The Unintended Consequences of Law==Killing Housing


#1

The Unintended Consequences of Law==Killing Housing
October 23, 2016 By Stephen Frank
By Joe Bosquin, Builder, 10/13/16

When Pat Burns began his construction career in California in 1970, houses sprang forth from the ground in as little as two months, and it didn’t cost that much to get them started. Today, he says, cycle times have doubled, and he estimates that fees, labor regulations, and more stringent building-code requirements add roughly $47,000 to a typical 1,400-square-foot home—and that’s if everything goes right.

“Building impact fees are now almost 20% of our costs,” says Burns, … “They just keep throwing more on us. If you have to do an Environmental Impact Review, that’s going to add a year onto your project and cost $50,000 to start.”

“Depending where you are in the California, you’re in the hole by at least $50,000 before you even put a shovel in the ground,” Ratner says. … Typical fees in San Francisco are $72,600 per home; in Sacramento, they’re $62,000. And for the six California markets highlighted in the Zelman & Associates report, the average is $51,650. That’s nearly two-and-a-half times the national average of $21,000. And the Zero Net Energy homes mandate … could add an additional $25,000, or more, to the cost of building a home.

“At the highest level, California has had a policy in place for decades that has restrained the supply of housing and driven up the cost,” says Chuck Reed, former mayor of San Jose … “It’s simple supply and demand. And surprise, supply and demand works.”

According to a widely referenced 2015 report from the California Legislative Analyst’s Office (LAO), … since 1980, California has built half of the housing units it needed—about 100,000 per year—to keep up with demand. … In high-demand locales like the San Francisco Bay Area and Los Angeles, the housing deficit is even greater. “Most of California’s coastal counties needed to build three times as much (or more) housing as they did,” … .

That acceleration started … under the administration of Ronald Reagan. In 1970, the then–California Governor signed the California Environmental Quality Act (CEQA), the state’s broad development review mandate, into law. It’s been at the heart of California’s housing shortage ever since.

… CEQA originally was cast as a progressive mandate that would protect the rolling hills, towering forests, and jagged coastlines … . It obliged local municipal bodies to consider environmental impacts before approving new housing projects, … require developers to … mitigate those impacts.

But what CEQA has become, housing advocates say, is a bludgeoning club used by anti-growth and NIMBY interests, as well as labor groups, to either block development outright or hold developers hostage to their concessions.

“I call it the California Extraction Quantity Act,” says Reed, the former San Jose mayor. “It’s the primary tool used to obstruct housing and drive up the cost of housing … . Under CEQA, it’s easy to litigate and easy for developers to lose.”

On of the major reasons companies and jobs are fleeing CA!


#2

**On of the major reasons companies and jobs are fleeing CA! **
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Costs plus taxes also drive companies out of the U.S… But that’s ok, we will just tax the companies that are left even more, right Hillary?


#3

That was about the same time Nixon created the EPA, I laugh when I hear today’s youth talk about how things have not really gotten that bad under Obama; as if the consequences of bad legislation will come to fruition within the term of the Executive who signed it originally and if those consequences are not debilitating IMMEDIATELY then the legislation must have been okay.


#4

Fleeing… odd considering California has a 2.0% growth rate, or about 8x Texas at 0.3% :eusa_think:

They’re in sad shape, moving up to the 6th largest economy in the world - ahead of France. Truly, the sky is falling :hippy:


#5

The EPA is a joke since they have caused more damage in the long run with rules with no backing in science and even created situations as the run off of a river with heavy metal in which they have done nothing but try to blame others for. Then there is that town where it was revealed they could have done something about the water supply and sat on their hands and tried to blame the only republican while ignoring the democrats who saw what was happening first hand and did nothing.

Then there is your own experience of what they have wrought in the name of environmentalism.The EPA should be reined in.


#6

Try your Egyptian River story on some one who didn’t change jobs a month ago because his company was closing the division he worked for and splitting operations between a facility in SoCal and a facility in central Pennsylvania. The big reason that SoCal facility will be kept open, for now, is that it’s qualified to do work for NASA. Were it not for Tech - high-flyers like Google, Apple, Facebook, and Cisco - CA’s growth would be much less, if not negative.

I’ve lived in Silicon Valley for nearly 40 years. Manufacturing started leaving Silicon Valley in the mid 1970s, and what is left now is low volume cost-insensitive products (e.g. what my former employer just moved to SoCal and PA) and prototyping. Most of what remains is engineering, marketing/sales, and corporate manglement, and some engineering, especially software, is moving elsewhere, even out of the US - not a good trend, as far as CA is concerned. Companies like Google have established housing and commute aid programs for their employees, including shuttle buses from SF to Mountain View (an hour or more each way, due to traffic), but it’s a race between escalating costs and SF’s government (“Gentrification” is one of their bogeymen) as to what forces Google to shut this down and consider alternatives to locating some operations out of Silicon Valley, maybe out of CA, maybe out of the US. On another tack, like those nice Intel or AMD processors and chipsets in your computer? They might have been designed in Silicon Valley, but then again maybe they were developed in Washington … or in Israel … or other parts of Asia or EuroLand.

As RET pointed out, it’s taken 4 1/2 decades, and is still in progress, but taxes, enviro-regs, hyper-expensive building permit processes, and no-growth housing policies have been driving Tech out of CA, bit by bit. The trend could probably be halted and reversed, but not with current state and local government - laws and regs and ordinances. It’s been a slow bleed-out, but CA is killing one of its golden egg laying geese.

Once over lightly with a couple more of CA’s golden egg laying geese …

Noticed in the past decade or two how much Hollyweird movie and TV production is set outside of the LA area and done on location? And how much programming on cable/satellite channels originates in Canada and other countries?

CA is rightly known for agriculture. While areas like the Napa Valley, Livermore Valley, and Salinas Valley may be better known, they are dwarfed in productivity and size by the Central Valley. But 10 or 15 years ago a Federal judge created a government-made drought in the southern half, the San Joaquin Valley (named for the river that flows through it). Farmers who had for decades and even generations received water from the river system there had their water slashed to the point that farms were driven out of business, prime farmland idled, and in some towns unemployment shot up to 40% (forcing the unemployed to move elsewhere).

Like I said above, CW, try your Egyptian River story on some one who hasn’t lived and worked here for nearly 6 decades - me - or whose businesses haven’t been shut down multiple times (RET) by industry-killing enviro-regs.

BTW, that .3% growth rate number for TX seems a bit low. Per CNN, in 2015 the Commerce Department put the growth rate for TX at 5.2%, second only to ND. In that same dataset, CA’s growth was just 2.8%, slightly more than half the growth rate of TX. Did you get that .3% number from a, ummmm, selective source?


#7

The numbers I cited are quarterly 2016 numbers, instead of annual for 2015. Over the last 5 years, Texas has had average rate of growth that’s about 1.5% higher than CA. But your example is this year(right now), not in years past.

Which seems more like an Egyptian River Story, the broad economic data that encompasses everything, or a specific look at a small subset?


#8

For Cwolf from thehill.com
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The BEA revised California’s real GDP growth downward from 2009 to 2011 in each of three years by a cumulative 2.6 percent, the third-largest negative revision in the nation.
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In other words, California’s economy shrank an additional 2.6 percent before it grew 3.5 percent.
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So, in the past five years California’s real GDP contracted 0.3 percent, one of ten states where economic activity was less in 2012 than it was in 2008.
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By contrast, the BEA revised Texas’ growth upward by 0.5 percent from 2009 to 2011.
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Texas’ newly revised real GDP growth from 2009 to 2012 was 13 percent.
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From 2009 to 2012, California’s share of the U.S. economy shrank from 13.1 percent to 12.9 percent while Texas’ portion of the American economy increased from 8.2 percent to 9 percent.
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Some critics might contend that Texas’ economic boom is wholly due to the revitalization of the Lone Star State’s oil and gas fields through fracking. However, if the entire mining sector is removed from the calculations, Texas’ economy would have still grown at a faster pace than California’s from 2009 to 2012. Further, California has about two-thirds of the nation’s proven shale oil reserves in the vast Monterey Shale formation—that the Golden State makes the political choice not to allow the extraction of this underground wealth can’t be held against Texas.
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There’s another interesting data nugget to be mined out of BEA’s revisions. Looking at the year-by-year real GDP revisions for California, we see that California’s output was revised downward 0.4 percent in 2009, 1.4 percent in 2010, and 0.8 percent in 2011. What most people have already forgotten is that California enacted a $24 billion, two-year tax increase in 2009, the largest state-level tax hike in U.S. history. This tax increase boosted income taxes, sales taxes, and vehicle taxes and was in full effect in 2010, then phased out in 2011. The greatest downward revision in California’s economy was in 2010, the year when the whole weight of the tax increase was being felt. The BEA now estimates that California’s 2010 output grew at an anemic 0.3 percent, down from the previously estimated 1.7 percent. The overall U.S. economy grew at a revised 2.4 percent that year, eight times California’s pace. Texas’ economy expanded 4.1 percent, 71% more rapidly than the national economy
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There’s more to the article.


#9

That article looks to be ancient. Every mentioned year starts almost a decade ago, and ends in 2012.


#10

[MENTION=49306]Old Tex[/MENTION], Please do link to the article from The Hill.

I noticed a word was missing from each sentence about the revisions, “Unexpectedly”.

In reality-based stereotype, TX is known for oil and gas. Less well known outside of Tech is that it’s also very big in Tech. Dell Computers has been a TX company from its start, and still has substantial operations there. Compaq was also located in TX - the Houston area, IIRC - but I don’t know whether HP still has substantial operations there. The largest semiconductor company in the world is Texas Instruments, headquartered in Dallas. TI produced the first silicon transistors in 1950 and invented the integrated circuit in 1958. Derivatives of TI’s 7400 series TTL logic - pin-compatible, but improved - are still the industry standard, and TI is one of the (perhaps THE) major innovators of improved families. TX is about much more than oil and gas.

SF Bay Area extremely high housing prices are driven by two significant factors. On the demand side, Tech and financial industries (and maybe more) have been growing - in people as well as dollars. And these companies pay their people well, in $$, benefits, and on-campus amenities. On the supply side, government regulations, fees, and extortionary permit processes have constricted housing supply. Tech companies face - and the time is now - a choice between keeping a critical mass of talent in the Silicon Valley area, where they started and are based, and an economic context that makes attracting talent to Silicon Valley increasingly difficult. Telling job applicants, “We’ll pay you a lot, but your commute will be 1-1/2-3 hours and 40-80 miles each way,” is a pretty tough sell, especially when they realize they’ll probably never be able to buy a home in the Bay Area. I have kids, and they are looking at alternatives to the Bay Area, only one by choice.

My former employer made that choice in shutting down and moving the division in which I worked. That division has been an innovator in microwave communications since the 1930s, and based in the Bay Area from its start. But after losing a few key people and having trouble recruiting, they split the division between SoCal (where housing prices are a bit less crazy and they already had a space-qualified facility - the qualification process being VERY expensive) and PA. How long they’ll be able to keep operating the SoCal facility (= staffing it) is an interesting question.


#11

[MENTION=49306]Old Tex[/MENTION], Please do link to the article from The Hill.
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Sorry PeteS, I tried to copy a link & it wouldn’t let me. That’s why I put the name of the site.
Basically what I was trying to say is that some states seem to be anti business & that can be from regulations or taxes. My view (& some would disagree) is that CA does both.
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I lived in CA for 3 years.& wasn’t compatible with it. For instance I saw my neighbors house damaged by some kids & called the police for him (he was out of town). The officer explained that he had some kind of long running problems with a local gang & started listing off all the stuff that they had done to his house. My reply was Well why doesn’t he just shoot them when they come on his property? The officer “guessed” that I wasn’t from around there.


#12

Count all the illegals you want. CITIZENS are still fleeing the State in droves.


#13

I probably come across down on CA & the truth is that I don’t care for it. But that’s just me. Mostly it’s the politics of the state that I hate but also I find the costs there insane. The crime rate is also horrible but I guess that goes with big cities (we were just outside Riverside). The weather was ok but I didn’t care for the wildfires or earthquakes. No, I’ll take my backward state where I can live cheaply & protect my house if needed & honestly live a lot better life than I could in CA. As for beaches, I don’t get why people love them. I grew up not all that far from beaches & I’d rather be under a shade tree than on a beach. Just me I guess because a lot of people do love it there.


#14

Dave, he was talking about GDP growth, not population.


#15

CW, open the windows let the smoke from the crack pipe out and remember, never play outside your league:

Texas adds 732,800 jobs in 10 years; no other state tops 100,000. 2001-2011

State…No Jobs…US Ranking

Texas …732,800 …1

California …-623,700 …51

We call that suckin hind teat…

http://www.bizjournals.com/bizjournals/on-numbers/scott-thomas/2011/05/texas-adds-732800-jobs-in-10-years.html

Latest stat lis approx 1000 people move to Texas every day x365, this results in a NET growth rate of approx 735 per day ( - deaths, move out of state)


#16

Latest stat lis approx 1000 people move to Texas every day x365
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I HATE that number. Those people move here & expect that things here will be exactly like the state they came from. Over time they will change things to be exactly like where they came from. Higher taxes to pay for “free” carp. Laws stopping you from protecting yourself or your property etc… What they don’t realize is that the reasons that they moved are being brought in here. It would be ok if they moved to the back woods part of Texas because we have a lot of areas where there aren’t a lot of people. But they don’t, they take over the cities. I guess that it’s a basic part of the change of attitude of people now days. Long ago people moved to get a better life & they adjusted to their new living conditions. Now days they want their living conditions to adjust to them.


#17

Liberal cities in Texas:

Houston
Dallas
Austin
San Antonio
Ft Worth

All the major cities are already left and EXTREME FAR LEFT (Austin)

Its the rural vote that is keeping Texas Red…barely


#18

I never step down to the minors. That’s what my ignore list is for :banana:


#19

The long term prospects look very good for the socialist movement. They took over the schools and colleges and have won over many of the educated people. As for the rest, the socialists get the low information voters who only want free stuff from the government. They are ignorant and proud of it.

The trouble is the whole thing is going to collapse eventually. I just hope that my assets hold out until I’m gone. Three of my nieces and nephews know the score. They are solid Republicans and are making out okay, one of them very well.

The two others are losers and in the socialist camp. One is your classic college graduate who can’t get job and is now living in his father’s basement. He has as much energy and get up and go as a sloth. The other going to be a permanent full time student going for graduate degrees as long as the loans and scholarship money holds out. He’s not studying anything that will give him a chance to earn a living, except as a college professor. He is a totally committed communist.

The kid who lives in his father’s basement posted some socialist garbage on Face Book. My wife and I had to laugh when another nephew who is working and has a family told him what a fool he is in plain language.


#20

Been saying this for years, they will win, even if Trump wins, they will win in 2020, you cannot stop the Free Lunch juggernaught train. Hidla is promising forgiveness of your college debt and free college. Lets look at that: Current college debt. $1.4 TRILLION…that buys a LOT OF VOTES!

Which will collapse first? Socialism or our financial system with debt.