The California housing crunch

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MYRNA BROWN, HOST: Up next…housing versus environmentalism.

Last month, California Governor Gavin Newsom signed a bill to reform the state’s landmark environmental law… one that critics blame for slowing construction of everything from housing to industry hubs.

JENNY ROUGH, HOST: Some see the change as a boon to the housing market… others see it as the governor trying to appear more moderate ahead of a bid for the presidency. WORLD’s Mary Muncy reports.

STEPHEN ANASTASIA: There just isn't that many houses available.

MARY MUNCY: Stephen Anastasia and his wife, Janette, have been trying to buy or build a house in Central California for almost three years. They’ve gone through a couple of different options.

JANETTE ANASTASIA: Through some mutual friends, we were able to be in a private offer for a house. It was, it was a hoarder situation.

They helped clean it out a little and got a good look at the property. It was a barn house on five acres.

STEPHEN ANASTASIA: And no improvements to the property so it's just bare property. And of course, the whole inside of the house is filled with stuff.

After a few weeks, the sellers decided to see if they could get more than the Anastasias offered.

STEPHEN ANASTASIA: And it went for over $500,000.

Stephen, Janette, and their three kids are once again looking. In the meantime, they’re living in a parsonage at reduced rent. But the church is considering selling the building, so they may not have housing for long.

STEPHEN ANASTASIA: …and then we have nowhere to go.

Since 2000, the price of mid-tier homes in California has nearly quadrupled… So last month, California Governor Gavin Newsom approved a bill meant to streamline homebuilding. Louis Mirante works on housing policy with the Bay Area Council.

LOUIS MIRANTE: The California Environmental Quality Act, better, probably better known as CEQA, has been a major barrier to local governments approving housing projects, to developers being able to entitle housing projects.

In 1970, then-California Governor Ronald Reagan enacted CEQA… It’s based on a federal law requiring federal agencies to create environmental impact statements before starting a project. When Reagan signed it, CEQA only applied to state and local agencies… but courts later expanded it to include private projects as well.

MIRANTE: That was when all these troubles really started.

The court’s expansion allowed just about any Californian to ask for an environmental impact review… That means disgruntled neighbors could ask for a review of a new industrial complex, or competitors could threaten to sue a business’s expansion project.

Mirante says that has led to major slowdowns.

MIRANTE: For example, I'm familiar with a project in San Francisco that was on a vacant parking lot just a couple blocks away from some of the best transit and some of the best jobs in the world.

It would have created almost 500 units. Twenty percent of them were scheduled to be affordable housing.

MIRANTE: But that project was delayed by several years of CEQA litigation, and the developer was required to produce two documents, both of which were in excess of 1000 pages each, of environmental analysis.

Delays like that can kill a project… especially for smaller developers. So, last month, Governor Newsom signed a bill that creates exceptions to CEQA… the biggest of which are for what’s known as infill housing… that’s housing within urban areas already zoned for residential use.

Mirante says the reform will go a long way toward filling the housing gap in California… but not everyone is so sure.

RUSSELL JOHNSON: It only affects a very slim portion of projects.

Russell Johnson works with Associated Builders and Contractors.

JOHNSON: It's not a blanket approval. It has to meet the definition of urban and has to meet the definition of infill has to be less than 85 feet.

And there are more… But if a site does meet the requirements, a developer can bypass CEQA.

JOHNSON: And it's a lot easier than having the potential for the CEQA lawsuit hanging out there.

The threat of a lawsuit can kill a project just as quickly as an actual case.

Johnson says the legislation is a necessary reform to CEQA… but it won’t change much about the housing market in California… because there are still so many other regulations and permitting requirements.

JOHNSON: Life in California, nothing is easy, which is why we're more expensive than many of the states that are out there.

But Dan Silver with the Endangered Habitats League says those requirements are there to protect nature.

DAN SILVER: There been projects that were delayed, yes, but generally for very good reasons.

Silver pointed to a study by CEQA Works that says only about two percent of projects face CEQA litigation.

SILVER: Just this year, my organization and others filed CEQA lawsuit on a project that was in very important wild lands, and we were concerned about endangered species.

After a year or so, the developer agreed to shrink the project’s footprint while upping the number of housing units.

SILVER: CEQA can produce better outcomes for both the environment and for housing. It's not anti-housing. CEQA is better planning.

Governor Newsom’s record on environmental policies has been a mixed bag. He’s leaned mostly in one direction…committed to habitat restoration and particularly hard on things he believes cause climate change. But his CEQA reform bill seems to be one more move in the other direction. Silver thinks that this bill is a bid to appear more moderate ahead of the 2028 presidential election.

SILVER: He has definitely been a driving force behind these attacks on CEQA and an anti-regulatory agenda.

Silver is all for smart regulation that protects habitats… but back in Central California, Stephen and Janette Anastasia say California’s restrictions go too far.

They started looking to build when they couldn’t buy… but permit requirements and safety regulations put it out of their price range.

The reform wouldn’t help people like them directly… It’s really meant to encourage large-scale projects… but it may increase supply and that could eventually bring costs down in their area. So for now, they’re stuck in a waiting game.

STEPHEN ANASTASIA: There's so many layers to it. It's not like, you know, if there's a one size fits all solution, it's, you know, and this is something that California has basically set itself up for, for many, many years.

Reporting for WORLD, I’m Mary Muncy.

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