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Sep. 27, 2017

New housing ‘solutions’ will make matters worse

More than 40 percent of the cost of new homes built locally is due to government fees and regulations. If California wants to deal with this extremely serious problem then those costs must be substantially reduced and eliminated.

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By Mick Pattinson

So the same people who created the California housing disaster want us to believe they are now going to finally fix it. Using the same methods that got us here in the first place.
Wouldn’t that be pretty if it were true.

Instead, they have taken an ugly situation and made it worse. A recent UC Berkeley housing study finds more than half of California’s voters are considering moving out of state because of sky high house prices. This legislation does nothing to tackle housing costs.

The California legislature passed two bills in the dying moments of this years session. SB2 sponsored by State Senator Toni Atkins, D-San Diego, will impose a $75 transfer tax on some real estate transactions which could raise $250 million a year to be spent on affordable housing. SB3 sponsored by State Senator James Beall, D-San Jose, will place a $4 billion housing bond on next year’s ballot to provide funds for affordable and military housing.

Combined, these two initiatives could deliver 18,000 affordable housing units against a current annual shortfall of 100,000 units and a total deficit as high as three million homes statewide. Reducing a 100,000 annual housing shortfall to 82,000 isn’t a solution. A shortage is a shortage!

Anyone remember “inclusionary housing”? This was another one of these governmental super solutions that was going to fix our affordability problems. Those greedy developers were forced to set aside a certain number of homes on each development for low or very-low income home buyers or renters. This plan was going to put needy folks in a brand new home but instead it helped drive up house prices for the vast majority of buyers forced to subsidize the chosen few.

More than 40 percent of the cost of new homes built locally is due to government fees and regulations. If California wants to deal with this extremely serious problem then those costs must be substantially reduced and eliminated.

In Washington, D.C. our new administration has been quickly shedding regulations imposed on multiple industries to lift our economy and create American jobs – and this strategy is working. Unemployment is getting lower each month, business investment is booming and the stock market has grown by $4 billion in just a few months. Slashing regulations on California home building would have a similar effect. Slashing regulations in California is the only hope we have.

For more than 30 years our government agencies have been at war with developers and home builders. The California Coastal Commission was founded, we were told, to protect the California coast but it soon became a home-killing machine spreading its influence East of the 5 freeway. The California Environmental Quality Act is widely recognized as a lawyers dream, a tool to delay and defeat housing supply as is the Endangered Species Act that protects rats, butterflies and fish but does nothing for home buyers.

Infrastructure burdens including roads, bridges, schools, traffic signals, parks, public open space and even public art are routinely imposed on new Home developments with massive costs not shared with the people benefiting from them. Regulations introduced in recent years to improve air quality and water run off are similarly borne only by development projects. More and more regulations on top of more and more infrastructure burdens on top of more and more government fee’s. That sounds to me like a recipe for disaster and a disaster is what we have.

Two important statistics prove that point. Today one in five Californian’s are living below the poverty line because of extremely high house prices. California house prices are almost two and a half times the national average. There you have it. The end result of more than three decades of anti-housing, anti-builder, anti-homebuyer sentiment in our public policy decision making.
In San Diego County, 41 percent of home owners and 57 percent of renters spend more than 30 percent of income on housing costs.

Do we really think that SB 2 and SB 3 are going to fix this mess? Do we really think 18,000 new homes targeted towards the politically chosen few are going to stop the growing under supply of new homes and the inexorable increase in new home prices? Let’s see these two pieces of legislation for what they are – window dressing passed by a legislative body that is bowing to the anti-housing, anti-homeowner lobbying groups it serves.

The problem with this faux legislation is that it creates the impression our legislators are doing something meaningful when they are not. That they are taking this disaster seriously when they are making it worse. That they really are trying when in fact they couldn’t care less! Just the usual political game we get out of Sacramento.

Mick Pattinson is Past President of The San Diego Building Industry Association and The California Building Industry Association. The opinions expressed here are his own.


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