Damian Dovarganes/AP Photo
Home Prices
A home for sale in Los Angeles.
In the 1990s, when I was editing the L.A. Weekly, among the most potent and unyielding forces in Los Angeles politics were the homeowner associations. These neighborhood groups were NIMBY avant la lettre, frequently exercising veto power over any project that they thought might slow the rise of their property values or the presumed tranquility of their hood. Plans for apartment buildings, transit lines, road widening, offices, and retail shops routinely bit the dust once a homeowner association arrayed against them, especially when the planned development brought a lower class of people (as the homeowners defined them) into their midst. And since their members tended to vote and make monetary contributions in low-turnout city elections—particularly, when city council seats were on the ballot, as council members could approve or scotch almost any development in their districts—the homeowners had the local pols thoroughly cowed.
Perhaps the most strident of these groups was the Sherman Oaks Homeowners Association. I distinctly recall their successful campaign to block the construction of a two-story senior citizens’ home on Ventura Boulevard, citing the disruption that the obstreperous seniors would bring in their wake.
At the time, some of these groups used the delaying tactics afforded them by the California Environmental Quality Act (CEQA), which gave Californians the right to challenge construction permits on a host of environmental grounds. At the time, local zoning ordinances customarily afforded these groups enough blocking power that invoking CEQA wasn’t required, but over the decades, the number and share of CEQA invocations steadily increased. And an increasing share of those CEQA-based suits weren’t really about environmental standards at all; they were simply ways to delay projects until the developers either modified their plans or, more commonly, just gave up in the realization that the delays would go on for years. The environmental reviews that the law required were lengthy, and lawsuits in which the government’s, the developer’s, and litigant’s environmental studies were completed and amended and then duked it out in court, were lengthier still.
CEQA had been enacted in 1970 and was signed into law by then Gov. Ronald Reagan. Soon thereafter, a court ruling expanded its scope from the construction of government buildings and public works to private projects as well. In recent years, some horror stories—invocations of CEQA to block the construction of a bike path and some University of California student dormitories—illustrated how the act had morphed from a way to preserve the public good of a clean environment to a way to block the public good that proposed projects could advance. But what really undermined the law was the state’s acute housing shortage and the ever-widening gap between Californians’ incomes and the costs of housing.
Yesterday, the state legislature, with substantial bipartisan support, passed and Gov. Gavin Newsom signed a new law that put major limits on CEQA’s applicability. Its criteria no longer apply to most urban areas, where the construction of multi-resident buildings has long been insufficient to meet cities’ need for housing. New suburban developments built on largely undeveloped land, by contrast, will still have to go through CEQA’s fact-finding and meet its criteria. Denser urban development, on the other hand, generally allows for more transit usage and shorter daily commutes, so promoting it, as the new law does, is actually environmentally friendly.
The state’s building trades unions had opposed earlier versions of today’s legislation (the earliest such attempt came when Jerry Brown was still governor, in 2016), as they eliminated some requirements that developers pay their construction workers the “prevailing” (often, union-scale) wage on multi-unit housing. Ironically, the two areas of the state where those unions are strongest—the Bay Area and Metro L.A.—are the two areas where housing is least affordable, including to their own members.
The compromise that enabled the new legislation to pass requires developers to pay prevailing wages only on housing projects that are entirely affordable, which often receive some public subsidies, on the theory that public funds shouldn’t subsidize inadequate wages. That means that market-rate housing, or developments that are part market-rate and part affordable, are not subject to wage requirements that go beyond the state or city minimum wage laws. All housing in new buildings that are higher than 85 feet will require the hiring of some union members, but such buildings usually require steel and glass work that only union members usually have the skills and experience to handle.
The conflict between the public’s need for new development and the public’s (particularly construction workers’) need for adequate incomes isn’t new. During Franklin Roosevelt’s second term as president, future AFL-CIO president George Meany, then the head of the New York state pre-merger AFL, led a picket line of construction workers protesting one New Deal public works project that employed non-union workers. In later years, Meany, who always personified both the commendable and the lamentably narrow perspectives of the old-line building trades, boasted that this was the only picket line he’d ever walked. (Meany’s lamentable narrowness should be clear from the fact that this came as a boast.) That said, the crisis of housing affordability is inherently a crisis both of inadequate supply and inadequate incomes, so it inevitably requires the kind of imperfect solution that California’s lawmakers have struggled to devise. Among America’s large cities, the four with the highest ratio of median home price to median income are, in order, Los Angeles, San Jose, Long Beach, and San Diego, with San Francisco and Oakland ranking seventh and eighth. That’s why, yesterday, California settled on its imperfect solution.
But that’s only half of what’s required to make California housing affordable again. The other half constitutes the wage hikes that the state and its major cities have been fostering by raising the minimum wage. In Los Angeles, with the tourist boom of the 2028 Olympics a guaranteed element of the city’s future, the hotel workers union has prevailed upon the city council and mayor to raise the hourly minimum wage of employees at the city’s large hotels to $30 by the time the Olympics roll around. The hotel owners have threatened to fund a mega-campaign for a ballot measure repealing the new ordinance, but I think the best way to understand that new law is that it, too, is a way, albeit piecemeal, for California to address the crisis of housing affordability.
Just as supply needs a boost, so does demand. Didn’t the hotel owners ever take Econ 101?
