Transcript
Speaker: Hello and welcome to John Nerds Out on California Housing Policy. This is John and I am back after some months. I apologize for the delay. We had a lot of stuff happening in the last few months and I was reveling in it with everyone else and participating in it with a lot of other people.
Speaker: And now the dust has settled and i have gotten some of my affairs in better order. And so now I am able to tell you what exactly happened with SB 79 because, whew, SB 79 winning was really gratifying.
Speaker: And in retrospect, it was a lot harder than we thought it would be after it passed the Senate. It was a lot harder at every step. It passed the Senate the last time I left off this podcast.
Speaker: It had just passed the Senate. And then there was the work on the CEQA reform, the environmental law reform, which also passed. And that was specifically with Gavin Newsom's help. But Gavin Newsom never intervened on SB 79.
Speaker: It passed the Senate floor. And we thought that it would be a lot easier in the Assembly than it was in the Senate. Well, guess what? It wasn't. And then it came back to the Senate, and the Senate floor was also not a slam dunk.
Speaker: Even though it had passed the Senate once before, it had to go back for concurrence in the amendments the Assembly had put on it. And that was kind of skin of the teeth, too. And then there was getting it signed by the governor. So I will get into all of those.
Speaker: But I will say it was a big struggle and there were a lot of amendments. So it is not as effective a bill as when it was submitted, but it has still stayed remarkably effective, we believe.
Speaker: And we are really happy that it got passed. So for those of you just joining us, what is SB 79? Well, Senate Bill 79, once again, is the Transit Oriented Development Bill. It is basically saying too many cities make it too difficult to build in an area around good transit that already exists. So that's BART, that's LA Metro, that's various other transit systems, maybe ferries, maybe bus rapid transit.
Speaker: And there should be effectively statewide zoning. making it possible for builders to build apartment housing up to six, seven, eight stories as long as it's near transit.
Speaker: Really taking the discretion out of the city's hands. It is zoned this way as long as you check the boxes. So I left off saying what SB 79 looked like when it passed the Senate floor.
Speaker: So after that, it went to the Assembly. It went to various committees. It kept passing the committees. It passed the Assembly. Over the course of passing the Assembly, it got a number of other amendments.
Speaker: What were they? How was it a different bill when it was passed back out of the Senate and sent to the governor versus when the Senate originally passed it and sent it down to the Assembly?
Speaker: Well, comparing the versions... The first sections are Tier 1 and Tier 2 transit-oriented development stops. So Tier 1 is heavy rail like BART, and Tier 2 is, for example, infrequent lighter rail or bus rapid transit, or just very frequent bus service in a few cases is still allowed.
Speaker: And Tier 1 and Tier 2 haven't really changed that much. So Tier 1, it's basically if you are within a half mile of a BART station, taking the bay as the example, then the density allowed is 100 units per acre, 65 feet, so six or seven stories, and floor area ratio of three, meaning your building can take up three times as much space as you have land.
Speaker: And then Tier 1 and Tier 2, it does also allow more height and more density if you're further close. If you're in a quarter-mile range, then it's 120 units per acre, 75 feet, 3.5 floor area more more height.
Speaker: three point five four area ratio so more buildings more height and Not much of that changed for Tier 1. Tier 2, a quarter mile is 100 units an acre and 65 feet. Tier 2, a half mile is 80 units an acre and 55 feet. So generally we're talking about several story apartment buildings, not skyscrapers.
Speaker: And as I said, that didn't really change from Senate to Assembly. And I was kind of surprised. I thought they would whittle away at it, reduce the height a bit here, a bit there, reduce the density a bit here, a bit there.
Speaker: One change they made, and unfortunate one, is that for the half-mile range, which is to say between a quarter-mile and a half-mile, They got rid of any application for cities that have a population of less than 35,000 people.
Speaker: But interestingly, there are some affluent cities that will be exempt now, but are not going to be exempt for much longer. For example, Menlo Park is 33,000 people.
Speaker: They already have development in process that could very well bring their population above 35,000.
Speaker: or even if they don't now, they will still be upzoned within a quarter mile, and that upzoning could itself bring them above 35,000. So that's a bit of a bummer. It doesn't really make any sense, but that was how the sausage was made.
Speaker: Now here's the really disappointing part. You know, it doesn't make the bill bad, but it means it's doing a lot less than it could. There was also Tier 3. And Tier 3 was originally the lowest level of transit service.
Speaker: So for example, transit systems that had a lot less trains per day, or just certain kinds of bus service. And originally that was going to be, you know, 55 feet within a quarter mile, 45 feet within a half mile.
Speaker: There were some changes by the time the Senate had passed it out. So, for example, in the quarter mile to half mile radius for Tier 3, they said that in some cases it would not even be 45 feet, it would be whatever the local height limit was.
Speaker: And then at a certain point in the Senate amendments, they said any station that is not in an urban transit county is Tier 3.
Speaker: Doesn't matter if it's BART, doesn't matter how good service it is, as long as it's not in the right kind of county, it's a Tier 3 and is upzoned less. Now, what is an urban transit county?
Speaker: It needs to have more than 15 of these eligible transit stops. So again, BART stations. Well, who does that exempt? Mostly Contra Costa and Orange County were the counties that all they did in the Senate was that they would still be upzoned, but they would be upzoned less.
Speaker: You know, previously it was Tier 1, now it was Tier 3. Well, in the Assembly, they freaking deleted Tier 3. So they said that Contra Costa and Orange and some other counties were simply not going to be included at all.
Speaker: So it was kind of a progressive set of changes in that they compounded on each other. First, these counties were pushed down in how much they'd be upzoned, and then they were taken out entirely, along with some lower-level transit stops that were in urban transit counties.
Speaker: So what does that leave? What are the urban transit counties that are going to be upzoned under SB 79? This is basically the counties of San Francisco, Alameda, San Mateo, Santa Clara, Los Angeles, Sacramento, San Diego.
Speaker: However, it is thought that Orange County will join the ranks of urban transit counties when certain streetcar stations open in 2026. Okay. Now, although this is not all of urban California, Contra Costa would be a great place to build more.
Speaker: So would it. a San Bernardino, Riverside, Ventura. This is still a lot of California. These are big counties. This is most of the Bay. LA County has 10 million people.
Speaker: And so it is still covering quite a lot of California. And again, it does allow for heights that make it really feasible to build in the standard way that developers do it.
Speaker: Now, there are some other changes. Another big one that came in the Assembly is that there was this idea in the Senate that it needed to be what we were starting to call plain bagel, meaning we shouldn't load it up with all these things, all these goodies, to satisfy every constituency there was.
Speaker: So previously, a lot of the proposals for upzoning had said, and a lot of affordable units, and union labor, and community benefits, say, and you know any number of things.
Speaker: And any any one of these goodies might not have been a huge problem, but then you add them all up, and at a certain point, it gets difficult. Well, when SB 79 was submitted, it did not have minimum affordability.
Speaker: It did respect that sometimes cities would require this, but it did not require it in the bill itself. So cities that chose to just let market rate be built, that SB 79 would increase how much of that could be built.
Speaker: And again, when we say affordability, we're talking about a requirement that the building itself contain units that are guaranteed to be affordable at certain defined income levels.
Speaker: which are usually not $500 a month. Usually they are something that you definitely need to have a steady job for. but they are still affordable in certain definitions. That's what it's meant to be.
Speaker: And again, there is debate over whether this is actually a helpful kind of thing to require or if there should be focus on just building enough market rate that the rents come down, which again, you do see in many places, and create affordability with other things like rental subsidies, like Section 8, or social housing.
Speaker: But there was pressure in SB 79 to create some affordability minimums so the people, I guess, would feel good about what they were building, that it wasn't just for new market rate renters.
Speaker: And what they ended up with was that there's still no requirements for 10 units and fewer, but for 11 more, there's You can choose 7% of your units at extremely low income, 10% at very low income, or 13% at just low income.
Speaker: Low income is 60% of area median income, and usually it's that has to be affordable. You look at what that income is, it has to be affordable, meaning it costs 30% of the income of someone at that income.
Speaker: And these are not very high, right? You know, they do add to the cost of each project. They may result in fewer overall units. But when they were doing Senate Bill 50 back in 2020,
Speaker: They had negotiated to more percentage affordable units than this when it failed to pass the Senate. Before it got to the Senate floor, they were like at, I forget, 15 or 20% low income and some other options for even lower than that.
Speaker: And this was before it got to the Senate floor. So they were being a lot more careful about making sure that these projects penciled this time. You know, if SB 50 back in 2020 had passed through from Senate to Assembly, we can be pretty sure that at some point they would have bumped up the affordability again.
Speaker: And possibly you would have gotten up zoning at an affordability minimum that no one could meet. There was also no union requirements for SB 79 when it was submitted.
Speaker: And that doesn't just mean skilled and trained. You know, there was argument before about skilled and trained is a requirement that basically means you have to have people who are already in a union as your labor force, which are kind of thin on the ground.
Speaker: And when there were other laws more recently in the last couple of years, the Carpenters' Union fought to only require prevailing wage and other things.
Speaker: prevailing wage, meaning they don't have to be unionized, but they do have to make higher than typical wages. The idea for SB 79 was we don't need labor requirements to begin with because prevailing wage is another thing that increases the cost of a project and is higher than basically what the market rate for labor is right now.
Speaker: But there is a bonus in the form that if you meet the standards of a previous bill that labor was involved in passing, and that was Senate Bill 423, and that means that if you choose to do more affordability and to add prevailing wage, then you also get ministerial approval.
Speaker: which means that it's really, really hard for the city to reject. For Senate Bill 79, it's possible for the city to reject, not for any reason, but it's a little easier. Ministerial means virtually no discretion.
Speaker: You're gonna get approved very quickly if you check all the boxes. So that didn't really change. Base 79 projects are not going to require prevailing wage. However, one change that the assembly made was that if you go to the higher optional standards of 423, you also have to meet a specific density.
Speaker: And it's basically you have to be at least three quarters the maximum of SB 79. So in the highest area of a quarter mile of a Tier 1 stop, that would allow up to 120 units per acre.
Speaker: Well, if you want to get ministerial approval, you need to add ah for more affordability, prevailing wage, and at least 90 units per acre. So I guess the idea was they didn't want to facilitate less dense units.
Speaker: There were a couple of other minimum standards added for all SB 79 projects. So they cannot go below the city zoning. This has been something that some people have been concerned about, that upzoning areas means saying anything under a maximum is allowed. And sometimes that has meant townhomes in very close proximity to a transit station, which is kind of less density than they want and less density than they think will help transit.
Speaker: SB 79 could only be used for projects of five units or more, and that are 30 dwelling units per acre or more. So there's an overall minimum.
Speaker: And then there's a size maximum for the apartments being built. It says that the units have to average to no more than 1,750 square feet.
Speaker: And this is something that's been cropping up in a lot of bills. The basic idea is that units that are more than 1750 square feet are sort of putatively luxury.
Speaker: Now, that's not necessarily true. There could be you know people who are... Renting for a a large family might really need 1,700, 2,000 square feet.
Speaker: And something like that might even be necessary if you want to make ownership units, because those are more likely to be you know people with families or planning for families. So it's a little bit like a sumptuary law, you know a law about how swank you can be.
Speaker: But overall, you know, you're probably going to get your standard 800, 1,000 square foot apartments, at least enough of a mix that you're going to meet that average, and then you can still have some larger apartments in your project.
Speaker: So that's probably okay. There was an interesting change that was about what does it mean to be within half a mile or a quarter mile of a transit stop? Because the Senate version of the bill just said precisely that, within half a mile.
Speaker: And so the implication was you look at the map and you take a measurement. But where in the map do you measure? You know, is it the center of the station? Is it somewhere? Is it the edge of the station?
Speaker: and And when the bill was out of the legislature, it said that you determine this by measuring from the nearest edge of the parcel in question, the parcel that you want to develop, to the pedestrian access point for the transit stop.
Speaker: So that means that in many cases, you will be able to measure to the edge. But, you know, if you are equitably placed with relation to the transit stop, you know, maybe it's only in two directions, maybe it's west and east and near to the south, maybe in some cases that will actually make it a little harder to make this. But in a way that makes pedestrian living easier, or at least targets it better to pedestrian living.
Speaker: So it's nice to have that clarity. Another question that people always have is, does this make it possible to demolish rental housing and evict people?
Speaker: And in the Senate version, in fact, I think from the very beginning, there were already protections under the Housing Crisis Act, which is also known as Senate Bill 330 from several years ago.
Speaker: which basically said you cannot demolish anything that had renters in it without offering the right to return an equivalent rent when the new building is built. And then during the construction, the other part of the deal is that they, the displaced renters, will get support to rent somewhere else while they wait for the building to be built.
Speaker: and then they can come back once again at the same rate and protections over time as well. So that was already pretty strong, but in the assembly there was another amendment that basically, that more or less made it moot.
Speaker: It basically said you cannot build SB 79 projects on rental housing because it said that an SB 79 project cannot involve demolition of any rental housing with more than two units that had renters in the past seven years.
Speaker: So it's saying it's not enough to just give people right to return at equivalent rent and support them during construction. We just don't want you to do this at all. We don't want you to build over rental housing.
Speaker: You can build over a single family home. You can build over a duplex. Those can be demolished. You can build on a vacant lot. You can replace a commercial building. You could even replace a condo building.
Speaker: although I don't know how that works with renters. Maybe you couldn't replace a condo building if the units were rented out individually by the individual owners. But it's just saying, don't do rental housing.
Speaker: We just want you to demolish other things that are not rental housing. And that is going to queue up, I think, something in the future. So all the protections I talked about, the right to return an equivalent rent, they were not really being used in practice.
Speaker: They were basically making it not a good proposition to demolish rental housing at all. And the amendments to SB 79 this regard Although there's still plenty of opportunities, they really just continue this trend that the legislature is not very interested in having people develop where existing rental property is.
Speaker: But at a certain point, that is going to come at the expense of housing because a lot of the existing rental stock is very old. And at some point, it does need to be redeveloped and there needs to be a humane way to accomplish that.
Speaker: So that may be a reform that the pro-housing movement looks to in coming years. to make it actually work and not just be prohibitively expensive to redevelop rental housing at all. Here's the other big change, in my opinion, that was made in SB 79 as it went through the assembly, and that is the local alternative plan.
Speaker: And what it boils down to is ah city can say, we're going to do something like the SB 79 upzoning, but we're going to tinker with it.
Speaker: We're going to make you know this neighborhood have a little less housing, that neighborhood have a little more housing. And it is within certain well thought out limits because this is a little like the historic, we still have the housing element process where every seven years, every city has to plan for housing at a certain amount.
Speaker: And these are really not very good plans. And one of the reasons is that they focus on just a few sites. But the local plans under SB 75 are not really like that because mostly you are not allowed to reduce any area or even any one site.
Speaker: it's it's You cannot reduce its capacity by more than 50% compared to what SB 79 would do. So you can make it you know three or four story apartment buildings, but you can't just say, okay, this whole area, we're carving this out. You can't do that.
Speaker: Conversely, you cannot allow for more than 200%
Speaker: of a density increase on one site, because that was the flip side, was that some cities would say, okay, we have this church and we think it's going to have a high rise built on it. So there, that we've planned for the housing.
Speaker: Doesn't matter if the church isn't going to do it. They just pretend that it's going to happen. I once heard a city council member in, i think it was Santa Ramon or Danville said, you know, you can use my house. You can zone for a high rise in my backyard by the creek.
Speaker: And obviously he was referencing that you can plan for unlikely dense development. But if you say you can't allow you can't plan for more than 200% of the SB-79 capacity on any one site, that makes that very difficult.
Speaker: So you still have to have broad upzoning. It has to be a wide area. And it has to add up to the same increase in capacity, with an important exception. If a city develops this plan and it gets approved by the state, because that is a the state has to go in and say that you know it does what it says it does, if it gets approved by the state, then they can delay SB 79 coming into effect in places that are mapped as medium opportunity or low economic opportunity.
Speaker: This is an existing map system called the TCAC or Tax Credit Allocation Committee maps that look at a lot of things like education and income and environment and say what area is low, high, medium opportunity.
Speaker: basically by census tract. So if you develop an alternative plan, it is possible for the first few years to allow for lower capacity, but only in the low and medium opportunity areas.
Speaker: So this is basically going back to the idea that if you are developing in economically worse areas, then you are inherently gentrifying and making it worse.
Speaker: We in the pro-housing movement do not necessarily agree with this. We think that development is more of a symptom than a cause of gentrification and that gentrification tends to be worse when there is demand but no development.
Speaker: But this is certainly something that people representing low-income areas reasonably care about. And so this was a concession that could be made, was that as long as you were planning for a similar amount of overall density, then you can delay the impact on some of these areas.
Speaker: Most of this is to the beginning of the next housing element cycle, ah regional housing needs assessment cycle, and that's different to all across the state, but in the Bay Area, it basically means delay until 2031.
Speaker: But a city does not have to make it delay, they just can. And if a city does not, make a local alternative plan, then it will come into effect July 1st, 2026. That was pushed back a bit in the Assembly.
Speaker: A couple of elements come into play January 2027. There is also another delay for unincorporated areas, where nothing in SB 79 will come into effect before the next RHNA cycle. So again, 2031 for the Bay.
Speaker: So the local alternative plans, really in the legislature, I think they represented part of the dialogue. Because a lot of the legislators were saying, we think there are areas that have been doing what they're supposed to and planning for housing.
Speaker: And are you really going to come in and make them follow your plan where it is precisely a half mile around certain stops?
Speaker: Is there really going to be no flexibility if places are in good faith trying to make it work? Now, are cities really the best planners of housing? I'm not sure the evidence supports that.
Speaker: But this was a reasonable request to make because cities still have a major planning role. And it does seem like from the speeches I heard on the floor, this did change some minds.
Speaker: People got that Scott Wiener and the proponents of the bill were listening to them and saying, okay, well, here are the basic parameters for how you show that you are meeting the intent of the bill, but applying your own local knowledge and with some guardrails to make sure it's harder to abuse than, frankly, the housing element system.
Speaker: And this may have flipped some of the needed votes. One thing that really got a lot worse, unfortunately, from the beginning of the bill was that it said transit agencies could develop their own land with whatever zoning they wanted, and they could thereby help save transit by making the transit agencies effectively developers and make their transit start to pay for itself, which is how healthy transit systems in other places work
Speaker: is often by developing and maintaining income streams from some land that is near the transit that they run. They added 20% minimum low income to these transit agency projects.
Speaker: So basically, they do not see these in the legislature, they do not want this to be a profit center. They want this to be and affordable housing project that maybe it houses some transit workers,
Speaker: but largely is paying for more low income units. They made a number of other changes. They said transit agencies can only do this with land they own honor or before January 2026. They said it can't be less than SB 79 zoning standards and it can't be more than double those standards.
Speaker: A number of requirements. So really this is not going to be as useful for transit agencies and it may allow some development, but probably not a lot. And not in the form that creates a lot of extra revenue for agencies.
Speaker: A few other things, there were in the Senate version penalties to cities denying eligible projects in high opportunity areas. Those penalties still exist, although the time at which those penalties can be applied was delayed a little bit, I think six or 12 months.
Speaker: SB 79 projects were allowed to be mixed use, meaning the majority is residential, but some is commercial. Well, they said, by commercial, we don't mean hotels and motels. We don't want your hotels in RSP 79 housing.
Speaker: So unfortunate, you know, hotels are also socially useful, but that got taken out. It did allow residential hotels, which is, you know, more just economical housing.
Speaker: They said any city with more than 15 transit stations, which, let me tell you, is not many cities at all, if they have a large industrial area near transit that was affected by this, and they mean at least 250 contiguous acres of industrial area, then they, in some circumstances, can exempt that industrial area from SB-79 upzoning.
Speaker: So that was knowing that LA was the beneficiary, so you know special deal, basically. There were a lot of other things put in, but I think I've mentioned most of them.
Speaker: I think it will need some kind of cleanup. I found some goofy language in it, like certain kinds of areas, quote, should be considered for entry-level ownership attached housing, like townhomes.
Speaker: So, like, what is that? that the legislature just throwing its oar in, saying, hey, why don't you think about this? You know, we're not requiring anything. We're a legislature, but we're just going to suggest you do something.
Speaker: Whatever. You know, I assume that was making someone happy. But, as I said... They did not increase the affordability much from when they put it in at seven, 10 or 13% low income.
Speaker: They did not add prevailing wage. They just carved out some areas and they kept the half mile radius. They kept the heights, they kept the density. They really kept a lot because they had their eye on what can really be used. It can't just be can't just look good on paper. It needs to be something that is going to create new housing.
Speaker: And to a large extent, this seems to have been achieved. Again, getting it passed was a huge struggle. It passed every House at every stage by the skin of its teeth.
Speaker: The Senate has 40, the Assembly has 80 seats, so they always need a majority of the total number of seats, so that means at least 21 in the Senate yes votes and at least 41 Assembly.
Speaker: On the Senate floor, originally, back in, I think, May or June, it passed with 21 votes. In the Assembly, when it came to the Assembly, it passed with 43 votes.
Speaker: And a couple of those may have only voted yes after they saw that it got 41. So that was very close to not passing. And then when it came back to the Senate, also 21 votes.
Speaker: And ah number of people changed their vote. So it was sort of by the skin of its teeth that it made it the first time in the Senate, the first time in the Assembly, and the second time in the Senate.
Speaker: It was kind of surprising looking at who changed their vote. There was actually one person in the Senate who originally voted yes back before the summer, and then when it came back, changed their vote to no.
Speaker: That was Senator Richardson. There were three who switched from yes to no vote recorded, Becker, Gonzalez, and Weber Pearson. I believe one of those was actually for a health reason.
Speaker: But there were two people who had abstained, and they switched to yes, Cortese and Reyes. And amazingly, there were two people who had originally been no and switched to yes, and Those were Durazo and Wahab.
Speaker: And this was really hardening because Wahab had been speaking out against 79 in really the left NIMBY style of saying, this is gentrification, we shouldn't be allowing this.
Speaker: But there was, I think, possibly some genuine engagement. And Durazo was also someone who has also said left NIMBY things. She's in the Southern California.
Speaker: And for whatever reason, We were able to bring her over. Notice most of the changes were from Democrats, not Republicans. It was changing within the Democratic tent.
Speaker: think the Republicans changing were just between no and abstaining. But the end result of all of this was that with a different coalition, mostly the same but somewhat different, it barely passed out of the Senate just as barely as it had passed originally.
Speaker: So many calls were made. So many people were talked to. And the reason it was so hard, really, you know, wasn't easier in the assembly, is that the NIMBYs were out in force.
Speaker: They really saw that this would be a big deal, and they were ringing off the hook. So the pro-housing people really had to keep calling and keep getting the word out to combat that.
Speaker: But in the end, it does seem like we did manage it. I want to talk a little bit about the regional coalitions. Because overall, Southern California was against SB 79.
Speaker: More LA than the rest of SoCal. The Bay was very much in favor, more in favor of the second time than the first. And that everywhere else was overall in favor.
Speaker: So imagine dividing the state up into four chunks by population and by senators. You can divide it into four chunks and say that about a quarter of the senators are just from LA County, because LA County is huge, it's a quarter of the state.
Speaker: Another quarter are from everywhere else in SoCal, so metropolitan. So San Diego, Orange County, Inland Empire, that's Riverside and San Bernardino.
Speaker: Put that all together, that's another quarter. Then the Bay is another quarter, and then everywhere else is another quarter. Really, Sacramento is like an eighth, and then you have Central Valley, the coast, the far north.
Speaker: LA County, that quarter was against SB 79 in the final tally by a margin of seven. And when I say margin, I should clarify, I mean difference between yes votes and no votes or no vote recorded, because that is essentially how much better off the yes side is considering these votes.
Speaker: So if there's a margin of plus one, then gets one more vote for, then votes against. The rest of SoCal was balanced. They had five yes votes and four no and two no vote. So basically a margin of negative one.
Speaker: Those votes came in against SB 79, but kind of balanced. You didn't need to make them up much. The bay was seven, four, one against or one not supporting. So that's a margin of six.
Speaker: And then everywhere else provided a margin of four. So overall it passed with 21, four, eight no and 11 no vote recorded. ah Basically, strong support from the Bay, strong opposition from LA County, the battle was fought everywhere else.
Speaker: Really, the battle was fought with every senator, but that was the regional breakdown. And it's pretty similar if you look at the assembly. The Bay provided a margin of seven, support over non-support.
Speaker: LA County, negative eight, non-support over support. Non-LA Southern California, margin of negative one. Everywhere else, margin of plus eight for a total of 43 to 19 to 18, or six more supporting than not supporting.
Speaker: Really, I sometimes wonder if you just made a super amped up SB 79 and said it's only going to go into effect in Northern California, it might pass pretty well. But...
Speaker: I don't think you want to say you're going to leave Southern California behind or that it shouldn't do anything about this problem just because they have some lack of support. That's part of being in state together.
Speaker: So all this work, getting it through all the committees, first in the Senate, then the me Assembly, then send it back to the Senate. All this was so much work, and it seemed like after that, getting Gavin Newsom's signature should be pretty easy, right?
Speaker: Nope. Nope. We started to hear, hey, we're not 100% sure Newsom is going to sign this. We didn't really hear why. i think it's a very easy surmise that he was hearing from donors who were saying, hey, what are you going what are you doing to Palo Verde's ranch, Chickamauga Hills, whatever, to my pleasant suburb? you know I give you all this money and you're going to destroy my community.
Speaker: course, people not realizing that it probably didn't apply to their cozy suburb because of transit. But they did not like the precedent. And so then it was time for a big campaign to influence Gavin Newsom to sign the bill.
Speaker: In the end, he did, a few days before his deadline. But we did hear afterward that this wasn't just rumors that he really was considering vetoing it. There was one very memorable moment in this saga where in his attempt to branch out to new media for his certain presidential run, he was on a Twitch stream with a very popular, very well-known streamer named ConnerEatsPants, all one word.
Speaker: And then suddenly the chat of his audience on Twitch as he was playing some game and talking about his policies with Conner Eats Pants was, sign SB79, sign SB79, sign SB79, to the point that the moderators had to mute that word.
Speaker: And Gavin Newsom at some point said, yes, this is a very serious thing. I'm looking at it. I'm considering it. And Conner Eats Pants was the one who asked him about it. Hey, I'm seeing all this stuff about SB79. What's going on there? What are you doing?
Speaker: So thinking about all the opposition, all the people who flipped their votes for one reason or another, this has been one of the hardest fought battles of this legislative cycle. But you know from our perspective, maybe the past five, 10 years.
Speaker: And although it was watered down to some extent, it's really gratifying that it was not watered down to the point that it's not going to be used. At least we don't think so. We'll have to see.
Speaker: Gavin Newsom did sign pretty much every pro-housing bill that was put in front of him. He did that in a big batch at the end, everything that had come to him. And I'll talk about that in a future episode.
Speaker: Now, what else do we need to be doing? You know, if we've passed this massive zoning reform, like, yeah, maybe we'll clean it up. Maybe we'll make it apply to other places. What else needs to be done?
Speaker: Well, a lot. because we know that it really isn't just zoning. Zoning is the most obvious because it literally bans the apartments we need, but there are so many other parts of industry and regulation that make it hard.
Speaker: So I will name a few things that will really be needed to improve housing all over the state, but especially could help kickstart it in 79 areas.
Speaker: And I've talked about most of them in one time or another. A big one that I've devoted at least one full episode to is condo defect reform. It needs to be possible to build a condo to a decent quality standard and not be guaranteed of a lawsuit down the line.
Speaker: Because at this point, ownership housing is so thin on the ground that ah condo unit is worth like 20% more than an otherwise equivalent rental unit.
Speaker: So there is a premium if you can get it to for sale construction. But first we need defect reform for that. Also deposit reform, that's a subsidiary thing that makes it easier for small investors to put, you know, 50,000, 100,000 into ah condo being built and reserve a unit yeah inclusionary zoning and fees. So I talked about it respecting cities' inclusionary zoning, you know, their minimum affordability.
Speaker: Well, it's not clear that it always should. How much you can mandate in affordability without it really starting to reduce feasibility depends on your market.
Speaker: But there are definitely places that have gone too far with it. There are suburbs, outer suburbs, that in an effort to have something else that prevents apartment buildings where they're zoned for, have put on 20 or even 25% affordability.
Speaker: Or in another vein that works out much the same way, they've put massive fees on them. They said you have to pay 50, 100, $150,000 per unit to mitigate all the horrible things you're doing to the community by building housing.
Speaker: Some kind of lid needs to be put on this. It is a very difficult discussion because it is preempting how cities get revenue or think they're getting revenue. In many cases, these don't actually create revenue, but they imagine that they need it for infrastructure.
Speaker: In fact, if you're building infill, then it creates much less infrastructure need, so that may be a way to accommodate it, but this needs to be reformed. We've talked about building code improvements like single stair, but that's not the only one. There's also allowing more, you know, five to 10 unit apartment buildings without as draconian building codes.
Speaker: And then there's the thing I mentioned earlier in this episode, which is the issue of redeveloping rental housing. You know, I think if you have a 10 unit building that's falling down, you should be able to demolish it and build something better and bring the people back.
Speaker: So the fight absolutely continues, and we hope that SB 79 will create enough activity that people are going to start to see the true benefit, that it's not just going to be theoretical.
Speaker: Granted, it's not just theoretical. We've seen it in Berkeley. We've seen it in Oakland, in Minneapolis, in Austin. But it's not really worked itself into the conventional wisdom that when building happens, affordability improves.
Speaker: Part of that is because the affordability we've seen is just rents standing still or dropping slightly, which means they're still pretty high. And obviously we need to do better on that.
Speaker: So again, i will come back in a future episode before the end of the year with the other bills that passed. and other things that are happening. i hope to bring on a guest. But that is the drama of SB 79.
Speaker: Who knows? Maybe it'll even improve Gavin Newsom's profile. So thank you for listening. Thank you if you're one of those who called in to support SB 79 or emailed or left voicemail.
Speaker: Because legislators, their staffers, and the governor's staffers really do write down what opinions they hear and report them up the ladder. And the decision makers do think about it, about how many calls they get.
Speaker: So thank you. I will be back in a future episode of John Nerds Out on California housing legislation. Thank you for listening. And as always, keep on learning.
