One common refrain among housing advocates and politicians is that high-rise construction is a solution to the problem of housing affordability. The causes of the problem, however, are principally prohibitions on urban fringe development of starter homes. Critics also note that high-rises in urban neighborhoods often replace older buildings, which are generally more affordable. One big problem: High-density housing is far more expensive to build. Gerard Mildner, the academic director of the Center for Real Estate at Portland State University, notes that development of a building of more than five stories requires rents approximately two and a half times those from the development of garden apartments. Even higher construction costs are reported in the San Francisco Bay Area, where the cost of townhouse development per square foot can double that of detached houses (excluding land costs) and units in high-rise condominium buildings can cost up to seven and a half times as much.
A state Senate bill to allow local authorities to place a 1/8-cent sales tax for Caltrain on the ballot in Santa Clara, San Francisco and San Mateo counties cleared the Assembly on Friday, pushing it close to the finish line. Senate Bill 797, by Sen. Jerry Hill, D-San Mateo, is part of an effort to raise $100 million annually for the popular train that shuttles more than 60,000 riders on weekdays up and down the Peninsula between San Francisco and San Jose.
There is no debate or question that we have a serious housing affordability crisis in this state, and we didn’t get here overnight. Each year, we need to build roughly 180,000 homes just to keep up with population growth, and over the last decade we have fallen short by at least 1,000,000. At the core of our exploding housing affordability crisis is basic economics: we have spiking demand coupled with stagnating supply, this leads to skyrocketing housing prices. This is a critical issue for small businesses who are seeing their workforce driven out of this state due to prohibitively high housing costs.
Unfortunately, Senate Bill 2 (Atkins), Senate Bill 3 (Beall), and Senate Bill 35 (Weiner) do nothing to address these fundamental economic realities, but instead raise more taxes on struggling small businesses and working families, put California further into debt, and drastically raise labor costs to build a home.
The bad news is: there’s very little housing in this housing package.
The new funding will produce only a tiny fraction of the affordable housing Californians need. And given the economic and regulatory pressures on housing, such housing won’t be produced quickly or cheaply.
The bills leave in place the tax, environmental, and regulatory regimes that add so much to the expense and difficulty of building housing in the state. And in some places, legislators have offered goodies, in the form of wage and other protections to labor interests to get their buy-in. Such incentives may add to the cost of housing, when the state desperately needs to make housing cheaper. The way that the building trades, in particular, have leveraged this crisis would be shameful, if organized labor in this state were still capable of shame.
California lawmakers introduced legislation Friday to bypass a key state environmental law that would dramatically ease the construction of rail, bus and other transit projects connected to Los Angeles’ bid to host the Olympic Games in 2028. Under the bill, any public transportation effort related to the city’s Olympics bid would be exempt from the California Environmental Quality Act, the state’s primary environmental law governing development. The law, known as CEQA, requires developers to disclose and minimize a project’s impact on the environment, often a time-consuming and costly process that involves litigation. The measure, Senate Bill 789, also provides major CEQA relief to help the construction of an NBA arena for the Los Angeles Clippers in nearby Inglewood.