Local Control Still The '10,000-Pound Gorilla' Worsening The Housing Crisis, Developers Say

A call to action and an additional $1B-plus proposed allocation to housing production are steps in the direction of easing California’s housing crisis, developers say.

But California Gov. Gavin Newsom and other housing advocates will need to go about a more fundamental fix a little differently, Burbank Housing CEO Larry Florin and other builders told Bisnow Monday.

“The big, 10,000-pound gorilla out there that [the state] is starting to focus on, is that as long as local communities have final say on land-use decisions, it’s going to be a very difficult process to get anything built,” Florin said.

That is and has been the case because many of the suburban cities of California (where roughly 80% of residential neighborhoods are zoned single-family, CityLab reports) have passed the buck, permitting only a fraction of the units the state mandates they plan for, and which the state already plans for, state Sen. Nancy Skinner (D-9th District) told Bisnow last year.

Aside from Skinner’s SB 330 and other moderate measures, enforcement of those housing goals is weak. And all the while, local opposition to projects that gets cities steps closer to meeting those goals is often robust, sometimes in the guise of environmental concern via the California Environmental Quality Act.

In his State of the State address last month, Newsom never directly mentioned SB 50, a defeated bill authored by state Sen. Scott Wiener (D-11th District) that would have allowed multifamily construction in transit-oriented and job-centric areas throughout California. But he did take one of his stronger stances yet regarding such housing reform.

“I respect local control, but not at the cost of creating a two-class California,” Newsom said. “This means a commitment, right now, this year, to major reform that will eliminate red tape, and delays for building critically needed housing, like affordable, multifamily homes, especially near transit and downtowns."

As Wiener and other housing advocates have found out, implementing such reforms is easier said than done, despite it being what they say is the most effective solution for California’s housing crisis. For his part, Newsom never endorsed SB 50 (though he did reportedly help whip up votes), despite calls for him to enter the fray. 

“We need as much legislation as we can get to at least make it easier to get things entitled,” Curtis Development principal Charmaine Curtis said, pointing to both the ill-fated SB 50 and the successful SB 35, which removed discretionary review for certain qualifying projects.

Resources for Community Development Director of Real Estate Development Carolyn Bookhart agrees, but, like Curtis, she also sees deployment of funding for affordable housing as a major obstacle.

Like municipalities, the state government has only so much staff to handle the number of applications for state financing coming in, and the $6B for affordable housing made available by statewide bond measures in 2018 has been hard to come by, according to Bookhart.

“Right now, it’s very slow actually getting out to developers like us to build the housing,” she said. “I would like to see more focus on streamlining the funding that we do have.”

Last year, Newsom signed the largest budget in state history, which included $1.75B for increasing the housing supply. This year’s proposed budget, which will be revised in May and then needs to pass in the legislature, includes another allocation of $500M in state housing tax credits and proposed $750M for a new California Access to Housing Fund.

Curtis, whose firm is working with developer Tenderloin Neighborhood Development Corp. on just over 200 affordable housing units in San Francisco’s South of Market, also expressed frustration at a cumbersome application process for public financing of housing, despite the budgetary allocation for it.

But Curtis and others still see local zoning controls as the biggest issue.

“You’ve got to take a lot of the discretion out of the [entitlement process],” Curtis said. “If you can’t do that, we’re not going to be able to go very far.”

Florin agrees, though he calls the sole focus Newsom gave housing in his state address a good sign this year, contrasting it with his predecessor’s attention on the issue.

“The very fact that he spent his speech talking about the issue was a breakthrough in a lot of ways,” Florin said.