California Governor Gavin Newsom recently unveiled his vision to address the state’s desperate housing needs, a statewide challenge that has worsened over the years into a full-fledged crisis. And yet, it is more obvious than ever that repeating this message has yet to produce the necessary policy breakthrough.
It’s been a long time since a California Governor made housing construction anything resembling a policy priority. A wide array of community partners (including the Building Industry Association of Southern California) has been sounding the alarm to create new housing, so Governor Newsom’s announcement was extremely encouraging.
Some good news: The Newsom plan includes an ambitious goal of building 3.5 million new housing units by 2025, and he has proposed a state investment of $1.75 billion for new housing initiatives. For that capital to produce a return on investment, however, three important steps need to be taken.
First, Sacramento must get serious about mending – not ending – the California Environmental Quality Act (CEQA). Originally enacted in 1970, CEQA was designed to ensure than environmental protections were instituted with new development projects like infrastructure and housing. Unfortunately, CEQA has evolved from a tool into a trap, ensnaring practically all new housing, regardless of how environmentally friendly or locally necessary.
A CEQA lawsuit can be filed by anyone, and even anonymously. From senior retirement communities to new student housing, hundreds of CEQA lawsuits have destroyed community hopes for sorely needed housing developments. Respected nonprofits including Habitat for Humanity have been the victim of frivolous CEQA attacks. Governor Newsom can bring all sides together and insist upon consensus reform.
Second, the state needs significant changes to prevailing wage requirements for new home construction. This is essentially the average hourly wage for construction work within a specific geographic region, and it applies to industries like roofers, carpenters, and plumbers. This matters because California requires home builders to pay prevailing wage on low-income housing developments receiving public financing. A report from the California Homebuilding Foundation found that prevailing wage requirements mean a 37 percent increase in construction costs– about $84,000 for a typical new home. To avoid adding additional hurdles to housing growth, it’s imperative that any new prevailing wage requirement fully recognize, with metrics, the economic realities of each geographic region throughout the state.
Finally, the state must honestly address the construction industry’s massive labor shortage. A recent study funded by Smart Cities Prevail estimated that California needs to generate at least 200,000 new housing construction jobs to meet current demand. This will require a new and cooperative effort between the public and private sectors to increase training and expand vocational education and apprenticeship programs to attract young people into the construction workforce pipeline. In addition, there should be a renewed focus by the state’s local workforce investment boards in addressing the construction labor shortage.
If these three reforms go forward, there is one imperative that advocates for a renaissance of new housing must understand: to date, they have been far more correct than persuasive. It is time to move away from anodyne advocacy that proclaims there is a housing crisis and advance towards a clear and civic understanding that this is far more than a business issue – it’s a quality of life imperative.
Ultimately, the shape and form of Governor Newsom’s vision can only be made real by tangible construction. If we do not decide – as a state and as a society – to commit to a future of full and fair housing development and construction, there is simply no way forward for our economy or community.
Jeff Montejano serves as CEO of the Building Industry Association of Southern California. Headquartered in Irvine, the Building Industry Association of Southern California is a leading advocate for thousands of building industry leaders who are committed to a better future for California by building communities, creating jobs and ensuring housing opportunities for everyone.