January 1, 2001 - From the January, 2001 issue

California's Housing Crisis Is Real: Two Legislators Detail Options

In looking to early writers, essayists and prognosticators, the dawn of the 21st Century was supposed to bring cures for many of the historic ills plaguing our populace. Yet, upon reflecting on our current environment, we realize that while our world may have improved, we continue to face many of the same challenges-including sufficient housing. In hopes of furthering this discussion among our State leaders, TPR is pleased to present this interview with California State Senator Joseph Dunn & Assemblywoman Patricia Wiggins, who offer insights as to why we're in this predicament in the first place-and what can be done at the local level to aid in their efforts.


Patricia Wiggins

In its 2000-03 Strategic Plan, the State of California's Department of Housing & Community Development states that between 1980 and 1990, housing production trailed demand by 660,000 units. These figures improved only slightly in the late 90s, with housing demand lagging by 145,000 units statewide. Senator Dunn, can you give our readers a sense of the housing challenge facing the State?

Sen. Joseph Dunn
California Senate, D-Garden Grove

Those figures are indeed accurate. The crisis is very real, and resolving it is going to take some time.

The 1980s were undoubtedly the worst decade in terms of production falling behind demand. But to be perfectly frank, the 90s weren't much better-and we let a deep crisis get deeper.

Unfortunately, there don't seem to be any magic bullets here. We're going to need a great deal of political discipline-at both the State and local levels-to right the housing imbalance. And if we don't, we're going to see traumatic downturns in the California economy, particularly in places like Silicon Valley and Orange County.

Senator, as the Chair of the Senate Housing Committee, you recently asked city managers across California to offer legislative suggestions to curb the statewide housing crisis, and in last month's TPR, we carried Azusa City Manager Rick Cole's response to that request. To put this in perspective for our readers, could you give us an overview of the responses you received from around the State?

Sen. Joseph Dunn

We've received good responses from cities big and small all over California.

The number-one issue they express-to no one's surprise-is local government finance. The way local government finance is structured in California has forced cities to become unhealthily reliant upon sales tax revenues. As a result, housing takes second-place to retail as municipalities seek to maximize local income to pay for law enforcement, fire fighting and other public services.

The second theme that most city managers express is a plea for more local control in solving local problems; they don't want Sacramento forcing solutions upon their cities. Again, while this comes as no surprise, allowing localities to decide things like whether or not they want high-density development must be balanced against statewide needs. We in Sacramento understand the desire for local control, but we also have a duty to ensure that cities comply with housing element requirements for the good of the State as a whole. Housing is an increasingly difficult local issue because no resident wants a high-density development to go up across the street. Therefore, if we leave those decisions solely in the hands of municipal government, we're going to need some strong-willed local politicians who are able to find the right balance.

While I agree with the principles behind leaving these decisions to the localities, it can't be the comprehensive solution if we want a statewide resolution to the housing crisis.

Assemblywoman Wiggins, as the Chair of the Smart Growth Caucus, can you give us a sense of how the housing crisis manifests itself? How do you handle it at the legislative level-and handle it smartly?

Asm. Patricia Wiggins
California Assembly (D-Santa Rosa)

The first issue that Senator Dunn outlined-the State/local fiscal relationship-is a big part of what we're trying to change. When asked how they view vacant land, 72% of city managers see a source of sales tax dollars rather than a place to build housing. The question is, how do we change that paradigm?

First of all, we need to increase the fiscal incentives for housing by changing the tax structure and providing cities with steady revenue streams. Local governments need fiscal stability so that they can provide their populations with both services and housing, especially in denser areas where costs are greater.

Right now we're developing legislation in the Assembly based on the work of former Speaker Antonio Villaraigosa's Commission on State & Local Government Finance. This is a good time to get that process going because unlike the last effort-which occurred at the end of a two-year process-this time we might actually be able to produce consensus along with a workable plan.

In reviewing the Governor's State of the State address and his subsequent proposed budget, many observers have noted something of a disregard for local government finance reform, with only one $250-million allocation. How much interest do you think the Governor has in joining with the Legislature to tackle these incentive issues?

Asm. Patricia Wiggins

First, we have to build consensus in the Legislature. That way, when we bring the issue before him, he'll have to listen.

Last year's veto of the ERAF shift cap sent a strong and clear message. Hopefully, some of the newer members in the Legislature who are revisiting this issue will learn from that, and concentrate on creating incentives instead of a ‘big-bang' financial shift to localities. That doesn't mean the Governor won't use his veto power again. But at some point, we need to figure out how to target the return of money to local governments so that we get the best Smart Growth outcome and also prove to the Governor that it needs to be done.

Sen. Joseph Dunn

One of the weak links in adjusting local government finance is that we live in a political world. Looking back over the past two years, an enormous amount of credit must go to the education, health and transportation communities because they were all able to craft a message that resonated not only with legislators, but with average citizens as well. They were able to convince the general public that these issues are critical to daily existence.

Can we say the same thing about local government finance? I don't think so. We have yet to answer the question: Why should Mr. and Mrs. John Q. Public care about local government financing? Right now, the average person on the street tunes out and their eyes just glaze over.

Proponents of adjusting the equation for local government finance need to come together in a unified voice and develop a strategy that sells not only in Sacramento-which generally has sympathetic ears-but also on the street. If we can do that, the Governor's Office may begin to understand that this public policy issue does in fact rival that of education, transportation and health.

Let me ask you both to comment on the new Speaker's Commission on Regions. Its predecessor Commission in December of 1960 issued a report for Pat Brown on metropolitan problems. The essential message in the first paragraph of the executive summary was that our State population, then 14.5 million, was projected to be 30 million by the end of the century, and local government had little capacity to manage that growth. When announcing the new Commission on Regions, Speaker Robert Hertzberg chided that perhaps we'd come back in a year and say, "We are a State of 34 million on the way to 55 million-and local government now has even less capacity to manage that growth." How are the Legislature and Governor intending to tackle that challenge?

Asm. Patricia Wiggins

The recommendations that eventually come out of this Commission will have to address a number of Smart Growth principles and attempt to blend existing regional partnerships into the fray.

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We need to make a stand and say: We want to direct growth so that we don't kill the goose that lays the golden egg.

Sen. Joseph Dunn

I would add only one word to what Pat's just said-incrementally.

I recently read a book tracing the history of California's governors back to the State's inception. It chronicled not only the history, but the issues with which each governor had to wrestle. Amazingly enough, one of the common themes extending back to the very first governor is this issue of local government's impact and effectiveness.

I don't think anyone in the legislative body today can honestly say that we'll resolve this in the next legislative session. That just isn't going to happen. But we can take incremental steps forward to at least begin reversing the trend of local governments' ineffectiveness. In the past few years, I think we've already embarked on that path. Hopefully, as we continue to place more power in the hands of local governance, we can eventually realize the goal of a representative local government that has the faith of the public. We need to recognize that the further power moves away from the local level, the less trust and comfort the citizens have. The State's responsibility is to deliver the resources local government needs to accomplish a variety of tasks-including housing-and act at the State level only when absolutely necessary.

When TPR interviewed Assemblywoman Wiggins several months ago, we asked her whether Smart Growth was a bipartisan issue. Now I want to bring the question to housing: Can you foresee bipartisan cooperation in the coming legislative session as we tackle the housing crisis?

Asm. Patricia Wiggins

I think people are finally seeing Smart Growth for what it really is-a commonsense approach to answering the question: How will California grow? The Republican members are slowly becoming more comfortable and less resistant to the issues of Smart Growth-and hopefully we'll see increased participation.

And in the Senate?

Sen. Joseph Dunn

I understand the Smart Growth Caucus does have some participation from Senators, but it's primarily an Assembly caucus. However, in looking at specific legislation, will there be bipartisan support? Probably yes.

While bipartisanship initially depends on how ‘Smart Growth' is defined, it will ultimately come down to traditionally Republican suburban areas realizing the size and scope of this issue. In that sense, it will become more about the political survivability of Republican representatives in those areas than Smart Growth issues in general.

Asm. Patricia Wiggins

I agree. Bipartisanship support for Smart Growth legislation will likely become a case-by-case issue.

But there's another issue we need to face at the local level. Because it's often hard for local leadership to buy into a comprehensive plan for State growth, the State needs to step up, show some leadership, and put comprehensive policies in place.

Some of these laws may simply serve as cover for elected officials. With State policies in place to support their decisions, they can stand up to a neighborhood and say, "This is the reason that we're supporting multi-family housing. And this is why it has to happen."

Let me close with this. I know it's very early and that there are a number of reports soon to be put in front of you, but what can you reasonably expect out of this session to grapple with this daunting problem?

Sen. Joseph Dunn

There are a variety of proposals already floating around on how to add teeth to the housing element law, but it's too early to know which one will ultimately make its way to the Governor's desk. Secondly, there will definitely be further discussion about reviving a housing bond of some sort.

There are many other issues, but I think we'll see particular activity in those two arenas in the coming months.

Assemblywoman Wiggins, as Chair of the Local Government Committee, what would you project?

Asm. Patricia Wiggins

I'm sponsoring a statewide bond measure-AB 52-that deals with farmland preservation and infill housing incentives: "Pave An Acre; Save An Acre." That legislation will provide incentives for preserving farmland and targeting growth into the city centers.

On a more macro scale, we're going to see the renewal of a smart investment policy on how we target infrastructure. We're going to see various proposals for incentivizing housing. And we're going to see a number of proposals coming forward regarding city center growth.

We're also testing the waters for streamlining the housing permitting process. I'm currently looking at strengthening the Master EIR so that subsequent proposals don't have to go through all the environmental review from scratch.

And then there's brownfields. There's going to be a number of proposals attempting to redevelop brownfield sites through housing. So I'd say we're going to see enormous activity over the coming legislative session.

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