California Dystopia Update, February 2020 edition: Going backwards on housing

By Chris Reed
February 20, 2020

A decade ago, when the U.S. Census Bureau began issuing a measure of poverty that included the cost of living, Californians found out something that had somehow eluded the thousands of journalists, authors and academics who chronicled life here. Because of the cost of housing, California — not West Virginia or Mississippi — had the highest percentage of impoverished households. The latest annual Census report, issued in September, showed 18.2% of state residents struggled to pay for the basics of life.

But a decade later, the housing crisis and the related issue of homelessness are worse than ever in California — and a strong case can be made that the most significant housing law enacted under Gov. Gavin Newsom is likely to make the problem even worse. Not only that, after failing to live up to big promises about adding housing while campaigning in 2018, Newsom somehow thinks he’s doing a good job on the issue. This is the definition of dysfunction.

This month, the Construction Industry Research Board reported that housing construction in California actually decreased in 2019 over 2018. The 110,218 new housing starts were down 7% from the previous year and nowhere near the 180,000 units state officials say is needed just to keep up with job growth.

Four years ago, there were reasons to hope that progress was possible in the Golden State. In 2016, then-Gov. Jerry Brown blasted his fellow Democrats’ complacent orthodoxy of responding to the housing crisis by providing heavily subsidized “affordable housing” units which cost $400,000 or more to a relative handful of families which won de facto lotteries.

Brown declared that the only way to have a substantial, long-lasting remedy for the problem was through a sharp increase in privately built homes. He endorsed a “by right” measure in which housing projects that met basic conditions could not be blocked by local officials.

That year, San Francisco Supervisor Scott Wiener got elected to the state Senate and immediately began pushing a similar bill. But while Brown and Wiener got some minor measures approved, their boldest ideas about limiting local control over housing approvals went nowhere. In January, Wiener’s Senate Bill 50 — which provided state pre-approval to small condo and apartment projects in areas near transit and population centers — failed for the third time in the Legislature. Despite his commitment in his 2018 gubernatorial campaign to a “Marshall Plan”-style approach to housing that would lead to the construction of millions of new units, Newsom stayed on the sidelines during the SB 50 fight for the second straight year.

Yet in an October interview with the Los Angeles Times, the governor strongly defended his administration’s housing record, touting intensifying efforts to use new and existing laws to force local governments to meet their “housing element” construction commitments. He cited his support for billions of dollars of the sort of affordable housing projects that his predecessor said would never solve the housing crisis — and his success in getting the Legislature to adopt a far-reaching rent-control measure blocking landlords from increases of more than 5% plus inflation.

He signed the bill to the groans of economists across the ideological spectrum. As Nobel-winning economist Paul Krugman famously observed in 2000, there are few topics that unite his profession like rent control. The vast majority of economists agree that rent control depresses construction of new housing.

It seems perverse that someone as proudly wonky as Newsom would pat himself on the back for ignoring what experts say — especially because in so doing, he has almost certainly made the housing crisis worse.

But it’s also possible that he’s had a cynical epiphany and realized that it’s not just NIMBYs who don’t want local governments to lose control over housing decisions. It’s the majority of Californians who are satisfied with their lives and their housing circumstances — including those who got elected partly with their social justice rhetoric.

Newsom can point to rent control and say, as President George H.W. Bush did to New Hampshire voters in 1992, “Message: I care.” That might be enough for an electorate that’s grown used to — and tolerant of — dystopia.

Memory Lane Department: Ten years ago this month, Gov. Arnold Schwarzenegger and the Legislature were completing negotiations on a gas tax scheme that went explicitly against the wishes of California voters. They approved ballot measures in 2002 and 2006 meant to ensure gas tax revenues were primarily used for road repairs. But clever lawyering freed up $1.8 billion in gas taxes for the general fund — voters be damned.

Penal Rental Department: A 1,078-square-foot apartment in the Chinatown neighborhood of Los Angeles can be had for just $3,525 a month. But consider getting some body armor before you move in. An analysis shows Chinatown has the highest rate of violent crime in L.A. — three times worse than what’s seen in scruffy Venice.

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Chris Reed is a contributing editor to California Policy Center, and an editorial writer and columnist for The San Diego Union-Tribune. You can follow him on Twitter @chrisreed99.

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