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How Legislature is missing the mark on California’s housing crisis

Low-rise homes dot the landscape in San Francisco in June. The Legislature is responding to the lack of affordable housing, but the former mayor of San Jose says it is on the wrong track.
Low-rise homes dot the landscape in San Francisco in June. The Legislature is responding to the lack of affordable housing, but the former mayor of San Jose says it is on the wrong track. New York Times

California’s housing crisis has reached a point where the Legislature may pass several of more than 100 bills on the topic.

But most likely none of the bills will have a significant impact because they do not deal with the central problem – our housing production has been below our need by about a million units over the last decade.

 
Opinion

The recently announced deal on a $4 billion bond that would fund low-income housing and subsidize home loans for California veterans will not reduce the shortage but rather will shift some housing toward the poor.

Most of the debate recently has been about “streamlining” the approval process, basically by eliminating or restricting local discretion. As a former mayor who has participated in a thousand hearings on housing, I know there are many other things that could be done instead of removing local control.

We have to deal with the facts at the center of the lack of production: Building new housing has a negative financial impact on city budgets. And housing opponents can easily kill projects.

City councils are acutely aware that new housing means new residents and demands for city services that will cost much more than the revenues the city will get. Elected officials also know that if they approve a new housing project, opponents have a powerful legal weapon in the California Environmental Quality Act that is easy to deploy against the city and the developer.

In past debates, the housing shortage has not been important enough to make significant changes. Perhaps this housing crisis has become important enough. If so, here are some financial and process reforms that would actually help increase housing production.

The state could modify how property taxes are allocated so that new housing generates enough money for cities to pay for increased services. It could also share sales taxes based on where the customer lives rather than the address of the business. And it could allocate a share of state income taxes to cities based on new residents, and send more state and federal transportation money to cities that build higher density housing.

California could also refocus CEQA to protect the physical environment so that housing projects cannot be stopped by visual impacts or cultural issues. It could also allow housing that is consistent with a general plan or specific plan to proceed without further environmental review. And it could allow cities to expand their boundaries for housing without approval of Local Agency Formation Commissions.

These changes would modify California’s fiscal structure, which makes housing a losing proposition for most cities, and decrease the ability of opponents to kill projects. They would encourage local elected officials to approve housing, without eliminating local decision-making authority.

Chuck Reed, a former mayor of San Jose, is special counsel at Hopkins & Carley. He can be contacted at chuckreed@hopkinscarley.com.

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