Governor’s Housing Promises Fail to Produce

Timothy L. Coyle
Consultant specializing in housing issues

A Governor’s Budget summary always boasts more than it has delivered, as well as what it promises to deliver in the future.  Governor Newsom’s description of the 2020-2021 Budget – his second effort – is no exception to that truism.   

The budget document’s so-called “A” pages, summarizing next year’s fiscal blueprint, are full of wishful look-backs, numerous “investment” citations (as if simply spending billions is the solution to a problem) and still more hollow assurances of serenity for the private sector.   

Truth is, the record shows that few of the Governor’s past hoped-fors have come true.  Nor is there much expectation that throwing more of the same – legislation, public policies and money – at complex matters will do any good.  

Take housing, for example. When he ran for office two years ago, candidate Gavin Newsom promised that under his leadership the state would add 3.5 million units of housing to the state’s insufficient total by the year 2025 – equating to about 500,000 per year.  (That might have been asking too much since only twice in its 169-year history has California produced even half that number of new homes in one year.)  The building industry and other housing advocates cheered the vow and expected radical change to follow.

Yet, last year, after the Governor – and the Legislature – spent billions of dollars and purportedly “streamlined” the local approval process, building permits went down, to an annual level of just more than 110,000 units, a full 12 percent, according to the state’s Department of Finance (DOF).  The agency also reported that permits for multifamily housing were down nearly 20 percent. This occurred despite the Governor’s report that with last year’s legislation and administrative actions Sacramento had “paved a way for the state and local jurisdictions to address” California’s housing crisis.  One wonders whether governmental actions were instead “paving a way” to more malaise.

Could it be that lawmakers and the Governor have gotten the housing fix wrong?  After all, the state’s chief executive, in addition to pointing out how he’s taken considerable administrative actions to stimulate desperately needed production, highlights several legislative accomplishments from last year, as well.  For example, although his overview of the housing problem in this year’s budget speaks to the laggard local approval process and mounting local barriers to new construction, in the same document the Governor celebrates bills he signed into law that seriously constrain or discourage it. 

AB 1482 is one of those bills.  AB 1482 (Chiu) among other things, subjects a California landlord’s eviction actions to dispute – typically requiring a court’s review and response.  Such cases are costly, including a loss of rent, and rarely vindicate the landlord. The bill – now a gubernatorial-approved law – also caps state rent increases, ultimately discouraging builders from building.

Governor Newsom doubled down on AB 1482 by spending millions in state funding last year – in keeping with “the need to create stable housing among renters” – to further assist the legal maneuvering of tenants.

Furthermore, in this year’s Budget recap, the Governor lauds as reform of California’s arcane land-use and project-approval practices the enactment last year of SB 113 (Skinner).  He calls it a win for housing. Yet, the legislation, while prohibiting certain local policies which inhibit production (an unmistakable good thing), it preserves housing’s biggest constraints, such as the California Environmental Quality Act (CEQA) and locally legislated limits on growth. 

Also in the summary, the Governor has harsh things to say, as he should, about local impact fees – especially since they run as high as $150,000 per house.  But, as the solution he touts a voter-approved bond for K-12 public schools and higher education because theoretically the more money that goes to schools means that districts will demand lower fees.  That’s sort of true since SB 50, which passed in 1998, restricts gouging builders. But, school tariffs add up to less than 10 percent of the problem of locally skyrocketing fees. What about the remainder?   

Finally, the Governor can’t make up his mind between using a carrot or stick in dealing with communities’ reluctance to build new housing.  Indeed, Budget summary rhetoric includes superlatives about local governments, using such terms as “encourage”, “technical assistance” and “working with” to illustrate a more cooperative approach.   

Yet, just a few short paragraphs later the Governor embraces different language, talking about new legal remedies available to state government and threatening to withhold cash from localities which don’t approve housing.  And, in case you didn’t believe his courtroom strategy, remember that the Governor sued the City of Huntington Beach for its failure to identify adequate sites for development.

This year’s Budget summary talks a good game, so far, but we’re still waiting for the Governor to produce matching results.

Comment on this article


Please note, statements and opinions expressed on the Fox&Hounds Blog are solely those of their respective authors and may not represent the views of Fox&Hounds Daily or its employees thereof. Fox&Hounds Daily is not responsible for the accuracy of any of the information supplied by the site's bloggers.