Sacramento Capitol Building image via wikipedia user Suvicce

published on September 1, 2022 - 11:36 AM
Written by Frank Lopez

A pair of bills on Gov. Gavin Newsom’s desk aims to make it easier to build more housing in the Golden State, but various components could prove a tough pill to swallow for cities and developers alike.

AB 2011 from Assemblymember Buffy Wicks (D-Oakland) would fast-track housing development in strip malls in California, reported Manuela Tobias with CalMatters. In exchange for bypassing lengthy and costly review processes, including the California Environmental Quality Act, Tobias reports that developers must pay construction crews union prevailing wages — and cap a portion of rents.

“Apartments would have to be either 100% affordable or mixed-use, meaning market-rate but affordable to at least 15% of lower income earners, or 8% of very low income and 5% of extremely low-income earners,” according to Tobias’ story.

Another bill, SB 6 by Sen. Anna Caballero (D-Salinas), would also make it easier to permit housing on commercial properties but would still allow local input, such as what is prescribed by CEQA. The bill doesn’t cap rent but would require developers to use some union labor on every project, according to Tobias.

“If at least two union shops don’t bid on the project, union-level wages kick in,” according to the CalMatters report.

Robin Kane, Fresno-based senior vice president of The Mogharebi Group, a multifamily real estate brokerage headquartered in Costa Mesa, said even with a desperate need for affordable housing in the Central Valley, requirements for prevailing wages would deter smaller developers in smaller markets.

Capping a portion of rents would also make developers shy away, he said.

“That might a tradeoff that builders won’t accept,” he said.

Kane added that even though the bill could help developers bypass local review and CEQA regulations, putting housing in commercial properties would naturally come with other environmental impacts.

“You’re still going to have some environmental concerns that CEQA has nothing to do with,” Kane said. “Say you have an old gas station or an old dry cleaners — that can definitely create some environmental issues. You could get away with putting commercial on commercial [property], but putting housing on commercial, those are the kind of environmental issues you can’t just wave a wand at and ignore.”

As CalMatters points out, dozens of cities and local control advocates are opposed to the bills, saying they take away neighborhood input on new projects and tax revenue from commercial properties.

As Kane points out, housing is a net user of city services such as police, schools, fire, etc. Commercial properties are tax generators, which might make some cities reluctant to give up a good tax source, he added.

Kane credits legislators in Sacramento for realizing that abandoned strip malls and empty shopping center parking lots could be used to build multi-family housing and help solve the state’s housing crisis.

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