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Tim Coyle

Strikeout – Governor Swings and Misses, Again

Gavin Newsom is lost. He hasn’t a clue how to fix California’s housing problem – something that he promised to do three years ago, when he ran for Governor.
And, the crisis gets worse every day.

What Newsom said he would do is to clear the way so that the state would produce about 500,000 housing units per year through 2025. Instead, California reports annual housing starts haven’t exceeded 115,000 in several years.

His budget for next year falls well short of helping, as well. After hearing the plaintive appeals for more money from the many poverty pimps surrounding housing programs the Governor proposes an $8.2 billion for them. (To this a skeptical Legislative Analyst warns that the state ought to be more directly funding the differing strategies of local governments, not state programs.)

The FY 2021-2022 budget also includes – presumably to improve California’s falling rate of homeownership – $3 billion to provide low-interest loans. Doesn’t Newsom know interest rates have never been as low as they are today and we may not need mortgage assistance right now? Doesn’t he know that getting cash for the down payment is the biggest barrier for homebuyers? He’s flailing.

Listening not to his instincts as a businessman but to his advisors at the Department of Housing and Community Development (HCD), Newsom has embraced the theory that if you put enough force into the law to beat local governments over the head your intentions will prevail.

But, that never works. First, most lawmakers at the Capitol hail from a prior role as local elected officials and their memories aren’t that short. With a little pressure coming from an articulate, well-organized advocacy corps – the League of California Cities (“the League”) – votes of legislators are subject to change.

Second, more than anything else, local governments don’t like the state telling them what do – no matter what the activity. They don’t like the state mandate of a housing element in their general plans nor do they care for the way the program is administered. They will resist Sacramento directives every time.

Lastly, it may not be their fault that locals are pinned in a corner over their decisions to dis-approve housing projects. The primary opponents to new housing are very vocal neighborhood groups (NIMBYs), accountable to no one but themselves. Most NIMBYs are constituents – and they vote. To wit, they have more political power than some nameless, faceless bureaucrats in Sacramento.

Though their efforts are well intended, the folks at HCD have never learned this. They believe their edicts are meritorious and will always be followed. Indeed, they believe the law is on their side and whatever they do to “enforce” it – including oft-used heavy-handed tactics (which never work) – they do ardently.

As outlined above, local governments believe they have the state constitution – and the doctrine of “local control” – on their side. Moreover, locals are forever evasive – they’ve mastered playing “hide the ball” with the state. They’re long on excuses and double-talk. The results: no housing – or very little – gets built.

What does get built costs a fortune. In Los Angeles, the average cost of building a multi-family unit is $500,000. At that rate, the Governor’s budget would produce only 16,000 housing units. That’s just a fraction of the annual low and moderate-income housing need.

If Newsom wants to honestly solve California’s housing mess, he can start with the following:
• Restore redevelopment authority to locals, to supply a steady and reliable source of funding for affordable housing construction, rehabilitation and tenant-based assistance;
• Scrap the state’s pedantic housing element law and replace it with large financial/infrastructure payments – tied to the Regional Housing Need Assessment (RHNA) – for meeting local housing goals;
• Abolish affordability mandates – like inclusionary zoning – and replace them with per-project charges or authority for local governments to accept as a benefit raw-land contributions;
• Consolidate and cap local development-impact fees; and
• Repeal the California Environmental Quality Act (CEQA) and replace it with a process for the conduct of one locally performed and trim environmental review with the assignment of a strict timetable for mitigating impacts.

My prediction: Newsom won’t do any of this.