California Attempts to Tackle Housing Affordability Crisis

National Los Income Housing Coalition

It’s a bit too early yet for our 2020 Construction Law Update but here’s a preview of some of the new laws taking effect next year. Earlier this month, Governor Gavin Newsom signed a slate of 18 bills to boost housing production in an effort to tackle the state’s housing affordability crisis.

First, a bit of background.

California currently ranks 49th among the states in housing units per resident. Experts say that the state needs to double its current rate of housing production of 85,000 unit per year just to keep up with population growth and four times the current rate to reduce housing costs. Anecdotally, here in the San Francisco Bay Area, the median rent for a one-bedroom apartments in San Francisco is currently $3,690 per month or $44,280 per year. However, as of May 2018, according to the U.S. Bureau of Statistics, the annual mean wage of a teller is just $32,840, for farmworkers $34,700, and for teachers $48,250. And that’s before taxes. Let that sink in for a moment.

The result is one in five Californians live in poverty, the highest rate in the nation, when factoring in the cost of living.

The primary cause of all of this is actually based on good news: Strong economic growth in the state that has resulted in the creation of hundreds of thousands of new jobs. Experts say that other factors are at play as well, which range from admirable but (some argue) abused policy goals such as the state’s strong environmental laws and open permitting process, to short-sighted local development decisions in which commercial and retail developments are more readily approved due to their greater tax generation and the imposition of impact fees on residential developments.

Of the 18 bills signed by Governor Newsom, SB 330, the Housing Crisis Act of 2019, has garnered the most attention. The bill streamlines the permitting and approval processes, ensures no net loss in zoning and capacity and limits fees after projects approved. Other bills signed by Governor Newsom include a bill to make it easier to build ADUs, or accessory dwelling units, also known as granny flats, a bill to further streamline the California Environmental Quality Act, and a bill providing a bonus incentive for 100% affordable housing projects.

We’ll take a deeper dive into these, and other housing bills signed by the Governor, in our 2020 Construction Law Update later this year. And, according to the Governor, this is only the beginning. “This Administration is just getting started on solutions,” stated the Governor, in a press release issued by his office announcing the signing of the 18 bills.  The Governor has made housing affordability a key part of his Administration’s policy objectives calling for a “Marshall plan for affordable housing” during his inaugural speech.