Despite new laws, state housing crisis may be worsening

by Chris Reed | September 10, 2019 1:25 pm

For 40 years after World Wat II, housing subdivisions sprung up in California in response to the rapidly growing population. But in recent decades, housing construction has lagged, creating what experts consider the worst housing shortage of any large state.

For the third straight year, the state Legislature has approved major legislation meant to accelerate housing construction in California to help stabilize or reduce the cost of shelter. But will the latest[1] – Senate Bill 330, the Housing Crisis Act of 2019 – fare any better than past legislation in improving the housing picture in the Golden State?

The bill’s sponsor, Sen. Nancy Skinner, D-Berkeley, is optimistic, saying in a news release that its enactment would help create the housing California “desperately needs.” Her bill is meant to force local governments to speed up the processing of building permits and limit fees on housing. It also forbids cities and counties from reducing how many homes can be built. SB330 easily won final legislative approval last week.

But there was similar optimism about past measures. Most notably, Gov. Gavin Newsom has used new powers to aggressively target local governments which don’t build enough housing, especially units with rents or mortgages within reach of families with average incomes or less.

Multifamily permits off 42% from 2018

Yet while this has produced headlines with the Newsom administration’s January lawsuit[2] against Huntington Beach over its refusal to add more affordable units and with threats[3] against other cities[4], it doesn’t appear to be boosting housing construction in any notable way.

State data shows residential building permits dropped by 12 percent[5] in the first five months of 2019 compared with the same span in 2018. And the statistics were far grimmer for less expensive multifamily housing units, which plunged 42 percent.

Builders and housing experts who contributed to a recent Sacramento Bee print symposium[6] on the news of declining residential construction were not optimistic. Two fundamental problems – one much noted, one less appreciated – are not going away, they said.

Tia Boatman Patterson, Newsom’s top housing adviser, said there continue to be bottlenecks at the local level in getting housing through bureaucratic hoops.

Sometimes there’s what appears to be defiance. The New York Times recently reported[7] that California cities “with some of the state’s highest rents, including Atherton, La Canada Flintridge, Los Altos Hills and Rancho Palos Verdes, issued no multifamily construction permits from 2013 to 2017.”

Cash-strapped cities increasing fees

But some participants in the Bee project said the problem isn’t just getting local governments to live up to their obligations and to stop dragging their feet in granting permits and approvals. Many cities and counties are so fiscally stretched because of the rising costs of pensions and other expenses that they’re increasingly adopting new or higher fees[8] on housing projects – even as developers beg for relief.

Rob Lapsley, president of the California Business Roundtable, even said these fees were on their way to being a bigger obstacle that the California Environmental Quality Act.

But there was also some pushback at the notion that NIMBYs were the biggest problem. Instead, some argued that it’s the fact that between the high cost of land and regulations that can add $200,000 to the cost of a single-family home, building housing in California is riskier and less appealing for developers than most other states. This decades-old problem may have been overshadowed by other housing issues of late, but it’s a consensus view of builders that has never gone away.

The executive director of the League of California Cities, Carolyn Coleman, noted in her contribution to the Bee that more than 450,000 homes had received final approval from local authorities but the vast majority weren’t being built.

The takeaway: Even when local bureaucratic obstacles are overcome, adding housing in California is a difficult proposition.

Newsom has not taken a position on SB330, but his signature is considered likely. It passed[9] the Assembly 67-8 and the Senate 30-4.

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