordon has been wrapped around California’s cities, with increasingly aggressive state laws passed to mandate densification. Local zoning laws that residents expected to be enforced when they bought their homes are being usurped, with legislators calling yards and single-family homes “immoral.” Senate Bill 9, currently sailing through the California state legislature, “allows 4 market-rate homes where 1 now stands, up to 6 units if developers use a hidden ‘two-step’ that Livable California volunteer attorneys spotted, and 8 units with local accessory dwelling units (ADUs).”

This is California’s policy solution to more housing. Use state law to empower developers and investors to buy existing single-family homes, anywhere, and demolish them to build apartments. This is not about “equity.” It’s about money. Not only will developers and investors be empowered to declare open season on any residential neighborhood, but they’ll get special tax treatment and subsidies if they construct low-income housing.

That sounds very high-minded, until you’re the family breadwinner, working two jobs to pay down your $700,000 mortgage, suddenly confronting a subsidized apartment building on the lot next to you, teeming with occupants who don’t have to work and don’t have to pay rent. And of course, the wealthy neighborhoods can afford to litigate, driving predatory developers to the vulnerable middle-class neighborhoods.

A Completely Different Approach to Housing

There’s nothing wrong with an organic process whereby local governments recognize that certain downtown neighborhoods, or certain high-traffic boulevards, would be more appropriately re-zoned to accommodate higher density housing. That has been happening forever, and it is an inevitable fact of urban growth. California can be the place where tantalizing possibilities that urban planners dream of are realized—architectural innovations that range from “parasitic architecture” to grand and inspiring new mega-structures. There is potential for high-rise, indoor agriculture; there is the potential to create more per capita interior and exterior space, even while increasing the population per square mile. Take a look at the skyline of Dubai or Shanghai to see what a confident culture that isn’t riven with Malthusian doubts and bureaucratic paralysis can accomplish.

To stabilize home prices and even begin to bring them down, however, the wood-framed one or two-story home remains a far more sustainable and cost-effective structure than an urban high rise. It is also where most families prefer to live. And that should count for something.

The economic model that enables affordable suburbs requires a redirection of public spending and public policy. As it is, the cost of infrastructure—swollen beyond reason by excessive mandates—is paid for by the developer and passed on to the buyer in the price of the home. This can amount to hundreds of thousands of dollars once the hard costs of parks, streets, connector roads, and utility conduits are all factored into the equation. The result? Unsubsidized developers cannot make a profit building modest “mid-tier” homes that people can afford. But it doesn’t have to be this way.

Public utilities could redirect just some of the money they’re currently plowing into renewables to finance the energy and water infrastructure necessary for new suburbs, as well as to retrofit their existing grid. General obligation bonds and redirected monies from the state’s general fund could help pay for the necessary water and transportation infrastructure. Socializing these costs, which used to be the norm, would not be prohibitively expensive if utilities, civil engineering firms, and developers had safe harbor from environmentalist litigation and excessive environmental mandates—something already done routinely for everything from sports stadiums to homeless shelters.

This is the economic model whereby the land and materials cost for new homes could be brought down significantly, at the same time as the total supply of housing would greatly increase since expansion would not only be up via infill and densification, but outwards via new suburban expansion. But curbing demand is also necessary, and can be best accomplished by using the tax system to make it less profitable for hedge funds to purchase single-family homes as investments.

The approaches necessary to bring the cost of housing down in California do not adhere to any ideological playbook. Libertarians might applaud the freedom of rural landowners to develop their properties, but object to the idea that existing zoning in residential neighborhoods should be respected. They also might not agree with a tax surcharge on properties owned by large investor conglomerates.

Ideological heresy is everywhere in this practical agenda to achieve affordable, abundant housing. Issuing bonds or allocating government funds to build water and transportation infrastructure will further inflame the anti-tax lobby. Developing open land and slowing down the deployment of renewables will infuriate the environmentalist lobby. But these are the practical, bipartisan steps that will make California’s housing affordable again.

It is possible for ordinary Californians to again be able to realize the dream of home ownership in upgraded, modern, glorious, sprawling, glittering cities and suburbs. It is possible to find a new balance between environmental concerns and the aspirations of California’s 40 million residents. It is possible to find a balance between urban densification and suburban expansion. It is possible to redirect government spending to build the infrastructure to make the enabling elements of urban growth—energy, water, and transportation—abundant and affordable again.

This is the optimistic, pragmatic vision that offers an alternative to the Malthusian, special interest-dominated agenda that currently governs Sacramento legislators. It must be advocated relentlessly and without reservations, because it is the path to a bright and prosperous future for everyone.

This article originally appeared on the website American Greatness.

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Affordable Housing in Suburbs is a Money Grubbing Scam

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There are few if any slurs that offend the conscience of Americans that carry more weight than the term “racist.” For this reason, most Americans go out of their way to live their lives in a way that is fair to everyone, regardless of race. Also for this reason, in order to get support for their agenda or project, people will often claim that it targets racism.

So it goes that in 2015 the Obama administration came up with the “Affirmatively Furthering Fair Housing” (AFFH) regulation that “established a 92-question survey and grading tool requiring local jurisdictions to assess their own racial and economic disparities and present detailed plans on how to address them.”

Because this regulation was designed to combat racism in housing, like everything that says the magic word, it didn’t get the scrutiny it deserved. The other reason it never became an issue was because after Trump’s surprise victory a year later, he quietly gutted many of its provisions. Then, on July 23, President Trump repealed the regulation altogether.

If it wasn’t an issue in 2015 or 2016, it’s shaping up to be a big campaign issue in 2020. And true to form, candidate Joe Biden and a chorus of media pundits are accusing President Trump of catering to “racist” voters in American suburbs.

The problem with this analysis, however, is that voters in America’s suburbs are probably the least racist American voters in an America that has never been less racist than it is today. What Biden and the democrats want to do, and which Obama attempted with AFFH, has nothing to do with combating racism. It’s about money.

Follow the Money

Government subsidized housing in 21st century America is one of the most corrupt scams ever perpetrated on the American people. As usual, California is ground zero for this corruption, although states like Oregon and Minnesota are not far behind. What they’re doing offers a cautionary example to suburban residents everywhere.

The first step is to make it impossible for regular land developers and home builders to construct housing that people at or near the median income can afford. Several mutually reinforcing policies accomplish this.

First, create an artificial scarcity of land through “urban containment.” This is justified by claiming suburban expansion causes more vehicle emissions, leading to accelerated climate change. It is also justified by claiming that open space is limited and must be preserved from development. Both of these claims are preposterous lies. People telecommute. Jobs follow housing. Cars are cleaner and greener every year. And the U.S. is less than five percent urbanized.

Nonetheless, urban containment policies have taken hold through local zoning decisions as well as via laws passed by state legislatures. Environmentalist attorneys and fanatical activists push for them, with help from municipal bureaucrats who don’t want new cities to be built that compete for residents that pay property tax and sales tax. The real estate industry and real estate investors also join the urban containment lobby, knowing that a shortage of land available for building will cause home prices to rise.

Next, impose a crippling array of building fees and permit delays. In California it is common for these permit fees to add up to over $100,000 per home. Many of these fees are to pay for infrastructure that used to come out of municipal operating budgets, but that was before California’s state and local government agencies became unionized. The reality these days is that union negotiated work rules, pay, and pension benefits have busted civic budgets, meaning that funds that used to pay for infrastructure are now used to pay government workers.

Related to these fees are building codes and infrastructure standards that are impossibly complex and expensive. For example, every new home in California has to be “energy neutral,” adding tens of thousands of dollars to the cost of the home. And wherever there is excessive regulations, there is all the more pretext for litigation. It is impossible to develop land in California before fighting off multiple lawsuits, costing countless millions and taking years. Far too many badly needed home construction projects die in court.

Out Flee Honest Builders, In Ride the Crony Developers

When it takes years if not decades to build a housing subdivision, and the costs and financial risks become so great that even at grossly inflated prices it is tough to make an honest profit, the good guys go away. Replacing them are the cronies. These are the politically connected developers, often hiding behind nonprofit corporations, who couldn’t care less how expensive a construction project gets, because they’ll get government subsidies.

This is the corrupt context underlying nearly all “affordable housing” developments, along with the new homeless shelters. Examples abound. Across the state of California, a boondoggle archipelago of affordable housing projects have been constructed, with the average cost of one small apartment unit exceeding $500,000. That bears repeating, because it isn’t a typo, and it’s well documented: Affordable housing in California costs on average $500,000, or more, per unit.

And why not? These nonprofit developers happily pay high-priced consultants and experts to fill out applications, draw up overdone plans for elaborate structures, pay exorbitant permit fees, and tolerate inefficient construction using overpriced labor, because they’re getting all of it back. They are collecting subsidies and their investors are getting tax incentives. And year after year, the politicians they help put in office go to the voters with more bonds, to spend more billions.

This is all folly, because there is a systemic problem, and it’s not racism. It’s that these politicians have made it impossible to build affordable housing without subsidies. But the cost to taxpayers is so great, at $500,000 per unit, that the supply of affordable units can never hope to meet demand. And, of course, anyone occupying these units will themselves have to collect permanent rent subsidies.

Destroying Suburbs Isn’t to Combat Racism, It’s to Get Rich

These are the dirty secrets behind the push to “end systemic racism” by forcing cities to build “affordable housing.” This reality is obscured by hailstorms of rhetoric that accuse anyone who objects to affordable housing as being racist. But beyond the fact that affordable housing projects in 21st century America are a government funded solution to a problem government created, the entire argument that affordable housing is necessary to “combat racism” is fatally flawed.

The argument goes something like this: People with low incomes are more likely to need affordable housing. On average, non-whites have lower incomes than whites. Therefore low income housing will serve a disproportionate share of non-whites, and if you object to this, you are a racist.

Exposing the problem with this argument is not pleasant, but must be expressed. In 21st century America, it is not racism that explains why some non-whites have lower average incomes. If that were true, why is it that virtually all non-whites of Asian descent, along with Indians, Nigerians, and dozens of other non-white groups, have higher average incomes than whites? If racism is a barrier to achievement, how did these groups do so well?

The reason some nonwhites, blacks in particular, have lower average incomes than whites in America is because decades of programs designed to help them have actually done harm to their communities. Two glaringly obvious examples are welfare, which created an incentive for a father to leave his family, and failed public education, which more than anything else can be blamed on the teachers unions. Why aren’t black leaders demanding welfare reform, school choice, and more law and order? The sad fact is that many of them are, but they get almost no media coverage.

What Joe Biden and the democrats want to do by mandating affordable housing projects in America’s suburbs is create an entirely new avenue for taxpayers to pay hundreds of billions that will mostly just benefit the bureaucrats and fake capitalists who will collect all that money. They hope to take advantage of naive voters supporting these projects by claiming to combat racism that does not exist.

People in low income neighborhoods aspire to upward mobility. Some of them eventually can afford to move into higher income neighborhoods. Race has nothing to do with it. Transferring people into neighborhoods where they cannot afford to live destroys the incentive for anyone to want to live in a better place. Even if a lucky few are helped by getting one of the limited supply of affordable housing units, it would not address the true systemic problem – inner cities beset with a culture of welfare dependency, failed public schools, and rejection of law enforcement.

Democrats are not the solution. They are the problem. Their government programs, launched with high-minded rhetoric, destroyed opportunities for residents of America’s inner cities. Their excessive regulation of home construction and land development, also imposed alongside high minded rhetoric, made homes unaffordable for everyone.

Now Joe Biden and his democrats want to fix these problems by creating a new problem. It is epic folly, and must be resisted at every turn.

This article originally appeared on the website American Greatness.

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The Hidden Agenda Driving the Destruction of Venice Beach

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AUDIO – How nonprofit developers and their corporate partners are wasting billions of taxpayer money by building affordable housing and homeless housing on some of the most expensive real estate on earth, and destroying established communities in the process – 18 minutes on KABC Los Angeles – Edward Ring on the Larry O’Connor Show

California’s Progressive War on Suburbia

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For three years in a row, California’s progressive lawmakers have attempted to legislate higher density housing by taking away the ability of cities and counties to enforce local zoning laws. And for the third year in a row, the proposed law, Senate Bill 50, was narrowly defeated. But eventually, inevitably, something like SB 50 is going to passed into law.

In opposition were homeowners who understandably don’t want their single family home neighborhoods subjected to random demolitions in order to replace single family homes with construction subsidized fourplexes to be filled with rent subsidized tenants. These homeowners, and the local elected officials who represent them, were joined by “housing justice advocates” who claimed the law didn’t adequately address the gentrification effect, whereby higher density developments often displace existing residents to construct luxury condominiums that only the wealthy can afford.

There’s a lot going on here, and it seems that very little in the way of analysis can support a dogmatic ideological perspective. For example, from a property rights perspective, you can argue that people who purchase homes have a right to expect the zoning density of the neighborhood to be respected, since that’s what they relied on when they invested their life savings and lifetime earnings. But a property rights perspective might also have one argue that each individual home owner has the right to do whatever they wish with their property, even if that means demolishing the home to construct a multi-story apartment building. These unresolved and conflicting interpretations of property rights prevent consensus and delay action.

And if some ideological dogmas lend themselves to contradictory interpretations, others simply defy reality entirely. Some of the housing justice advocates believe that providing shelter is a human right. For them, mandating taxpayer subsidized “affordable housing” construction, and taxpayer subsidized rent, is the only solution to California’s housing shortage and affordability crisis, and the sooner we get busy, the better. This unrealistic extension of human rights attracts opposition, if not ridicule, and in any case is impossibly expensive.

But perhaps the worst of the ideological dogmas that prevents rapid solutions to the housing challenges facing Californians is environmentalist values taken to extremes. The practical impact of regulations attendant to environmentalist values – from CEQA reporting requirements and CEQA lawsuits to burdensome and expensive building codes – is to make housing construction unprofitable for anything that might be considered affordable to the average Californian.

Environmentalist ideology hasn’t just made construction costs unaffordable, it has made land costs unaffordable as well, by passage of environmentalist inspired laws that strictly limit the amount of raw land that can get approved for new home construction. Around every city in California, with varying degrees of enforcement, “urban containment” boundaries have been established. Sometimes these boundaries serve important goals; to protect prime farmland, or to preserve important ecosystems such as wetlands for migratory birds. But it seems that almost all open land, everywhere within California’s vastness, is off limits to developers because of environmentalists.

California’s Regulations Destroyed Affordability

The problem with SB 50, or any eventual legislation that mandates higher housing density, is that without reforms to the laws that have made construction of affordable housing unprofitable, the only housing that will ever get built will be high-end homes by private investors, or housing that will require government subsidies both to construct and for the renters to be able to afford to live in them. This is not sustainable. It costs too much, and it takes too long. And it sets up a dangerous bifurcated society, where forcibly integrated into residential single family neighborhoods, randomly situated pretty much anywhere, are apartment buildings populated by residents receiving taxpayer funded rent subsidies.

There’s no doubt that some legislation may have to occur to selectively increase housing density. When a bill like SB 50 returns, which could be any day, certain modifications could help. In particular, SB 50 specified where state law could preempt local zoning, and included in “job-rich, good schools areas.” This is “inclusionary zoning” at its ostensibly high-minded, vindictive worst. The bill’s authors made this provision without any reference to whether or not “job-rich, good schools areas” are in parts of town that ought to naturally convert to higher density. Instead, the message seems to be “you’ve managed to maintain a prosperous and stable community with good schools and jobs, so into that community, we’re going to subsidize the entrance of predatory investors, who will purchase and demolish homes that come onto the market, replace them with apartments, and fill those apartments with people who never had to face down the astronomical mortgages that all you residents shouldered in order to have the right to live here.”

This is wrong. It destroys the incentive for anyone to ever want to pay extra to live in a decent neighborhood. Equally important, it destroys the incentive for low income individuals to work hard and aspire to move to a better neighborhood. And to be clear: this provision would never impact truly wealthy neighborhoods. Those people can afford attorneys to tie development proposals up in knots for years, SB 50 or not. This provision attacks California’s middle class. As usual. Delete it.

On the other hand, within the urban core and on properties with frontage along major boulevards, it is an unfortunate reality for anyone still living there in single family homes that their property is doomed to transition. In the past, that would be accomplished because the value of a few of these properties, consolidated and rezoned for a large multi-family building, would make it a lucrative deal for the sellers. Now, however, the business model is broken. Not only has the impact of CEQA and overdone building codes raised costs, but the resultant entrance of public financing into the equation has made project labor agreements elevate the total project cost still further. The relatively recent entrance of powerful “nonprofit” corporations into the subsidized housing market has padded total project budgets and increased costs even more.

For these reasons, mandating densification, however better tuned the rules eventually turn out, is not enough. The entire economic landscape requires revision.

Rewriting SB 50 to Recognize Economic Reality

It is possible to increase the supply of affordable market rate housing without involving the government and taxpayers in the actual construction funding. It is possible as well to increase the supply of housing in a manner that allows the developers and landlords to earn a decent return on investment without involving the government and taxpayers in funding rent subsidies. Therefore, the next version of SB 50 might recognize and account for the following factors:

  • Abandon “inclusive zoning” aimed at integrating subsidized low income residents into middle class neighborhoods via massive taxpayer expenditures.
  • Restrict mandated higher density zoning to the core urban areas in California and along major traffic arteries. One absolute set of governing criteria should apply everywhere.
  • Treat every county and city exactly the same, instead of allowing select counties and cities to take longer to come up with their own plans.
  • Repeal or significantly reform the California Environmental Quality Act.
  • Repeal energy neutral mandates and assorted other unwarranted environmentalist inspired building code regulations that add costs to home construction.
  • Set a maximum period of time within which building permits can be granted, and set a maximum building fee at $10,000 per home/unit (or less).
  • Streamline the building permit process to make it easier, not harder, for developers to acquire permits. Look to Texas for guidance.
  • Ban project labor agreements and require open bidding processes for public works projects.
  • Restore public funding to streets and connector roads instead of charging developer fees which are then reflected in much higher home prices.
  • Repeal laws designed to prevent reasonable expansion of the urban footprint. Allow housing developments again on open land.

These and other changes would make it possible again for private homebuilders to profitably construct affordable housing. Redirecting public money into constructing enabling infrastructure would take additional financial pressure off of home builders as well as home buyers. That worked in the 1960s and 1970s in California, and it still works in other states. The overall cost of increased public investment in infrastructure is less, perhaps far less, than the cost of taxpayers subsidizing the construction, and then subsidizing the rent in perpetuity, for literally millions of units of housing.

There is a war on suburbia being waged in California. This ideological battle, where suburbanites are stigmatized as classist, privileged, and environmentally destructive, is utterly unfounded. Suburbs are where a majority of Americans prefer to raise their families. And not these new suburbs with a dozen “single family dwellings” per acre. Spacious, beautiful suburbs where homes sit on lots of at least 6,000 square feet; suburbs where the homes themselves might actually be smaller and more affordable, once the economic hindrances to building them are removed via legislative reforms.

The arrogance of environmentalists who believe suburbs to be a planetary abomination must be called out for what it is – extremism completely unjustified by reality. Everything, from cars to energy to building materials, are becoming clean and sustainable. And there’s plenty of open land in California to spare a few thousand more square miles for new human settlement. At the least, if environmentalists are serious about saving California’s ecosystems, they might stop making common cause with the open borders lobby, and they might endorse nuclear power. Until then, they are transparently hypocritical.

This article originally appeared in the California Globe.

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California Pioneers Subsidized Housing for Public Employees

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When it comes to affordable housing, what California’s state legislators have done epitomizes what happens when you have a government bureaucracy that serves itself instead of the public, one that is under the complete control of special interests.

They have enacted laws that have made it nearly impossible for the private sector to build homes, which has made homes unaffordable. Then to supposedly solve the problem they created, they brought in the public sector to build “affordable housing.” Their “solution” is a preposterous fraud that has already wasted tens of billions, and the worst is yet to come.

Nothing about publicly subsidized affordable housing is affordable. As a matter of fact, government funded “affordable housing” costs far more to construct than privately funded housing. But thanks to the politically engineered shortage of privately funded housing, and thanks to the result of this, a politically engineered and unaffordable price to rent or purchase homes, public housing is being sold to voters as a humanitarian necessity. And after the taxpayers foot the bill to construct this housing, taxpayers then foot the bill to subsidize the “affordable” rental rates charged the lucky occupants. Forever.

Subsidized housing developments were once known as the “projects,” which back in the 1960s were built as part of the “war on poverty.” These attempts at providing free housing backfired, as tenants with no ownership stake had no incentive to care for their property. But at least the projects were built cost-effectively. No such luck this time around. Certainly not in California. By the time the litigation has ran its course, and the many expert consultants have taken their share, and the public bureaucrats have collected their fees, and the financial middlemen have been allotted their skim, the cost of these new public housing “projects” exceeds over $500,000 per unit.

From Flophouse to Bauhaus – Courtesy of Taxpayers

Critics of this astronomical price tag may relax, however, because affordable housing is no longer called “project” housing. It’s been rebranded! The new names, along with “affordable housing,” are “supportive housing,” “community housing,” and “municipal housing.” And instead of stark red brick mid-rise blocks of apartments, reminiscent of Ceaușescu’s proletarian barracks, today’s public housing may still be big boxes of concrete and steel, but they’re designed by visionaries, integrating “social justice” and “green design” into “transit oriented” utopias, replete with curved surfaces, a calming color palette, and “pedestrian paseos.”

The latest scam being foisted onto voters is called “workforce housing.” Never mind that government policies made housing unaffordable – let’s borrow money to build subsidized housing for government workers. This new scam taps into a few reliable voter sentiments. Not only is this “affordable housing,” but it’s financed through a school bond which only requires a 55 percent vote to get approved vs two-thirds for most other public bonds. This scam also taps into voter sentiment favoring anything to support schools and “the children,” as well as sentiment favoring helping our “public servants.”

Perhaps before providing some examples of this scam, let’s reiterate why it is a scam:

(1) Housing is unaffordable in California because government policies have made it impossible for private sector developers to construct affordable homes.

(2) Instead of changing these government policies, a coalition of public sector unions, crony developers, and financial intermediaries have decided to present voters with bond measures – already totaling tens of billions – to construct “affordable housing.”

(3) Due to the morally corrupt (but entirely legal) process costs – government planning and oversight, nonprofit service providers and partners planning and oversight, expert consultancy, litigation and settlement costs, financing costs, “green” compliance costs, “inclusion” compliance costs, project labor agreement costs, permits and fees, plus spectacularly expensive ongoing administrative costs – the total project cost per unit for these affordable housing projects actually exceeds what private development projects incur per unit, to the insufficient, limited extent those private projects are approved.

(4) Public employees are indeed unable to easily afford to live in the communities they serve, but that’s because everyone is unable to easily afford to live in these communities.

(5) It is alleged that representing “workforce housing” as eligible for the lower threshold of 55 percent voter approval because it’s a school bond may be illegal.

Bearing in mind that the first four reasons are reasons enough for this new practice to be a scam in every sense of the word “scam” (scam: “a dishonest scheme”), nonetheless, examples of #5 should be exposed. With help from Richard Michael, who for years has fought local government corruption and publishes (and perpetually updates) his website “BigBadBonds.com,” here are a few:

2018 Local California School Bonds that Included Funds for Workforce Housing

Pittsburg Unified School District, Measure P, $100 million

Jefferson Elementary School District, Measure U, $30 million

Palo Alto Unified School District, Measure Z, $460 million

Monterey Peninsula Unified School District, Measure I, $213 million

Pacifica School District, Measure O, $55 million

Perhaps we should be surprised that only five ballot measures of this nature could be found on local ballots in California during 2018. Then again, this is a whole new frontier of government expansion. Housing as not only a human right, but as an obligatory government entitlement, and never mind the fact that government policies made housing unaffordable.

Maybe the paucity of school bonds with “workforce housing” funding buried in the fine print is because it’s a new innovation. Or maybe it’s the fact that including “workforce housing” in a school construction bond is quite possibly illegal, since school construction bonds are for, imagine this, school construction. But the 55 percent threshold isn’t absolutely critical – three of these five were passed by over a two-thirds vote.

And what of bonds that require a two-thirds vote? How do they fare, and to what extent are these bonds offering “workforce housing”? A look at San Francisco’s Prop. A, which piled another $600 million in borrowing onto the tens of billions already spent by taxpayers to provide “affordable housing” and “supportive housing” offers a glimpse into the future. Because in Prop. A’s allocation of funds – which doesn’t unequivocally require a single unit of new housing, just rehabilitation of existing housing – is $20 million for “educator housing.”

San Francisco’s Prop. A was approved by 71 percent of voters.

Current California Housing Policies Are a Fraud

Across the state, voters have been conned into borrowing – against their future tax payments – tens of billions of dollars in pursuit of housing for the homeless, housing for low income residents, and, now, housing for public employees. All of this is a “dishonest scheme.” It is a monstrous fraud.

It is a fraud because the model being pursued will never solve the problem. By the latest estimates, California has over 150,000 homeless, well over 1.5 million state and local public employees, and at least 7 million people living below the poverty line. Shall all these 8.65 million people receive government subsidized housing?

A few basic calculations provides the answer: To provide “supportive housing” for all of California’s 150,000 homeless, even at $250,000 per unit – which is rock bottom and extremely unlikely to ever constitute the average cost – taxpayers would have to shell out $37.5 billion.

And what about “workforce housing”? Does anyone expect public employee unions to tolerate the lottery style allocation of subsidized housing to a select few, which is the process endured by low income families? One may rather expect these benefits to proliferate, finding their way into operating budgets as well as buried in bond measures. Again, even at a low-balled $250,000 per unit – taxpayers would have to shell out $375 billion.

As for “affordable housing,” it’s fair to say that the sky high home price equilibrium would be broken long before 7 million affordable housing units ever got built. But it’s also fair to wonder how on earth any private sector housing will remain in California – apart from plush high rise condos for the international investor class – when they’re competing with taxpayer funded developments at the same time as punitive laws continue to make it almost impossible to build without subsidies.

When it comes to housing, as with so many other things, California leads the nation. Instead of building practical enabling infrastructure and limiting their zoning laws and building codes to practical necessities, they have institutionalized a system of rapacious yet totally legal corruption, masked by moral imperatives.

It is a fraud of historic proportions, with incalculable cost and tragic consequences.

This article originally appeared on the website California Globe.

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Housing and Transportation – Why California’s Legislature Gets EVERYTHING Wrong

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California, the welcoming sanctuary state, has a population on track to break 40 million by the end of this year. Its highway system was designed to handle a population of 20 million. Its cities, bound by legislated “urban containment,” are 3.5 million homes short of what would meet current housing needs. As a result, commuters spend hours stuck in traffic, and millions of homeowners endure indentured servitude to mortgages on ridiculously overpriced homes.

None of this had to happen.

There are many reasons it has come to this, but two causes stand out, because if they were corrected, the problems would be solved in a few years. The first is obvious but very tough to counter – there is a conventional wisdom that most of these damaging policies are necessary to save the planet. But upon examination, almost none of the ones with the worst consequences for housing and transportation were environmentally necessary.

With respect to housing, the environmentalist boogeyman was alleged “sprawl.” But California is a vast, spacious state, including tens of thousands of square miles of semi-arid wasteland that could easily be brought to life if used for housing. California is only five percent urbanized. If that allocation were just increased by half, to a mere 7.5 percent urbanized, ten million new residents could live in new homes on half-acre lots. It is absurd to think there isn’t enough land in California to accommodate this sort of development, which, in any case, would never be that expansive.

The problem with urban containment policies, set to get worse with the likely passage of SB 50, is the lack of balance. Increasing housing density in the urban core of cities is normal and inevitable. It is part of the natural evolution of all cities. But doing that without also permitting the outer footprint of cities to expand is destructive. Population growth that the urban core can’t absorb overflows into tranquil residential neighborhoods and destroys them. It ruins established low density communities, making them fodder for predatory investors and government rehousing schemes.

Environmentalists counter that housing must be near the jobs, and jobs must be near the housing. Notwithstanding the historical amnesia that must be making them unaware of how jobs and housing naturally flow to wherever new land development occurs, these objections ignore the future of transportation. There is no transportation conveyance more versatile than wheeled vehicles, no transportation conduit more versatile than roads.

What are quaintly still referred to as “cars” are on the brink of stupefying transformations. Vehicles over the next few decades will evolve to drive themselves, “convoy” in “hyperlanes” at very high speeds, operate as on-demand shared vehicles, public and private mini buses and full size busses; some of them will be mobile offices, conference rooms and hotel rooms; some of them will even fly. There is monumental folly in allocating funds for light rail and high speed rail, when car of the 2050 will be as dissimilar to the car of 1950 as an eagle is to a fruit fly.

There are other arguments for roads over rail. The supposedly lighter environmental footprint of rail is overstated, since it has to exist as an entire parallel transportation network that still requires cars and roads for anyone to get to the rail stops, or get to their destinations after they disembark. And the supposedly heavier environmental footprint of cars diminishes every year, as we enter the electric age, as cars become far more energy efficient, as their AI facilitates heavier road density at speed, and as more people share them.

As for other enabling infrastructure, it’s time that anyone willing to challenge the environmentalist fallacies that preclude development of civil assets such as roads, water projects, and nuclear power plants also challenge the supposed financial obstacles. One of the primary reasons California doesn’t have billions each year to spend on infrastructure is because, statewide, they’re pouring over $30 billion each year into state/local public employee pension funds – an amount set to double by 2025. Then, of the nearly $800 billion that California’s 83 state/local pension funds have invested, less than 10 percent is invested in California. Require 10 percent to go into public/private revenue bonds to finance infrastructure. Problem solved, assuming the money could be spent on bulldozers instead of bureaucrats.

There’s another cause for California’s failure to build homes and roads, however, one that’s rather elusive but even more fundamental. California’s liberal elites, nearly all of them aging boomers, are immune from the consequences of their voting patterns. These liberal voters never saw a piece of environmentalist legislation they didn’t like. Meanwhile, they’re all living in the homes they purchased well before the politicians they supported passed all those fine sounding, high minded laws.

This liberal immunity is challenged by SB 50, a law that threatens to fill wealthy liberal enclaves from Palo Alto to Brentwood with fourplexes filled with Central American migrants, living on public assistance. The horror! But don’t hold your breath. If SB 50 and similar legislation passes, those fourplexes will indeed be coming to a detached, single family home neighborhood near you, but they’ll skip the zip codes where the residents can afford attorneys. Why bother, when just up the road there’s a nice lower middle class block we can bust?

One cannot stop wealthy liberals from hiring lawyers to stop in its tracks anything they love conceptually enough to vote for, but not enough to suffer personally. But there is something that can be done. Repeal Prop. 13. Make every homeowner in California pay property taxes based on the current assessed value of their homes. That’s never going to happen, thank God. But the reason it will never happen is not what you might expect. The reason is because Democrats know that if they ever overreached that much, they would turn millions of voters into Republicans overnight.

The bigger shame is that the only reason these liberals aren’t conservatives is because they don’t have to live with the consequences of liberalism. They don’t have to buy homes at today’s prices, and as retirees, they don’t have to drive during rush hour. If they did, they might think more carefully about where their money is going, and they might question more urgently the environmentalist moralizing that served as the pretext for wasting so much of it.

This article originally appeared on the website California Globe.

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California’s Unaffordable “Affordable” Housing Scandal

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When discussing the seemingly intractable and growing problem of homeless people living in California, journalists reporting on the issue don’t spend enough time questioning the numbers, much less the policies driving the insane numbers. A recent article in the San Jose Mercury provides a perfect example.

The article gets off to a good start with a provocative, and very informative title. “How much would it cost to house the Bay Area’s homeless? Try $12.7 billion.” Then paragraph two leads off with another bit of vital quantitative information, “With 28,200 homeless residents, the nine-county Bay Area has the fifth-highest concentration of homelessness in the country.”

Ten paragraphs down, the problem is revealed, but not questioned: “By one metric, it would cost $12.7 billion to solve the problem. That’s the price tag to build a new unit of permanent housing for each of the 28,200 residents reported as homeless in the Bay Area in 2017, according to the report. The calculation assumes mid-range construction costs of $450,000 per unit.”

Questions should abound. Four hundred and fifty thousand dollars per person? Why is only one person going to live in each of these subsidized units? And why does a housing unit have to cost nearly a half-million dollars? You can buy a ridiculously overpriced four bedroom home in San Jose for under a million dollars, but you can’t build a studio apartment for less than a half-million? Why?

This isn’t an isolated example. The same problem exists in Los Angeles County, where the average per unit costs for “permanent supportive housing” for homeless people is also around a half-million. As reported by NPR, “The PATH Ventures project in East Hollywood has an estimated per-unit cost of $440,000. Even with real estate prices soaring, that’s as much as a single-family home in many places in Southern California. Other HHH projects cost more than $500,000 a unit.”

This is a scam, disguised as compassion. Developers accept public money to build these projects. Cities and counties collect outrageous building fees. The buildings are then handed off to nonprofits with long term contracts to run them. Politicians accept campaign contributions from the developers and the nonprofits. Where are the journalists? Where is the withering criticism? Why isn’t this a scandal?

Why is the national average construction cost per new apartment unit somewhere between $65,000 and $85,000, yet it costs five to 10 times that much in Los Angeles and Santa Clara counties? Why do we accept this?

Earlier this week, Sue Frost, a Sacramento County Supervisor, spoke about California’s housing crisis to a taxpayers group. Her litany of reasons why housing is so expensive, and why the related problem of homelessness is so intractable, was comprehensive and depressing. It ranged from extreme environmentalist mandates such as the California Environmental Quality Act, to absurdly high fees for building permits (often equal in cost to the value of the materials used in construction), to unchecked immigration, to restrictive zoning, to numerous court orders. Even as Frost limited her remarks to summary bullet points, it took several minutes for her to recite all the causes. But in every case, it was government policies that created this nightmare, and in every case, they were policies largely unique to California.

How to Waste Taxpayers Funds

One of the “creative” solutions Sacramento County has adopted to increase the supply of housing is to streamline the process for homeowners to build “accessory dwelling units” in their backyards. At the same time, Sacramento County is funding the conversion of homes in residential neighborhoods into group homes for homeless people.

All of this sounds wonderful. But it is the path of least resistance, adopted in lieu of making fundamental reforms either through legislation or litigation. This path of least resistance means cities and counties will waste billions on new “affordable” housing for low income and homeless people. At a half-million per unit, however, spending billions will not even make a dent in the homeless population, even as it enriches developers, well heeled nonprofits, and the campaign coffers of compliant local politicians.

Then, since those billions are wasted, they will seed residential neighborhoods with subsidized group homes for a homeless population that is, according Supervisor Frost, 50 percent mentally ill and 30 percent criminal. These group homes are ran by private entrepreneurs who are, in effect, state sanctioned predators that destroy peaceful residential streets. They become inordinately enriched by cramming people into these group homes and collecting reimbursement from the government.

Similarly, Sacramento County’s supervisors have implemented an aggressive interpretation of a new state law designed to streamline the process for homeowners to build accessory dwelling units (“ADUs”) on their properties. There is nothing “accessory” about many of these new ADUs. Often they are full size homes, with their own garage, driveway, utilities, and address. All too frequently, ADU ordinances, for all practical purposes, subdivide a property in violation of zoning laws that residents relied on when they bought their homes. Equally problematic, because these lots are not actually, legally subdivided, both homes on the properties become permanent rentals.

This is happening all over the state. In Southern California, Los Angeles County has launched a program to pay homeowners to build granny flats for the homeless in their backyards. Consider the unintended consequences: Once two or more units are permitted on lots that were previously restricted to single family dwellings, these properties become worth more if they’re converted to permanent, government subsidized rentals.

Remember the “blockbusting” of the 1960s and 1970s? That was an ugly affair. Expect the same displacement in the 2020s, except it will be entirely legal. And this time, as private investors and their accomplices in real estate and the government bureaucracy convert entire residential neighborhoods into multi-family lots, they will receive government subsidies to do the conversion, then the government will pay them again to subsidize the rent they collect as landlords.

To recap: Billions are wasted constructing a handful of ridiculously expensive new housing units, then, since that makes no difference whatsoever, established residential neighborhoods are destabilized and ultimately destroyed thanks to laws enabling opportunistic investors, cashing in on government subsidies, to convert random homes into halfway houses, homeless shelters, and subdivide properties with ADUs. Nobody is safe. Welcome to California in the 2020s.

None of this is a moral choice. It disrespects the residents of these neighborhoods who have worked hard their entire lives to pay for the privilege of living a safe and tranquil environment. Moreover, these residents who are betrayed in this manner have worked far harder than they should have had to (to pay their mortgages) because of California’s state and local government policies which are to the primary cause of overpriced housing.

If a majority of local elected officials in just one major city or county in California mustered the courage to challenge the laws that have needlessly caused California’s housing shortage and homeless crisis, and litigated all the way to the U.S. Supreme Court, they could overturn some of these laws, in order to pursue far more cost effective options.

Housing Solution

For example, for the homeless, here is an alternative that could cost-effectively solve the entire problem within months, not years or decades: You can house homeless people in durable $399 10-foot-by-10-foot tents, sleeping on durable $75 cots, four per tent. You can position $649 porta potties to service these tent dwellers, and you can set up a larger tent to serve as a food kitchen and medical station. You could put these tent cities on city owned property or leased private land on the outskirts of town or in industrial areas, and by enforcing revitalized (through court action) vagrancy laws, you could swiftly move the homeless into these managed camps. You could have three types of camps, one for criminals, one for substance abusers, and one for everyone else.

More Solutions

To increase the supply of housing, the solution is harder, but obviously possible, since so many other states in America do not have housing shortages. Policies to make housing affordable again in California could be accomplished without requiring expensive government programs. Instead, to name a few policy changes: lower the fees for building permits, speed up the permitting process, reform extreme environmental regulations, make it easier to extract building materials in-state, and, crucially, end the policies of “urban containment” that deny building permits on California’s vast expanses of open land.

It is time for a courageous city council or county board of supervisors somewhere in California to pursue, through litigation, cost-effective, practical solutions that don’t ruin the lives of the many for the sake of the few. Particularly since government policies are the reason the many have to work so hard. And if mainstream journalists would abandon their politically correct group-think, and question the status-quo with the skepticism that once was the life blood of their profession, public awareness might demand such action.

This article originally appeared on the website California Globe.

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Defining Appropriate Housing Development in California

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One of the most frustrating contradictions inherent in the policies being enacted by California’s one-party state goes something like this: We are inviting the welfare cases of America and the expatriates of the world to move here, while simultaneously enacting environmental policies that make it extremely time consuming and expensive to build anything.

No wonder there’s a “housing crisis.” Until demand decreases, or supply increases, housing in California will remain unaffordable for most of its residents. But don’t expect demand to slacken any time soon. The political consensus in favor of increasing California’s population has a strong moral justification – why shouldn’t the wealthy, innovative, compassionate people of California be willing to share their wealth with millions more people who are less fortunate? But there are other less high-minded upsides to population growth and obstacles to new housing.

Currently, real estate prices and rents are on the rise, favoring investors and landlords. Banks enjoy higher lending volumes, while borrowers enjoy greater liquidity, however precarious, as the property bubble offers them more collateral as security. The government agencies profit from higher property tax assessments and higher capital gains collections on sales of real estate. Large land developers that have the political clout and financial heft to build housing despite the many obstacles, enjoy unusually high margins that they could never achieve in a normal competitive market. Finally, as an expanding population increases demand for housing, at the same time public school districts can increase attendance-based revenue – which will make it somewhat less urgent that they reform their union work rules and spending priorities.

Efforts by California’s policymakers to increase the supply of housing have to be viewed in this context. They want to increase the supply of housing. Yet they also want to keep happy the special interests that pay for their political campaigns. Therefore, strict – and very self-serving – parameters are likely to limit what new laws are enacted to stimulate new housing. For example:

Negative Consequences of Special Interest Defined Development in California

(1) Additional open land outside of urban boundaries will remain off limits to development, in order to ensure that existing municipal jurisdictions are able to retain access to the new property revenues that will accrue to new stocks of residential and commercial real estate. This will be justified as necessary to protect the environment.

(2) Most obstacles to housing construction will remain in place – in particular, excessive fees to government agencies and onerous CEQA requirements. This will ensure that only the most powerful corporate and financial entities will be able to take advantage of new opportunities to build housing, while cutting out the small landowners and developers.

(3) Major land developers will be given financial incentives by state and local government entities to build “affordable housing” and eliminate “blight,” but these incentives will be out of reach for smaller landowners and developers.

(4) In order to keep the real estate asset bubble fully inflated, housing prices will only fall marginally as development occurs, which pretty much helps nobody, but massive programs of taxpayer funded rent control and rent subsidies will be enacted to make up the difference for qualifying low income families.

(5) “Densification” will be imposed on residential neighborhoods, with the primary victims being any neighborhoods that are situated close to bus stops or light rail stations. Developers will be permitted to build multi-story, multi-unit buildings on small residential lots and will not be required to offer parking; all of this will greatly increase their profits.

(6) Building code requirements will relentlessly increase in the name of energy efficiency and safety, with the practical effect being to lock out small landowners and developers from being able to afford to upgrade their properties or develop new properties; these same more stringent regulations will not seriously impact large development corporations and financial investors.

It is wrong to be entirely cynical about the laws that are coming. Slamming the door completely shut on newcomers to California would be cold hearted, unpopular and probably cause more economic harm than good. Zealously enforcing residential zoning densities that were put in place several decades ago would be overly sentimental, ignoring the disruptive adaptations and radical transformations that have defined and enriched urban life since settlement began. Completely embracing a new wave of suburban sprawl would needlessly eat up more open land than a more balanced policy approach might cost. While the new building code mandates are now excessive (if not ridiculous), nobody wants to go back to toilets with seven gallon tanks, or insulation with an R value of 2.0.

Unfortunately, balance is not what we’re finding in the new laws. Last year, the State Senate considered a bill – SB 827 – that would have removed local zoning control and allowed multifamily housing to be built in well-established single family neighborhoods. This would have allowed those multifamily housing projects to be as tall as 55 feet. Against heavy opposition, SB 827 never made it out of committee, but this year it’s back. The new legislation, again sponsored by Democrat Scott Wiener, is SB 50.

Reading through the text of SB 50 grants insight into just how entrenched the collusion is between public officials and developers seeking subsidies and waivers. Consider this introductory language:

“Existing law, known as the Density Bonus Law, requires, when an applicant proposes a housing development within the jurisdiction of a local government, that the city, county, or city and county provide the developer with a density bonus and other incentives or concessions for the production of lower income housing units or for the donation of land within the development if the developer, among other things, agrees to construct a specified percentage of units for very low, low-, or moderate-income households or qualifying residents.”

In plain English, the “Density Bonus Law” forces taxpayers to subsidize not only developers who are already making more money by being allowed to pack more units on less land, but also low and “moderate” income households who will occupy a percentage of housing units. Bring ’em in! Paying artificially high prices for housing while also paying for someone else’s inflated rent will never wear thin with taxpayers.

The Coalition to Preserve LA, “a citywide movement of concerned residents who believe in open government, people-oriented planning, equitable housing and environmental stewardship of Los Angeles,” produced this summary of SB 50.

Densification a la SB 50:

  • Forces cities to allow luxury towers in single-family areas.
  • Upzones thousands of beautiful streets to 6- and 8-story apartments if an area is “jobs-rich with good schools.”
  • Upzones thousands of single-family areas within a 1/4 mile of a frequent bus stop or 1/2 mile of a rail station.
  • Lets developers sue any city that tries to stop them.
  • Cuts parking to zero, claiming rich residents “use transit.”
  • Falsely claims to protect renters & sensitive communities.
  • Strips protections of many HPOZs and historic buildings.
  • Lets developers wipe out setbacks, backyards, green belts.

For millions of Californians who live in bucolic suburbs, with tree lined streets and spacious private yards, SB 50 unchecked is going to be a holocaust. It will utterly destroy their way of life. Many victims will not have the ability to move. The greatest insult of all: Their taxes will be paying for it. And as a “solution,” it is completely unnecessary. There are better ways, that leave established neighborhoods intact and cost taxpayers nothing.

Reforming the California Environmental Quality Act (CEQA)

There are two ways to mitigate the impact of CEQA, the law that requires “environmental impact reports” on any land development in California, including “climate change” impact along with a host of metastasizing additional requirements. The first, being practiced increasingly, is to grant CEQA waivers to politically connected developers that are proposing projects deemed politically correct. The second, far preferable solution, is to fundamentally rewrite CEQA.

An excellent summary of how to reform CEQA appeared in the Los Angeles Times in Sept. 2017, written by Byron De Arakal, vice chairman of the Costa Mesa Planning Commission. It mirrors other summaries offered by other informed advocates for reform and can be summarized as follows:

  • End duplicative lawsuits: Put an end to the interminable, costly legal process by disallowing serial, duplicative lawsuits challenging projects that have completed the CEQA process, have been previously litigated and have fulfilled any mitigation orders.
  • Full disclosure of identity of litigants: Require all entities that file CEQA lawsuits to fully disclose their identities and their environmental or, increasingly, non-environmental interest.
  • Outlaw legal delaying tactics: California law already sets goals of wrapping up CEQA lawsuits — including appeals — in nine months, but other court rules still leave room for procedural gamesmanship that push CEQA proceedings past a year and beyond. Without harming the ability of all sides to prepare their cases, those delaying tactics could be outlawed.
  • Prohibit rulings that stop entire project on single issue: Judges can currently toss out an entire project based on a few deficiencies in environmental impact report. Restraints can be added to the law to make “fix-it ticket” remedies the norm, not the exception.
  • Loser pays legal fees: Currently, the losing party in most California civil actions pays the tab for court costs and attorney’s fees, but that’s not always the case with CEQA lawsuits. Those who bring CEQA actions shouldn’t be allowed to skip out of court if they lose without having to pick up the tab of the prevailing party.

Unfortunately, California’s new governor, Gavin Newsom, while acknowledging problems with CEQA, has put responsibility for recommending changes to CEQA in the hands of a task force consisting of labor union officials and land developers. It will be a surprise if a group dominated by these two special interests will be capable of coming up with the solutions recommended by De Arakal and others.

Principles of Appropriate Development in California

There is a moral imperative to increase the supply of housing in California. As noted, California’s policymakers have awakened to the fact that construction of new housing is not nearly meeting demand for new housing. But the way they’re going about stimulating housing construction is flawed. It will not appreciably lower the cost of housing and it will needlessly enrich special interests. Here are some ways housing could be more appropriately developed in California:

(1) Eliminate all forms of government subsidies, incentives or waivers to any developers. All players in the housing industry should be unsubsidized, and playing by the same set of rules.

(2) Stop requiring diverse types of housing within the same development or neighborhood. Mixing high-density, subsidized housing into residential neighborhoods devalues the existing housing, and this social engineering is unfair to existing residents who have paid a high price to live there.

(3) Roll back the more extreme building codes. Requiring 100 percent of homes to be “energy neutral” or include rooftop photovoltaic arrays, for example, greatly increase the cost of homes.

(4) Lower the fees on building permits for new housing and housing remodels. Doing this might require pension reform, since that’s where all extra revenue goes, but until permitting costs are lowered, only billionaire developers can afford to build.

(5) Speed up the permitting process. It can take years to get permits approved in California. Again, the practical effect of this failure is that only major developers can afford to build.

(6) Reform the California Environmental Quality Act as noted. Better yet, scrap it altogether. Federal laws already provide adequate environmental safeguards.

(7) Make it easier to extract building materials in-state. California, spectacularly rich in natural resources, has to import lumber and aggregate from as far away as Canada. This not only greatly increases construction costs, it’s hypocritical.

(8) Increase the supply of land for private development of housing. Currently only five percent of California is urbanized. There are thousands of square miles of non-farm, non critical habitat that could be opened up for massive land development.

(9) Engage in practical, appropriate zoning for infill and densification in urban cores, but only after also increasing the supply of open land for housing, and only while continuing to respect the integrity of established residential neighborhoods.

California has unaffordable housing because extreme environmentalists have imposed an agenda onto state policymakers that, unfortunately, dovetails perfectly with the agenda of special interests – in particular, public sector unions and bureaucrats, and large corporate land developers and construction contractors. This coalition is also responsible for the related problem of neglected infrastructure in California. Until California’s voters wake up and break this immoral, self-serving coalition, there is little hope that housing prices in particular, or the cost-of-living in general, will come down in California.

This article originally appeared on the website of the California Policy Center.

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