Everybody Talks About California’s Housing Crisis, But Nobody Will Solve It

There isn’t a politician, economist, social justice advocate or journalist who hasn’t viewed with alarm the unrelenting climb in housing prices and rents, the dwindling supply of affordable housing, and the promise of homeownership receding out of grasp for young or middle-class residents.

For the past decade, state leaders have rejected any significant actions to increase the affordability or supply of housing yet have allowed new mandates to increase costs.

The consequence has been the construction of a fraction of the new residences California needs to fight poverty and income inequality. And soon it may mean hundreds of thousands of dollars of new fees on new construction throughout the state.

As sure as sunrise, elected leaders in Sacramento will turn down time- and money-saving reforms to build new housing, whether for sale, rent, or even subsidized shelter:

  • A bill to streamline upzoning of underused or obsolete commercial and retail properties for affordable housing could not get a vote in its first committee.
  • A proposal to prevent new local regulations or fees on housing projects if they would have discriminatory impacts on protected classes of Californians was quietly stricken.
  • Legislators rejected a requirement that a government agency charging an impact fee demonstrate that the amount of the fee is roughly proportional to the impact of the development.

None of these proposals would have prevented legitimate environmental analysis or litigation over development projects, none would have stopped fees from being assessed for legitimate public services, and none would have interfered with legitimate local government land use authority.

On the other hand, even in the face of the worst housing crisis in a generation, the Legislature and regulators add new restrictions on residential construction, inevitably consigning housing affordability to “collateral damage.” Just this month, legislators are debating whether to add new, onerous restrictions on housing development in areas near fire-prone wildlands.

But the most insidious and potentially most harmful new mandate is the botched implementation of legislation to improve the California Environmental Quality Act (CEQA) analysis of traffic patterns. In 2013, the Legislature enacted a law to encourage more infill development by directing the Governor’s Office of Planning and Research (OPR) to come up with an alternative method to mitigate the inevitable traffic congestion that comes from densifying cities. The idea was to recognize the benefits of infill projects that allow residents to walk, bike or take shorter car trips for work and daily activities instead of penalizing them for adding more people to urban areas.

The planners chose instead to analyze vehicle miles traveled (VMT). As the law matured it became clear that rather than having each individual housing project mitigate their vehicle trips through measures like installing bike racks or establishing ride share programs, Californians would be better served by having new housing projects pay a fee and collectively amass funds to upgrade transit, build community-wide bike trails and safer streets, or expand other non-vehicular transportation options in these urban areas already served by transit.

Here’s the rub: Even though the new law gave OPR the discretion to limit the new VMT analysis to urban areas, state planners instead chose to apply it everywhere, even in sparse rural and exurban areas where traffic levels could be mitigated easily in the traditional manner. The result: San Diego County planners have proposed that county supervisors levy VMT fees on new developments that range from $50,000 to $900,000 per home. Of course, the upshot of such massive fees is no housing construction at all, which may be the underlying motivation of its proponents in the first place.

To be clear, these new VMT fees are not designed to mitigate air pollution, greenhouse gas emissions, or other typical environmental impacts of automobile travel or new housing. Builders must already address these effects under current CEQA rules. The focus of the law creating VMT analysis is supposed to be on congestion. But the planners have taken rules designed for urbanized neighborhoods and unnecessarily applied them to outlying development, where congestion is a lower order problem.

The new VMT regulations are a gift to NIMBY activists and no-growth communities. They are a back-door, unlegislated “urban limit line,” the Holy Grail for these activists, which will increase the price of homes inside the line, and fence off housing opportunities for even more families seeking a foothold in California.

Loren Kaye is president of the California Foundation for Commerce and Education, a think tank affiliated with the California Chamber of Commerce.

Loren Kaye
Loren Kaye was appointed president of the California Foundation for Commerce and Education in January 2006. He has devoted his career to developing, analyzing and implementing public policy issues in California, with a special emphasis on improving the state's business and economic climate. He also was a gubernatorial appointee to the state's Little Hoover Commission, charged with evaluating the efficiency and effectiveness of state agencies and programs. Kaye served in senior policy positions for Governors Pete Wilson and George Deukmejian, including Cabinet Secretary to the Governor and Undersecretary of the California Trade and Commerce Agency. See full bio.