Instead of Spending Billions on Housing Affordability, Silicon Valley Should Demand CEQA Reform

Instead of Spending Billions on Housing Affordability, Silicon Valley Should Demand CEQA Reform

Amid much fanfare, several Silicon Valley firms have announced plans to collectively contribute billions to “affordable housing” programs.

Last month, Apple announced “a comprehensive $2.5 billion plan to help address the housing availability and affordability crisis in California.”  Their plan includes “a $1 billion commitment to the state of California . . . (to) provide the state and others with an open line of credit to develop and build new, very low- to moderate- income housing faster and at a lower cost.”  They also committed $1 billion in a first-time homebuyer mortgage assistance program.

In October, Facebook announced a $1 billion contribution “to help address the affordable housing crisis in California.”  Their spending also includes “$250 million to a partnership with the State of California for mixed-income housing on state-owned land in communities where housing is scarce.”

And Google unveiled a $1 billion affordable housing plan in June.  Their proposal includes repurposing “at least $750 million of Google’s land, most of which is currently zoned for office or commercial space, as residential housing.”  In addition, they are funding a $250 million fund to provide developers with incentives to build at least 5,000 affordable housing units.

These initiatives are smart politics, especially as they try to gain an ally in Newsom and various Bay Area city halls with billions in funds to spread around on their constituents.

One way Facebook, Google, Apple and can increase housing affordability in the state is by using their money to facilitate market-based housing of all sizes.

As PRI’s Kerry Jackson wrote in a recent column, “what California needs are homes of all types: large, single-family houses on big lots, medium-sized houses on modest lots, small homes on small lots, McMansions, suburban tract homes, high-rise apartments, townhomes, condominiums, duplexes, triplexes, quadplexes, and granny flats.”

He cites analysis from the Legislative Analyst’s office, which argues that “building new market-rate housing indirectly increases the supply of housing available to low-income households in multiple ways.”

The tech affordable housing fund is also good public relations for these companies as some are trying to point the finger their way for California’s housing woes.  As Breakingviews columnist Gina Chon recently charged, “tech companies helped create this situation – now they’re trying to fix it.”

In Facebook’s press release, Gov. Gavin Newsom said that, “state government cannot solve housing affordability alone, we need others to join Facebook in stepping up.”

He’s right but is also somewhat passing the buck here.  In my view, Newsom has been as forceful in his call for fundamental CEQA reform as he should be.  And he also signed a so-called anti-rent gouging measure that is really just another name for rent control.

Yes, state government cannot solve housing affordability alone, but it sure has made homebuilding unaffordable in the state.  For example, as PRI Board Member Daniel Kolkey wrote earlier this year, “even organizations sympathetic to (the California Environmental Quality Act or CEQA) acknowledge that the costs of an (environmental impact report or EIR) can range from $200,000 to millions of dollars, depending upon the project’s scope.”

He also cites estimates from the Legislative Analyst’s Office that “California’s ten largest cities averaged 2 ½ years to approve housing projects that required an EIR (and) naturally, by the time a project is approved, the costs of construction have significantly increased.”

There is no shortage of homebuilders who want to start new housing construction in California.  The problem is that state and local governments have made it unaffordable to build here.

Sadly, Sacramento is going the opposite direction, blocking modest reform legislation (SB 50) this session that would have reformed CEQA and removed local and state hurdles to homebuilding in some circumstances, but was ultimately blocked by NIMBYs in the Legislature.  The combined support of these California titans for reform could have gone a long way to overcome the Legislature’s vote.

If Silicon Valley really wants to lower housing costs, they’ll put pressure on Newsom and the Legislature to eliminate these roadblocks to homebuilding in California.  That would have a far greater impact on housing affordability than any amount of money they could spend.

Tim Anaya is the Pacific Research Institute’s communications director.

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.