California’s housing crisis is well-understood and documented. A chief culprit is the fact that the state’s coastal urban areas, for various reasons, do not approve enough new housing to accommodate everyone who seeks to live there.
The lack of new housing development is a function, in part, of the fact that California’s local finance structure essentially incentivizes nonresidential development. There is also limited vacant developable land in coastal urban areas.
In addition, however, NIMBY-ism is rampant, as the nonpartisan Legislative Analyst’s Office has documented in reports such as 2015’s California’s High Housing Costs: Causes and Consequences and its 2016 follow-up, Perspectives on Helping Low-Income Californians Afford Housing. As the LAO wrote, project opponents can convince local decision-makers to use their land use authority to deny new housing developments, or to require that they be built at lower densities. Project opponents can also take matters into their own hands—even after a city or county has approved a new housing development—by using the CEQA process to challenge, limit, or stop the development.
The LAO addressed this pervasive problem on May 18, 2016, in a report entitled Considering Changes to Streamline Local Housing Approvals responding to Governor Jerry Brown’s bold proposal to change state law to streamline certain local housing proposals. We wrote about the Governor’s proposal on May 19.
In responding to the Governor’s proposal, the LAO wrote that “residents of California’s coastal communities are hesitant to allow new housing and, therefore, use their communities’ land use authority to limit housing construction.” The LAO also concluded that “[t]he Governor’s proposal . . . would be an important first step toward addressing California’s housing shortage. We believe the Governor’s proposal warrants serious consideration from the Legislature.” The Governor’s proposal died in the face of substantial opposition from environmental groups, labor unions, and local governments.
More recent reports recognize, however, that adequately addressing California’s housing crisis will indeed require state action. On October 10, 2016, for example, the LAO examined the effects of NIMBY-ism in the state’s coastal communities on the mobility of the workforce, in an article entitled Housing and Economic Mobility. According to the LAO, local decisions to limit homebuilding in coastal communities has pushed workers to other parts of the state where their incomes are lower. As a result, according to the LAO, “state intervention may be needed to encourage more home building in key parts of the state.”
The housing crisis, both in California and nationwide, has also captured the attention of President Barack Obama’s administration. On September 26, 2016, the White House released a white paper called the “Housing Development Toolkit,” which identifies actions state and local governments can take to encourage housing development. The Toolkit notes that restrictive zoning contributes to high rents, exacerbates wealth inequality, and slows the U.S. economy.
According to the Toolkit, local barriers to new housing development include land use restrictions that make developable land much more costly than it is inherently, off-street parking requirements, arbitrary or antiquated, preservation regulations, residential conversion restrictions, and unnecessarily slow permitting processes. The Toolkit describes actions taken by jurisdictions to reduce these barriers, and the first policy prescription it highlights for state and local governments to take in order to promote healthy, responsive, high-opportunity housing markets is to establish by-right development for new housing developments that meet existing local zoning requirements. Other actions include more density, speedier permitting, and fewer restrictions on accessory dwelling units.
There is, of course, no silver bullet to immediately fix solve California’s ongoing housing crisis. But we think these reports have correctly identified the problem and its consequences and that they are supporting the types of solutions an issue of this magnitude will require. In particular, we agree that instead of fighting these battles on a project-by-project basis, or even community-by-community, state action will likely be necessary to break through corrosive local barriers to new housing development.
Questions? Please contact Bryan W. Wenter, AICP of Miller Starr Regalia.
For more than 50 years, Miller Starr Regalia has served as one of California’s leading real estate law firms. Miller Starr Regalia has expertise in all types of real property matters, including full-service litigation and dispute resolution, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, exactions, title insurance, environmental law, and land use. Miller Starr Regalia attorneys also write Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. For more information, visit www.msrlegal.com.