What’s the Fastest Way to Cede Local Control to Sacramento? Ask the Housing Industry.
“We are all for ‘Local Control’ until the locals get out of control,” was a mantra I heard for years working with various advocacy organizations – and it rings true today, more than ever, when it comes to housing in Orange County. The result is quickly becoming that we are losing control to reasonably plan for the future of our communities.
The latest example in Orange County can be found in Laguna Hills. As it considered what to do with the land at the former Laguna Hills Malls site, the city went through the standard procedures for land use approvals on the property. While contentious, at first, a proposal to build a master planned multifamily community eventually passed, providing some certainty for the property’s future.
A small group of dissatisfied citizens decided to draft a local ballot measure seeking to impose a $1,400 per-unit, per-year tax on all multifamily housing in the city. Yes, that means even existing apartments in the city would become collateral damage in this small group of residents’ war against a new apartment project. The measure was so imprecisely written that it may end up applying to single-family homes and condo complexes, as well.
Residents seeking to impose a tax of more than $100 per-unit, per month, in an already challenging housing market is not only irresponsible but also shortsighted, as it places their city and their fellow taxpayers at great financial and legal risk.
The ramifications of this reckless, citizen-driven measure are already being felt, and their signature gathering process to qualify the measure has barely gotten started. Californians for Homeownership recently filed a lawsuit against Laguna Hills for failing to meet its housing element requirements. And should the city fight this and its obligation to comply with its Regional Housing Needs Assessment (RHNA) allocation from the state via the Southern California Association of Governments, the legal costs would fall upon the taxpaying residents of Laguna Hills – leaving city leaders to explain why they are not doing their job.
The city of Huntington Beach faces similar challenges coming off the heels of a legal entanglement with the California Department of Housing and Community Development (HCD), and the state’s lawsuit against the city for failing to meet it’s affordable housing needs. Famously, Governor Gavin Newsom noted, “You can’t just see the world through the lens of your own city,” highlighting the fact that trying to push responsibilities off to other communities does not work anymore.
Now, Huntington Beach is facing a call for rent control under the guise that it will provide “affordable housing.” While tenants’ rights groups champion this policy thinking that it will contain the cost of housing, it would actually have the opposite effect. For rental property owners, it would signal to them that investing in the city would restrict their ability to recoup their costs of providing affordable housing. For tenants, it would result in annual maximum rent increases becoming the new normal as property owners seek to keep up with escalating costs and keep their properties up with the market.
Another city in Orange County is currently struggling with this reality – Santa Ana – which made two huge mistakes.
First, the city council enacted rent control with a limit of no more than 3 percent per year, unless a rental property owner can get an exemption from the city. The result, you guessed it, has been rental property owners seeking exemptions from the city, and seeking the maximum allowable annual rent increase. Why?
With inflation over 7 percent and rents capped at 3 percent or lower, rents now fall far short of covering the property owners’ costs to provide the housing. Cutting preventative maintenance and planned renovations, closing amenities, and implementing fees becomes the only way to operate under these restrictions. The unfortunate result is that the renter, the housing provider, and the rental property all suffer.
Second, the city council also implemented a tripling of fees on new housing as part of the paradoxically named “Housing Opportunity Ordinance.” Affordable housing under these conditions is nearly impossible to provide – and the escalation of costs makes building housing in the city an unappealing option, with developers looking to other cities – or counties – whether they can propose and build their projects.
So, what happens when no one wants to build the necessary housing in our communities?
For the longest time – nothing much. HCD would send the city a strongly worded letter.
However, that’s not the reality anymore. In 2019, Governor Newsom sent a shot across the bow of many cities for failing to meet their obligations – Huntington Beach being one of them. HCD signaled they were following suit in 2021. Organizations such as the forementioned Californians for Homeownership and the state and local Yes in My Back Yard (YIMBY) organizations have begun filing lawsuits, challenges, complaints, and initiatives to take that control away from local governments when they stray from compliance with state housing laws. The solution, which is prescribed by California law, is to take control away from the cities.
This leaves the question to the residents and the leaders of our local communities – What path do we choose?
On one path, we can implement restrictive policies, pass ballot measures to make housing even more unaffordable, and say “no” to every proposed project seeking local approval.
On the other path, we can encourage, incentivize, and allow housing to be built in an appropriately planned manner, with local oversight, input, and cooperation.
In other words, we can preserve control of our future by acting in good faith, or we can be defiant and ostensibly give away control to an unelected bureaucrat 400 miles away.
Chip Ahlswede if Vice President of External Affairs for the Apartment Association of Orange County.
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