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Lots of Housing Laws. Not much Housing. Part II
Skinner’s “good RHNAs” charade
The legislators’ CEQA hatefest was punctuated by a rambling, cryptic commentary from Sen. Nancy Skinner about funding the housing envisioned by the RHNAs:
“I’m appreciative of the fact that both the cities’ responses but also of the HCD’s taking the RHNA enforcement process very seriously and you know holding our cities accountable. It’s very important that we do this. However, having good RHNAs is still not necessarily going to result in achieving the actual construction of the housing….We are of course facing problems of you know higher interest rates. We’re seeing a kind of drop in market housing—you know we’ve got projects that are permitted but haven’t broke ground and indications by developers that they might not. Anyway, I feel like we have to work together with our state agencies to kind of understand that landscape and see whether in the near term is there space for either more investments in the very affordable or low-income housing, and is there more ability to get that broken ground right now than some of these market-rate projects? Again, the financing on this side is not an expertise I have. One of our panelists talked about the loss of redevelopment. We do have in two areas the regional housing finance authorities, both in the Bay Area now and in LA. It seems to me that more of those would obviously help. I don’t know if any of our city panelists spoke at all about whether they had efforts to put things on the ballot that might help them fund housing and that then failed due to the threshold,…the voter threshold that’s required to get those passed.”
Failing to get a response from any of the city reps, Skinner repeated her question.
Finally, Gluckstein said that in 2019 San Francisco voters had approved a $600 million affordable housing bond “that passed at the current threshold.”
She added that her city was
“looking at BAHFA [Bay Area Housing Finance Authority] as an opportunity to get funding across the region. We understand in San Francisco that to succeed, we need all the jurisdictions to also be part of the solution. We’re very supportive of looking at the regional level for measures that would be helpful in building more affordable housing.”
Translation: After having authored some of California’s most aggressive preemptive housing legislation purportedly designed to make cities “accountable”—for starters, see SB 330, SB 167, and SB 168—Skinner suddenly appears to have discovered the influence of market forces. In fact, cities don’t build housing; developers do; and developers are not going to build housing unless doing so guarantees their profit margins. California’s new housing policy regime holds cities accountable for something—housing production—that they don’t control and thus shouldn’t be held responsible for.
Having stripped local jurisdictions of their land use authority, the lawmakers now confront the challenge of funding the preposterous, or as Skinner has it, “good” RHNAs. Despite her disclaimer about lacking expertise in housing finance, on February 13 the senator had introduced a bill, SB 440, which she and her colleagues see as one solution to the funding impasse: regional housing finance authorities. SB 440 would authorize the creation of such agencies throughout California, except in the Bay Area and Los Angeles, where they already exist. According to the Legislative Counsel’s Digest, SB 440,
“would authorize two or more local governments, as defined, to reestablish a regional housing finance authority to raise, administer, and allocate funding for affordable housing in the jurisdiction of the authority, as defined, and provide technical assistance at a regional level of affordable housing development, including new construction and the preservation of existing housing to serve a range of incomes and housing types.”
SB 440 would also “authorize an authority to, among other things, raise and allocate new revenue and allocate funds to the various cities, counties, and other public agencies and affordable housing projects within its jurisdiction to finance affordable housing project and preserve and enhance existing affordable housing, as specified, in accordance with applicable constitutional requirements.”
Like BAHFA and LACAHSA [L.A. County Affordable Housing Solutions Agency], these new regional housing finance authorities would be authorized “to impose various special taxes, including parcel taxes, certain business taxes, a special tax on real property, and a documentary transfer tax within its jurisdiction and to issue general obligation bonds secured by the levy of ad valorem property taxes.”
SB 440 extends the preemptive thrust of the state’s new housing regime. Legislative staffer Hank Brady’s analysis of the bill notes:
“While this bill is modeled on BAHFA and LACAHSA, [SB 440] would grant newly formed Authorities additional powers not bestowed on those existing entities. These authorities, in addition to the ability to manage existing buildings, could hold and acquire existing buildings for purposes of attaching affordability requirements. For any property acquired, these Authorities, unlike BAHFA and LACHASA, will have the power to set the land use and development parameters for such property, including setting the request for proposal criteria and selection process for a developer partner.”
In a subtler blow at municipal prerogatives, SB 440 provides that:
“[a]n authority shall be governed by a board of directors consisting of a minimum of three directors. All directors shall be elected officials representing the cities, special districts, or counties that are members of the authority. The authority shall consist of members appointed by each of the cities, special districts, or counties that are a member of the authority in proportion to the population served by the member city, special district, or county.” [Emphasis added]
In other words, the new authorities will be governed along the same lines as BAHFA, whose Executive Board is the Metropolitan Transportation Commission, a body weighted toward the Bay Area’s big cities. Small jurisdictions: beware of teaming up with much bigger ones.
As journalist Michael Barnes observed to me, “The Legislature is just gutting local governments and turning them into cash cows for regressive taxes for their pro-growth agendas.”
SB 440 also belies Skinner’s professed solicitude for “very affordable or low-income” housing. As Bob Silvestri recently pointed out in The Marin Post, California’s definition of affordable housing is notable for its plasticity. Thus, citing Section 50093 of the California Health and Safety Code, SB 400 authorizes “an authority board” to
“make a finding that market-rate rents or housing costs are unaffordable to households at 120 percent of the area median income [AMI] in a particular geographic area of the district. An authority that makes this finding may utilize a higher income limitation for housing developed and preserved within that particular geographic area of the district, provided that the income limitation does not exceed 150 percent of the area median income.”
The current AMI in Sacramento County is $102,400 for a household of four. In San Diego County it’s $116,800. In other words, SB 440 authorizes regional housing finance agencies to promote market-rate housing.
Just as Wicks omitted to say that she had just introduced AB 1307, Skinner never disclosed that she had just introduced SB 440. The senator’s reference to “voter thresholds” for “things on the ballot that might help [cities] fund housing and that then failed due to the threshold” was similarly devious.
“Things on the ballot” means revenue measures. Thanks to Prop. 13, the voter threshold for passing such measures in California is 67 percent. BAHFA, in concert with Enterprise Community Partners, is leading a campaign for a 2024 statewide ballot measure that would amend the California Constitution by lowering the threshold to 55 percent. (In 2017, ECP got $500K from the Chan Zuckerberg Initiative, i.e. Facebook money, to draft and then lobby for David Chiu’s AB 1487, the 2019 legislation that authorized the BAHFA’s creation.) BAHFA and ECP are also pursuing a regional bond measure to go on the 2024 ballot that would raise $10 or $20B for “affordable” housing in the Bay Area. If the lower voter threshold measure passes, it would apply to the bond measure as well.
When Skinner asked for examples of housing revenue measures that failed because they didn’t meet the voter threshold for approval, she was looking for evidence to support BAHFA-ECP’s twofold campaign. Gluckstein piped up, presumably to spare the senator the embarrassment of getting no response at all. But the example she gave, San Francisco’s passage of a huge housing bond (by 71%), was exactly the opposite of what Skinner sought. Gluckstein then got with the program, lauding BAHFA and “measures that would be helpful in building more affordable housing.” But like Skinner, she said nothing about the big measures that are in the offing.
SB 440 has passed the Senate and is moving through the Assembly.
The developers 1: Ann Silverberg on the dire lack of affordable housing money
The final set of witnesses comprised three developers, Mark MacDonald, Ann Silverberg, and Steve Eggert. Only MacDonald appeared on the hearing agenda. He appeared to have invited the other two, whom he called “my panelists.” Unsurprisingly, each member of the trio lauded the state’s housing agenda, albeit from varied perspectives and in distinctive voices.
Of the three, Silverberg was the only affordable housing developer proper. She described herself as “the CEO for Related’s Northern California and Northwest Affordable Division,” a role in which she’s currently overseeing the development of more than 5,000 units of affordable housing. She said that in its 30-year history, Related California has been “one of the larger developers of affordable and mixed-income housing in the state,” where it has built more than 18,000 units.
But Silverberg is more than a developer; she’s also a political activist who advocates the preemptive, supply-side position in a wide range of private and public contexts. Her profile on the Related website states that she chairs the Board of Directors of the California Housing Consortium, described on that organization’s website as a coalition that advocates “the production and preservation of housing affordable to low- and moderate-income Californians”; co-chairs California State Treasurer Fiona Ma’s California Debt Limit Allocation Committee/Tax Credit Allocation Committee Working Group; serves on SPUR’s Housing Policy Committee; sits on the board of the San Francisco Housing Action Coalition; belongs to the ULI San Francisco Local Product Council; and is past president of the Board of Directors of the Non-Profit Housing Association of Northern California.
After expressing her “deep, heart-felt gratitude” to the lawmakers, “most particularly the housing committees,” and to the Newsom administration for their “clear commitment to combating this severe housing shortage that we’re in,” Silverberg marked “what’s working:” the “recent suite of land use reform and land use laws, starting with SB 35 but now also including SB 330 [Skinner’s Housing Crisis Act of 2019], AB 1763 [David Chiu’s 2019 bill drastically expanding the state’s Density Bonus law for 100% affordable housing projects], AB 2923 [Chiu’s 2018 bill giving BART land use authority], and soon-to-be-implemented AB 2011 [Wicks’ 2022 bill authorizing by-right approval of 100 percent affordable housing in commercial zones and mixed-income housing projects along commercial corridors].”
Citing her “30 years in the industry,” Silverberg enthused that these statutes “have literally revolutionized how we’re proceeding with entitlement of affordable housing. Instead of spending years and years of time and millions of dollars to defend and process and often fight for affordable housing, affordable developers now can choose from a menu of laws in streamlining entitlements and CEQA clearance in ways that we didn’t dream of even a decade ago.”
She singled out SB 35 for extra praise. Under Wiener’s 2017 bill, “Related has entitled 818 units in seven projects since SB 35, with another 1,176 units in process—just months away.” (I emailed Silverberg asking for a list of those projects; she didn’t reply.)
She went on to urge the passage of SB 423: “I know there’s more to be done with CEQA and streamlining, to expand applicability and make permanent the sun-setting legislation of SB 35,” which is due to expire in January 2026; SB 423 extends that date to January 2036. “So SB 423, if I have my number correct—it’s really, really important to see those changes,” which would bring “time savings, providing certainty to the process, and housing dollars.”
Silverberg didn’t mention that the California Housing Consortium is one of the four co-sponsors of SB 423. (The other three are California Yimby, the Nor Cal Carpenters Union, and the Southwest Mountain States Regional Council of Carpenters.) CHC has also endorsed Wicks’ AB 1307.
Then she turned to what’s not working: “Our greatest challenge today is funding.” Affordable housing is “getting bottlenecked at the financing stage.” The state’s “LIHTC program and tax-exempt bond program” are the “main engine” for 100 percent affordable housing,” funding about 20,000 units a year. “Not nearly enough, but at least it’s something. We’re worried about falling short of that.” At the very least, the state should “at least support the production levels we’ve had over the last couple of years.” The “critically needed soft debt to complete the capital stack for affordable housing…is running dry….The recent HCD Super NOFA [Notice of Funding Availabilities] round for state-level financing was oversubscribed by five to one….The MHP [Multifamily Housing] program was oversubscribed by ten to one—3.5 billion in requests for 650 million in resources. Those are projects that are ready to go.… The CDLAC process was “seriously oversubscribed in the last round.” Silverberg implored the state to follow up its “groundbreaking and legacy-producing” streamlining legislation and to “stabilize affordable housing production long-term with a reliable, ongoing, dedicated source” of money for affordable housing.
The Developers 2: Mark MacDonald and 300 De Haro
The first of the two market-rate developers to speak was Mark MacDonald, CEO and founder of the San Francisco-based firm DM Development. DM said MacDonald, “focuses on market-rate, ground-up, multi-family developments, both for-sale condominium properties, as well as programmed communities.” He added, “I’m proud to say that in almost all our market-rate developments, we also build on-site below-market units to create mixed-income communities.”
MacDonald said he’d been asked to give an overview of the development process. He proceeded to list the steps in that process and how long it typically takes to accomplish each in San Francisco: site selection (one year), site acquisition (one year), design and entitlements (two years), permits and financing (one year), construction (two years), and leasing (one year)—six to eight years in all. He said that DM considers 100 deals for every one it actually does. Detailing the complex work involved in each action, MacDonald emphasized that the entitlement process “is very lengthy, time-consuming, and extremely risky.” In San Francisco, he said, it usually takes 18-24 months, “or in many cases much longer, depending on neighborhood opposition.”
And today there’s a bigger challenge: financing. “We as market-developers,” MacDonald said, “work at the behest of our investors, who need our development projects to meet certain return thresholds,” and who have “a lot of options where they can place their capital to achieve the best-risk-adjusted returns….If the capital markets turn against you, as they have in the current environment, as a result of rising interest rates, it could take considerably longer to lock in financing to get a project off the ground.” He said that in his view, “the primary issue” now
“is that many housing developments don’t pencil, given the high costs to build, and that rents in San Francisco have not recovered their pre-Covid levels. The returns to develop projects ground-up now are simply not there for many investors to deploy capital….So to jump-start housing, we really need to focus on creative ways to make housing less costly to build in California.”
By “creative ways,” MacDonald presumably meant more policies like the state’s recent housing laws. He thanked the California Legislature for having done “an excellent job over the last number of years passing legislation to help make more attractive land available for housing development and to streamline the development process through bills such as SB 35 and AB 2011.” MacDonald said DM had availed itself of many of these bills, such as SB 35, but didn’t give any details. Indeed, a striking aspect of the entire hearing was that nobody explained how any specific project had been facilitated by the new state’s recent housing policy regime.
As it happens, one of DM’s current developments, the project at 300 De Haro, was facilitated by SB 35 and the state’s Density Bonus laws. Its history was recounted in August 2021 by San Francisco Chronicle reporter J.K Dineen. Under the headline “How one S.F. housing project is using state law to circumvent neighborhood protest,” Dineen told how early in 2020, DM had approached the site’s neighbors with a plan to build a seven-story tower at 300 De Haro.
“Residents said they would support a slightly shorter six-story project — a building consistent with zoning — and asked for more retail and tweaks to the exterior design…. But instead of bending to the neighbors’ wishes and dropping the height of the project, DM Development went in the opposite direction, increasing the proposed 80-foot building to 120 feet [eleven stories], and raising the original 290 units to 450 units.”
Dineen commented: “[W]hile conflict between neighborhood groups and developers is the bread and butter of San Francisco’s land use politics,” the fight at 300 De Haro is “different.” Thanks to SB 35 and the State Density bonus program, “DM Development doesn’t need the support of residents”—including residents who sit on the city’s Planning Commission or its Board of Supervisors. 300 De Haro is “by right.”
I asked Dan Sider, chief of staff at the San Francisco Department of Planning, exactly how SB 35 and the State Density bonus program authorized MacDonald to expand 300 De Haro from 290 to 450 units and from six to eleven stories.
“SB 35 mandates that when a city—in this case, San Francisco—has not permitted its RHNA share of low-income units, a project with 50% affordable units is subject to ministerial approval. 300 De Haro will have 450 units, of which 181, fewer than 50%, are affordable. What is the base number of units on which the affordable units were calculated? How did the applicant avail himself of the Density Bonus Law in arriving at these numbers?”
Sider replied:
“It’s a good question. State Law overlaid upon local law makes for a complex analysis. An SB 35 project must construct at least 50% of units as affordable units (to 80% AMI or below).
“An SDB [State Density Bonus] project is eligible for up to a 35% floor area bonus when no fewer than 20 % of the units are restricted as affordable units (to 80% AMI or below).
“When we combine those two programs, as was the case for 300 De Haro, the 50% SB35 figure (the greater of the two) is applied to the “base” density of the SDB project.
“Of the 450 units in this project, 337 are base units, so 169 of them must be restricted to 80% AMI or below.”’
Note that, in another ploy that belies the state’s professed dedication to affordable housing, the state Density Bonus applies the inclusionary requirement stipulating the amount of affordable housing to the original number of units, not to that number plus the bonus.
I replied:
“You've explained the effects of SB 35 on 300 De Haro, and how the project qualified for Density Bonus. But DM Development came in with 181, not 169, affordable units. So did they go beyond what the law required?”
Sider’s reply further illustrates the state’s cynicism about affordable housing:
“The short answer is that at the time the project was approved, the affordability tiers required under our local inclusionary affordable housing program essentially required that additional affordable units be provided in order to satisfy both local and state law. Since then, the state has changed its position such that our local affordability tiers can be “collapsed.” This has the effect of lowering the total number of affordable units required in cases like this. As for overall unit count in a bonus project like this, we look at floor area rather than unit count. A developer can slice the floor area into however many units they choose.”
At 300 De Haro, DM sliced and sliced. Each of the project’s 450 “group” units will be between 280 and 300 square feet, with access to lounges and communal kitchens on each floor. MacDonald described them as “‘an attractive option for those who can’t afford a $3,000 studio.” Jeff Alexander, president of the homeowners association at Showplace Lofts at 370 De Haro had a different take: “’It’s a glorified Airbnb hotel.’”
Citing San Francisco Planning Director Rich Hillis, Dineen wrote that 300 De Haro was the first majority market-rate project in the city to take advantage of SB 35. Hillis told him that “DM Development’s approach to 300 De Haro is a harbinger of what’s to come—that developers will increasingly use state law to circumvent local codes.”
If SB 423 becomes law, Hillis will look prescient. It might seem that SB 35 should have generated more market-rate than affordable housing. After all, California developers are building many more market rate than affordable homes. The HCD dashboard shows that the great majority of permits issued in the current, Sixth RHNA cycle have been for above-moderate homes.
So why are these outcomes reversed under SB 35?
In his analysis of SB 423, as amended on June 19, Assembly staffer Steve Wertheim suggested two reasons. First,
“SB 35 only applies for market development in jurisdictions that are not meeting their RHNA for above-moderate income households. Because more than half of the state’s jurisdictions met this target in the 5th RHNA cycle, SB does not apply for market-rate housing in these locations. The list of cities to which SB 35 currently does not apply for market-rate housing includes all of the state’s major coastal cities, including Los Angeles, San Diego, and San Francisco.”
Let’s read between the lines. Currently, SB 35 does apply for market-rate housing in the 251 jurisdictions that have not met their above-moderate RHNAs—more than half of the state’s 482 cities. But many of the 251 are in areas where market-rate housing has a limited market compared with the coast.
Wertheim commented that the RHNA targets in the 5th RHNA cycle were “very low…, particularly in wealthier coastal cities”; and that given the “substantially higher” targets in the 6th cycle, “it is anticipated that eventually, SB 35’s market-rate provisions will apply to most of the state.” In other words, those provisions will be apply to the now-exempt, larger, and wealthier coastal cities where most of the market-rate housing has been built to date—in many cases more than enough to satisfy the city’s market-rate RHNA. Not incidentally, SB 423 would extend the terms of SB 35 into the coastal zone.
The developers 3: Steve Eggert and labor standards in California’s new housing laws
Even if that happens, it might not generate many market-rate homes. Wertheim said that’s because SB 35’s labor standards “essentially require a union-only workforce for each of the crafts involved in building housing.” Developers have argued that there are not enough workers in the state to meet the bill’s “skilled and trained” standards; and thus that “it is not financially feasible to take the risk of investing the up-front costs to design and entitle a housing project given the substantial risk that there would be no eligible workers to build it.” Wertheim offered no example of a potential SB 35 project that never got off the ground because the developer could not find workers eligible to build it.
The legislative staff background paper for the hearing also identifies a shortage of construction workers as a major problem. To answer the question “Why has insufficient housing been built in California?” the staff says that “the preponderance of costs in housing comes from the construction of the project itself, including the materials and labor.” As to the latter:
“A useful rule of thumb is that there is a 1:1 between residential construction workers and the number of housing units that can be built. As recently as 2006, when over 200,000 units were built in California, there were approximately 200,000 residential construction workers in the state. With the bursting of the housing bubble and the onset of the Great Recession, that number had decreased to 100,000 by 2018. Despite the massive economic growth that occurred in the subsequent decade, the construction labor force never rebounded – and neither did production. This is for a number of reasons, including that the work is typically poorly paid and thus make it difficult to attract new workers to the profession, high housing prices make it difficult to lure out-of-state construction workers, and changes to national immigration policy have decreased the number of undocumented workers that historically have made up a high percentage of the residential construction workforce.”
SB 423 addresses the developers’ claims by removing the union-only ‘skilled and trained’ workforce requirement from market-rate SB 35 projects…less than 85 feet in height. For projects over 85 feet in height, the bill…add[s] ‘off-ramps’ that enable [a] project to proceed should a general contractor not receive three bids from subcontractors that guarantee that they can provide a skilled and trained workforce.” Under those circumstances, “the prime contractor need not require that a skilled and trained workforce be used by the subcontractors for that scope of work.” On June 19, Wiener amended the bill, changing the 85-foot threshold for skilled and trained labor requirements so that they apply only to “floors used for human occupancy that are located more than 85 feet above the grade plane.”
SB 423 has widened the split in the building trades unions that opened up in 2022 during the bitter fight over Wicks’ AB 2011. Co-sponsored by the California Council of Carpenters (the other co-sponsor was the California Housing Consortium), AB 2011 was opposed by the State Building and Construction Trades Council of California. SB 2011 was also endorsed by several other building trades unions.
Like AB 2011, SB 423 has also been endorsed by the Nor Cal Carpenters Union, and other building trades unions, including the District Council of Plasterers and Cement Masons of Northern California and the Laborers and Operating Engineers Union, and is opposed by the State Building and Construction Trades Council. The split is significant because the building trades unions have been one of the few political forces in the state with enough clout to block state legislation.
As a March 2023 article in the Sacramento Bee explained,
“*California law defines a “skilled and trained workforce” as one where all workers on a project must either be journey-level workers or apprentices enrolled in state-approved apprenticeship programs. At least 30% of journey-level workers in most trades must have graduated from state-approved apprenticeships. Some crafts, such as plumbers and electricians, must have at least 60% of journey-level workers graduate from state-approved apprenticeships. Many view “skilled and trained” requirements as mandating the use of union labor, since unions run the vast majority of apprenticeship programs.”
The Bee cited California Labor Federation President Lorena Gonzalez, a former Assembly member:
“Prevailing wage is simply — it’s good. However, prevailing wage is a job-by-job issue,” she continued. “We want people to go into a career for construction — not just a job.” The State Building and Construction Trades Council, for its part, argues “that [SB 423] should not amend the labor provisions of SB 35, because the skilled and trained workforce provisions of existing law are better for workers. Paying workers fairly does not ensure that workers will be treated fairly, and this approach embraces only short-term benefits for workers with no pathway to the middle class.’”
Like the developers, the carpenters’ unions argue that given the shortage of unionized construction workers, requiring a skilled and trained workforce delays housing construction. They further contend that unions, not the state, should bear the responsibility of unionizing workers. Jay Bradshaw, executive secretary and treasurer of the Northern California Carpenters Union told the Bee: “It’s the job of the union to organize, not the government to organize for us. Our mandate is to help workers, and our best protection for our current workforce is to grow.”
At the hearing, the first speaker who mentioned labor standards was the final witness, developer Steve Eggert. Eggert is the president of AntonDevCo., the Sacramento-based firm that he founded about 30 years ago. He said AntonDevCo has built 12,000 units, about half of them affordable.
Like Silverberg and MacDonald, Eggert expressed gratitude to the state for the recent housing legislation—specifically, SB 330—“whoever wrote that law knows what we deal with with cities”—and for “trying to close all the loopholes” with the ADU law and the Density Bonus Law. “HCD has been enormously helpful.” And he cheered the “overall …focus on production—because that’s the way to make anything more affordable whether it’s housing or widgets or anything—more supply.”
In fact, increasing supply does not make everything more affordable. Houses are not like widgets. In a hot market, allowing more units to be built on a lot raises the amount of profit that can be squeezed of that space and thus the value of the property. Even supply-side eminence Chris Elmendorf concedes that point.
Having declared his support for the new housing laws, Eggert went to voice his reservations. “SB 35 and SB 330 are really just nibbling around the edges. I mean, if we’re gonna be just level with each other, if we really want to see housing built.” He unfavorably contrasted the Bay Area with Phoenix and Denver, where “they’re getting serious, serious production,” because “they don’t have CEQA or prevailing wage requirements. The laborers are protected, the environment is protected—and it’s working great—okay?” (In June, drought-ridden Arizona prohibited new housing development in the Phoenix area.) Eggert recommended exempting all infill housing from CEQA, “period.”
But Eggert’s biggest gripe was about the requirement to pay prevailing wages—typically union-level wages. “SB 35,” he said, “is so close to being such a great law. I just want to concur with Ann, how much it helps with the affordable housing, but for market-rate housing, it does not help, because we must pay prevailing wages” and maintain a “skilled and trained workplace,” meaning that workers must have proof that they graduated from an apprentice program.
He contrasted the wages for “rough framer” carpenters in Colorado, which he said are $40 an hour, or $85,000 to $95,000, a year to their counterpart in the South Bay at $86 an hour and $110,000 to $120,000 a year. “Prevailing wage carpentry” is “a no-go.” “If you rewrite SB 35 to eliminate the prevailing wage requirement that brings market-rate housing into play.”
For the record, according to the California Department of Industrial Relations, as of February 22, 2023, the prevailing wage for “Carpenters”—nothing about “rough framers”—in Santa Cruz County was $83.71 an hour.
Like Terner’s report about SB 9’s meager results, Eggert’s tirade against prevailing wages was at odds with the official narrative, in this case, the state’s support for construction workers, a storyline in whose credibility Wicks has a large stake. In a move that paralleled Wiener’s reprimand of Terner, the assembly member pushed back. “Respectfully,” she said,
“I wanted to just disagree with the last panelist….If you look at a bill like AB 2011, yes there are prevailing wage components in it… but this was also a bill that was supported by the affordable housing developers, as well as the carpenters union and others. We sought to strike a balance, to ensure that we can provide such wages,…it’s important to have the wage set protection, the health care component, the apprenticeship requirement, the so we can build the workforce that we need to. And we believe that providing the CEQA streamlining and the ministerial approval, that streamlining process will then allow developers to ensure that they are paying their workers what we believe they should be….As someone who’s a big supporter of prevailing wage and the labor movement, but also someone who’s a big housing production person, our goal is to ensure that we do both of those things.”
Despite her avowed support for “the apprenticeship request,” Wicks didn’t note that AB 2011 has no requirement for housing developers to use a skilled and trained workforce.
SB 423 has advanced through the Senate and is now being heard in the Assembly.
Coercion as collaboration
The February 28 hearing was a highly orchestrated piece of political theater in which deviations from the state’s housing narrative were suppressed. But despite Wiener’s and Wick’s assiduous efforts at crowd control, the testimony of one witness exposed a major fault line in the official scenario.
HCD Deputy Director Megan Kirkeby displayed a slide stating that RHNA is “a contract with the state of housing commitments for eight years, and the Housing Accountability Unit will hold jurisdictions to those commitments.”
In law, parties cannot enter into a contract under duress. Kirkeby’s usage of “contract” implies that cities freely negotiated the terms of their RHNAs with the state. That implication is false. The state sets the RHNAs for each region in California, after which each regional agency divvies up its areas allocation among its cities.
Recent housing legislation has greatly increased HCD’s authority in the RHNA process while leaving much to the agency’s discretion.
Timothy Grayson’s AB 879 (2017) required that a city’s preparation of its Housing Element has to meet “standards” adopted by HCD and eliminated the requirement that HCD formulate those standards pursuant to the state’s Administrative Procedure Act. AB 72 (2017), authored by David Chiu and Miguel Santiago, authorized HCD to refer to the state attorney general cities whose housing element the agency has deemed out of compliance with state housing law. Wiener’s SB 828 (2018) shifted the RHNA mandate from planning for housing to producing it and prohibited a city from arguing that underproduction in a previous RHNA cycle or a stable population justified a lower allocation. Alan Lowenthal’s AB 2158 (2004) eliminated the provision in California law that subjected HCD’s RHNA determinations to judicial review.
On July 27, the Second District Court of Appeals repeatedly referenced AB 2158 (by date, not name) as it affirmed the Superior Court of Los Angeles County’s denial of the Orange County Council of Government’s challenge to the RHNAs that HCD had assigned to the Southern California Association of Governments:
“*To the extent that the RHNA statutes authorize the Department of Housing to act in multiple capacities, a single administrative agency may legally combine investigative, prosecutorial, and adjudicative functions.”
There’s nothing collaborative about the RHNAs. Local governments must do what HCD tells them to do or invite prosecution by the state attorney general. Kirkeby’s attempt to pass off cities’ relationship with HCD as contractual was the clumsiest cover-up at the hearing. That it emanated from a high-ranking HCD official may explain why Wiener, Wicks, and their fellow legislators let it pass in silence.
More likely, it’s that they share her cynicism.
Click here to read "Lots of Housing Laws. Not much Housing. Part I"