California Housing Trends and Laws

By pjain      Published Feb. 2, 2020, 1:48 a.m. in blog Housing   

California Housing Macroeconomics and Trends

CA loves suburbs and long car drives since 50s

Since the post-WWII baby boom, California’s has had a devotion to both single-family housing and motor vehicles leading to sprawl in So CA and Sacramento, but gridlock in SFO Bay area where land is limited.

High Cost of Housing, SALT 10k limit threaten Economic growth

California has an extraordinary cost of living

A third of Californians devote more than 50% of their paychecks to housing.

Demand - demographics

Supply - expensive top heavy houses being built

Affordable housing in short supply

The state is short roughly 3.4 million affordable units according to a report from the California Housing Consortium.

Experts say even more than 1 million units per year is needed to offset rising rents and home prices (final numbers for 2019 are expected soon).

Cities are struggling to deliver basic services because teachers and firefighters can’t afford to live near their jobs.

CA's 18% poverty due to high cost

Housing costs are the primary reason that California’s poverty rate, 18.2 percent, is the highest of any state when adjusted for its cost of living, despite a thriving economy that has led to strong income growth and record-low unemployment.

CA's homeless problem tied to low supply of affordable housing

CA's homeless problem stems largely from a dearth of lower-cost housing in particular.

The state saw its numbers of unhoused go up more than 16% in 2019. It is impacting nationwide which saw a 2.7% increase mainly on CA rapid rise in homeless.

A surge of sidewalk tents and homeless camps has prompted city leaders to urge a state of emergency — and led lucrative business conferences to find other locations.

Supply: Permits, Rezoning needed to generate enough New Units

Newson campaign goal was to build 3.5 million new housing units by 2025 to help relieve the state's crippling affordability crisis, i.e. well over 500,000 per year to meet the goal. That would be more than quadruple the current rate. Looks like in 2020 he is backing off and started referring to it as a “stretch goal.”

But in his first year in office, California was on pace to permit roughly 120,000 units despite a strong economy and a median home value, $556,000, that is more than twice the national figure.

Year Housing Permits
2019 111,000
2018 117,000

UCLA analysis found that cities across California would likely have to dramatically "upzone" --- allow much denser development where it is legally prohibited now ---for anywhere remotely close to 3.5 million new homes.

Redevelopment: State Bribes to local cities to make SB50 happen? Newsom vetoed.

To persuade local cities, a bribe/sweetener could be redevelopment — a state program that cities used and misused to fund affordable housing before former Gov. Jerry Brown dissolved the program nearly a decade ago. Cities have desperately clamored for that lost revenue ever since.

"A hard production bill [upzoning] can pass the Legislature, and if you pair it with [redevelopment] funding it makes it even much less challenging, I would love to see major zoning reform paired with SB 795," a bill from San Jose Democratic Sen. Jim Beall that attempts to revive redevelopment." -- Wiener

Newsom hates billions in such giveaways to cities - he vetoed Beall's redevelopment bill last year, and is loathe to commit the state to the billions in ongoing spending it would entail.

Upzone density

SB 50 attempted to dramatically "upzone" --- allow much denser development where it is legally prohibited now. "A housing production agenda without zoning reform is incomplete," said Sen. Scott Wiener, the San Francisco Democrat who authored the bill. "Restrictive zoning puts a mathematical cap on the new housing you can build."

Gridlock solution - SB50 seeks density near transportation

SB 50 attempted to dramatically "upzone" to permit higher density near transportation to alleviate congestion and gridlock.


Exclusionary land use rules lead to segregation by income and race.

Economists agree that CA's housing squeeze arises in part from an excess of process and local rules.

Attempts to reform exclusionary zoning are central to the housing plans of most of the current Democratic presidential candidates, including Sanders and Elizabeth Warren.

FEES: City building fees hurt new supply

Developers constantly say junk fees that local governments impose on new developments for parks, schools and other infrastructure to serve a new development's residents - these inhibit new housing from being built.

Cities want money replacement for permit fees in capping!

Cities could be receptive to lowering how much they're allowed to charge as long as they get that revenue from another source. * Demanding compensation for reducing entry barrier fees for developers!

"There's probably no avoiding a conversation about impact fees," said Rhine, the League of Cities' lobbyist. "We are open to finding new ways of funding it. We just have to make sure we're made whole. You can't build a house without sewer and infrastructure and roads."

Transparency in fees needed

A bill from Assemblyman Timothy Grayson seeks to bring more transparency to how much cities charge per new unit of housing.

Seeking a State-wide cap on permit fees

Supporters want to expand the bill to have it cap how much cities can charge.

However such a cap would hardly dent California's housing shortage - it needs lot more sweeping options.

CA Politics and Laws

State Regulation, Penalties and Admin Laws forcing More Housing Units Building

CA state officials claim their administrative efforts — are going to force cities to allow more housing.

  1. Many of this administrative push happened under the Jerry Brown administration

2a. Newsom's housing department has tripled the number of units Southern California have to plan for. Huge new housing quotas are on the horizon for the Bay Area. His office has pressured cities to accommodate more housing and actually issue permits for what is already zoned.

2b. Newsom's original proposal to withhold gas tax revenue from cities stubbornly failing to meet their state-imposed housing goals but it failed to garner much support.

2c. Newsom has pushed an initiative to build affordable housing on public land.

3a. Gov signed legislation penalizing cities that don’t meet their state housing goals. Newsom authorized a lawsuit against Huntington Beach, a city of 200,000 in Orange County, for failing to comply with state housing laws, and warned other cities that they faced similar action.

3b. A replacement scheme that allows a judge to fine non-compliant cities has yet to be tested.

3c. However these new state penalties are unlikely to effectively coerce California cities, which have a long history of flouting state housing law for NIMBY and local interests.

"Since we are already getting much larger numbers, our cities are going to have to contemplate greater density and greater height anyway just to comply with these laws," said Jason Rhine, assistant legislative director for the League of Cities, which opposed Wiener's bill. "A lot of the objectives of SB 50 will be realized just based on existing law."

Law: Need to be pre-packaged bundles to pass fragmented lobbies

A spoonful of sugar helps the medicine go down!

Wiener also hinted that any production bill would benefit from being included in a broader package of other housing bills — some serving tenant and anti-gentrification groups, others serving cities. Ironically, Newsom's housing achievements last year may have doomed SB 50 in 2020.

"The idea was to pair SB 50 with a renter protection bill and with a funding bill and the (accessory dwelling unit) bills...and have a real package," said Wiener. "Once the renter protection bill passed without SB 50...the leverage diminished significantly."

State Paternalism to Resolve Local Bratty City Politics

S.B. 50 at its base transfer power from cities to the state. Surprisingly, perhaps, this was an answer that many city officials, frustrated with their own intransigent development processes, endorsed.

Law: Zoning law change

A new passed law prevents cities from changing their zoning laws to reduce future housing,

Law: FIND! 3 units per SFR Lot

A new passed law makes it legal to build three units on single-family lots across the state, regardless of local rules.

Environmentalists Liked SB50, even though normally Hate Development

While SB50 bill was a rare piece of housing legislation that united developers, unionized labor and even surprise-surprise most environmental groups.

SB50 garnered support from environmental organizations, including Natural Resources Defense Council and California PIRG as it can reduce the carbon pollution that comes from long driving commutes.

However, these groups of developers, unions and environmentalist groups — major sources of campaign donations for Democratic lawmakers would go to war against each other over changing the California Environmental Quality Act.

  1. DEVELOPERS have long contended the act is a burdensome tool that labor and neighborhood groups use to block and delay new developments, adding unnecessary costs to projects.

  2. LABOR: Newsom tried to broker a deal between developers and labor to modify the law last year, to no avail. And reports of ongoing tension between construction workers' unions and the Newsom administration make the prospects of compromise increasingly remote.

  3. Environmentalist groups

Climate impact of low density

The disputes over SB50 have also tested the degree to which so-called liberal California voters were ready to embrace higher-density neighborhoods near job centers.

Theoretically green-friendly CA should be all for an approach that various policymakers and researchers say is crucial to curbing emissions that cause climate change.

What is the need to reform California Environmental Quality Act

The Legislature isn't yet considering any proposal to seriously alter the act.

Support from LARGE Cities with Painful development

SB50 was backed by big city mayors including San Francisco's London Breed and San Jose's Sam Liccardo as well as Adrian Fine of Palo Alto.

These all represent cities where development is notoriously expensive and difficult.

CA Gov Newsom - wanted it but did NOT endorse SB50

Despite never receiving the governor's explicit endorsement, backers of the housing-near-transit bill presumed it would serve as the de facto legislative vehicle for the governor's ambitions.

Newsom came to power early 2019 and had a signature campaign goal to deliver on building 3.5 million new homes by 2025. That output would be more than quadruple the current rate, and the governor has started referring to it as a “stretch goal.”

"California's housing affordability crisis demands our state pass a historic housing production bill," -- Newsom said in a statement shortly after the bill was voted down by Democratic and Republican lawmakers.

Support by Other California Big Politicians - Confused Populist Democrats

In CA's Democratic majority, consensus can be elusive despite a lopsided Democratic majority.

Sen. Toni Atkins, Democratic leader of the state Senate, who typically has a pretty big say in which bills make it out of her chamber.

Support from Builders, Developers

Developers, landlords, Facebook, construction unions, the state Chamber of Commerce, Realtors, environmental groups and even the AARP wanted to see the bill pass.

Pro-housing organizations supporting SB50 include California YIMBY, the California Labor Federation, and the California Chamber of Commerce.

Builder Lobbies

  1. Dan Dunmoyer, president of the California Building Industry Association, the lobbying group for developers in the Capitol. "

  2. Yes in My Backyard lobby Louis Mirante, legislative director for California "Yes in My Backyard", which sponsored the defeated Wiener bill. They also support city permit fee transparency and possibly statewide capped fees.

ANTI: Lobbying by Smaller Cities AGAINST that killed it - League of Cities and others

If labor and the environmental community and trial lawyers and local governments are opposed to it, it's very difficult to get [SB50] it passed.

An assortment of powerful interests backing that bill, what pro-development policy options are left?

ANTI: Affluent suburban homeowners could stymie

SB50 drew opposition from a key constituency: suburbanites keen on preserving their lifestyle and their high priced real-estate.

Livable California, a group that was formed largely to oppose Mr. Wiener’s bill and others like it. The organization was founded by homeowners in exclusive suburbs in places like Marin County and the San Francisco Peninsula.

ANTI: low income "keep it cheap" anti-gentrification

Less affluent city dwellers seeing a Trojan horse of gentrification.

Livable California ironically also counts activists from Leimert Park, a middle-class and predominantly African-American neighborhood in South Los Angeles, among its members.

Housing policy is not neat or clean, referring to historic racism and class issues baked into policies. The issue of gentrification is a core fear [as cost of living keeps going up] - Sen. Holly Mitchell, D-LA

Small Cities resent state interference and loss of local control on development

Cities resent the state encroaching on local control over housing decisions.

Some cities political groups raised concerns over the loss of local control for the city and county planners, who they say know the needs of their communities best.

Boards of Supervisors across the state were against the measure, along with dozens of city governments and the League of California Cities, an association of city officials.

  • While not quite corrupt, local control on development is a major political factor with developers and home owners remodeling and seeking permits is a major source of campaign funds.

2019 NIMBY Small Affluent cities - Los Altos, blocked it in back office Politics

The California Senate Appropriations Committee Chair, Sen. Anthony Portantino, D-La Cañada Flintridge, who opposed the bill, was pivotal to blocking its advancement. He successfully holding it in his committee.

2020 SB 50 attempt failed again and again

SB50 was given new life when Sen.Toni Atkins, D-San Diego, pulled it into the rules committee in January, so it could reach the Senate floor for a vote before the deadline at the end of the month.

SB 50 101

SB50 seeks to strip away limits on housing density near public transit. It would have overridden local zoning rules to allow high-density housing near transit lines, high-performing school districts and other amenity-laden areas.

The legislation took aim at restrictive zoning and would have required counties with more than 600,000 residents to approve permits for more construction of multi-story housing and streamline the approval process for apartment buildings in neighborhoods near public transportation.

It would have required local governments to approve four-story buildings within half-mile of transit and five-story buildings within a quarter-mile. SB 50 also would give the state more power to curb local parking requirements in favor of more housing, and enable more building in high-income areas. Smaller cities, with less than 50,000 people, would have to add up to 15 extra feet of height to their permits, essentially adding an extra floor of housing, in areas within half-mile from transit.

SB50 background

Starting 2018, SB50 has been pushed by State Senator Scott Wiener, a San Francisco Democrat and one of the country’s most outspoken advocates for reforming local zoning laws.

Supporters portrayed it as a big but necessary step toward reducing the state’s housing deficit — and helping to curb carbon emissions from long-distance driving — by fostering development in dense urban corridors.

Opponents decried it as state overreach into local land-use rules.

Senate Bill 50, a measure that would have forced cities to allow more mid-rise apartment buildings around public transit and next to some single-family homes

SB 50 dies again, Feb 2020

SB 50 failed to get enough votes in the California Senate to survive in 2020 before time ran out.

This is the third time it has failed.



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