AFFORDABILITY ANSWER: A NEW TAX ON HOUSING SPECULATORS?

 

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, JULY 5, 2022, OR THEREAFTER

BY THOMAS D. ELIAS
     “AFFORDABILITY ANSWER: A NEW TAX ON HOUSING SPECULATORS?”

 

        The TV commercials and online ads are fast becoming ubiquitous: “We’ll buy your house as is,” they trumpet. “No need to spend any money fixing it up.”

 

        That’s commonly the message from housing speculators, often institutional investors including real estate investment trusts less interested in preserving or maintaining housing than cashing in as land values rise. It’s the land, not the houses, that interests them most.

 

        Says a Northern California citizens group called United Neighbors, “Non-wage capital, especially institutional and private equity, is entering the single-family market in unprecedented amounts.”

 

        That’s a big reason why, the group contends, “California housing costs have inflated at such a rate that housing costs have completely decoupled from their historical wage-based income basis.”

 

        That, they say, is the root cause of the affordability crisis. It is furthered by the fact that institutional investors, including pension funds like CalSTERS (the California State Teachers’ Retirement System) and CalPERS (the California Public Employees Retirement System) keep many purchases vacant while they await land value increases. This frees them from dealing with tenants and evictions when they decide to sell or to demolish existing homes and turn them into multi-unit properties.

 

        United Neighbors claims institutional buyers, including Wall Street investment banks, spent a record $77 billion on single-family California homes over the last six months of 2021.

 

        That makes them the ultimate house flippers, people or companies buying homes to hold for awhile before they resell at a hefty profit.

 

        It creates large vacancy rates in some places at a time when California supposedly has a housing shortage. The actual shortage is in affordable housing, as 73 percent of houses permitted in 2020, for just one recent year, were affordable only to households with incomes well over $100,000.

 

        All this has also seen vacancy rates rise among housing units built since 1970 – more than 50 years’ worth. Statewide, the vacancy rate on these “newer” units was 12.4 percent in late spring. In Los Angeles County, it was 16.3 percent, while San Francisco had an overall vacancy rate of 8.7 percent and more than 40,000 vacant units.

 

        All of which suggests none of the controversial housing bills passed with alacrity by the Legislature in recent years can be effective, including last year’s Senate Bills 9 and 10, which essentially did away with R-1 single-family zoning statewide and allow subdividing of almost all lots in those areas.

 

        The problem, it appears, is less a lack of housing – especially while California’s population is relatively stable and not growing fast, if at all – than the fact that wages and home prices have gotten out of the usual synch, partly because of institutional investments.

 

        This year, Democratic state assemblyman Chris Ward of San Diego, which recently “won” the ranking as America’s least affordable city, proposed a bill to tax the profits of house flipping, especially by corporations and pension funds. It died in committee, but deserves resurrection.

 

        His bill, known as AB 1771, aimed to place a 25 percent levy on after-capital-gains-tax profits from reselling any house within three years after it’s bought. After that, the rate would have dropped to 20 percent and then declined steadily before disappearing after seven years.

 

        Taxes collected would have gone to cities, counties and affordable housing funds, said Ward, whose purpose, he told a press conference, was to create a disincentive for equity investors, thus opening more opportunities for people who plan to live in homes they buy.

 

        This would especially help mid-priced housing availability, because institutional buyers are more likely to buy that type of housing than high-end homes, whose appreciation rates are far less steady and predictable, often selling for millions less than their asking prices.

 

        The bill was opposed by building trades unions, whose workers don’t much care whether or when the places they build are occupied, so long as paychecks arrive on schedule.

 

Those unions and the developers with whom they work have been the main drivers behind the Legislature’s recent spate of unwise, unneeded new housing laws.

 

The bottom line: Yes, there is a housing crisis, but it’s at least as much a matter of hoarding and waiting for profit as it is of supply.

 

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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

GROUNDWATER LAW HAS NOT STOPPED SUBSIDENCE

 

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, JULY 1, 2022, OR THEREAFTER

BY THOMAS D. ELIAS
      “GROUNDWATER LAW HAS NOT STOPPED SUBSIDENCE”

 

        Drive almost any road in the vast San Joaquin Valley and you’ll see irrigation pipes standing up several feet tall in the middle of fields and orchards, pipes that once were underground.

 

        These metallic artifacts are emblematic of the utter failure of a 2014 law once billed by then-Gov. Jerry Brown as a landmark achievement. The omnipresent pipes, often unnoticed by speeding motorists, are symptoms of subsidence, the result of decades of overpumping groundwater in all the frequent episodes when California endured drought conditions, right up to this moment.

 

        Pumping their ever-deeper wells has been about the only way the state’s huge and nationally vital agribusiness community could maintain production of everything from peaches to peas, broccoli to pistachios, tomatoes to citrus, cotton to cauliflower, when snowpack has been thin atop the high Sierra Nevada Mountains and the state’s two large aqueducts cut back their deliveries to mere drops – as they’ve had to do this summer.

 

        The 2014 law was actually a rather ho-hum, non-crisis approach to something that was already a big problem many years before the law passed. The timetable of the law has increased metering on wells tapping into groundwater, but leaves no limit on what anyone can pump until 2030, when it may be too late.

 

        For, as a new Stanford University study shows, not only are the state’s groundwater reserves disappearing, but it’s decreasingly likely they can ever be restored to historic previous levels, or that the land subsidence which leaves irrigation pipes standing high above the land they water can ever be completely reversed.

 

        The comforting thought behind making water wells ever deeper as farms chase new groundwater supplies has always been that recharging the natural storage basins below ground level will eventually replace whatever is used.

 

        The study, from Stanford’s School of Earth, Energy and Environmental Sciences. suggests this isn’t so. In fact, the research suggests ground can continue to sink even if groundwater levels are stable or rising. That’s because when water is taken from the ground, the sheer weight of the land above the storage basin causes a partial collapse of sub-surface rocks around the storage spaces, known as aquifers.

 

        Even refilling those spaces above capacity – not a realistic possibility in the near future – cannot fully reverse this effect. The Stanford research indicated it’s unrealistic to expect ground levels ever to re-rise more than about one-third of the distance they have dropped.

 

        Subsidence levels vary a bit, but so far, they typically total about 20 feet over the last 65 years, gradual but now very visible. That only becomes disastrous when it affects things on the surface, like cracking roads and bridges and moving foundations of homes and other buildings.

 

        The 2014 law, called the Sustainable Groundwater Management Act, forced local water districts to make plans for avoiding “significant and unreasonable” new subsidence. It did not require those agencies to figure out how to prevent disputes between farmers or cities when one well-owner drills deeper and siphons off supplies from others.

 

        This very phenomenon has caused at least two episodes where portions of Central Valley cities suddenly saw their faucets run dry, forcing them to import supplies from unaffected nearby areas. This can be both expensive and unfair, but there’s often little the owners of suddenly dry wells can do about it. For one thing, farmers and cities whose wells dry up can’t always tell where their water went or who took it. They can only be sure it flowed downhill and away from them.

 

        All of which makes it very obvious that the 2014 law was far too meek when it passed and that more serious action to regulate and reduce groundwater use is needed.

 

        But that is not a priority for the current Legislature, dominated by coastal, urban politicians whose constituents are untouched by what’s happening under the ground where their food supplies are grown. Nor have Central Valley lawmakers done much, not wishing to offend corporate farms that often donate big campaign dollars.

 

        Which means more fields will be fallowed in the next few years, more wells will run dry, more cities will take emergency steps to find water supplies and the ground will likely sink ever lower.

 
-30-

    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

CALIFORNIA’S NATIONAL ROLE BECOMES MORE ACTIVIST

 

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, JUNE 28, 2022, OR THEREAFTER

BY THOMAS D. ELIAS

     “CALIFORNIA’S NATIONAL ROLE BECOMES MORE ACTIVIST”

 

        California has long had a major role in national affairs, often defined by personalities as disparate as Earl Warren, Richard Nixon, Ronald Reagan, Kamala Harris, Nancy Pelosi and Kevin McCarthy. They’ve been chief justice, presidents, vice presidents, speaker of the House and a possible speaker-to-be.

 

        For sure, without California’s two Democratic senators and the huge Democratic majority in its delegation to the House of Representatives, plus its 55 electoral votes in 2020, Republicans today would have solid control of both Congress and the White House.

 

        And California state laws have often been precursors of major national trends, as befits the Union’s most populous state. There have been the Proposition 13 property tax limits, imitated in 26 other states at last count, and California’s path-breaking anti-smog rules, copied automatically by more than a dozen other states. Plus many more examples.

 

        Only rarely has this state acted in direct reaction to the politics of other locales, but that’s probably about to change within the next few months.

 

        As states big and small, from Texas and Florida to Mississippi and Arkansas, limit abortion rights and even discussion of eons-old realities like homosexuality and transgender life, California officials exhibit a new determination to counteract those moves.

 

        It’s yet to be determined whether this strategy will somehow reverse at least partially the pandemic induced half-percent drop in California’s population over the last two years.

 

        But the contrasts between California laws and the new ones elsewhere are already stirring rumblings in places like Austin, TX and Jacksonville, FL. Women seeking abortions have reportedly begun coming to California, a repeat of what began happening 55 years ago, after Reagan signed a liberal therapeutic abortion law in his first months as governor. This is partly in anticipation of a U.S. Supreme Court decision upholding Mississippi’s new and very restrictive law limiting women’s reproductive choices.

 

        Flights from Texas, Mississippi, Florida and other states are far cheaper than half a century ago, so even poor and lower-middle class women can likely get here for procedures if they feel desperate.

 

        What about the Texas law allowing citizens to sue doctors and others who help women get abortions or provide them, even in other states? That law has been upheld by the Supreme Court, but it’s doubtful any such lawsuit would survive dismissal motions in any California court. The same for New York or Illinois, two other likely abortion destinations.   

 

        But California politicians are not merely relying on longstanding state law to resist the trend toward taking away a variety of rights, from schoolteachers discussing sexual roles to parents aiding transgender children as they try to find their way.

 

        Where Florida has legally classed helping children deal with gender role confusion as a form of child abuse and other states attack rights like same sex marriage or gay couples adopting children, California’s Legislature now appears set to pass laws making this state a legal haven for anyone affected by some of the changes and planned changes in other states.

 

        No one knows how many of the affected might migrate here, but some teachers in Florida schools have said they might if their current state enforces its new elementary school “don’t say gay” law.

 

        Then there are guns, especially illegal “ghost guns” lacking serial numbers, like some apparently used in last month’s early morning massacre on a Sacramento street.

 

        Taking a flier on the Texas abortion law, legislators – with vocal support from Gov. Gavin Newsom – are advancing a plan letting citizens sue anyone who distributes illegal assault weapons or their parts. Unlike other lawsuits, where plaintiffs must prove they were harmed, no such showing will be needed if this law passes. It’s an open question whether this putative law will actually produce penalties, or merely further discussion of what one state senator calls “the absurdity of the Texas law.”

 

        It’s a brand-new phenomenon for California politicians to openly admit they are reacting to laws passed in other states. But it also promises to be a new, personal and perhaps permanent way for California to exert its influence on politicians elsewhere.

       

        -30-

    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

PICK YOUR OPPONENT’ PLOY FAILS BONTA

CALIFORNIA FOCUS
   1720 OAK STREET, SANTA MONICA, CALIFORNIA 90405
FOR RELEASE: FRIDAY, JUNE 24, 2022, OR THEREAFTER

 

BY THOMAS D. ELIAS

     “’PICK YOUR OPPONENT’ PLOY FAILS BONTA”

 

        It was a ploy, much like one first used in the modern era of California politics by the late Democratic U.S. Sen. Alan Cranston in his 1986 reelection bid. The tactic worked that time.

 

        But radio ads that hit California airwaves in large quantities in May, as the primary election approached, did not work this spring.

 

        The ads touted the state attorney general candidacy of previously little known Republican candidate Eric Early, the most conservative hopeful in the running and an unapologetic supporter of ex-President Donald Trump.

 

        They were funded primarily by a pro-labor political action committee whose desire was to create as easy a path to election as possible for the appointed Democratic incumbent Rob Bonta, by far the most liberal candidate in the field.

 

 

        Bonta backers did not want his November opponent to be the most credible Republican in the field, former prosecutor Nathan Hochman, a party-backed hopeful who pledges to be tougher on criminals than Bonta – a longtime supporter of the “no-cash-bail” system overwhelmingly nixed by voters in 2020.

 

Bonta has also threatened numerous cities with costly lawsuits if they don’t knuckle under by OKing large amounts of new housing construction as called for by the state Department of Housing and Community Development, whose figures have been labeled unreliable by the state’s nonpartisan auditor.

 

        The radio ad sponsors plain hope was that California’s top two “jungle primary” would give Bonta an opponent far less electable than Hochman might turn out to be. But Hochman holds a significant edge over Early with most votes counted. The final count might not be known for weeks, but Hochman is Bonta’s apparent November opponent.

 

        As an incumbent in a state where no Democratic statewide officeholder has lost a reelection bid since the 1980s, there was never much doubt Bonta would win the primary vote. But one nuance of top two is that even with a clear Bonta majority in the primary, he still would need to run again in November against the No. 2 finisher.

 

        Knowing this, Bonta’s supporters wanted to split the Republican vote between Early and Hochman and allow no-party-preference candidate Anne Marie Schubert, the Sacramento County district attorney, to sneak into the fall runoff. That didn’t happen, as Hochman took second place and  Early in third, both far ahead of Schubert.

 

           Bonta backers figured Hochman could be tougher for Bonta to beat because he had major-party backing, while Schubert was strictly on her own and Early would be hurt by strong anti-Trump feeling in California.

 

        The system is significantly different today than in the pre-top two days when Cranston, feeling threatened by the moderate Republican Silicon Valley Congressman Ed Zschau, encouraged backers to donate more than $100,000 to American Independent Party candidate Edward Vallen, who used it mostly for radio ads strikingly similar to this spring’s ads touting Early. They essentially said Zschau was dishonest, claiming Vallen and Cranston were the only candidates in the race with integrity.

 

Cranston eventually won reelection by just 104,000 votes, while Vallen pulled 109,000, including many that figured to go to Zschau if the ultra-conservative Vallen had not been a factor, albeit a minor one.

 

        The ploy infuriated Republicans at the time, but it worked for Cranston, very likely responsible for the last of the four terms he served before Democrat Barbara Boxer won his old seat in 1992.

 

        The odds are that even though this ploy did not work  for Bonta, he will nevertheless win election in his own right this fall. That’s because Democrats outnumber Republicans almost 2-1 on the rolls of registered California voters, and no statewide GOP candidate except the movie muscleman Arnold Schwarzenegger has been able to overcome that deficit since it began to appear in the 1990s.

 

        No one else had used the “boost your opponent” playbook to a significant extent in a statewide race in the 36 years that passed since Cranston did it. But modern PACs and their sometimes hidden donors are well situated to repeat it, even if that displeases or offends some voters.

       

-30-
    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

 

Suggested pullout quote: “The ploy worked for Cranston, but not for Bonta.”

NEWSOM PROBABLY CAN'T LOSE THIS FALL

 CALIFORNIA FOCUS

FOR RELEASE: TUESDAY, JUNE 21, 2022, OR THEREAFTER

BY THOMAS D. ELIAS

     “NEWSOM PROBABLY CAN'T LOSE THIS FALL"

        Gov. Gavin Newsom easily won this month’s California primary election. But no matter, he will still have to run this fall.

 

        After demonstrating overwhelming vote-getting power both in this balloting and last fall’s abortive, Republican-led recall election, is it possible he might somehow contrive to lose in November’s runoff election?

 

        The easy and very likely answer is no. For one thing, no candidate who so overwhelmingly whipped all the opposition since the state adopted its top two “jungle primary” system has ever lost, or even seen their springtime edge diminish much in the general election.

 

        But there is also evidence Californians are unhappy with the direction where Newsom has led the state since 2018, and there is no sign of any kind of course change from him. There have been some signs he may be a little bored with the job, too – blithely taking off on family vacations both last Thanksgiving week during the spate of smash-and-grab burglary/robberies and leaving again for two weeks in late March and early April as inflation began striking hard at the pocketbooks of almost all Californians.

 

        There is no evidence yet that many voters hold those absences against Newsom, but there’s ample evidence most voters think the state in general is on the wrong track. In a springtime survey by the UC Berkeley Institute of Governmental Studies, about 60 percent said they believe this.

 

        The survey’s director, Mark DiCamillo, told a reporter that “Californians are giving a negative rating of the direction of the state. That coincides with how voters are viewing their personal financial situation.”

 

        Could Newsom have done something about that? For sure, rather than take his family to Central and South America as inflation bit harder and more suddenly than it has anytime in the last 40 years, Newsom could have stayed home and done some serious jawboning, as governors often do in economic crises.

 

        No one knows if it would have been effective, but Newsom could have summoned the heads of California’s major gasoline refiners to Sacramento when they first raised prices more than $1.30 above last year’s levels. He could have threatened them with legislative actions including oil depletion taxes like those in other oil producing states like Texas, Oklahoma and Wyoming. He could have invited legislators in to discuss price controls with the executives.

 

        Even if it produced little result, meetings like that would have been good theater, creating the impression Newsom cares about inflation’s effects on individuals and that he’s determined to help. But he did nothing like that. Perhaps boredom with his job is the reason for such an abject lack of creative thinking.

 

        Or maybe he’s just taking his reelection completely for granted and figures he doesn’t have to do anything special to earn it.

 

        But the crises in this state that produce the “wrong direction” poll finding go far beyond gasoline prices. They also include realities like the fact found in other surveys that 64 percent of Californians feel their taxes are too high. It’s no coincidence that this number and the level of “wrong direction” discontent are virtually identical. Especially since fully 42 percent of voters also said in the polls they are worse off financially than one year ago.

 

        Then there are falling enrollments in both public schools and community colleges, by proportions far greater than the state’s population loss of less than half a percent over the last fiscal year. The enrollment figures indicate pessimism over the future, many Californians concluding it may not matter whether or not they try to better themselves.

 

        There’s also the continuing dilemma of homelessness, where no one offers a proven solution. Newsom has at least demonstrated caring and interest in this, devising a plan to force thousands of the unhoused into counseling and psychotherapy, like it or not. That’s condemned by some as too draconian and coercive, but no one else has much of an alternative.

 

        It adds up to a situation where Newsom remains the obviously huge favorite for reelection, but just might be ripe for ambush if rival Brian Dahle can quickly come up with tens of millions of dollars and overcome the Republican tag after his name.

       

        -30-

    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

 

Suggested pullout quote: “The crises…go far beyond gasoline prices.”

THE YEAR’S KEY PROPOSED LAW LIMITS SOCIAL MEDIA MANIPULATING KIDS

 

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, JUNE 17, 2022, OR THEREAFTER

BY THOMAS D. ELIAS

     “THE YEAR’S KEY PROPOSED LAW LIMITS SOCIAL MEDIA MANIPULATING KIDS” 

        It may not seem this way on the surface, but there’s a growing awareness that the most important bill California legislators will consider this year is not about housing or homelessness or abortion or wildfires or taxes. Rather, it’s one that might force gigantic electronic firms to lay off our teenage kids and stop trying to addict them for profit. 

        If most adults were not yet aware of the potential mind-changing effects of kids looking at screens for hours, a year or more of watching schoolchildren struggle to learn while working on computers programmed to help them, not exploit them, probably provided some understanding. 

        But even as computer programs and sessions devoted to learning had difficulty holding kids’ attention, there was no reduction in youthful addiction to more glitzy screen programs like Tik-Tok and Instagram, designed not to help them learn, but rather to manipulate them in myriad other ways.

         In his landmark 2015 book The Wired Child: Reclaiming Childhood in a Digital Age, the Harvard-trained, Walnut Creek-based Ph.D. psychologist Richard Freed asserted that “We need to stop accepting on faith the gadget-dominated life thrust upon our kids…The push to give our kids so many playtime devices is based on inaccurate notions…”

        Widespread emphasis on “STEM” education (science, technology, engineering and math) rather than subjects like history or English composition contributes to parental acceptance of myriad screens in their children’s lives. That has made social media a vital part of many – maybe most -- childhoods. 

        But big technology companies led by Facebook, owner of Instagram, use algorithms to mine information about users, selling that information to advertisers who then send out personalized content and ads. 

        Enter the current Assembly Bill 2408, sponsored by Assembly members Jordan Cunningham, a San Luis Obispo Republican, and Democrat Buffy Wicks of Oakland. 

        The bill’s preamble cites internal Facebook research showing the company is aware that “severe harm is happening to children,” who are decreasingly connected to family and school the more addicted they become to Instagram and similar media. 

        This is done via targeted videos and notifications that pop up 24 hours a day and never-ending scrolling designed to keep users on a particular site.

         The preamble adds that girls have a higher prevalence of screen addiction than boys and that girls admitting to excessive social media use are two to three times more likely than boys to be depressed, a condition that can lead to suicide. And it says an internal Facebook message board reported that 66 percent of teen girls on Instagram experience “negative social comparison,” often leading to low self-esteem, which can precede depression. 

        The bill’s solution is to prohibit social media platforms with parent companies whose annual revenues exceed $100 million from addicting any child user via use or sale of personal data. It would allow parents and guardians to sue for up to $25,000 per violation, with no ceiling on total liability. 

        Lawmakers are usually loath to create new grounds for lawsuits aimed at California companies, but this bill passed the Assembly on a 51-0 vote, with no explanation why that house’s other 29 members did not vote. 

        Psychologist Freed, who testified in favor of the bill in a committee hearing, said it could reduce what he called “an epidemic of depression and suicidality in girls.” That’s because, as the bill preamble notes, “Numerous studies show that reducing social media use (has great) mental health benefits.” 

        The state Senate will now get its shot at making a contribution to mental health in California by following the Assembly and approving the bill, with Gov. Gavin Newsom – parent of four pre-teen children -- likely to sign it without hesitation. 

        And if California passes this, expect other states to follow, as they often have on unrelated measures like the Proposition 13 property tax cuts and this state’s smog rules.               

-30-

    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

NEWSOM BUDGET AT LAST RECOGNIZES ONE HOUSING REALITY

 

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, JUNE 14, 2022, OR THEREAFTER

BY THOMAS D. ELIAS
    “NEWSOM BUDGET AT LAST RECOGNIZES ONE HOUSING REALITY”

 

      It’s anyone’s guess whether the developer campaign donors who greatly influence California’s huge Democratic legislative majorities will follow suit, but Gov. Gavin Newsom’s proposed budget at long last recognizes one reality that has been plain since the beginning of the COVID-19 pandemic:

 

        With hundreds of thousands of white collar office workers switching permanently to home offices where they are often more productive than before, billions of square feet in office towers and other buildings now sit vacant, earning their owners nothing.

 

        Meanwhile, despite a state audit showing its figures are unreliable, the demand of the state Department of Housing and Community Development  (HCD) for more than 1.8 million new housing units by 2030 remains the mantra for so-called “progressive” politicians. And state Attorney General Rob Bonta persists in threatening lawsuits against local governments which don’t knuckle under and approve thousands of new units right away.

 

        The trouble is that at the current pace of construction (less than 100,000 new units per year since Newsom took office in late 2018), there is no chance for creating anywhere near that many newly constructed apartments, condominiums and individual houses.

 

        Not even the 2021 passage of densifying measures like SB 9 and SB 10, which all but eliminate single-family zoning, could change that.

 

        So Newsom has had to recognize the reality of office vacancies and their inevitable conversion to housing. It’s already happening in some places, with more than 5,000 converted units either created or approved so far in all parts of California.

 

        This trend would be accelerated considerably by the proposed Newsom budget, which is better known for its effort to place billions of dollars in the pockets of car owners to help them cope with inflationary gasoline prices created by oil company price gouging.

 

        But squirreled away in the more than $300 billion spending plan – which must be approved by June 15 in either its submitted form or a revised version, on pain of financial penalties for legislators – is $600 million to help convert office space to housing, particularly in dense urban areas.

 

        The need for these conversions has been obvious since March 2020, when Newsom ordered lockouts to help slow the spread of Covid. That edict suddenly emptied not only freeways, but also office towers. There has been only a partial return to offices since anti-pandemic measures were largely relaxed.

 

        Without conversions, local governments stand to lose many millions of tax dollars annually, as property values and assessments drop in amounts parallel to lost rental revenues. So the real estate investment trusts that own many of those buildings will feel ever more pressure from shareholders as many dividends remain well below pre-pandemic levels.

 

        But will legislators respond? They say they’re committed to creating new housing for the benefit of would-be homeowners now priced out of the market, where median single-family home prices statewide top $810,000. But the lawmakers are tied closely to developers, who stand to make far less from conversions than from new construction.

 

        They are also beholden to building trade unions, which would get plenty of work from conversions, but still much less than from new developments.

 

        Because those interests are among the top financiers of Democratic legislative campaigns, the Democrats who rule in Sacramento have resisted office conversions. They allowed a 2021 measure that would have made local approval of such conversions automatic die without floor votes.

 

        The questions now is whether they will try to knock the $600 million one-time enabling contribution out of Newsom’s budget proposal.

 

        If they do, it will prove they are committed far more to their campaign donors than to the prospective homeowners they nominally support.

 

        Right now, the fate of this boost to housing supplies remains uncertain regardless of all the evidence that it would help property owners, new buyers and local governments, each an interest to which the Democrats pay lip service.

 

        Now is the time for anyone who wants to see housing at all price levels created quickly to speak up and pressure legislators to leave that appropriation alone. But it’s unclear what will happen.

 

     -30-

 

     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