LOW-COST HOUSING? STATE KEEPS IGNORING THE NEW REALITIES

 

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, JUNE 15, 2021, OR THEREAFTER

BY THOMAS D. ELIAS
     “LOW-COST HOUSING? STATE KEEPS IGNORING THE NEW REALITIES”

 

        From Sacramento comes word that the median price for a single-family home in California skyrocketed by 24 percent over less than one year, topping $810,000 in May, a rise of almost 30 percent from the previous year.

 

       At the same time, one developer of “affordable” housing in Southern California revealed that the average cost of a two-bedroom unit in a new four-story, 48-unit building that will target low-income families, comes to $729,265. Much of that tab will be picked up by local taxpayers, and the building is pretty typical of so-called affordable housing all around California.

 

        Such buildings, the developer said, will likely “increase affordable housing opportunities for families who often have difficulty finding appropriately sized housing” in the region.

 

        Even if thousands of buildings like this one were constructed around the state over the next six years, they wouldn’t come close to solving California’s housing shortage, which some experts say is the main reason median prices keep rising steeply. Gov. Gavin Newsom plumped during his 2018 campaign for building 3 million new units by 2025, a total that won’t even be approached.

 

        Rather than focusing on ways to really resolve the state’s housing problem – and thereby deal simultaneously with the homeless crisis which now sees more than 160,000 individuals sleeping outdoors or in mass shelters every night, winter or summer – state and local officials persist in trying to build ever more expensive new structures.

 

        That’s happening, unreasonably, while the potential solution involving very little new construction stares these same local and state “experts” in the face.

 

        The answer is simple, and will resolve problems for many disparate interests. It’s also inevitable, even if many state legislators and developer interests refuse to see it.

 

        That solution has been obvious since the beginning of the coronavirus pandemic, when thousands of businesses sent their white collar workers home to do their jobs at the same time the businesses themselves started campaigning to get out of long-term leases.

 

        Because many of those companies are delighted to let employees stay home post-pandemic, thus cutting their real estate costs, billions of square feet of former office space are now vacant, most of it likely to stay that way for the foreseeable future.

        Law firms, stock brokerages, insurance companies, internet firms – essentially office-based businesses of all types – are dumping their leases, moving to smaller quarters and enjoying the fact their employees appear to be just as efficient away from the office.

 

        Polls indicate about two-thirds of onetime office workers prefer to stay home, where they can set their schedules more independently and save money on both child care and commuting costs.

 

        That leaves building owners holding the bag. Many are real estate investment trusts whose shares are sold as investments to folks expecting regular dividend payments. The main way for them to recover their investments in office towers and other buildings will be to turn them at last partly into residences, as this column first suggested in April 2020, when the trend became obvious to anyone looking.

 

        The current office vacancies do not exist just in California. The New York Times the other day headlined a long-ish story on the office-conversion scene there “Eerie Emptiness in New York.” Quite a contrast to the many previous tales of overcrowded Manhattan.

 

        Once buildings are converted either wholly or in part to residential units, much of the housing shortage will disappear.  It’s a far cheaper and easier task than building billions of new square feet, often in places where existing residents don’t want them.

 

        That means fewer lawsuits, less disruption of established neighborhoods, more convenience for most residents. It also means fewer construction jobs, although there will still be plenty of work involved in drywall, carpentry, electricity and plumbing shifts, plus construction of new elevators. But the buildings’ profiles and footprints will not change, giving neighbors little to gripe about.

 

        The real question here is why legislators and local city council and county board members keep pushing more and more new construction, which is obsolete and hard to sell even before it’s built. The answer most likely lies in campaign donations from developers and building trade unions.

 

        So once again, it’s money interfering with inevitable progress and problem solving.    

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    Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It" is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net

SOLAR MANDATE, UNDER ATTACK, ACTUALLY GOOD FOR CONSUMERS

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, JUNE 15, 2018, OR THEREAFTER

BY THOMAS D. ELIAS

          “SOLAR MANDATE, UNDER ATTACK, ACTUALLY GOOD FOR CONSUMERS”

          Ever since the California Energy Commission adopted a new solar panel requirement for new homes sold in 2020 and beyond, the edict has been under concerted attack.

          “This forced mandate represents an extraordinary regulatory overreach,” lamented Jon Coupal, president of the Howard Jarvis Taxpayers Assn. and self-anointed consumer advocate. “Future homebuyers,” he added, “are the real losers…The other loser is the principle of free enterprise.”

          But consumers won’t lose in this, despite the complainers’ gripe that putting solar panels on new housing will add about $9,500 to the cost of each new home. The Energy Commission calculates that while its rule will add about $40 to the average monthly payment on new housing, it will also save an average $80 a month in electric bills, for a net gain of $40 a month to the new homeowners.

          And their actual gain might be far greater. For most new housing in California these days is built inland, far from the coastal strip where weather is coolest. Because air conditioners often run steadily there at least six months of every year, power use for basic household functions is much higher inland than along the coast.

          Add to this the steady increases in electric rates perpetually demanded by utilities and the usual aquiescence of the state Public Utilities Commission in granting them, and the benefits of solar figure to get higher each year. For solar power will cost the new home buyers very little beyond the original expense and they won’t have to worry about price increases that will afflict other homeowners.

          This does not mean the solar mandate is perfection. Immaculate has rarely been a word to describe the Energy Commission, whose dealings on hydrogen refueling stations, for just one example, have been rife with conflicts of interest.

          So yes, the new rule benefits builders and solar panel suppliers, adding to their profits. It also helps labor unions, whose members will get added work.

          But the new mandate will not aid only the new home buyers, who will likely have to meet slightly higher standards to get mortgages. It will also benefit all consumers. Here’s how:

          Putting solar photovoltaic panels atop as many as 80,000 new roofs each year (the approximate average number of new homes built in California in each of the last five years) will eliminate the need for the equivalent of one new solar thermal farm in the California desert each year. Costs of those facilities are usually borne by private companies, who recoup their investment by selling power to the big utilities.

          The utilities often then build hundreds of miles of transmission lines to fetch power from those solar farms in desert areas, adding billions of dollars yearly to their rate base. All customers foot the bills for that, while the utilities get a guaranteed profit on this use of consumer money, usually about 14 percent yearly for 20 years.

          Solar thermal plants, then, are a bad deal for everyone but the companies that own them and the utilities that exploit them. Anything that eliminates need for those plants is good for every consumer in the state.

          All that is entirely aside from the environmental benefits of adding large amounts of solar power annually to the state’s supplies, thus helping meet California’s 2030 goal of getting 40 percent of its energy from renewable sources like hydro-power, geothermal, wind – and solar.

          And yet, there remains the problem of home prices. California’s median price of about half-a-million dollars for an ordinary house has driven away more than 500,000 low-income families over the last 11 years, says a study commissioned by the Next 10 public policy non-profit group.

          To mitigate the added cost solar will bring at mortgage-application time, what’s needed is a sliding-scale state solar subsidy based on income. (The new rule already includes subsidies for adding battery storage to solar systems on new homes.) This should be built into home-purchase paperwork, with the money going directly to sellers and thus cutting some of the added $40 in mortgage payments.

          This is about all that needs to be added for this mandate to become one of the best public policy decisions California has seen in decades.

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     Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net

HOW MUCH EXTRA MONEY SHOULD GO FOR ENGLISH LEARNERS?

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, JUNE 15, 2012, OR THEREAFTER

BY THOMAS D. ELIAS

     "HOW MUCH EXTRA MONEY SHOULD GO FOR ENGLISH LEARNERS?”

          At budgeting time, when legislators and the governor decide how much state support each public school pupil should get, it’s pretty clear that some students are more equal than others, as the late "Animal Farm" author George Orwell might have put it.

          As things now stand, school districts will start out getting a base grant of $4,920 for every student they register during the next school year. Then there are extras, with the single largest category both in terms of money provided and numbers of kids involved being pupils designated as English learners.

          If you have a child who speaks little or no English, his or her school will get at least an additional 8 percent from the state on top of the basic grant.

But if you’ve got an extra-bright kid there’s absolutely no state requirement that your local school district put any money into gifted and talented education programs tailored for that child. So when parents lack the funds to send children to a private or parochial school, the brightest pupils can be out of luck when it comes to the stimulation often needed to hold their attention and facilitate further progress.

Classes for the gifted, unlike teaching English as a second language, are a local option. School districts can spent money for them or not, as local school boards decide, and in an era of extremely tight education dollars, some districts have opted out.

There are plenty of other programs in a similar spot: college counseling for high school students, civic education, training assistance for bilingual education teachers, school safety, ongoing training for principals, summer school and ninth grade class size reductions were just some of the programs on a list the nonpartisan state legislative analyst’s office presented to an Assembly committee this spring.

          It’s almost inevitable all those programs will suffer cuts, even if the tax increase initiative pushed by Gov. Jerry Brown should pass.

          One reason: The money going to English learners will increase dramatically if Brown’s proposed new state budget passes as submitted.

          The theory is that extra attention and teachers need to be diverted to English learners in order to bring them up to speed. So Brown wants to increase the current 8 percent added “weight” given them to 37 percent over the next six years. In short, the state would give districts $6,740 to spend on educating each English learner they have enrolled.

          The very thought of this rankles some Republicans, who contend this all is a subsidy for illegal immigrants. It doesn’t matter to those making this claim that the long and vast immigrant tide from Mexico has been brought to a virtual halt by a combination of today’s lousy economy and new enforcement tactics, which combined last year to cause more persons to move from this country to Mexico than the other way around, according to a new study by the Pew Hispanic Center.

          “ESL (English as a second language) is really about helping illegal aliens learn English, using money that could go for equipment, textbooks and supplies for honest students,” gripes Stephen Frank, an ultra-conservative blogger and former head of the California Republican Assembly. “(The Brown proposal) means that illegal aliens, instead of having 8 percent more money spent on them for education will now have 37 percent more…Our kids deserve better than having criminals stealing their education money.”

          That complaint, of course, ignores the fact most English learner students now enrolled in California schools are U.S. citizens, regardless of their parents’ immigration status. And the fact that youthful illegals can hardly be categorized as criminals just because their parents brought them here at an age where they had nothing to say about the matter.

          For sure, there’s one other issue that must be dealt with before the Brown program should go forward: How to prevent the extra money from keeping students in English-learner status long after their language skills are adequate.

          Said the legislative analyst report, “High funding linked to English learner status could create fiscal incentives not to reclassify students as proficient in English.” In short, the longer a child is classified an English learner, the more money goes to the school district involved.

          Some experts already believe too many students are being kept too long in English-learner status.

          The bottom line: Without at least some tweaks to ensure honesty and some consideration for the brightest children, this change should not go forward.

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     Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available. For more Elias columns, go to www.californiafocus.net.

SCHWARZENEGGER WOULD PIT UNIONS AGAINST THE POOR

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, JUNE 15, 2010, OR THEREAFTER

BY THOMAS D. ELIAS
“SCHWARZENEGGER WOULD PIT UNIONS AGAINST THE POOR”

All through his almost seven years as governor, Arnold Schwarzenegger’s most basic priority has always been clear: As much as possible, feather the nests of his largest political donors.

A secondary priority has been to “get” his political enemies.

This has been true in almost every budget proposal and many of the legislative deals he’s struck to get his fiscal plans passed. Never was it more visible than in the budget bargain of February 2009, providing $2 billion a year in corporate tax breaks.

So it is again with Schwarzenegger’s latest budget plan, which takes aim squarely at the poor and at state employees, most of whom earn under $60,000 per year. Perhaps this proposal is mostly a bargaining ploy, designed to force Democrats to propose new taxes, which they have already done.

Yes, the plan has some positive components, including restoration of $140 million in state parks funding and, at long last, leaving steady the state's already much reduced contributions to its public university systems.

But Schwarzenegger would fob the responsibility for providing any safety net to the poorest Californians onto counties – themselves cash strapped. He would remove almost all state aid for 1.4 million persons. There are also huge cuts in the Medi-Cal program covering the same people and many others. And there’s no certainty about what any county could or would do for its poor.

Schwarzenegger would also subtract one day’s wages each month for all state employees, giving them eight hours of personal leave instead. This pay cut would come atop the 5 percent reduction he proposed in January, essentially docking state workers 10 percent of their pay. At the same time, their pension contributions would be upped by 5 percent of each paycheck because of bad investment decisions by government pension plans. Taken together, all this would give highway engineers, Department of Motor Vehicle clerks, park rangers, tax auditors, agricultural inspectors and many more a net of 15 percent fewer take-home dollars than they’ve gotten in prior years. The three days most state employees have lately been furloughed each month would end, leaving net pay about the same as in the last few months but much lower than before. Another way to look at it: employees would work two more days per month for the same pay they’ve recently gotten.

Meanwhile, the plan asks absolutely nothing new of private sector workers or businesses. Corporations would keep their tax breaks, old and new, and might get even more. California would remain the only oil-producing state without a severance tax on oil and would become the only one without a welfare-to-work system.

It’s plain what’s going on here: The poor don’t vote as reliably as others, so they have little clout in Sacramento. And Schwarzenegger has vilified public employees and their unions for years, beginning with his late 2003 promise to kick their rears. Those unions have thwarted Schwarzenegger for years, defeating several pet ballot propositions designed to increase his power, and this is the last chance for the termed-out governor to get back at them.

As he proposed his budget revisions in mid-May, Schwarzenegger said the state could easily afford to keep its health and welfare programs going -- if state workers’ pay and pension benefits are reduced even more than he’s already proposed.

Schwarzenegger has no use for either of these interest groups, so he’s now in effect inviting them to compete politically, telling them to fight over what scraps may exist on California’s bare dinner table.

The governor would like to befuddle union-backed Democratic legislators who also generally support programs benefiting the poor, pitting the two constituencies to which they are most devoted against each other.

“We can’t fall for Arnold’s wedge,” warns Robert Cruickshank, public policy director for the liberal Courage Campaign.

But Democrats almost certainly will have to concede something to Schwarzenegger. That’s because they can’t raise a dime of new taxes without a Republican vote or two in each house of the Legislature, and none now seems available.

Will they reduce pension benefits for new state employees to raise the money needed for keeping welfare alive? Will they keep pensions at present levels and allow removal of virtually all aid for the poorest of the poor, thus expanding the existing homeless problem and likely creating new public health issues? Will they find another way, via taxes or borrowing or something else?

No one can answer these and other questions just yet. But two things are clear: Schwarzenegger has put organized labor and advocates for the poor in an unprecedented quandary. As a result, this year’s budget battle could be longer and more bitter than even the extended fights of the last few years.

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Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net