Transcript
Speaker: Hello, this is John and this is John Nerds Out on California housing legislation. i am fortunate to have with me today, Muhammad Al-Meldin of California EMB.
Speaker: yeah I'm happy to be here, John. It's good to be on the podcast. Thanks for coming. So, and we are going to be talking today about Assembly Bill 1903, Construction Defect Reform, which I have given a broad overview about on previous episodes, but because Muhammad is so involved in this, we'll be able to go a little more in depth and learn and more about the process and about what it does and what's happening with it.
Speaker: Mohamed, first, could you tell us a little bit about what you do and maybe a little bit how how you got where you are? Yeah, definitely. I'm the senior policy advisor at California UMB. I've been doing this housing work for eight years now.
Speaker: i was inspired because I was fighting so much to get people higher wages. And I realized that the landlords were just benefiting from it. And I ended up just sleeping in my car when I was going through school. And I was like, you know what, this housing thing, I should try to...
Speaker: Solve this. And was that a mistake? Now I've lost all my hair. So at California, I plan legislation and take on some kind of the more high profile legislation sometimes when it's going through the legislature.
Speaker: I'm very involved. I think I've written most of the bills that we're working on with our policy team. I try to plan ahead a year ahead to five years ahead of what we're going to do.
Speaker: Then i manage sort of the policy support for construction defect liability, condominium, pre-sales, and a number of other bills, the revolving loan fund at the state that we're trying to do with downtown high rises.
Speaker: It's all interesting work. And I could get into a little bit about well how I got into construction defect liability stuff. I think we'll get to that. Thank you. know So you're you're one of the leads at California EMB or possibly the lead, I don't know how it's arranged, on this particular bill, which is going through the legislature.
Speaker: So to frame things a bit, you know, Obviously, we all know about the need for more housing. And I think at this point, my audience knows that when we say condos, we don't just mean ritzy apartments or we don't mean ritzy apartments.
Speaker: We mean apartments that can be bought and sold individually. But what is the focus on condos as condos? Like, for example, why focus on things that facilitate condos as opposed to facilitating housing more generally and not worrying about the ownership structure?
Speaker: Yeah, definitely. so that's a great question. Really like construction defect liabilities. There's reason when people say condo defect liability, it drives me up the wall.
Speaker: It is construction defect and impacts all types of housing. Your co-ops cannot be built. now because no general contractor will deal with the liability of construction defect like your single family homes. Now they're all in HOAs and subdivisions. Those deal with construction defects.
Speaker: Townhomes deal with construction defect litigation. the The first thing that we saw die when it came to a home ownership structure was condominiums. We saw, i mean, 90% decline or even more of condominiums being built in California. and across the nation, really.
Speaker: And that was like the first casualty. But now we're seeing that other housing types and the co-ops didn't really grow as much. So you don't really see that casualty as often. But all these other housing types are going to deal with this issue and it's going to just steer developers to build more rental housing across the board. And the reaction nationally is like, let's ban developers from building single family homes for rent. And it's like, no, that's that's not the solution. Like there's some need of that there. Like this is a bandaid feel good solution. There's, you just need to incentivize homeownership supply, which is but not overdue.
Speaker: Yeah. So you're saying it affects all kinds of housing and I can see that, but what makes it affect rental housing the least rental multifamily housing, I guess. Yeah. When it comes to rental housing.
Speaker: So the construction defect period is only four years in California. And like the developer could just, and any, anyone who owns the rental housing unit has maintenance on site.
Speaker: It's a different relationship. Like the renters don't own the units. Like if there's issues with the units, you have maintenance, you have people that can come in and fix it. Home ownership is very limited when it comes to condominiums, because then it's like,
Speaker: Oh, you have to deal with like, maybe you don't report your problems or you have to fix your own problems or you have to deal with the HOA and HOA is not like a professional group. You just have more of a barrier there where you have a, and you have a longer liability period, which is 10 years.
Speaker: So, and the developers not involved as much in that 10 year period as they would be with a rental unit. So it's just like when shit gets broken, how do you fix it? That's the whole debate here.
Speaker: So if I understand correctly, it's because when you have a a rental building, you have one owner, well, one manager, certainly, and either one owner or maybe maybe slightly dispersed, but they're professionals and there's sort of one interest involved, right?
Speaker: They're about as organized and well-advised as your average builder, So they can go after the builder if it makes sense. And you don't have these coordination problems of everyone working with the HOA. Is the HOA making the right decisions with an amateur board?
Speaker: Things like that. 100%. And also, if I could add, this is kind of a fun part. HOAs can get away with being kind of shitty. Like you don't know until you really buy the unit.
Speaker: And then if they're kind of shitty or if the reserves are too low, right? Like there's a certain standard that a new building that's rentals has to meet, but like there isn't much for new for sale housing.
Speaker: So like, let's say your reserves are low because you want people to buy homes. And then it's like year nine and you're like, oh man, we're going to have to replace the roof soon. But our reserves were so low. How do we fix this? And sometimes the plaintiff attorneys come, hey, do a construction defect lawsuit because you'll get a windfall of money on top of these repairs. So you can you could fill up some of your reserves.
Speaker: So it's just becoming dust. It's become part of the industry now. And like we kind of have to shake that because now we're dependent on litigation to keep up housing maintenance. And I don't think that's a good system in any society, you know.
Speaker: Yeah, I am intimately familiar with some of the problems of HOA governance. I believe you did a study of sorts on the barriers to condo construction. What did you find? Yeah.
Speaker: yeah Prior to my time at California, yumbby I was at UC Berkeley's Turner Center for Housing Innovation. Really, I wanted to buy a condo in Jack London.
Speaker: And then I found out, i was like, oh, dude, this is like affordable. And I'm like, oh, but there's a lawsuit? What's this lawsuit? Construction defect. And Victor Flores, the board BART director, decided but to buy into that building.
Speaker: I didn't. Victor's having a fun time there. Let's just say, I think ah if I was like, yeah what is this construction defect? So I started like, You know, talk to some like developers and general contractors. I'm like, well, why are this do people get sued all the time?
Speaker: And they're like, oh, dude, we don't build four cell housing because of this. i'm like, what? I'm like, oh. So I started talking to some more people, architects, engineers. I kept getting referred to people and they're like, oh, we don't.
Speaker: we do not build for sale housing. And I'm like, wait, how many, how much for sale housing are we building that are like multifamily? And, you know, had to track down this data, this Zonda data that only one person had access to in the whole country that we got really lucky to find.
Speaker: Sorry, the Zonda data? What is that? Zonda data. So at the Turner Center. So private data sources are really hard to find. And this Zonda data was like Zonda used to collect how many were rentals and how many were for sales being constructed in like municipalities across the nation.
Speaker: And really, they just drive up to job sites and talk to a GC and be like, hey, is this rental for sale? Like that's literally what they did because there's no other way to collect this information. But it's the best information we have.
Speaker: And after I watched this like webinar by Lambda Alpha International, I think I forgot how we got connected to the sky, but we got this like treasure trove of data that like just they were like, oh we don't collect this for the last two years. And I'm like, no one's ever seen this data before. And this is amazing. We've seen this decline in for sale units like across the nation. Well, a few years after they adopt these construction defect laws and whenever I tried to interview anyone,
Speaker: Like any any developer, dude, they would be like, oh, I don't want to talk about this. Oh, I don't want to get sued. Oh, I'm scared. Like no one would talk to me about this. I was like the pariah of the space until like, oh, dude, like it it was it took a year to get people comfortable about talking about this issue.
Speaker: was the first academic paper, 25 years addressing construction defects. And yeah, and I was very lucky with East Bay for Everyone. Derek Sagehorn helped me a lot there. i was very lucky with like the Council of Infill Builders and their support and talking to developers.
Speaker: Sarah Karlinsky moved from Spur to Turner and she was able to send over some contacts and help with the paper. Like this was an all team effort and it was just like... You know, when it was released, it was like a bomb entered the space because no one wanted to talk about this really like nuanced issue. But then we had to prove the case that like, it's not only this, this isn't the only reason we're not building for sale housing, but it's a main driver because these developers would sit in courtrooms for like three to five years, 10 years after projects built.
Speaker: And their insurance are fighting over it. And these attorneys are getting like private equity firms invested into their firms to do these construction defect lawsuits. And it's it's like this super messy situation but like no one wanted to talk about. And non I'm like, okay, let's expose this. And then i moved over to California and b so I could work on construction defect work, could work on AB 1903 so we could start this charge and it's kind of remarkable how far it's come in the last three years.
Speaker: Yeah. So because this podcast, as you probably have seen goes into the details. So I would like to talk about some of the detailed provisions of this. We won't be reading the actual language unless we have to, but I wanted to talk about some of what I see is sort of breaking down the because there's a lot of different components of this bill because there's a lot of different ways that the current system is messed up.
Speaker: And so the first one, i think that you see it in a lot of parts of the bill revolves around actually specifying the defects and making sure they are concrete problems.
Speaker: Could you talk a little bit about what's what underlies that and what it's what the the bill would change? Yeah, definitely. So this one is also we have to specify some things and amendments later, but like an overview is that a lot of like cosmetic issues are considered as defects like nail pops or like cracks in the wall that could be used as, you know, as a basis for a lawsuit.
Speaker: There's this thing where the inspectors work with the plaintiff attorneys and they get a cut of the settlement. So they want to find as many defects as they can.
Speaker: So there were cases where like an inspector would go in and like just blow up a wall and look under a wall, like be behind a wall. And then like that wall doesn't get patched up or fixed until the litigation is done.
Speaker: So there's just like this this sort of like malpractice in the industry of like, how do we define something as a defect? There are some standards were ran into SB 800, which was the original construction defect law But it was mostly for like single family homes and like like it didn't really consider too much of like, hey, what happens with an elevator shaft or what's an elevator defect or what's a defect for like a shared roof pitch? Like they don't have any of that.
Speaker: So it becomes he say she say kind of thing. The courtrooms for specifically multifamily housing, they don't have like objective standards. But yeah, how much, how far does something have to be for it to be considered a defect is a great philosophical question because it's like, right. But yeah, we're working through that to specify that a little bit more, especially the release of that defect.
Speaker: Yeah. Now, yeah. Well, what are some examples of something really cosmetic that's become an issue that, you know, that was material to lawsuit? I mean, yeah, I mean, like cracks on the cement outside of the building.
Speaker: ah yeah, it's ugly, but if you're in an earthquake zone, like it's bound to happen, right? Your cement's going to crack. It could be like, oh, like one of the gutters isn't like properly draining. And it's like, okay, you're going to clean your gutters for a while.
Speaker: Nail pops when you put it into the wall and you have like a little pop on the wall that you, you know, that's inevitable to happen in some construction. I mean, like typical human error of things that look just a little ugly are seen as, you know, a bassist's sue at the same level as like something with foundation issues or something with like water issues.
Speaker: And we we kind of just have the standard where like two are the same and two are clearly not the same. But yeah. Okay. I feel like another another big topic in the bill is the ability to get or so sometimes new ways to get or sometimes not banning getting releases or waivers, you know, contracting that you won't be sued anymore. Right now, the current state of the law is that that's kind of banned as a matter of public policy, right?
Speaker: Is my rough understanding. Yeah. but You do not really get a release until after the settlement. And then the settlement is basically a release, which I think sets bad precedent because it's like if the settlement isn't enough to make to fix these issues, it causes like even more problems because now the homeowner has to hold the bag.
Speaker: So a good example I like to use is like you have a leaky window right now under SB 800. The leaky window you could sue right under construction defect. It takes like three years. Oh, they gave you the money to fix the leaky window.
Speaker: but now there's mold all over the window. Like it makes more sense for there to be a repair to a leaky window within like 60 days. So you don't develop mold. But then if you do that repair to that window within those like 60 days, are you liable for if something happens later?
Speaker: Clear it. Right. Like how like is it more of a general release, like anything within that approximate area is like not affected or is it going to be specific? That's like just the window.
Speaker: Those are amendments we're still working through right now to make sure because California's position here is that we really want this to be friendly for the consumers. Like we want it to be a better standard in what consumers have right now. No one really has that incentive, right? Like CBIA, they want what's best for the developer, right?
Speaker: And then the consumer attorneys want what's best for the consumer attorneys, which is money. And there's no one there that's like, hey, what about the Joe Schmo that has a leaky window and just wants it fixed and doesn't want to deal with like going to court?
Speaker: Like that's, i I see us as we're that part of the conversation. And then there's something relating to a builder sort of bolstering their position by getting better than usual certification.
Speaker: Can you tell me what that concept is? Yes. I like to call it a warranty because that's what it is. So we just can't say the word warranty because of some political issues from the platform from when I was like 10 years old. but i don't want to deal with.
Speaker: But basically, you could go this path with your construction now. where So the bill right now is like we're just trying to fix the current litigation environment and fix a lot of this like egregious stuff that's happening.
Speaker: The other side of this. So we want that to apply to all construction, right? Like all construction immediately because we can't wait another eight years to find out if it works. The other part is that it's this experiment of which, okay, let's say you're constructing housing and you have inspectors after certain phases.
Speaker: and they have licenses they don't want to lose. And they certify that like this building has been built at the best quality possible. And if there are any defects that the builder could just come straight in and fix it, like you just call the general contractor, you call the subs and they could go and just fix these defects. You don't have to deal with litigation.
Speaker: So it's it's basically a warranty without saying it's a warranty. That is, I think, my favorite part of the bill. the The thing about is like, how long would it take for the insurance and industry to feel comfortable and investing in the California market again?
Speaker: I'm not sure. That's why we have this general fix, too, so people could feel more comfortable with current condo situations and they can ease into this certified building pattern. Certified warranty, basically.
Speaker: I call it an optional warranty. Like a builder could choose to do this or they could choose to live within the existing regime. I think more options for people are better. But if insurance brokers are giving better rates for the certified building, the whole industry should move to that standard.
Speaker: So there's the bill includes fixes to the current system, and it also includes a prospective sort of new system that would create more certainty for more quality is the rough idea.
Speaker: But it sounds like that needs a lot of specifications sort of built out, not just for insurance to accept it, but you talked about it's built according to the best standards. But like, who says what those standards are? I'm assuming that would be a further process. I can't imagine you could write that all in the legislation, right? Even with all the time in the world.
Speaker: Yeah, it is possible to write it into the legislation, which is what SB 800 does. But I mean, they had a team of people writing that out and they, it was before we had these reforms, like they put it on the floor in the bill text. Now you have like 72 hour period and like this, that, like they did it in the last second.
Speaker: because there was enough time. We're working with CVIA and a few others on like, how do we do multifamily objective standards, which is basically the solution, right? Like, how do you say something is a like, how do you so how do you determine that a nail is where a nail needs to be? Or if it's within a half inch of wherever this proximity of where that nail needs to be.
Speaker: British Columbia has these standards. It's about 400 pages. And we're hoping to tackle it this year. If we can't, it's it's going to be my top priority next year.
Speaker: So if I understand correctly, SB 800, that was the 2002 right to repair bill. That's the issue now. That did put in some some performance standards in some detail, but they were geared around single family homes. Is that right?
Speaker: Yes. I'm curious, how well do they work for single family homes? does that Is it a better process there? We keep building single family homes. Single family homes do have advantages of like, you know you don't pay prevailing wages. Like you have, it's harder to do like these mass lawsuits, like neighbors walls aren't touching. So like an issue in one unit doesn't hit another unit.
Speaker: They work pretty well. They just haven't been updated in 20 years. Yeah, 20 plus years. So like it hasn't kept up with like industry standards. The building code has changed like God knows how many times.
Speaker: You know, we have these things called objective design standards or objective is in quotation marks where local governments are just making fun like designs that no one can really build that actually should need the construction defects.
Speaker: One material or two, make sure it's leak proof, please. We cannot have random architects who have never worked with a GC or a random planner who's not even an architect design what objective buildings are. That is ludicrous. Like it needs to be someone actually builds housing. Single family homes, they're doing better, but the language needs to be updated.
Speaker: How do we have a system where the language is constantly updated? What has to go through like a government agency, but there's such a lack of trust in government agencies that by builders and we're in a budget deficit year, so it's very difficult to get the state to shell money on something like this, that it's always in the back burner of something that eventually needs to be done.
Speaker: Got it. So the certification process and the performance standards, those two would go together, right? I was trying to see if these were the same or something different, but it was the certification would be that it meets the applicable performance standards.
Speaker: Correct. Yeah. And it seems like the bill has not just making sure that these are these third party inspectors, not just that they're licensed, but also that they lack a financial conflict of interest. Right.
Speaker: Yes. So it's trying to go a little further. And we're going to specify that as well with amendments coming forward. So another big category of changes that I see in the bill are changes around how HOAs do the make these decisions of whether to sue or what to accept.
Speaker: Can you speak to all to that family of changes? Yeah. So like those changes have actually changed too. So the initial bill drafting had it that the HOA has to have a 75% vote of its residents. 75 or 71, I forget. I think it's 75. I think I saw 75 in somewhere. 75% of residents voting for it.
Speaker: When we have been negotiating with amendments, that was taken out entirely. And there was something about making it suitable if an HOA board decides not to sue ah not over a construction defect.
Speaker: And that language is still in there. I don't, I only see one round of amendments. I don't know where, it where it all currently stands. Yeah. So if it's still in there, then it didn't get touched. The HOA stuff was like a lot of back and forth.
Speaker: So ah we just had to make sure the bill got through this committee and it's like out of all the other changes there, like the HOA stuff is something that could always like, we should come back and fix like HOA rules and the legislation is like a lot less contentious than what we're proposing for construction defects.
Speaker: How about the thing on recovering investigative costs? Because it may because i'm I'm going to read out loud here. Part of the new, and this is, I think, the current version, it's it's the first sentence is, no investigative costs are recoverable.
Speaker: And then it goes into some detail. So what is the thinking there? Yeah, the thing there is that it's like you pay the inspector for the work when they do the work. Like they they shouldn't have a financial incentive when it comes to the settlement or when it comes to payment later. Like we want it to be so then investigators act in good faith and not focus on like, how do I get the biggest settlement or how do I get the but biggest benefit?
Speaker: Oh, so it sounds like the implicit issue that is not really described here is that it's often the plaintiff's attorneys that are hiring the inspectors.
Speaker: Yes. To find the issues. Yes. Isn't that amazing? And it's the one time I've ever heard developers say, oh, we'll pay for the inspectors. Like you've never heard them say that. This is the one that should be like, no, no, please. We'll pay for the inspectors if we have to.
Speaker: So when it comes to building certification, the inspectors are paid for by the developer, but they just can't have too much of a financial stake on like, know, you can't have just one guy inspecting all these buildings and like all their money from it.
Speaker: When it comes to construction defect litigation within the current structure, That has been so closely negotiated. And I think it's section 916 or 946, where like there's such a thought out process on this that like that isn't necessarily being touched.
Speaker: So this could end up conceivably being, it might allow investigative costs to be recoverable, but with a lot more safeguards. Yes. Okay. Yeah, because I was kind of wondering about that, because it seemed like if you really have a problem, then you want to be reimbursed. And, you know, and you prevail in court, then you want to be reimbursed. But yeah, but I see the issue.
Speaker: Yeah, it's, it's very similar to like, like, can so like, consumer attorneys are also like personal injury attorneys. Like they're kind of the same thing. And it's kind of like, oh, like you get into a car accident, you go to a chiropractor, the chiropractor does a few adjustments on, you know, they write a note saying like, oh, like,
Speaker: This person has a lot of back issues from this injury and then they give it to the personal injury attorney. Personal injury attorney gets you a 15K check, right? And the chiropractor gets a part of that settlement.
Speaker: It's the same thing with the inspectors. It's the exact same thing. So we're taking out the chiropractor here. We're like saying, okay, no, like if someone is good a chiropractor, they could just pay for that visit. It'll pay for it later.
Speaker: yeah Okay, so what are there any provisions you'd like people to know about that I haven't put in the broad families I just described? Is that most of it?
Speaker: No. I'm sure there's one or two that I haven't fully described, but is that most of it? Yeah, there's like a threshold of basically defect claims before lawyers and lawyers get involved.
Speaker: It can't just be one thing and a bunch of possible imaginary things. Like it has to be clear-cut defects that are found within Isn't that the part about extrapolation where says no claim for damages based on extrapolation of claims may be made?
Speaker: Exactly. That is absolutely huge. Because when you have, let's say you have like one leaking window and like a whole apartment my building, they're saying every window is leaking. And it's like, well, no, like you could literally check and prove to see that this was just a defect on one unit.
Speaker: Why are you suing for all 200 units? Yeah. Right. It limits the settlement amount. There's also this provision of which the inspectors, the the consumer has to say where these defects are for inspectors and work with the builders to build or knows where these defects are.
Speaker: Currently in the law, if the builder tries to go in and tries to fix an issue, the homeowner is told by the lawyer not to say anything so they can get a settlement. When builders are actually trying to use right to repair, they don't know what to repair. And they don't know what it is or where or any of that.
Speaker: So we're saying that you have to be in good faith and in documentation, say what are these things that need to be repaired. That's another big one. Something in this bill on access to investigate and repair by the builder?
Speaker: Yes. Access to the home, ability to enter, and to know what needs to be fixed. All of that was missing in SB 800, which is kind of crazy. So currently, when they extrapolate, can they actually extrapolate from one, or can they just say, we found two, and that means it must be more?
Speaker: Or do you actually have to get like a statistically significant sample? Yeah, no, you could you could have two or four units out of 100 having like some issues and you could extrapolate that all the units have this issue.
Speaker: And that's really how the single family home lawsuits work. Like that's how they work now. It works especially especially in condos, but you see it in other types of housing in the market.
Speaker: You know that thing about how a lot of modern statistics, some of the early work underlying it was around finding manufacturing defects and specifically around beer, how much beer you had to sample to know there was a problem with a batch reliably.
Speaker: That's interesting. Wait, so how much, how much beer do you have to drink? I don't know. it was from the the I don't know if it was testing or chemical or what, but it was like a Guinness employee invented the T-test and it's it was called the student's T-test because he wrote, he did a journal article under the pseudonym student because he couldn't put his name because he was employed by Guinness.
Speaker: Yeah. Yeah. And then, oh, no that's interesting. Yeah. See, but this is the thing is that like, we have people that could actually like work and figure this out. You know what mean? Like, yeah. But yeah. So, okay. So now we've gone through the main provisions.
Speaker: So it went into print with the current detail on March 19th and there were, there was one set of amendments in print now on February 23rd. But what what has happened with the bill overall since most of the detail went into print?
Speaker: What thresholds has it passed? Yeah. So we caught it through the assembly judiciary committee, which is, I think the hardest fight we'd have to go through.
Speaker: maybe Senate might be difficult as well. We, it was a 12 to zero decision to move forward, which surprised everyone. And now it goes to appropriations on the floor counting votes, seeing what's happening.
Speaker: This coalition is quite interesting. Tell them, tell me more about that coalition. So I think this is the first bill ever that California andmb and the CBIA or California Builders Industry Association are working together as co-sponsors.
Speaker: That's a big deal. It's more infill development and re-infilled development working together saying that this is an issue. And then Habitat for Humanity. The way these attorneys have been squeezing Habitat for Humanity is actually disgusting.
Speaker: There's a condominium project, I think in Fremont, where there was one issue, one window that had an issue for $200,000. No one else wants to sue Habitat except for this one resident because their attorney is pushing them to do it.
Speaker: HOA has to comply because the attorney, because there's a fiduciary duty of the HOA pursuing the lawsuit that they have to comply with. And they are suing for $8 million, $7 $8 million dollars for a construction defect That was their testimony for AB 1903. And they're seeing this happen more and more.
Speaker: So it's us, CBIA and Habitat and also Housing Action Coalition, which when we were all losing faith on this becoming a bill, they helped move it forward.
Speaker: Spur. has always has been ringing the drums on this since i was at the Turner Center and I worked closely with spur on moving some of this earlier provisions of construction defect or just to start having a conversation and the Council of Infilled Builders, which are infilled housing developers and practitioners that like really push for this like optional warranty provision.
Speaker: It's a great group of folks working together and our main opposition is just to consume our attorneys. And it seems like, yeah, I, I'm also kind of impressed that it got not just you majority, but unanimously passed the judiciary committee because the analysis in the judiciary committee was a little catty at times.
Speaker: Oh yeah Like, oh, it even cited my paper saying based on one Turner center paper, you're doing this. play call Yeah. yeah it' It seems like, yeah, like, what were the, I know that often the, you have one perspective from from the committee staff who are, you know, permanent employees, and they may have a stake in the current system, or who knows, and that doesn't necessarily reflect the legislators.
Speaker: but some But the legislators, you know, if they aren't that familiar, they need some walking through, I would think, to go against the the committee analysis. So like, what have, what have those conversations been like and sort of getting people acquainted, getting people on board?
Speaker: Like what's, what, what have you had to contend with? I have to say, Assemblymember Wicks is an amazing author. She has worked really hard with the member on getting him comfortable to be in a record recommendation position.
Speaker: Her staffer, Steve Worthine is an absolute beast, former housing committee consultant. yeah I don't know how he does it He is bringing so many people together. and the I mean, you even have anti-poverty groups in the support list.
Speaker: You have high equity groups. You have like chambers of commerce. You have like, you have people that never joined together on anything backing this bill. And it's really Steve's dedicated efforts.
Speaker: And I think the committee consultant, I think they did raise some really good concerns that we're actually addressing with amendments when I think when I was to the floor. I mean, sometimes like I think everybody knows this is an issue that needs to be fixed. Like no one's saying, wow, we're building too many condos in California. We're not Canada.
Speaker: And, you know, they so they so they they worked with the author's office and they have to tell this line because historically, almost all the time, actually, the judiciary committee usually sides the consumer attorneys.
Speaker: So like this is the first time where they haven't. So it's just like everybody's just in a strange place right now. Yeah. Yeah. Because i I feel like a lot of the time, the political picture with consumer attorneys is the people against them are like the corporations that are, you know, polluting or something. And so there's a standard line of this is killing business. Like, no, you're hurting people.
Speaker: And this is an example where the truth really is in the other direction that the lawyers really are holding things back. And I guess it feels like that truth is coming through. Yeah. And they're still opposed unless amend, because I think they realize that the current regime doesn't work.
Speaker: If they're suing, if there's no condos being built, like what can they so? So like, I think we've kind of like reached that point and this is a, and it's because no one's happy. I mean, this is like the consumer attorneys, they do fight for consumers, but they do get a huge portion of the check.
Speaker: Right. Sure. I think everyone realizes like these delays are what's hurting consumers and we still want like if you're having issues with your foundation or your pipes. Yeah, dude, like go sue. Like that's fine.
Speaker: But like give someone a chance to fix it. And if it's not like Santa Rosa, this big condo building in Santa Rosa is having all these foundational issues and everyone had to evacuate everything.
Speaker: Yeah, we should have consumer protections there. But like Habitat for humanity, having a $200,000 repair and you're going to sue them for $8 million. Okay.
Speaker: okay That's kind of egregious. Like maybe we shouldn't have cases like that. Like we should tighten the law. So then at least we get more condos built. Yeah, and I guess that gets to one of my bigger questions is, you know, I i don't pretend to be neutral here. i support this. I think it makes sense. You know, the system isn't working.
Speaker: And then you have a whole lot of pro-housing work. requires working with developers because developers really are doing this work and can do more, should do more. But in many cases, that means non-incumbents, as the incumbents are often building doing the sprawl housing.
Speaker: That's been an issue and other thing in other areas. So for example, he you know so i imagine CBIA, the developers, are also thinking a little more about how the current regime affects the sprawl housing that they do.
Speaker: She said it does, just in maybe in somewhat different ways. And you know we're still, as a movement, trying to represent the public, like the people who haven't yet moved in.
Speaker: So like what are some of the touch points you use to make sure that you that a provision is going to support you know productive building and not necessarily and not you know make certain kinds of corner cutting more viable.
Speaker: So I know you've described that, but how do you go about it? So first of all, I will say CBIA, they use 22% of their product used to be like their members product used to be condos in California. Now it's less than 3%.
Speaker: and right And with the VMT mitigation fee taxes that are pushed, like they can't sprawl as much as they used to. Well, they're fighting those, but yeah. Yeah. Yeah. But in the meantime, they I'm sure they have this come to Jesus moment. That's like, okay, maybe we should start building and fail. Like if we build tall, like that's better. Let's try to fix the current system.
Speaker: And I suddenly remember Wix is the best author to do that. One of the best authors to do that. When it comes to consumer protection touch points, I just read the text and you can kind of just tell, like i don't know. I like, like a lot of the provisions and fixes that we've had with the, like what's going on with inspectors and what's going on with, I have like a list of things for CBIA that was like, this is kind of like a developer giveaway.
Speaker: Like we need to fix these things. And they were all amended in a committee. Right. So like, it's just like, I think I, everyone's so scared of legal code, but it's like, if you're able to actually read, understand things, like it's not that hard to see when something's like, oh, that doesn't feel right. Like this is a release for unknown things that might happen in the future. That shouldn't be in the bill.
Speaker: Like we should, we should specify what that is. You know, I know this is your first crack at it, but let's work together to get this a little bit better. And that's kind of what's happening. And i i do think like you could have a conversation with consumer attorneys and they'll bring then they actually brought up a lot of the issues that we had to.
Speaker: So it's like, OK, you have the co-sponsor, you have consumer attorneys like you have like the AG's offices sometimes like looking over what's going on. They always examine a lot of the bills are moving forward and they have some expertise to provide us some guidance as well.
Speaker: Like, you know, we all kind of like it's it's ah it's ah it's a process. And the committee consultants, I think there's so many people in the room that like you it's so undeveloper friendly already.
Speaker: Like you already have this kind of like safeguard right here that like, you know, we we we were kind of catching a lot of things that are very unfriendly. And I think it's been working. So what's next? Well, what does the bill need to get through in the future? Yeah. Our probes, assembly floor, then judiciary, Senate judiciary will be rough.
Speaker: Then it goes through Senate and then both houses concurrence and then signed by the governor. And I want, I mean, California NBA, we have this philosophy that I really, really stand by. We've developed that the last few years that we would rather have a good bill die than a bad bill move forward.
Speaker: And we're going to, we're going to hold that line. And and with any legislation, i think everybody expects it to be perfect the first time. want something good the first time and we could go back and we could fix it. yeah If it's necessary, I want it to be perfect, but I understand.
Speaker: And this is like the detriment of all these like lefty orgs is that they're like, it has to be perfect. Like this exact thing. It's like, no, okay, let's like get good through, right? Like 684 was good. 1123 was better.
Speaker: Now we're doing 1116. Same with ADU law. And we're going to do the same thing, construction defect. Like there's going to be some things that we're not, or we haven't negotiated out. We're going to come back again and we're going to fix it.
Speaker: And that's it's always a multi-year process. yeah Yeah, that's one great thing about the California legislature. And I think state legislatures broadly against Congress, US Congress is that we're willing to keep tinkering with things year after year after year then figure out what we need to change.
Speaker: Yeah. Yeah. It could also be the reverse, right? Like we've done all this sequel streamlining and we've had so many bad sequel bills that we have to, we've had to kill this year. The amount of bills that we've had to kill. i think it's, we're at eight right now.
Speaker: yes It's like, oh, if we weren't here, like this would have passed and we would have just like years of work where might have work have just went away. yeah What can people do if they want to help get this bill through?
Speaker: Send the letters to the legislators. so Call their member offices. They're getting a lot of pressure with people with a lot of money. Write an op-ed in support of construction effect reform. Write an op-ed in support condos.
Speaker: Condos are villainized. because of our previous history of like how condo conversions were a way to skirt rent, control laws and rent and tenant protections.
Speaker: But condos aren't a bad thing. They're starter home. Thanks very much. This has been great. It's really good to see this see this working and see the see the work being done. Yeah. Oh, yeah. I was going to say ah one of my sayings, although it's I don't think everyone agrees with it. So at least it's it's not a truism is if a thing's worth doing, it's worth doing badly. Oh, yeah. I at least tried to do it. Yeah.
Speaker: It's funny. We've got this narrative of unintended consequences and, you know, making something work worse. And it feels like even though there was a whole book about that as one of the touchstones of conservatism, but it really is kind of universal in everyone who works with legislation. I feel like, well, almost, not literally everyone, not C-A-N-B, but... Yeah, that's pretty, you see it a lot of places. So yeah. How much worse can condo construction get in California?
Speaker: Like that's the craziest part of all this. Like it's like we're building like 3000 units a year to like, it's so sad. Yeah. That's like one high school in California built homes for in citysiders. Like it's so bad. du Yeah. Yeah. might all not john creeping up yeah Yeah, John, thank you for having me, man. This was great. Thanks so much for being here. It's been great.
Speaker: love nerding out. Yeah, hope to have you or one of you on again in the future. Maybe we'll be talking about what's next with condos next year after this one succeeds.
Speaker: Hopefully. okay So I will end things here. And thank you. And to everyone listening, once again, keep on learning.
