More evidence Californians are overpaying for housing - Part IV

California citizens have long-demanded non-subsidized housing affordability and now we have a definite answer. Governor Brown has recently made a big announcement and we'll take a look at it.

Concept: In-fill residential development in East Anaheim oriented around conceptual BRT express services via the 91 Express Lanes.
Note: Concept Only. Not endorsed by City of Anaheim, OCTA, Caltrans, or any public entity.

Transit Talking Points by: Nicholas Ventrone, Community Engagement Director

If you read this blog often, you know we believe that the housing affordability, super commuting, urban sprawl, and dire freeway congestion problems in Southern California are the direct result of a lack of housing inventory caused by broken policies at the state and local levels. Job-rich Orange County for example has a huge problem in that area with the median-price home today more than $600,000 with typical marketplace rents creeping toward $2,000 per month for single bedrooms and over $3,000 for 3+ bedroom family units according to various real estate sources. Similar price hikes have begun to encroach into the Inland Empire which includes Corona and Southwest Riverside County. As a result, both the 91 and I-15 freeways as well as the local surface streets in Corona suffer from excessive through-commuter traffic during rush hours as the affordable non-subsidized homes are in the far-off regions.

More disturbing facts: From 2003 to 2014, California cities and counties granted permits to only 45% of the residential units needed to meet market demands, according to the Housing and Community Development department. Meanwhile as this blog has shown through this series on this topic, other major metropolitan areas generally don't have this problem to this scale with the exception of New York City, Portland and a few other areas.

Last October, I laid out a scenario where a guy named Tom earns a generous $69,000 per year salary working at a firm in the Irvine Business Complex. For many of us, that would be a dream wage. Tom is married with a stay-at-home wife and two children. The wife cannot work. With the child tax credits, about $5,000 is taxed out from Tom's salary per year, leaving the net income around $64,000. At that time, the median home value in Irvine was a whopping $733,100 with median rent at $3,000.

A listing on Zillow had a 3-bedroom single family rental unit at 1,906 square feet listed for $2,985 per month in the older Deerfield neighborhood a few miles east of the Irvine Business Complex job hub. The rent adds up to more than $35,800 per year or a whopping 56% of the net household income; almost double of what should be paid according to financial experts.

The root cause of skyrocketing rents and housing unit purchase prices in Southern California is the broken rule of law at the state and local levels that obstructs inventory development. Back in January, I began this multi-part series "More Evidence Californians are overpaying for housing" in an effort to see whether a single provider of a household with a full time job can afford a 3-bedroom unit for the rest of the family by purposing 30% of the income toward housing costs in other metropolitan areas. The positive results and findings pretty much embarrassed the state.

Governor Calls for Action

Concept: In-fill job and retail development in Moreno Valley
But now, the state government is finally doing something about this economic and urban sprawl disaster as Governor Jerry Brown has announced a plan during his budget proposal that would reduce costs to homeowners and renters not by subsidies, but by better allowing the marketplace to increase the housing supply through reductions in the state's infamous and costly red-tape process.

Essentially, it will suspend or reduce the requirement of local environmental approvals, in particular, under the California Environmental Quality Act, which delay projects or make them prohibitively expensive or not profitable, especially in-fill smart growth projects near transit lines.

Call for CEQA Reform

Think about it. CEQA abuse and obstruction is currently an epidemic and the state government has allowed it to go unchecked for far too long. For decades, "Not In My Back Yard" activists, development opponents, and some lawyers have used CEQA as a tool to block locally approved projects through expensive lawsuits even though the development proposed is clearly not an environmental threat. In fact, some projects that are meant to improve the environment are often obstructed in court. The Metrolink Perris Valley Line which will finally open next week fell prey to that. CEQA often gives NIMBY's and some in the lawyer lobby a tool to distort market supply and demands which allows their properties to be worth more money. Pure greed of power.

More shocking facts: San Francisco law firm of Holland & Knight released a study last year showing such CEQA abuse at epidemic proportions. The findings are shocking and spell out the irony:
  • CEQA is not a battle between business and environmental advocacy groups: 49 percent of all CEQA lawsuits target taxpayer-funded projects with no business or other private sector sponsors.
  • The most frequent targets of CEQA litigation are projects designed to advance California's environmental policy objectives.
  • CEQA's most frequently targeted public infrastructure project: transit.
  • CEQA's most frequently targeted industrial/utility project: renewable energy.
  • CEQA's most frequently targeted private sector project: housing – with the most frequently challenged type of housing project being higher density urban projects such as transit-oriented development and multifamily (including affordable) housing.
  • Despite claims by special interests that defend CEQA litigation by contending that it combats urban sprawl, 80 percent of CEQA lawsuits target infill projects in established communities rather than greenfield projects on undeveloped or agricultural lands outside established communities.
  • CEQA litigation is overwhelmingly used in cities. Special interest CEQA lawsuits often target core urban services such as parks, schools, libraries and even senior housing.
  • Sixty-four percent of the petitioners filing CEQA lawsuits are either individuals or local "associations" that often have no prior track record of environmental advocacy. By contrast, recognized state and national environmental advocacy groups comprise only 13 percent of CEQA petitioners.
  • CEQA litigation abuse is primarily the domain of Not In My Backyard (NIMBY) opponents and anonymous new unincorporated entities, including those using CEQA litigation tactics to gain leverage against business competitors, negotiate union agreements, or stop neighborhood-scale changes required to meet new state mandates such as greenhouse gas reductions or improve critical local services and facilities such as schools and parks. 

There is no question that CEQA abuse is a key example of government obstruction of in-fill urban smart growth at existing California job hubs that has contributed to expensive housing in the state. Now finally, the state government is taking action.

If Brown's proposal becomes law, it will give developers and entrepreneurs an incentive to better compete with the existing big-name home builders and finally address the housing shortage in an intelligent means which will help get prices and rents under control.

I will continue to cover this story as it unfolds and get specifics, but generally speaking, it is long past time for the state to step in and help the working family. Most of us can attest to this situation. Uncounted hardworking families in California struggle every month to pay the unjustified high rents and mortgage payment. Many families often pair up under one roof which overwhelms the infrastructure. Others resort to units far from their jobs and have to spend hours upon hours commuting which clogs the freeways and local streets with through-traffic. Limited affordable rooms for rents have also likely increased the homeless transient population and obstructed supplies in the hotel and motel industries, leading to price hikes there. How can independent developers in the marketplace compete with the bigger-name existing home builders in solving the supply issue if government red tape like CEQA abuse prevents them from making any money? They can't under the current system.

These are all legitimate environmental issues that every environmental organization should be addressing; such groups should not be siding with the greed and overpriced housing.

To be fair, the local governments need to retain their authority to govern land use and approve development projects fairly and impartially. They should retain the power to zone sensitive habitats and wildlife corridors as open space zones and park space. That's why we have planning commissions. But there are jurisdictions out there that would be on board of allowing the market to keep prices in check for their people with adequate inventory. With CEQA abuse proposed to be moved out of the way for housing especially in-fill projects near transit routes, we might finally see some change in the right direction.

Allowing abuse of current environmental law to block projects meant to improve the environment is harmful to the environment. Allowing such abuse to unjustly hike housing prices beyond affordability for working families is morally unacceptable.

The state needs to confront this serious environmental and economic crisis.

Further Need for CEQA Reform

One last fact: Although developed areas, Southwest Riverside County and the Lake Elsinore area are both voided of a full community college campus; students needing access to a full-service campus have to commute north to Menifee or Norco, or south to San Marcos. That sends additional through-traffic along the freeways and local surface streets and overwhelms those schools with outside area students. Mount San Jacinto College proposed developing a science, technology and math campus with open spaces and condensed structured parking (ie. limited surface parking lots) along Clinton Keith Road in Wildomar to address this issue and other growth demands. It's on 80 acres of flat land which would be in-fill given the surrounding residential developments and local land use plans. This school should have been funded and developed decades ago.

Despite this campus being very feasible, environmentally friendly and the fact that it would reduce peak-hour commuter demands to Menifee, Norco and San Marcos via the congested I-15 freeway, it still has an open CEQA lawsuit on the books that was recently appealed to an appellate court after the suing party lost its trivial case in a costly trial paid for by you and I.