California Leaders Propose Rewards, Fines to Spur Housing

SACRAMENTO (AP) — Faced with a crippling housing shortage that is driving prices up while putting more people on the streets, California’s governor and legislative leaders agreed Thursday on a plan to reward local governments that make it easier to build more housing faster and punish those that don’t.

The proposed law, which still needs approval by both houses of the Legislature, would let state officials reward “pro-housing” jurisdictions with more grant money for housing and transportation.

It also calls for the state to sue local governments that do not comply, possibly bringing court-imposed fines of up to $100,000 a month.

The agreement removes one of the final barriers to Newsom signing the state’s $214.8 billion operating budget. Lawmakers passed the budget earlier this month, and Newsom has until midnight Thursday to sign it. He has delayed his signature while negotiating the housing package with state lawmakers.

The housing plan does not define what local governments must do to be declared “pro-housing,” other than passing ordinances involving actions to be determined later.

In a joint statement, Gov. Gavin Newsom, Assembly Speaker Anthony Rendon and Senate President Pro Tempore Toni Atkins — all Democrats — said the agreement “creates strong incentives — both sticks and carrots — to help spur housing production across this state.”

California’s population is closing in on 40 million people and requires about 180,000 new homes each year to meet demand. But the state has averaged just 80,000 new homes in each of the past 10 years, according to a report from the California Department of Housing and Community Development.

Home ownership rates are the lowest since the 1940s while an estimate 3 million households pay more than 30% of their annual income toward rent.

State officials often blame local zoning laws for slowing the pace of construction.

In January, Newsom proposed withholding state transportation dollars from local governments that do not take steps to increase housing. Local governments pushed back hard, resulting in Thursday’s compromise.

The court fines could be difficult to collect. A court would have to rule local officials are out of compliance. And once that happens, jurisdictions would have a year to comply before they would have to pay a fine.

If they refuse, the state controller could intercept state funding to make the payment. In some cases, the court could appoint an agent to make a local government comply. That would include the ability to approve, deny or modify housing permits.

“This bill puts teeth into existing state laws, to ensure cities and counties actually follow those laws,” said state Sen. Scott Wiener, a Democrat from San Francisco who is chairman of the Senate Housing Committee. “At the same time, we need to be clear that California’s existing housing laws, even with better and more effective enforcement, are inadequate to solve our state’s massive housing shortage.”

Lawmakers have already agreed on most major items in the state budget. They voted to expand taxpayer-funded health insurance to adults younger than 26 who are living in the country illegally.

They also agreed to tax people who refuse to purchase private health insurance and use the money to help families of four who earn as much as $150,000 a year to pay their monthly health insurance premiums.

Lawmakers have not yet voted on details of a plan to spend $130 million from the state’s cap and trade program to help improve drinking water for about a million people.

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