crat-party-controlled State of Califor - nia, outsiders might be curious why it can’t get its affordable housing act together. Governor Gavin Newsom stated in 2017 that housing was a fundamental right and that his goal was to lead the effort to develop 3.5 million new housing units by 2025. So, what’s the issue? Politics. Builders hilariously call states like California BANANAS (build abso- lutely nothing anywhere near any- thing-ers). The high cost of dirt, exor - bitant development fees, expensive building code, and onerous timelines stuck in CEQA litigation have builders steering clear of affordable hous - ing projects. The City of Los Angeles raised $1.2 billion in 2016 to tack - le 10,000 affordable housing units. Unfortunately, four years on, not even the city has been able to manage
keeping prices down. In September, the city controller announced that the measure is not only behind, but the per-unit cost has ballooned to $530,000. The real culprits are NIMBYS (not in my back yard-ers). These locals show up to council meetings to pro - test projects. California has attempt - ed for years to pass legislation that allows density projects along trans - portation corridors. The efforts have failed because NIMBYs show up and protest to their local elected who put them in office. They don’t want the neighborhood’s character to change, and constraining supply means prices continue to increase. Measure blocked! California’s brilliant answer to the NIMBY problem has been accessory dwelling units (ADUs) legislation. By
right, local property owners can build secondary structures on their prop - erty. Local governments and HOAs resisted by instituting huge develop - ment fees, parking restrictions, and absentee owner restrictions. But, the state has continually respond - ed and legislated those objections. If you’re building a 750 square feet ADU on an existing California rental, your application should be approved within 60 days, have minimal fees attached, and no local politicians, building department, or neighbor can do much about it. In all fairness, California is trying. Some cities are paying for ready- made ADU plans. Others have incor - porated tiny homes into their ordi- nances. One city is even in discussion to allow up to six ADUs on a qualified lot zoned R1. Local investors plugged into upzoning can take this effort even further and make some unique, long-term portfolio plays. RUN. Even before Covid, California municipalities had budget issues largely tied to poorly funded state pensions. Covid has exacerbated budget issues leaving states with few options other than to increase local sales taxes, building fees, and other fees to plug the gaps. Currently, the state of California is looking at a $54 billion shortfall. Measures adopted to stop the fiscal bleeding include the use of reserves, reduced spending, borrowing, fed - eral grants, and cutting education spending. With an unemployment rate stubbornly high, the state will continue to seek additional sources of revenue. On the 2020 ballot, three real estate initiatives offered a way for - ward.
PROPOSITION 15: The most con - troversial of all sought to change
76 | think realty magazine :: january 2021
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