By Tim Hunt
Assemblyman proposes driving up housing costs to delight unionsUploaded: Mar 23, 2017
It’s is widely acknowledged that coastal California is facing a housing supply crisis, particularly here in the Bay Area.
As I reported last week Pleasanton Mayor Jerry Thorne said the state will be 2 ½ million housing units short by 2025 if nothing changes.
It’s a particularly acute problem in the Bay Area counties, notably the Silicon Valley, the Peninsula and San Francisco where job growth has outstripped housing supply by a huge margin. Since the depths of the recession in 2010 (although it officially ended in 2009), tech companies have added hundreds of thousands of jobs. That set off a construction boom to house those growing companies (check out the changes to the skyline in San Francisco) that drove blue collar jobs.
Sadly, housing was slower to recover and now lags job growth by a factor of 10. That means precious little housing close to jobs in the growth areas and more housing long commutes away.
Pleasanton has its challenge because the city did not permit any apartment building for more than 10 years. It also had an unlawful housing cap that was finally overturned in court. The city spent millions defending the cap and ended up finally settling the suit and the court ordered rezoning land for apartments.
That sparked the construction you see all over town today. It’s a bunch and most are market-rate projects so there will be plenty of competition for renters. That should be good news for renters who have been suffering with increasing rents because of limited competition.
So, in Bay Area counties, given the shortage of housing, it’s notable that Democrat Assemblyman Kansen Chu of San Jose wants to increase the costs of what affordable housing is being built. His bill, AB 199, would require prevailing wages being paid on any project that received a public subsidy.
In our backyard, because the city of Pleasanton is investing money from its affordable housing fund in the new low-income senior project, Kottinger Gardens (I serve on the Pleasanton Gardens board), this legislation would mean paying union wages. Abby Goldware, the project manager for Kottinger Gardens, estimated that the prevailing wage requirement adds 20 percent to the costs.
That’s an estimate I have long heard. Federal law, Davis-Bacon, requires prevailing wages on federal projects and there’s the state equivalent. It adds up to taking care of politically powerful unions at the expense of taxpayers.
One builder estimated that the bill could drive up costs between 10 and 46 percent in the committee hearing as reported by the San Francisco Business Times.
Given the shortage, state lawmakers should be doing what they can to expedite approvals and drive down costs. Instead, this bill amounts to a gift to construction unions and a hit on taxpayers and people seeking affordable housing.
Unfortunately, it cleared the committee and moved on to the appropriations committee. It needs to die in a suspense file there.