Another Housing Package Destined To Fail

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Lee’s package of seven bills is yet another effort among many in recent years that are promised as solutions for California’s housing crisis. Will his initiatives work? Let’s take his proposals one at a time.

Democratic Assemblyman Alex Lee of the 24th District has produced a collection of housing legislation intended, says his team, “to address the housing crisis by protecting California’s homeownership opportunities and tenants’ rights, creating social housing for all.” Oh, “and much more.”

Lee’s package of seven bills is yet another effort among many in recent years that are promised as solutions for California’s housing crisis. Will his initiatives work? Let’s take his proposals one at a time.

Assembly Bill 2881 – The Social Housing Act. This bill “will establish the California Housing Authority to produce mixed-income housing that is affordable and financially self-sustaining.” The better name would be the Public Housing Act. Lee, who believes housing is a human right, argues that “government has to take a more active role in providing housing.” He cites social housing in Singapore as a model. But those who had to pick their way through the minefields of Chicago’s Cabrini-Green, St. Louis’ Pruitt-Igoe and many other government housing projects, and whose lives were disrupted when their neighborhoods were razed to make way for their construction, might hold a different view.

Assembly Bill 2665 – Revolving Loan Fund. The aim here is “to finance the construction of affordable housing for Californians of mixed incomes” through a revolving loan program administered by the California Housing Finance Agency. “The program will provide zero-interest construction loans to qualified developers for constructing mixed-income affordable housing.” How long before this devolves into a gravy train for the politically connected and politically favored?

Assembly Bill 2584 – Ban Corporate-Owned Single-Family Homes. Let’s say it again: “Homebuyers, homeowners and renters would be better off if the institutional investors were more aggressive than they are.” Corporate owners add value to neighborhoods, and reduce vacancy rates by using their resources to make homes more attractive to buyers and renters. There’s no evidence that corporate owners increase housing costs or evictions.

Assembly Bill 2616 – Repeal Tax Break on Second Homes. This feels more like a punishment than a solution, since, as Lee acknowledges, only about “175,000 taxpayers benefitted” from the mortgage interest deduction on second homes in 2016. The total revenue “lost” due to the MID for second homes totals about $250 million a year.

Assembly Bill 2530 – Housing For Educators. Here’s a bill that would “create a program within the Division of the State Architect to provide technical assistance for school districts to build housing for employees,” because “the high cost of living including housing costs poses a major challenge for school districts to fill staff vacancies.” Which is likely true in much of the state. In at least one school system, which happens to be in Lee’s district, officials have tried to place teachers in students’ homes because nearby housing is too expensive. But does anyone think school districts should be building housing when they’ve become failure factories that can’t meet their core mission, which is to educate kids?

Assembly Bill 2304 – Tenant Protection. This is to ensure “that tenants are not unfairly penalized on rental applications if they have won their civil eviction cases.” Does it not violate landlords’ right to decide who lives in their property? California is already a tenant’s paradise, and squatters often have more rights than owners.

​​Assembly Bill 2314 – Tribal Housing Security. This bill would enable “tribes to build denser residential housing beyond what’s permitted by local law,” which is not a bad idea, in fact it’s the best one in the entire lineup.

Government has caused California’s housing shortage, and only a fully functioning market will resolve it. Most lawmakers likely know this but are unwilling to open the market because once they do they can no longer control it.

Kerry Jackson is the William Clement Fellow in California Reform at the Pacific Research Institute.



Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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