The state of California has begun a takeover of local housing policy.
That’s the big story behind the more than 100 housing bills now introduced in the Legislature. None of these proposals is up to the task of getting the state to meet its enormous housing needs. But taken together, the varied legislative proposals clearly signal the state’s intention to take a leading role in how California houses itself.
The prospect of a Sacramento intervention is usually worrisome. But this one should be welcomed. The threat of the state seizing power may be the last, best hope for pressuring the biggest obstacles to new housing – local governments – to get out of the way.
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One can hardly blame state government for aggressive meddling. California has a nasty history of destabilizing housing calamities: from the 1970s runup in housing prices that produced the Proposition 13 backlash to the debt-fueled mid-2000s increases that led to the Great Recession.
Today, California’s housing crisis results from a failure to create enough units to meet the population’s needs. While the state needs an estimated 180,000 new units a year, it’s been getting less than half of that. By one estimate, the resulting shortage is a $140 billion annual drag on the state economy. Housing costs also force Californians into long commutes that damage our health, infrastructure and environment. And housing prices are one big reason why California suffers from the highest poverty rate of any state.
Fashioning a policy response is difficult because of the bewildering mix of federal, state and local policies that affect housing. Federal and state programs, which support those who seek housing and those who try to provide it, are tiny compared to the need for subsidies in expensive California. Local governments add to the housing shortage via limits on housing development, density and sometimes rents themselves. This local hostility is fueled by NIMBY-ism, environmentalism and a state fiscal system that encourages local governments to pursue retail development instead of housing.
The state’s goal should be straightforward: more housing. That should mean more assistance to those seeking housing, more incentives to produce more housing, and fewer regulations limiting housing. But the politics are wickedly complicated, even by California standards. Housing divides key interests that must come together to pass ambitious laws. Among these are labor (split between building trades unions that oppose reforms to lower housing costs, and service-sector unions whose members need lower-cost housing), environmentalists (between those who embrace denser development and hardliners who oppose all growth), and advocates for the poor (between those who want to revive poorer communities with new housing and those who fear new housing will displace poor people).
Some of the more than 100 housing bills could make the shortage worse by adding to the costs of housing or creating disincentives for local governments to approve housing. And it’s very difficult to make even small gains in housing. State Sen. Toni Atkins of San Diego has built a formidable coalition behind a bill to create a dedicated funding stream to support below-market housing. In Sacramento, that would be a major political breakthrough. But the legislation would produce only $250 million a year, while California’s affordable housing needs run into the billions.
The crisis is urgent, and the state’s legislative efforts could take years to bear fruit. Can we go faster? Perhaps, but it would require the politically perilous step of empowering developers.
One model, with roots in Massachusetts, gives developers great powers to challenge land-use regulations that prevent housing development. The developers get an especially free hand in localities that fail to meet state requirements on housing. This puts local governments on the defensive; they can’t just say no to housing projects but must make plans for housing.
Such pressure from the state may sound extreme. But so are the consequences of our housing shortage.