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Greenbelt Alliance In the News

March 23, 2006

Regulation led to high cost of housing, builders say

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The Sacramento-based trade group, which represents companies that want to build more houses, has proposed an unsurprising solution: Let companies build more houses. The CBIA is calling on state and local legislators to reform laws that it says make building for-sale units too risky or expensive.

Environmental advocates generally support the goal of more housing, but they argue existing regulations are critical to ensure development moves forward in a well-planned and noninvasive manner. Some also assert that California's high cost of housing is as much because of the steep profits earned by developers as to building restrictions.

"Even if you got rid of all the environmental regulations," said David Reid, East Bay field representative for the Greenbelt Alliance, "if the home builders were still building houses and charging what they are, we wouldn't see any improvement in the homeownership rate."

Since 1995, homeownership rates have grown from 65.1 percent to 70.3 percent nationwide, according to the CBIA report. During the same period in California, the rate increased from 55.4 percent to 57 percent, the 49th lowest level in the nation. Ownership stands at a lower 54.3 percent in Alameda County, but is near the national rate, at 69.3 percent, in Contra Costa County.

The biggest factor in the ownership disparity is California home prices, which run $300,000 ahead of the national median. The CBIA attributes this directly to five laws and court rulings made during the 1970s. That includes the passage of the California Environmental Quality Act, which requires public review of development impacts and, the CBIA asserts, opens the door to frivolous lawsuits.

"During the '70s, a long list of state, local and federal regulations came into being that cumulatively relegated too many Californians to a lifetime of renting," said Alan Nevin, the CBIA's chief economist.

It would take building at least 50,000 houses per year during the next third of a century to close California's homeownership gap. That would have the added benefit of producing more than $4 billion a year in property tax revenue.

But the goal can only be met if state and local governments reform building policies, the CBIA report concluded. Specifically, it is lobbying for legislation that encourages denser development, discourages lawsuits against downtown housing projects and funds public infrastructure through long-term bonds rather than developer fees.

It remains to be seen whether builders, who have argued against California's environmental restrictions since before their passage, will succeed in pushing any of these proposals through the Legislature. But the CBIA claims escalating home prices are engendering growing public support for their efforts, and a number of proposed state Assembly and Senate bills do address several of these goals.

"California has nine of the top 10 least affordable communities," said Robert Rivinius, president and CEO of CBIA. "Every day, it becomes a little more critical and a little more obvious to people that something has to be done."

Proposed development-related bills the CBIA is supporting include:

• SB 1800, introduced by Sen. Denise Moreno Ducheny, D-San Diego, would require counties and cities to adopt a long-term physical development plan, which would entail identifying existing and projected housing needs and land available for development.

• AB 2751, sponsored by Assemblyman Mark Wyland, R-Carlsbad, would require that developer fees only pay for facilities related to the project at hand, and not simply cover the cost of existing infrastructure deficiencies.

• SB 1191, introduced by Sen. Dennis Hollingsworth, R-El Cajon, would alter several aspects of the California Environmental Quality Act, such as allowing an expedited review for development in infill areas and specifying certain situations that do not constitute a significant environmental impact.

James Temple covers real estate for the Contra Costa Times. Reach him at 925-977-8534 or jtemple@cctimes.com.

By the numbers:

California homeownership 57 percent

Bay Area homeownership 57.1 percent

Alameda County homeownership 54.3 percent

Contra Costa County homeownership 69.3 percent

Nationwide homeownership 70.3 percent

Number of owned houses needed to close the California gap 1.6 million

Property taxes generated by that many new homes More than $4 billion

Source: California Building Industry Association

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