California continues to terrify and confound conservatives. If liberal politics are supposed to be harbingers of economic and social disaster, California’s successes certainly seem to be an inconvenient reality. The Golden State is running a $30 billion surplus while functionally locking Republicans out of power in the legislature and statewide office. California’s economy is the 5th largest in the world, with job growth in the state far outpacing its relative share of the population. And the state is home to a diverse range of growing industries, including Silicon Valley’s technology, Hollywood’s cultural output, the Central Valley’s agriculture, and coast’s tourism among others. Notably, unlike some other states, California’s boom depends very little on declining or soon-to-be-automated legacy industries like fossil fuels or industrial manufacturing. Higher tax rates, increasing diversity, better social services and effective environmental protections have not only failed to stunt California’s economic powerhouse, they have served to make it a robust and vibrant place for life, work and entrepreneurship.
But California does have a few massive problems. The biggest of these is housing. A combination of geography, restrictive zoning laws, a pleasant climate, lack of rent control and artificially low property taxes created by shortsighted voter initiatives have created a housing catastrophe in the state. Gentrification is pushing longtime residents out of their communities, homelessness is a serious problem and young people are unable to live in the communities where they work. Millennials are particularly impacted: nationally, half of Millennial renters who want to purchase a home have no money saved for a downpayment. The problem is much worse in the state, where rents and mortgage costs are far higher than the national average but most jobs outside of tech and finance don’t pay all that much more to compensate for the higher standard of living. The housing shortage in California is so massive it has its own lengthy Wikipedia page.
Conservatives love to claim that Californians emigrate to other states to get away from high taxes and liberal culture. The tax claim is utter nonsense; some Fox News acolytes may indeed leave to go where the weather suits their clothes. But the vast majority of those choosing to leave California do so to escape the exorbitant mortgages and rents–provided, of course, that they can find good work in a lower cost-of-living area, which isn’t always a guarantee for those not on fixed incomes.
But unlike many other chronic problems in American society, California’s problems can be fixed–mostly by building a lot of new housing. Newly elected governor Gavin Newsom has a plan to do exactly that:
Newsom has said California’s housing crisis – driving up rent and home prices – is essentially a problem of supply and demand. He wants to spend state money to create more supply.
He proposes a $1.75 billion increase in funding for housing initiatives. Of that, he’d like to devote $1.25 billion in one-time spending for building new housing, which includes $750 million in grants to help local governments plan for increased housing production and $500 million to expand the mixed income loan program.
An additional $500 million would be devoted to tax credits, with $300 million going to the state’s program for low-income housing developers, and $200 million going to a new tax credit program to help develop housing for higher income households.
Newsom says he wants the Department of Housing and Community Development to “establish statewide goals that break down by region so that they’re more realistic and more nuanced.” They plan to initially allocate $250 million of the $750 million to local governments to help them start reaching those goals, and then dole out the extra $500 million as the local governments hit certain benchmarks.
The biggest challenge to Newsom’s plan is cities themselves. While Californians tend to be progressive overall on national issues, many older homeowners are reluctant to allow construction of new housing locally for a variety of mostly selfish reasons under the umbrella of NIMBYism (Not In My Backyard): they don’t want views impacted by taller construction, they don’t want poorer or younger residents nearby for fear of “crime” or reduced home values, they don’t want any extra traffic on their way to the suburban shopping mall, etc. And city councils tend to be responsive to the priorities of the mostly older homeowners who vote in every municipal election and don’t mind slow-walking their communities into becoming retirement centers where their grown children can only visit but never live, so long as they don’t lose a dime of the parabolic property value increases they didn’t actually earn or endure the horror of waiting an extra traffic light cycle to get to Trader Joe’s.
Newsom’s plan is to essentially compel cities and counties into building the housing they have so far refused to, through a combination of incentives and threats, including withholding funds from cities that refuse to comply. There are also bills proposed in the legislature such as Assemblymember Scott Weiner’s AB50 that could force cities to allow for the construction of larger, denser, transit-friendly apartment buildings that would significantly increase the supply of affordable housing.
The bounded political parameters for housing in California aren’t just generational or homeowner-versus-renter. There are also basic geographic, environmental and political constraints. No one YIMBY or NIMBY wants to see city councils and boards of supervisors give away the store to developers at the expense of community standards. Few want to increase sprawl, and most want insofar as possible to limit impacts to the local environment, water usage, and climate emissions in any new housing construction. In many coastal cities expanding outward isn’t even possible because they’re bounded by the mountains on one side and the ocean on the other. This ultimately means upzoning to allow housing in areas where it was previously banned; the construction of denser housing in urban zones that have lower environmental and water impacts; and building up rather than out, even though some residents may complain about the impact on their views.
These are challenges, but they certainly aren’t insuperable. They’re simply a matter of political will. Fortunately, it’s an issue that is receiving greater attention from both legislators and activists, especially those most profoundly affected.
Having an ally in the governor’s mansion is certainly a big help. If he can succeed, it could help spur similar reforms in other high cost of living areas around the country as well.