California Governor Gavin Newsom campaigned on solving the state’s infamous housing affordability woes. In 2017, he promised 3.5 million housing units by 2025, or 500,000 per year. This boost in supply would serve to stabilize prices and relieve the crushing burden that housing costs create for working and low-income residents.
But with the legislative tabling last week of SB 50, the only bill in the legislature to upzone neighborhoods near transit and jobs, that goal now appears to be infeasible. Gov. Newsom’s signature issue is already looking to be a failure.
Why? California is currently zoned for 2.8 million units, as UCLA Luskin comprehensively documented. And many of those planned units are in areas not in need of new housing, such as in rural, fire-prone parts of the state with low demand. Furthermore, as the study authors point out, the planned units may face other obstacles to getting built, such as permitting challenges. In short, massive upzoning is required to meet the Governor’s goals.
Sure, it’s only a few months into Gov. Newsom’s term, so couldn’t solutions emerge later? Here’s the problem: by tabling this effort into an election year (2020), legislative appetite to address the fundamental cause of the problem (resistance from affluent, predominantly white suburbs) will wane further. And even if the legislature acts in future years, it will still take years for the changes on the ground to take hold, as communities likely resist these zoning changes by enacting more permitting obstacles. At that point, the 2025 goal will be out of reach. The state needs to start the solutions now.
Interim steps certainly exist, such as strengthening the affordable housing allocations the state gives to local governments. But with at least a 700,000 zoning shortfall statewide to get to 3.5 million units, those steps will hardly make a dent.
So far, the Governor has not wanted to take an aggressive stance to save upzoning measures like SB 50. As Liam Dillon of the Los Angeles Times reported on the shelving of SB 50, Newsom stated the following yesterday:
“To the extent that we can find a pathway to take core components of SB 50 and getting it over the finish line, I’m committed to helping support that effort,” Newsom said.
But Gov. Newsom apparently did not step in to shepherd SB 50 in the state senate, as Gov. Brown did in 2017 to extend the cap-and-trade program in the face of legislative resistance.
There is still time, and credit is certainly due to Newsom for championing this issue (Gov. Brown, by contrast, viewed the politics as too intractable to try very hard). But the crisis is real, and words are not enough. Action, leadership, and courage are required, and the window of opportunity for real solutions may soon be closing.
Huntington Beach, a non-compliant city on state housing goals.
California’s new governor is coming out firing on housing. First, Gov. Newsom’s proposed budget threatened to deprive cities of gas tax money if they don’t allow more housing to be built. And now today he’s suing Orange County’s Huntington Beach, population 200,000, for lack of compliance with state housing laws.
Technically, he’s not actually filing the lawsuit. Instead, he’s referring the case to the state’s Attorney General, Xavier Becerra, thanks to a relatively new state law, AB 72 (Santiago, 2017), which empowers such a lawsuit to be filed over local government intransigence on housing.
So why the need for the lawsuit? According to the San Francisco Chronicle, NIMBY influence on Huntington Beach’s city council caused the city to fall more than 400 units behind its state targets on housing, after city leaders scaled back approval of a high-density development in 2015. That proposal that would have otherwise allowed the city to comply with its housing target.
According to the state, in the three years since the rejection, the city has “taken no action to bring the housing element into compliance.” The city must now build 533 low-income housing units by the end of 2021 to meet updated state quotas.
In the old days, this lack of compliance would have been met with…nothing. There was essentially no penalty for non-compliance, and even when cities or counties complied, they often negotiated down their requirements to trivial amounts of housing or gamed the system in other ways to avoid having to make meaningful changes to their land use rules. But starting with SB 375 (Steinberg, 2008), which linked transportation funding to compliance, up through AB 72, the state has gotten more serious.
Which brings us to today’s lawsuit. It is a big deal, and not just for the potential impact on Huntington Beach’s land use policies, which will have to change if the suit is successful. More significantly, this lawsuit will be a wake-up call to cities across the state, motivating them to action on housing and also providing political cover for municipal leaders who know they need to do more to allow housing but are fearful (and captured by) their NIMBY constituents.
Furthermore, this probably won’t be the end of the lawsuits. According to the California Department of Housing and Community Development, at least four dozen other California cities also have not received state approval of their housing elements, as of the beginning of the year. Newsom is reportedly considering additional litigation against them.
So we can expect Newsom and Attorney General Becerra to be busy on housing in the coming months and beyond, ushering in a more combative era in the state’s effort to get local governments to allow new homes in their communities.
Governor Newsom is making housing a top priority. His proposed budget devotes significant resources to housing production and homelessness, including:
- $500 million for local governments to address homelessness
- $500 million (from $80 million originally) for the state’s low-income housing tax credit
- $500 million for “moderate-income” housing production
- $25 million for homeless Californians to access federal disability programs
But public cash alone won’t solve the problem, given the scale of the need. Along these lines, Gov. Newsom correctly identified local restrictions on new housing as a key barrier. To address the intransigence, he proposed the revolutionary step of limiting local government access to gas tax funds if the jurisdiction is behind on its housing production.
But how do you define a local jurisdiction “not meeting” housing production? Right now, it’s a bureaucratic threshold, set by the state for each region, which then in turn sets housing targets for each city and county in the region. Historically though, these “regional housing needs allocations” have been weak and easily gamed (though this process will become more stringent going forward, based on recent legislation like AB 686 and AB 72).
So if Gov. Newsom relies on an opaque and uncertain state-derived metric, his policy may not be that effective in actually encouraging new housing production. And cities and counties are somewhat limited anyway in how much housing actually gets built in their jurisdictions, particularly if they’re in areas without much housing demand.
A better metric would involve assessing local zoning and permitting processes near major transit stops or in “low vehicle miles traveled” areas (if a local jurisdiction doesn’t have much transit). Cities and counties can certainly control those two aspects of land use. For example, cities that have upzoned and streamlined permitting near transit would maintain their gas tax funding. Cities and counties that restrict what can be built or require multiple layers of discretionary review would then lose access to dollars.
Sen. Scott Wiener’s proposed SB 50 would get the state far down that path already, but Gov. Newsom’s use of that kind of budget mechanism would add political heft to the approach.
And as an added bonus, it might actually work in encouraging responsible local land use policies to boost housing production in the right places.
