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Saturday, Dec 2, 2023

OpEd: Pro-Housing Bills Pass – With Setbacks

The 2023 legislative session officially wrapped up, and this year Gov. Gavin Newsom was tasked with deciding the fate of more than 1,000 bills sent to him by the state legislature.

While Newsom delivered some powerful blows this year – like vetoing a gut-and-amend bill that aimed to give striking workers unemployment insurance (a ridiculous proposal in my opinion) as well as vetoing a bill that would have required having a backup “human safety operator” inside all autonomous trucks, among other (unnecessary) regulations for the automated truck industry – he also made it abundantly clear that 2023 is the year of housing production.

Just this year, the legislature passed numerous pro-housing bills, including two bills backed by the Valley Industry and Commerce Association that will make it easier, faster and cheaper to increase California’s housing stock.

One of these bills, Senate Bill 4, also known as Yes in God’s Back Yard (a play on Yes in My Back Yard, or YIMBY, a term coined to mark a pro-housing stance in stark opposition to the anti-housing term NIMBY, or Not in My Back Yard) will allow for a streamlined housing development process for housing proposed on land owned by religious organizations.

SB 423, a slightly wonkier bill, will allow developers to pursue a streamlined approval process for affordable and mixed-income developments in cities that have fallen behind their state-allocated housing goals, which are most of California’s cities.

In addition to these two bills, the governor signed a huge package of over 50 pro-housing bills, like Assembly Bill 1633, a bill that limits the abuse of the California Environmental Quality Act by bad actors who use CEQA as an excuse to block new housing developments or AB 835, a bill that will start the process of legalizing the production of different types of affordable, family-sized apartments that are currently banned under California’s state building code.

Still, despite this year’s big wins for the pro-housing movement, I can’t help but note that, as with most things the government plays a role in, it always feels like one step forward, two steps back. Although many of these pro-housing bills will make it easier to build housing in California, many come with one very important caveat: labor requirements.

Take SB 4, for example. Although this bill opens up land that may have previously been very difficult to build housing on, all projects with more than 10 proposed units must pay workers prevailing wages, while all projects with at least 50 homes require contractors to offer apprentices employment and pay for health care for all workers and their dependents. You know what these requirements translate to? A much more expensive project that is now less likely to get built.

Granted, labor requirements in pro-housing legislation are moving in the right direction, largely thanks to support from the Carpenters union – the first union to actually use common sense and recognize that everyone needs a home, including unionized workers, and that opposing housing hurts everyone – but high labor costs remain one of the biggest deterrents to building more housing. If we really want to make progress on increasing California’s housing stock, we should stop putting up barriers to new housing production.

Speaking of one step forward, two steps back, Newsom took a second step back on addressing California’s housing crisis when he signed AB 12. This bill will limit the amount property owners can collect for security deposits to the equivalent of one month’s rent, ending the ability to ask for two to three months’ rent upfront for added security.

Making rental housing more affordable is a respectable goal. Unfortunately, this is not the way to do it. Property owners who rent out housing put themselves and their property at risk when renting it out to tenants. When these rental apartments, houses, condos or additional dwelling units commonly called ADUs are furnished, there is an added layer of risk that comes with renting. Not only can a tenant flake on a payment, they can also damage or steal the owners belongings. Knowing these risks, landlords understandably require a form of security to ensure that their property is protected. This comes in the form of the very aptly named security deposit.

When you limit the amount a property owner can charge to feel safe enough to rent out their property, they are not going to just shrug it off, say, “Oh well,” and start charging less. Instead, they will pull their rental properties off the market or only rent to tenants with impeccable credit. With the passage of AB 12, we are going to see a decline in California’s rental housing stock and, even worse, we will see furnished apartments disappear from the market altogether. In the midst of a state-wide housing shortage, pushing policies that remove available housing from the market is a clear step in the wrong direction.

The bottom line is that we need to build more housing in California. There is no doubt about that, and this year’s legislative victories show that the governor, and California, agrees. The tide has turned in favor of pro-housing policies, but the work is not done. We will never ease California’s housing crisis if every time we make progress, like we did this year, we simultaneously pass regressive policies that put us right back where we started.

Stuart Waldman is president of the Valley Industry and Commerce Association, a business-advocacy organization based in Van Nuys that represents employers in the San Fernando Valley area at the federal, state and local levels of government.

Hannah Madans Welk
Hannah Madans Welk
Hannah Madans Welk is a managing editor at the Los Angeles Business Journal and the San Fernando Valley Business Journal. She previously covered real estate for the Los Angeles Business Journal. She has done work with publications including The Orange County Register, The Real Deal and doityourself.com.

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