When Gov. Gavin Newsom issued an executive order “to address the shortage of housing for Californians,” he got it right, or at least halfway.
The order directs “the Department of General Services (DGS) and the Department of Housing and Community Development (HCD) to identify and prioritize excess state-owned property and aggressively pursue sustainable, innovative, cost-effective housing projects.” Of about 45,000 possibilities, officials have found 1,300 that might be able to accommodate homebuilding, according to news reports. Newsom’s office said on April 11 the state will be accepting “proposals from developers of affordable housing interested in entering into low-cost, long-term ground leases of parcels on the priority map.”
Utilizing idle and ineffectively used state land for housing is the half the governor got right. But rather than being an involved – and therefore meddling – party, the state should outright sell the property to commercial builders, from which point it will stay out of the process. Of course the government insists that it remain a “partner” so that it can demand developers – a term synonymous with “pirates” in some political corners – build “affordable housing.”
Such a requirement, however, is not necessary. Even if builders put up large, luxurious homes, the increase in the state’s overall housing stock will make homes more affordable in general. While “it is often assumed that new construction does not increase the supply of lower–end housing” because the bulk of “new construction is targeted at higher–income households,” the nonpartisan Legislative Analyst’s Office says there is “considerable evidence” that building “market-rate housing reduces housing costs for low–income households.”
The LAO further explains:
New housing generally becomes less desirable as it ages and, as a result, becomes less expensive over time. Market–rate housing constructed now will therefore add to a community’s stock of lower–cost housing in the future as these new homes age and become more affordable.
At the same time, says the LAO, “expanding affordable housing programs to help” low-income Californians who receive little or no assistance “likely would be extremely challenging and prohibitively expensive.”
Though it might seem unusual to some, and too revolutionary to even consider for others, governments selling surplus property to private owners is, in fact, consistent with our traditions.
“So-called public lands represent a huge socialist anomaly in America’s capitalist system,” says Cato Institute scholar Steve H. Hanke, who once worked on the President’s Council of Economic Advisers, where he analyzed “the federal government’s landholdings and made recommendations about what to do with them.”
“As is the case with all socialist enterprises,” said Hanke, public lands “are mismanaged by politicians and bureaucrats,” and despite the fact they “are worth trillions of dollars . . . they generate negative net cash flows for the government.”
Unloading state land for homebuilding in California is unlikely to add trillions to the public fisc, yet it would raise significant amounts of dollars that could be used to relieve the burden on the state’s taxpayers, who are among the most heavily yoked in the country. At the same time, if the land is allowed to reach its highest and best use, more homes will be built, and the state’s housing crisis would get a little relief.
Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.