The May decision of state Senate Appropriations Chairman Anthony Portantino, D-La Cañada Flintridge, to kill a sweeping bill making it far easier for developers to build four- or five-story condominium and rental projects near mass transit led many disappointed pundits to complain that the Legislature still hadn’t done enough to spur housing construction. Senate Bill 50, by Sen. Scott Wiener, D-San Francisco, was seen as crucial to getting local communities to meet housing needs.

But officials and residents of the San Francisco suburb of San Bruno don’t want to hear that the state hasn’t done enough to pressure local governments. Thanks to a 2017 housing law – also crafted by Wiener – and another bill recently signed by Gov. Gavin Newsom, the city of 43,000 residents could eventually face fines of as much as $600,000 a month for failing to meet housing mandates, according to a report in the San Francisco Chronicle.

At issue is the San Bruno City Council’s July 10 decision to reject a 425-unit housing project proposed by the Signature Development Group. Zachary Olmstead, a deputy director at the state Department of Housing and Community Development, warned city officials in a letter last week that under the 2017 law, they were legally compelled to approve the project since it met all planning and zoning requirements without imperiling public safety or health. Olmstead noted that state law compels San Bruno to approve construction of 1,155 new housing units by 2023, but so far it had approved just 118 units – with none for low-income families.

Gov. Newsom sees lawsuits as way to fight local NIMBYs

The formal notice from the state clears the way for the Newsom administration to eventually sue San Bruno if it doesn’t reverse its decision on the project or otherwise approve new housing. The governor already made it clear he considers such lawsuits as a powerful tool to force housing construction, suing Huntington Beach in January because the Orange County city had made little progress toward the requirement that it add 533 low-income housing units by the end of 2021.

Huntington Beach officials, who believe that their state constitutional protections as a charter city are being violated, are suing the state over its housing edict.

San Bruno officials have reacted with much less defiance. That may be partly because as a general law city, San Bruno can’t claim constitutional cover. It’s also because there is far more support for the 425-unit project in San Bruno than there is for low-income housing in Huntington Beach.

According to the Chronicle, the Signature Development Group worked to firm up support for its project by accepting city officials’ request that its plan add 64 more low-income units and include a grocery store, among other concessions. But while four of the five council members backed the project, two of those members recused themselves because of perceived conflicts of interests, since they live within 1,000 feet of the proposed project site. That meant there weren’t the necessary three votes for approval.

Unlike Huntington Beach, San Bruno is conciliatory

Even before the state’s warning arrived, San Bruno City Manager Jovan Grogan posted a statement on the city’s website about the controversy late last month that acknowledged the City Council’s decision might not stand. 

Grogan’s conciliatory remarks presented a sharp contrast with Huntington Beach officials’ reaction to the state’s pressure. There, City Attorney Michael Gates blasted Newsom and suggested that Huntington Beach’s history as a Republican stronghold was why it was singled out first instead of the 50-plus other cities in California that also failed to meet state housing mandates.

Meanwhile, there were reports this week that the San Bruno City Council would meet soon to review its limited options. An opinion from the city’s legal advisers saying the two council members who recused themselves from conflicts could vote because of the unusual circumstances could be a tidy way out of the problem.

The state’s lawsuit – filed in Orange County Superior Court by Attorney General Xavier Becerra on Jan. 25 at Newsom’s behest – is the first to be filed under a 2017 law that allows the state to pursue legal action against local governments that don’t comply with their housing requirements.

The state wants to compel Huntington Beach to build 533 low-income housing units by Dec. 31, 2021, to meet its state quota. The city has only approved about 100 such units, according to the Southern California News Group.

City attorney sees H.B. singled out for its politics

Huntington Beach City Attorney Michael Gates maintains that as a charter city, his city should be able to set its own housing policies. He also hinted that there were political motives driving the actions of Democrats Newsom and Becerra. “It is noteworthy that Sacramento is suing only the city of Huntington Beach, while over 50 other cities in California have not yet met” their targets, he wrote in a statement. Huntington Beach has been a Republican redoubt for decades.

But state officials said they were motivated by Huntington Beach’s bad faith. Not only did the city refuse to provide a housing plan in compliance with state rules, in 2015, the City Council revised zoning rules to reduce by 2,400 the number of homes allowed in a neighborhood on the eastern edge of the city near Interstate 405.

While the state’s suit got far more attention, Huntington Beach’s suit – filed Jan. 17 in Orange County Superior Court – also involves high stakes. The city is targeting Senate Bill 35, the high-profile 2017 state law crafted by state Sen. Scott Wiener, D-San Francisco, that limits the ability of local governments to block housing projects that meet certain conditions, such as using union labor and including a portion of affordable units.

“It’s one thing to have more basic housing laws come out of Sacramento; it’s another to have Sacramento try to micromanage cities’ zoning and attempt to approve development projects in spite of the city,” Gates told the San Francisco Chronicle. “It’s really nothing more than the city trying to maintain its local control.”

Can charter cities defy state’s housing edicts?

Wiener blasted Huntington Beach in a statement given to his hometown paper. “Huntington Beach’s dismissive approach to housing – claiming there is no problem and that the state should just mind its own business – is Exhibit A for why we have a crisis in this state.”

When SB35 was discussed in 2017, there is no indication from a Nexis news search that Wiener or any lawmaker saw charter cities as being exempt from the bill’s requirements.

But lawyers for the League of California Cities have used language similar to that in Huntington Beach’s lawsuit to assert that there are limits to state power over charter cities. “The benefit of becoming a charter city is that charter cities have supreme authority over ‘municipal affairs,’” states the league’s legal primer on the topic. “In other words, a charter city’s law concerning a municipal affair will trump a state law governing the same topic.”

About one-quarter of California’s 478 cities have charter status. If Huntington Beach wins its challenge to SB35, general law cities that want to regain greater control over local planning could craft proposed charters and ask their voters to approve them under a process laid out in the state Constitution.

It’s been two and a half years since Gov. Jerry Brown jolted the debate on California’s housing crisis by saying much more private-sector construction was the only realistic way to address the crisis, not the old Democratic recipe of building a relative handful of subsidized housing units that help a small percentage of those in need. “We’ve got to bring down the cost structure of housing and not just find ways to subsidize it,” he said in January 2017 in criticizing previous state policies.

Brown sought to make it much easier for home-builders to clear regulatory hurdles. In September 2017, Senate Bill 35 by Sen. Scott Weiner, D-San Francisco – which reflected the governor’s priorities – was enacted. It holds that cities could not put up new obstacles to projects with proper zoning so long as they contained at least 20 percent of units at lower price levels.

And in the last two months, Brown has signed a series of new housing measures with similar goals – most notably Assembly Bill 2923, which will make it much easier for the Bay Area Rapid Transit authority to follow through with its plan to build 20,000 new housing units by 2040 on 250 acres BART owns nears its transit stations.

Legislature renews emphasis on subsidized housing

But when it comes to Tuesday’s election and major housing initiatives, it’s back to the old Democratic playbook. Both the key measures meant to increase housing – placed directly on the ballot by votes of the Legislature – involve government-subsidized construction.

Proposition 1 authorizes the issuance of $4 billion in general obligation bonds. The biggest chunk – $1.8 billion – would go toward building apartment-type residences. $1 billion would go to loans to veterans. Both infrastructure and homeownership programs would receive $450 million each. And $300 million would go to build housing for farm workers.

The official state voting guide’s analysis estimates that this will create access to housing for 55,500 families.

Proposition 2 would allow the state to divert funds from 2004’s Measure 63 – which generates about $2 billion a year for mental health programs from an income tax surcharge on the very wealthy – to pay back over 30 years up to $2 billion in bonds to build housing for the homeless and those at risk of being homeless.

The official state voting guide’s analysis doesn’t estimate how many people would gain housing as a result. But based on Proposition 1’s estimate that $1.8 billion could create about 30,000 apartment units, $2 billion should be able to provide around 33,000 units.

Bonds would fund 88,500 units; 2 million needed

The combined net effects of the two measures: providing housing to about 88,500 families over the life of the two bond measures in a state that a 2016 McKinsey consulting group report said has a shortage of 2 million housing units.

The small increases in housing that Proposition 1 and 2 would create are consistent with the criticisms that have been made of California’s state housing policies since at least 2003. That’s when the Public Policy Institute of California released a report that said affordable housing programs focused much more on establishing a process for such housing than on actual results. It said it was “unrealistic” to think such an approach could have a significant effect in increasing affordable housing.

No recent polling has been done on Propositions 1 and 2, but they’re widely expected to pass easily. That’s in keeping with the record of bonds placed directly on the ballot by the Legislature.

In January 2017, state lawmakers returned to the Capitol determined to make a difference on the state housing crisis. Dozens of bills were touted – including Senate Bill 35, by state Sen. Scott Weiner, D-San Francisco, which ended up as the most far-reaching law to reduce obstacles to housing construction in modern California history.

But even as momentum built for SB35 and other housing measures, the head of the respected, nonpartisan Legislative Analyst’s Office warned in a 12-page report issued in March 2017 that state lawmakers would never be able to reduce the housing shortage without much more support from the public.

“Unless Californians are convinced of the benefits of significantly more home building – targeted at meeting housing demand at every income level – no state intervention is likely to make significant progress on addressing the state’s housing challenges,” wrote Mac Taylor.

Now a USC Dornsife/Los Angeles Times survey offers the most definitive support yet for the legislative analyst’s conclusion that when it comes to building new housing, Californians aren’t very enthusiastic.

Few see lack of construction as big problem

The survey asked 1,180 Californians why they thought housing was so expensive in the Golden State. They were given a list of eight possible primary reasons.

The most popular reasons were lack of rent control (28 percent) and lack of affordable housing programs (24 percent).

In the middle tier of explanations were environmental regulations (17 percent), foreign home buyers (16 percent) and the influence of the tech industry (15 percent).

Bringing up the rear were a lack of homebuilding (13 percent), Wall Street buyers (10 percent) and restrictive zoning rules (9 percent).

The Times’ analysis of the poll noted how at odds the public’s view of housing is with the view of economists, policy analysts and housing experts.

There is “general agreement that a lack of supply is at the root the problem. Reports from the state Department of Housing and Community Development, the nonpartisan Legislative Analyst’s Office and a host of academics contend that California has a chronic shortage of home building that has failed to keep pace with the state’s population growth – especially during the recent economic expansion – which has forced prices up.”

But this wasn’t the only way Californians parted with conventional wisdom. The survey also included other questions that showed two-thirds of those surveyed backed local control over housing even if local governments weren’t meeting state-set goals for adding housing stock.

It is this local power over the approval process that empowers motivated NIMBYs in city after city. Taylor’s March 2017 study identified it as the single biggest reason behind the emergence of the housing crisis.

“For decades, many California communities – particularly coastal communities – have used this control to limit home building,” the legislative analyst wrote. “As a result, too little housing has been built to accommodate all those who wish to live here. This lack of home building has driven a rapid rise in housing costs.”

Tech industry certain to keep pushing for housing 

While the USC-Times poll could influence candidates in close elections to side with NIMBY views, it is unlikely to blunt new efforts by the Legislature to use legislation to bring down housing costs. The deep-pockets, influential Silicon Valley Leadership Group is one of many business organizations that sees the housing crisis as a threat to the state’s future prosperity because of its potential to hurt recruitment and retention of workers.

Another of the state’s most politically potent forces – the California Teachers Association – also sees the housing issue as bad news for its members. But the CTA’s main policy prescription for now is Proposition 10 – the Nov. 6 ballot measure that would overturn a 1995 state law and let cities impose rent control. It has generally trailed in state polls, although with high numbers of undecided voters.

As CalWatchdog

Senate Bill 35 by Sen. Scott Weiner, D-San Francisco, requires cities that have not met their affordable housing requirements to approve projects that are properly zoned, pay union-scale wages to builders and have at least 10 percent of units in “affordable” ranges.

After months of objections from Cupertino elected officials and activists, in June, the city signed off on developer Sand Hill Property Company’s plan to convert the largely empty 58-acre Vallco Mall site to a huge multi-use project with 2,400 residential units, 400,000 square feet of retail space and 1.8 million square feet of office space

Given that 98 percent of cities have been found to have an inadequate supply of affordable housing, according to a state evaluation, the Cupertino precedent seemed potentially huge.

Two months later, new developments related to SB35 appear to point in the opposite direction.

Last week, Berkeley officials rejected a plan to use the law to fast-track approval of 260 apartments and 27,500 square feet of commercial space at 1900 4th Street just east of the Berkeley Marina despite evidence presented by developer Blake Griggs Properties that it was properly zoned and otherwise met SB35’s edicts.

City tactics in fighting project have familiar ring

The tactics that Berkeley is prepared to use mirrored the ways that construction projects have been fought in California for decades: raising a variety of legal objections that could cost developers millions of dollars because of delays, even if they have little or no validity or applicability.

Berkeley planning chief Timothy Burroughs said the project could not proceed because:

• It would have been built on land designated as a historical landmark because of a Native American burial ground. As a city with its own charter government, it is given deference in protecting its history.
•  It would have considerable low-income housing but not enough housing for those with very low incomes.
•  It would have increased traffic in the area in ways not allowed by city laws.

The objections were of the sort that Weiner sought to bypass with SB35. This is why the developer warned of a lawsuit earlier in the summer after the city put up roadblocks to approval.

But in a surprising move reported last week by the San Jose Mercury-News, West Berkeley Investors – part of the group backing developer Blake Griggs Properties – has backed out of the project without explanation. The assumption of many is that it saw the hassles as outweighing the chances for success.

The Mercury-News also reported that a spokesman for Berkeley City Hall said officials would welcome it if developers chose to reactivate a previous application that had far fewer residential units – 135 – and slightly more commercial space – 33,000 square feet.

In his Sept. 4 letter rejecting the latest version of the project, the city planning chief emphasized the historical significance of the Native American burial ground. Why that significance would lose weight in planning decisions if a smaller project were being considered was not explained.

But Burroughs pushed back against the idea his city was hostile to adding housing stock. He said 910 housing units have been built since 2014, 525 are now being constructed and 1,070 are cleared and in the pipeline.

A ballot measure that would repeal California’s 1995 state law limiting what properties can be subject to rent control seems certain to be on the November ballot after proponents submitted more than 565,000 signatures to state authorities last week, far above the minimum needed.

The measure’s lead sponsor is Michael Weinstein of the well-funded Los Angeles-based AIDS Healthcare Foundation, which is working with tenants rights groups and social justice activists and which sponsored two 2016 state initiatives. At a news conference this week, Weinstein and his allies depicted rent control as an obvious solution to a housing crisis that has pushed rent and mortgages higher for years without drawing a vigorous response from local and state officials.

“The rents are too damn high and we need local control to solve the problem,” Elena Popp of the Eviction Defense Network said at a rally in Los Angeles, according to a published report,

The measure would repeal the Costa-Hawkins Rental Housing Act of 1995, which banned rent control on housing units completed after its enactment and on existing single-family homes, duplexes and condos. The complex law imposed other limits as well, depending on rent-control provisions in individual cities.

Its passage came in the mid-1990s after developers backed by Republicans, planners and some community activists made the case that rent control laws adopted by 15 California cities after World War II – most notably Los Angeles and San Francisco – had had the effect of stifling new construction and leading landlords to skimp on renovations and repairs.

Economists and housing experts generally continue to see rent control as having a long-term negative effect on housing costs by making shortages more likely. A 2016 report by the Legislative Analyst’s Office agreed with this conventional wisdom.

But with average monthly rents for two-bedroom apartments soaring past $2,500 in most Southern California coastal counties and above $4,000 in San Francisco and parts of Silicon Valley, public interest in rent control increased. In November 2016, eight measures to control housing costs were considered by Bay Area communities. Four passed, included laws capping annual rent hikes in Oakland, Mountain View, Alameda and Richmond.

Focus on housing stock plays better with policy wonks than public

The idea that rent control is no real long-term solution to a problem that is rooted in a shortage of housing units remains the view of some prominent Democrats. Most notably, Gov. Jerry Brown supported 2017’s Senate Bill 35, which makes it more difficult to use regulatory tactics to block properly zoned housing projects with at least some affordable units. According to one analysis, SB35 will compel more than 97 percent of California’s local governments to build more housing.

But this medium- and long-term approach to addressing the housing crisis has played better with policy wonks than the general public. Frustration over California housing costs has been a staple of social media and in the letters sections of newspapers for years.

This has caught the attention of elected officials. Los Angeles Mayor Eric Garcetti once appeared to be in the camp of those who saw adding housing stock as the key to slowing or stopping the increase in rent and mortgage costs. In 2014, the possible 2020 Democratic presidential candidate committed his administration to approving 100,000 new housing units by 2021 and has bragged about already being nearly three-quarters of the way to his goal.

But Garcetti surprised some political observers by coming to this week’s L.A. rally for the statewide rental control initiative and offering strong support. According to a City News Service report, Garcetti used one of the favorite talking points of activists – depicting rent control as a way for average citizens and City Hall to scale back the power of corporate and other interests. “I’ve always believed that those who live closest to a given block or a street know what’s best. Local government should have control over their own city,” he said.

In a statement, Tom Bannon, CEO of the California Apartment Association, offered a starkly different assessment: “This ballot measure will pour gasoline on the fire of California’s affordable housing crisis. It will do exactly the opposite of what it promises – instead of helping Californians, it will result in an affordable housing freeze and higher costs.”

Senate Bill 35 – the 2017 measure authored by state Sen. Scott Weiner, D-San Francisco, that was billed as the most far-reaching response to California’s housing crisis – could be about to get its first major test in Silicon Valley, the region with the state’s most severe problem with extreme housing costs.

Under the law, cities that have failed to build enough housing to honor their obligations under state law to respond to public needs must approve properly zoned housing projects that meet certain conditions, such as having 10 percent “affordable housing” units and paying union-scale construction wages. State housing officials reported in February that nearly 98 percent of cities would be affected in some ways by SB35’s requirement that housing be fast-tracked.

Weiner’s bill was hailed by many activists, housing experts and think tanks as a potential “game changer” that could address California’s emergence as the state with the nation’s highest effective poverty rate because of the high cost of shelter. But many local elected officials have reacted with anger and dismay to their apparent loss of control over construction permitting, with a Brown administration housing official taking withering fire at a meeting with city leaders in San Diego County in early March.

Now the question of how much say local authorities still have over housing in the SB35 era is about to be addressed in Cupertino.

Voters rejected 800 housing units; now far more may be built

Last Tuesday, officials with the Sand Hill Property Co. announced that they will seek to use provisions of Weiner’s law to compel Cupertino officials to allow their company to build more than 2,400 homes on a lot that now holds the Vallco Mall. Opened in 1976, the mall – shown above in a 2017 photo – was once a vibrant commercial hub, with nearly 200 tenants. Now it has fewer than a half-dozen.

Sand Hill had proposed a multi-use project at the mall site, but Cupertino voters in 2016 rejected the plan out of fears that its housing component of up to 800 units would strain local schools and roads. Now the company wants far more housing, especially less expensive options. Its plan calls for about 1,200 of the proposed residential units to be “affordable housing” – meaning they would be set aside for families making about $85,000 or less a year. A San Jose Mercury-News analysis said this single project “would increase Cupertino’s affordable housing stock fivefold.”

“It has now gotten to a point where we do not have any confidence that this process can come to a conclusion in a timely manner,” Reed Moulds, managing director of Sand Hill, told the Mercury-News. “This housing crisis needs to be resolved in a manner that actually provides near-term solutions, and sites like this have an opportunity to do a lot of good for the housing situation.”

The project also would include 2.2 million square feet of office and retail space.

But SB35 or not, local activists are gearing up to try to persuade Sand Hill to sharply downsize the project. The Better Cupertino group has fought development of the Vallco Mall site for years. Its website bristles at attempts to limit local control of planning and even challenges the widely held view that suburban malls such as Vallco are doomed, given the steady growth in online shopping.

But the tone, at least, of city officials seems to reflect an assumption that times have changed. Cupertino Councilman Barry Chang told the Mercury-News that he didn’t see how his city could reject the application, at least if it met the standards set out by SB35.

Cupertino, home to Apple’s headquarters, has a median home price of $2.3 million as of late February, according to data from the Zillow real-estate information company. Zillow said home values have soared by more than 25 percent in the last year alone. The Rent Jungle website said that as of February, the average monthly rent of an apartment in Cupertino was $3,114.