Legislature Takes Two Steps Back on State’s Housing Crisis

California lawmakers can’t hide from the state’s housing crisis caused by a severe shortage of homes. They’ve even promised to do something about it. But a bill just signed into law last month indicates that the promise is likely to be hollow.

Rather than lower government-imposed barriers to home building, Senate Bill 106, tucked neatly, and obscurely, into a budget-related bill, allows Marin County a special exemption to limit growth more narrowly than in other parts of the state. The county will be able to continue to keep tight restrictions on the units developers can build through 2028. In other words, construction of high-density and multi-family housing developments, which are more affordable than the Marin-favored sprawling single-family suburban homes, whose median price is $1.27 million, are going to be blocked.

This state needs to sharply increase its housing stock. At least 1 million new homes have to be built in California in the next decade on top of the housing that is already expected to come on line. It’s the only way that housing will become affordable to those who aren’t the state’s richest residents. At a median price of $500,000, most homes are either out of reach for many, or are so costly that they create budget strains that wreck millions of families’ and individuals’ finances.

But the needed building boom will never happen as long as policymakers continue to believe their government programs are superior to a free and open market in which developers have a strong profit motive to build. And they have given every indication they will continue to pass legislation such as SB 106, and Senate Bill 2, the Building Homes and Jobs Act, which would levy a $75 tax on every real estate transaction to raise $250 million a year for government affordable housing programs.

If they followed the right approach by embracing the power of the free-market to fix the problem, the lawmakers whose purpose is to continually increase government intervention in the private sector would have to surrender some of their political power. They could no longer shamelessly congratulate each other as saviors for struggling Californians for passing yet another round of damaging housing legislation.

Because SB2 is a tax increase, it needs a two-thirds supermajority in the Assembly to pass, and it’s unlikely to reach that level of support there as it did in the Senate. But SB106, which never had to endure the scrutiny of the committee process as it was included in the budget at the request of Democratic Assemblyman Marc Levine of San Rafael in Marin. Its impact won’t be felt statewide, but even the San Francisco Chronicle is on record as saying that it “does embody the sort of parochial policymaking that has been ruinous for the state’s greater good.”

More than 130 housing-related bills have been introduced in the Legislature since December, but it would take only one to make a meaningful difference: reform of the California Environmental Quality Act to remove barriers to building new homes. CEQA is “the mother of all government-sponsored obstacles to development,” according to Tim Coyle of Coyle Consulting Group, former director of California’s Department of Housing and Community Development. That’s the promise lawmakers should be making.

Kerry Jackson is a fellow with the Center for 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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