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!