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California Bill Would Loosen Housing Rules Along the Coast – Pacific Research Institute

California bill would loosen
housing rules along the coast

National commentators always have a field day discussing the unusual new progressive legislation that California’s lawmakers send to the governor, with the latest eye-popping new law raising the minimum wage for fast-food workers to $20 an hour. This year’s “crazy list” is rather long.

But whenever I give interviews to out-of-state radio hosts – most of whom want a California commentator to provide insight on what’s going on the Left Coast – I always offer a caveat. In the area of housing, the Legislature has passed a succession of surprisingly reasonable measures that make it easier to build homes.

The most significant and praiseworthy housing bill this year is Senate Bill 423. It passed the Legislature and now is on Gov. Gavin Newsom’s desk. Mainly, the bill extends for a decade the provisions of 2017’s Senate Bill 35, which was the first major deregulation-oriented housing measure from the last few years. SB 35 provides ministerial approvals (guaranteed approval provided it meets basic standards) for affordable-housing projects.

SB 423 also expands on SB 35 in a meaningful way. First, it applies streamlined approvals to market-rate projects, which is significant because the state cannot possibly meet its pent-up housing demand with subsidized projects alone – most of which are built at appallingly high costs. Second, it applies these loosened standards along California’s coast. Currently, the anti-growth California Coastal Commission has veto power over projects as far as five miles inland.

The League of California Cities complained the bill “would double-down on the recent trend of the state overriding its own mandated local housing plans by forcing cities to approve certain housing projects without regard to the needs of the community.” The state is overriding cities, but had cities not routinely caved in to NIMBY (Not In My Back Yard) pressures, we wouldn’t be in this predicament.

Liberal activist groups complained about the bill, also, because they wanted “higher affordability requirements for mixed-income housing projects (and) exempt areas at risk of displacement from the bill,” per the Senate floor analysis. These groups have also helped create housing shortages. They focus almost entirely on subsidized projects – and use fears of “gentrification” to oppose many new developments. So the bill has the right enemies, anyway.

Various cities are resisting new state streamlining laws. The locals – especially in coastal cities – often are the biggest impediment to new housing construction. As I explained in my Orange County Register column, “Developers should be free to build more of everything … without subjective approval … Few current residents want more congestion, and yet-to-be new residents don’t get a say, so the local default position often is ‘no.’”

I note that the UC Berkeley Terner Center for Housing Innovation found that SB 35 resulted in 11,000 more housing units than otherwise would have been built. Extending that law – and expanding its provisions to a wider range of projects – will help even more. Another Christmas-tree ornament in SB 423: It would provide oversight of San Francisco’s snail-like approval process. That city only approved 2,800 new housing units last year even though it needs at least 10,000 new units annually to meet its needs, even with its current declining population.

The Southern California News Group’s editorial urging Newsom to sign this bill quoted urban planner Nolan Gray, who deflated concerns about despoiling the coastline. “Of course, nobody wants to see natural areas of the coast developed, but the coastal zone covers over 225,000 acres of land that are already developed,” he wrote. “Subjecting anything and everything built in these areas to additional layers of review simply does not make sense.”

Some of the other recent noteworthy housing laws include Senate Bills 9 and 10, which provide “by right” approvals for property owners to build duplexes in single-family neighborhoods and multi-family projects along transit corridors. Gov. Gavin Newsom also has signed bills that allow developers to build housing on the site of vacant malls and that reduce parking requirements, thus encouraging new condo construction in downtown areas.

Those recent laws have yet to make a huge dent in the housing shortage, but they are chipping away at the problem in the right way via deregulation. They also provide housing exemptions to the California Environmental Quality Act, which makes it too easy for opponents to file a lawsuit against virtually any project for virtually any reason.

Read the Pacific Research Institute’s study and graphic about the CEQA Gauntlet.
Read Edward Ring’s two-part series on a proposed new city in Solano County east of the San Franåcisco Bay area here and here.

The main problem with California’s current approach is that it doesn’t go far enough. California Democrats, who are the driving force behind the bills, have embraced a New Urbanist ideology that seeks to densify our cities. They have over the years backed measures – urban-growth boundaries, climate-change policies that seek to curtail green-field developments, etc. – that led to housing shortages in the first place.

Density is fine, when the market demands it. But most Californians still prefer single-family living. As Free Cities Center writer Edward Ring explained in an August 25 article, “California has 25,000 square miles of unirrigated rangeland used for cattle ranching. Less than 10 percent of that land could be covered with new suburbs accommodating 10 million people living in single family homes on spacious lots,” he wrote. “Why not?”

Why not do both things – make it easier for developers to build higher-density projects in urban and suburban communities, and make it easier to build housing on empty tracts? Metropolitan housing markets are regional, so an increase in suburban development will also reduce demand and housing prices within the entire region including the urban core.

SB 423 is a great idea, but the goal should be more housing and not just more housing of the type and density that lawmakers prefer. California is on the right track with deregulation, but lawmakers need to get more serious and embrace this decidedly not-crazy idea: Why not just let market work everywhere?

Steven Greenhut is director of the Pacific Research Institute’s Free Cities Center.

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