Time to Address the Harsh ‘Hidden Tax’ on Housing

    — By U-T San Diego Editorial Board midnight April 29, 2015, republished by Lilac Hills Ranch, April 29, 2015


A new report by Point Loma Nazarene University’s Fermanian Business & Economic Institute chronicles a regulatory culture that adds about 40 percent to the cost of new housing in San Diego County — what PLNU economist Lynn Reaser likened to a “hidden tax” on all residents. Some cities are better (San Marcos). Some are worse (Carlsbad). But the cumulative picture has grim implications for the county’s future, given projections of the population going from the present 3.1 million to 4.2 million in 2050.

The report was sponsored by the California Homebuilding Foundation and other industry interests, so its accuracy will be questioned by some. But its findings are consistent with past scholarship and the realities of life in San Diego County. Homes and apartments cost far more here than in most of America — a huge change from the 1980s. The number of building permits went down 22 percent in 2014 vs. 2013.

This cost premium could be reduced, the report says, by simplifying and standardizing the building permit review process in as many cities as possible, especially setting a baseline for when California Environmental Quality Act requirements kick in. State law gives cities surprising flexibility on how they implement CEQA.

The study says just a 3 percent reduction in regulatory costs could have a significant impact on housing by making homes and apartments less expensive and by encouraging homebuilders to shift their focus from luxury homes to less expensive units.

San Diego Mayor Kevin Faulconer seems sure to embrace this study; it’s a perfect fit with his vision of a smarter, more efficient City Hall. But with the City Council and California in general, we are pessimistic. The current governor and his three predecessors have all called for CEQA reform and gotten nowhere. Local and state Democratic lawmakers — led by Assembly Speaker Toni Atkins of San Diego — refuse to acknowledge that their present approach to affordable housing doesn’t work. Subsidizing a relative handful of units for a few thousand lucky families to enjoy does nothing for the vast majority of low-income folks. Adding housing stock — increasing supply — does far more broad good.

What’s also not understood is how housing costs threaten the state’s booming high-tech economy. The attraction of California’s weather and lifestyle is immense — not infinite. Information-technology giants in Silicon Valley and tech and life-sciences giants in San Diego may not relocate, but they’re unlikely to expand in California. It matters that the median cost of a family home in the Seattle area is much less than half of what it is in San Jose, Santa Clara and Sunnyvale. It matters that the median cost of a home in the Austin, Texas, metro area is less than half the cost of a home in the San Diego-Carlsbad-San Marcos area.

And the cost of housing also has a wrenching fallout at the personal level. Every San Diegan knows someone whose children have moved primarily because they can never realize the dream of homeownership here.

But at least the PLNU report offers hope that local efforts can improve this disturbing picture. Every local mayor and council member should read it — then take action.




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