The Riverside Press-Enterprise
Why housing does not get built in California
Would you like to know why housing doesn’t get built in California?
Because of blithering idiocy. For example, consider a new bill just introduced. Well, not exactly introduced. It was a gut-and-amend job, that sketchy legislative technique of taking an existing bill that was introduced by the Legislature’s actual deadline for such things, and then gutting it like a fish and stuffing it with a completely different piece of legislation, usually something that emerged from a backroom deal.
It’s the California Way.
Stuffing backroom deals into gutted bills is an idiotic way to make laws, unless you think laws should benefit only the well-connected players in Sacramento at the expense of rational economic outcomes.
Assembly Bill 2011, “introduced” by Assemblymember Buffy Wicks, D-oakland, is cosponsored by a statewide coalition of affordable housing providers and the California Conference of Carpenters, an organization that represents more than 82,000 union carpenters. It creates a “streamlined” approval process for affordable housing developments built on certain commercial sites, but only if the workers who build the developments receive the highest wages plus benefits.
“To be eligible to build housing on commercial sites currently zoned for office, retail and parking uses,” Wicks’ news release explains, “the bill requires developers to meet a range of responsible wage and training standards.”
First, “prevailing wage is required on all projects.” If you’re not familiar with the term, “prevailing wage” means the highest wage paid in the region for that type of work. It’s generally based on what union members working on a government project are paid, and because the government is spending your money, money is no object. A government official’s main concern is winning the political support of those unions. Nobody likes a wellfunded primary opponent.
And there’s more. For projects of 50 or more units, contractors must participate in a state-approved apprenticeship program or request apprentices from an approved program, and must provide health benefits.
And there’s still more. The bill includes “new enforcement mechanisms” to ensure that developers, contractors and subcontractors really pay the wages and benefits they’re required to pay — that is, if they have any money left for workers after they finish paying lawyers to “certify compliance with these requirements to the local government and to report monthly to the local government that they are in compliance with those requirements.”
And it doesn’t stop at the local government. The state labor commissioner would be in charge of enforcing the obligation to pay prevailing wages. Failure to comply with any part of this regime would subject the developer, contractors and subcontractors to “specified civil penalties.” Penalty payments would be “deposited in the State Public Works Enforcement Fund” to pay for more of this kind of thing.
So this bill would allow developers to build affordable housing on commercial sites without having to worry about complying with the California Environmental Quality Act (CEQA), as long as they paid higher-than-market wages to construct the buildings along with the legal bills for continuous compliance certifications.
Why is this blithering idiocy?
Because the more costly it is to build the building, the less likely it is that the rents can be affordable, and the less likely it is that the building will ever get built at all.
And then it gets even worse. A perennial proposal, Assembly Constitutional Amendment 1, would lower the vote threshold needed to pass tax increases to build “affordable housing.” Under Proposition 13, those taxes would need a two-thirds vote to pass, but ACA 1 would change that to just 55%.
ACA 1 would need a twothirds vote in each house of the Legislature in order to get on the ballot, and then it would need the approval of a majority of the voters in order to become law. But for local governments that don’t want to wait, there’s a new workaround, courtesy of some vague language from the state Supreme Court: the justices speculated in a 2017 decision, California Cannabis Coalition v. City of Upland, that tax hikes put on the ballot by a “citizens’ initiative” might only need a simple majority, and the lower courts are putting this into effect.
Read your local ballot very closely. Tax increases that formerly required a two-thirds vote may be declared passed with 50% plus one.
So there you have it. The California Environmental Quality Act adds massive costs and delays to housing construction, but rather than reform the 1970 law, state lawmakers prefer to grant exemptions from it in exchange for developers paying more money to lawmakers’ political allies, which makes the projects infeasible, unless your taxes are raised to fill the gap.
All of this takes years to play out, during which time lawmakers collect campaign donations from everyone involved, and no housing gets built.
This is only one example of how California lawmakers gleefully turn urgent problems into fountains of cash to sustain their political careers as they hopscotch from office to office. It’s a template. The first step is to create an onerous law that raises costs and adds burdens. The second step is to offer relief from the costs and burdens in exchange for something lawmakers want but have no authority to order. The third step is raising taxes to pay for the problems that result.
You do that long enough, you’ll have a state with the highest taxes and the worst problems.
Blithering idiocy. It’s the California Way.