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California’s Legislative Analyst’s Office released a sobering report Tuesday that looks at the roots of California’s dire housing affordability crisis and how to solve it.

From Legislative Analyst's Office report.
From the Legislative Analyst’s Office report.

The report lays the blame for the current housing crunch (and the skyrocketing rents and housing prices it’s producing) at the feet of state’s many coastal cities and counties, two thirds of which have enacted formal constraints on housing growth. To make up for decades of stifling housing growth, California, and especially, its coastal cities would have to roughly double the amount of housing built each year, the report says.

“Though the exact number of new housing units California needs to build is uncertain, the general magnitude is enormous. On top of the 100,000 to 140,000 housing units California is expected to build each year, the state probably would have to build as many as 100,000 additional units annually—almost exclusively in its coastal communities—to seriously mitigate its problems with housing affordability,” the report said. This short video offers a nice summation of the whole report, as is this nifty infographic.

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“First, build more housing. Do it in coastal cities and build it densely.”
[/pullquote]”Local residents are often resistant to new housing development and they’ll use their local communities’ lan- use authority to delay or block new housing development,” said Brian Uhler, senior fiscal and policy analyst with the LAO, in a video released with Tuesday’s report. “We see that this type of resistance is particularly heightened in California’s coastal communities.”

No Growth Equals Higher Rents

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Sound familiar? Last year, Santa Monica approved only one new project, a 32-unit apartment building, which came not long after no-growth activists managed to kill the Hines project, a mixed-use housing and office space development at the site of a former Papermate factory. The city had spent seven years negotiating the project, which would have added about 430 new homes including subsidized affordable homes, across the street from a future Expo Light Rail station.

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“If one believes, for any reason, that we cannot or should not build more housing, then the upshot of the report is that we must accept that we will continue to have escalation in the disparity of the cost of housing and [in] the social and economic costs that come with that disparity.”
[/pullquote]While California’s housing crunch is a bigger problem than Santa Monica alone can handle, it’s clear that all coastal communities will have to shoulder the responsibility, or there will be dire consequences for future generations.

“Santa Monica never has and never should bear this responsibility to current and future generations alone. But, this report provides a compelling argument why Santa Monica — and other communities — should continue longstanding efforts to build new housing,” said Assemblymember Richard Bloom, a former Santa Monica City Council member and current representative of Assembly District 50.

“If one believes, for any reason, that we cannot or should not build more housing, then the upshot of the report is that we must accept that we will continue to have escalation in the disparity of the cost of housing and [in] the social and economic costs that come with that disparity,” Bloom said.

“Those disparities will largely fall on those who likely are not participating in this conversation, e.g. those who do not already own their housing and those who are not protected by rent control. They are the majority of those who live in California. They are poor people and they are young people of every background,” he said. “If we (all communities, including Santa Monica) do not increase the supply of housing, then how do we avoid continuing to shift the heavy burden of increasing housing costs onto the poor, the middle class, and young people?”

One of the consequences we could see is landowners increasingly pulling rent-controlled units off the market through the Ellis Act as market rents and housing sales prices skyrocket, as is happening in San Francisco. In 2014, Santa Monica, which has historically seen very little Ellis activity, saw an uptick in the number of controlled units lost to the Ellis Act.

And coastal cities’ refusal to grow is encouraging sprawl and making other communities more expensive.

“A shortage of housing along California’s coast means households wishing to live there compete for limited housing. This competition bids up home prices and rents. Some people who find California’s coast unaffordable turn instead to California’s inland communities, causing prices there to rise as well,” the report says.

Ben Allen, who represents Santa Monica and the Southbay in the State Senate said, “The demand for affordable housing, even for those in the middle class, far outpaces supply, and the situation will only worsen unless California gets more aggressive and more creative in coming up with solutions.”

“In my district we have rent control, private investment, infill projects—and it’s not enough. I agree with the Legislative Analyst that “major policy changes” are necessary. Especially with the dissolution of redevelopment, the need for a long term statewide housing strategy is more acute than ever,” he said.

Looking Forward

While Santa Monica has been a leader in the preservation and construction of affordable housing, it is much more typical of other California coastal cities when it comes to creating new, non-subsidized housing for the middle class, as evidenced by the snail’s pace at which the city’s population has grown over the last half century.

Since 1960, Santa Monica’s population has grown by less than 10,000 — from 83,249 in 1960 to 92,472 in 2013. The city’s recently-adopted LUCE plans for about 5,000 new homes to be built by 2030, about 250 new homes a year only bring the anticipated population up to 103,363 people.

But even that modest amount of growth is coming under attack as the city is planning to update its three-decade-old zoning ordinance. And this fight is going on in almost every coastal community in California, deepening their communities’ housing deficit while making the state’s housing crisis worse with each passing year.

What Can Be Done

In the video summary of the report, Chas Alamo, senior fiscal and policy analyst, offered four succinct recommendations.

“First, build more housing. Do it in coastal cities and build it densely. Secondly, doing so will probably require major changes to existing policies that have been important to the state for decades,” he said.

The report talks about how the California Environmental Quality Act (CEQA) is often used by no-growth advocates to stall construction of new homes in their communities, in the past using the legislation’s requirement for traffic impact studies as a basis for lawsuits. CEQA reforms, currently underway, are expected to remove some of the legislation’s more regressive standards.

But it also seems clear that local zoning laws that overly restrict housing construction will have to be addressed, likely in the legislature.

“Third, because the magnitude of housing the state needs to keep prices from growing faster than the rest of the country is so large, we believe the vast majority of these units will have to be supplied by the private sector,” he said. “And last, there should be a targeted role for the state’s affordable housing programs.”