Housing Killers & Creators
California is in crisis. The cost to build a house continues to rise. The number of families who cannot afford to purchase a house also continues to rise. A study released this year by the National Association of Home Builders estimates that if a home price goes up by $1,000, close to 9,000 households in the state would be priced out of the housing market. And those unable to find housing to fit their needs, whether it be affordable housing, single-family or multi-family housing, are at risk of becoming homeless.
Yet, even with promises of legislative leaders to remedy the state’s housing crisis, new laws are introduced each year that add to the cost of building and prevent an adequate supply of new homes for Californians from being built.
But the greatest threat to housing production continues to be the extreme and burdensome regulatory environment in California.
California’s decades-long neglect of housing construction is now exacerbated by the current unprecedented health crisis.
During these challenging times, home builders continue to serve their customers while ensuring the health and safety of both customers and employees. We want to build, and Californians need us to build, as housing production of all kinds is essential to the lives of Californians and to the state’s economic recovery.
California’s home builders urge California’s decision-makers to pause on new homebuilding requirements of any kind. One more unnecessary requirement, one more unnecessary change, one more prerequisite mandated by the state will add to the final cost of the house.
Let us do what we can to produce the homes California needs.
Suspending these Four Regulations Is Critical for California to Meet its Housing Goals
1. New transportation analysis will add to the cost of building a home
Effective July 1, 2020, cities and counties will be required to analyze the amount of driving, known as Vehicle Miles Traveled (VMT), residents do every day. Then, those local agencies will then tax new homes to punish people who drive. The primary target is lower- and middle-income people who are often communities of color. These communities often have the longest commutes. Applying this new metric is an arbitrary and unproven strategy that runs the significant risk of litigation, delay, cost-overruns and constraints on housing production.
- Action needed: Delay the effective date of the VMT regulation.
2. Proposed changes to the state’s water regulations will add to the cost of building a home
Waters of the State Procedures (WOTS) were adopted last year and are set to go into effect on May 28, 2020. This regulatory scheme is entirely new and very complex. It requires education and training for both the regulators and the regulated community. It will also require a significant number of new hires for the State Water Resources Control Board which administers the regulation.
While one workshop was held in early March to receive comments on an implementation guidance document, it is unclear how the Board will hold additional meaningful educational workshops due to the current environment. Further, given how this health crisis will impact the state’s 2020-2021 budget, increasing board staff and providing them with the resources they need by May 28 is virtually impossible.
- Action needed: Delay implementation of WOTS Procedures for at least six months after the emergency order is lifted.
3. Permitting Caltrans to use CEQA when commenting on new residential developments impedes housing production
Caltrans plans to use the California Environmental Quality Act (CEQA) to oppose development projects to prohibit the addition of road lanes and relieve congestion. Instead, they are looking to use CEQA to tax housing to pay for public transit in hopes that drivers will take public transit rather than drive on congested roads. While California has dramatically increased spending on public transit over the last couple of decades, ridership has been on the decline. The current health crisis may lead commuters to be less willing to take public transit.
Caltrans’ opposition to housing – even where Caltrans is successful in their demands on a project – will assist housing opponents in litigation against the project. This will reduce housing production.
- Action needed: Prohibit Caltrans from using CEQA to oppose housing projects.
4. Proposed changes to stormwater runoff protocols will add to the cost of building a home
Construction General Permits (CGP) require home construction sites to plan for wet weather and follow certain protocols to prevent soil erosion and stormwater runoff. The current CGP has been proven to protect the quality of the environment and there has been no indication that it has failed to achieve its goals. The State Water Resources Control Board is considering radical modifications to the CGP requirements. Now is not the time to make unnecessary and burdensome bureaucratic changes to a program that is working.
- Action needed: Maintain the delay of the formal promulgation of a new stormwater construction general permit.
Legislative Bills to Watch
With the 2020 state legislative session in a state of flux, this list represents the bills homebuilders consider Housing Killers and Creators – in their present form. By identifying bills that will make it exceedingly more difficult/costly to build housing in California and those that will expedite/facilitate the creation of housing, it is our goal to highlight legislative efforts that should be jettisoned, improved, or championed.
To determine placement on one of these lists, members of CBIA will evaluate bills based on the following criteria:
- Will the bill constrain housing production and supply?
- Will it increase the cost to build houses?
- Will it make housing even more expensive for Californians?
- Will it make any of the processes associated with homebuilding such as the entitlement, approval, or permitting processes more complicated, difficult, and lengthy?
- Does it discourage homeownership?
- Does it increase regulatory barriers?
- Will it encourage unnecessary lawsuits aimed at new home construction
- Does the bill balance the housing crisis unfairly on the backs of a few versus a more egalitarian distribution?
Based on feedback from our builders around the state, in January 2020 we compiled a series of legislative proposals aimed at relieving the state’s ever-growing housing affordability crisis. Read more here.