MOORLACH UPDATE — SB 50 — April 29, 2019

One of the more controversial bills this year is SB 50 by Sen. Scott Wiener. What has made it all the more interesting for me is that last December I decided to get out of my comfort zone and I signed on to be a coauthor (see MOORLACH UPDATE — Committee Season Has Started — April 3, 2019, MOORLACH UPDATE — Really Addressing Housing Goals — January 29, 2019, and MOORLACH UPDATE — 2019-20 Session Underway — December 4, 2018).

Sen. Wiener and I have a track record of working together on legislation, SB 1004 in particular (see MOORLACH UPDATE — Goodbye to my Dad — March 23, 2019 and MOORLACH UPDATE — SB 689 – Needle Exchange — March 1, 2019, MOORLACH UPDATE — Fire Prevention Not Embraced — November 13, 2018, MOORLACH UPDATE — Youth Mental Health Care — September 15, 2018, MOORLACH UPDATE — SB 1004 and CIRM — September 10, 2018, and MOORLACH UPDATE — Joint Author Details — July 7, 2018).

I believe Orange County is doing a great job of building new housing around job centers, especially in my District. So I came onto the bill with a few stipulations, one of those being that there would be no funny labor agreement provisions that always makes housing more expensive for prospective homeowners. I also reserved the right to pull my name off of a bill if it starts to head in what I believe is the wrong direction.

So far, I’m pleased with the conversation and the amendments, inasmuch as I’ve had a chance to digest what happened last week when both SB 50 (Wiener) and SB 4 (McGuire) were essentially combined into a super-housing bill.

The good news is that I have since been joined in support of this bill by some very credible players, like the California Chamber of Commerce, the California Realtors Association, and the California Building Industry Association, to name a few.

The bad news is that this bill would impose new zoning requirements on cities, which is why the bill is opposed by the League of California Cities. My last UPDATE should confirm that I am firmly in support of local control (see MOORLACH UPDATE — The Week That Was — April 26, 2019). I have been consistent on this position for a number of issues in the 4 years I’ve been in the Senate. Local control is largely the first comment I make when I’m debating any number of measures before me in committee or on the Senate Floor.

So, why am I supporting this bill? First, Orange County does not have close to the transit circulation activity that SB 50 mandates for zoning around bus stops. This social engineering effort to connect individuals to their workplaces has been a failure and bus ridership continues to decline. I do not believe one bus stop in the OC qualifies under the current proposed definitions in this legislation. So Orange County’s communities should not be impacted in this regard.

Second, the LOSSAN Rail Corridor used by Metrolink and Amtrak has some ten train stops in Orange County and they have been active in providing higher density housing within a half-mile radius. Just look at the Santa Ana Train Station for an example. And this has been done without a stick from the state. We should encourage more of this kind of thinking and problem-solving.

Third, except for the Balboa Ferry, Orange County has no industrial ferry stops.

Fourth, housing adjacent to existing neighborhoods that abut job rich areas will have to meet existing building code requirements, with the exception of an additional story.

All to say that the big geographical areas that will be impacted by SB 50 are Los Angeles and the Bay Area. And they believe in transit, a social engineering effort that is failing. But, the emphasis on trains resulted from pushing housing for downtown employees out into the distant suburbs.

For years, we’ve been dealing with the out-migration of young families from Los Angeles to Orange County that had to “drive-to-qualify” for housing. That drove up prices for Orange County, which was more of a bedroom community and hospitality destination than an industrial center. Los Angeles and the Bay Area have built programs that attracted people to the area, but restricted their ability to find reasonable housing accommodations and decent transportation infrastructure because of prices, fees and/or regulations.

Fortunately, Orange County used its self-help Measure M sales tax revenues and built lanes, not trains. And with the shared economy, an Uber or Lyft ride is more reliable and efficient than taking the bus or train, more than making up for the extra cost.

More importantly, as a Republican, I have a seat at the table in working on this bill. I went to all of the hearings last year that Sen. McGuire held for what would become SB 4, which would streamline the approval process for multifamily or transit-oriented development projects. So, I have an ownership stake and am a respected and active participant in providing a leadership role by someone in Orange County on this critical topic (also see MOORLACH UPDATE — Mediating Huntington Beach — February 8, 2019).

It also gives me the right to request an amendment if the cities in my District have any specific suggestions that I can bring forward. After all, if Marin County can continually weasel its way out of housing mandates time and again, then why should Orange County be held to a higher standard? If Sacramento is going to the change the rules, I would remind my colleagues of another principle that I hold, and that is “no better,no worse.” This should set you up for the LA Times piece below.

25th Anniversary Look Back

On Sunday, April 24th, 1994 Chris Knap provided the lead, top-of-the-fold headline for the OC Register‘s Metro section, with “O.C. treasurer’s race stirs markets — Finance: A political challenger has raised doubts about Robert Citron’s aggressive investment strategies, making some investors nervous.”

The piece extensively quoted Irvine investment chief Jeff Niven, who encouraged the city to borrow $64 million to invest in Citron’s investment pool, and was bent out of shape by my concerns. He would be fired from his position after the county filed for Chapter 9 bankruptcy (see https://www.sfgate.com/news/article/Fallout-From-Orange-County-Bankruptcy-Affects-3035502.php).

County Administrative Officer Ernie Schneider exploded in anger last week when asked about the effect that the challenge to Citron’s strategies could have on Orange County’s financial reputation.

Mr. Schneider was replaced shortly after the bankruptcy filing and would have difficulty finding similar positions for the remainder of his life.

“What am I supposed to run on?” Moorlach asked. “Full disclosure by Citron will cause no harm if in fact the investments are as solvent as he has represented them to be,” Moorlach said.

The interview would cause me to send Chris Knap a letter:

“The central thought in my mind is: who is being more irresponsible? Mr. Citron for investing in reverse repurchase agreements and derivatives? Or myself for questioning those policies? Or the participants for not asking enough questions themselves?

“Time will tell. But Mr. Citron would be transferring responsibility if he tries to hold one candidate responsible for his poor investment judgment. And to assist in that insinuation would also be an exercise in poor judgment.”

If the headlines use of the word “aggressive” didn’t say enough, the closing argument nailed it:

“As an outsider, I have misgivings that school districts and others are permitting their money to be leveraged in this fashion. You’re not supposed to be playing games with other people’s money,” said Zane Mann, author of the monthly California Municipal Bond Adviser.

Time did tell. For the last two editions of the Look Backs, see MOORLACH UPDATE — The Week That Was — April 26, 2019 and MOORLACH UPDATE — SB 584 Goes To Natural Resources — April 21, 2019.

High-profile California housing bill

clears hurdle after tense debate

over local control

By LIAM DILLON

https://www.latimes.com/politics/la-pol-ca-senate-bill-50-changes-20190424-story.html

High-profile housing legislation to allow mid-rise apartment construction near mass transit across California advanced in a state Senate committee Wednesday after two lawmakers reached an agreement that would limit its effect on smaller counties and along the coast, but eliminate zoning that allows for only single-family homes in much of the state.

Under changes to Senate Bill 50, communities in Los Angeles, San Francisco and 13 other counties with populations larger than 600,000 would have to allow four- to five-story apartment buildings near rail lines, and smaller apartments and townhomes in wealthy neighborhoods near job centers.

But in smaller counties, including Marin, Santa Cruz and Santa Barbara, cities would be required to permit height increases near rail one story taller than existing zoning as well as fourplexes in many single-family-only areas. Neighborhoods along the California coastline also would not have to permit buildings as tall or construction as dense as required further inland.

The deal is a concession to Sen. Mike McGuire (D-Healdsburg), the chairman of the Senate Governance and Finance Committee, who represents smaller coastal counties, including wealthy communities in Marin County that have a history of pushing back against low-income and higher-density development.

McGuire had been critical of SB 50 for not taking into account differences between large and small cities, and he authored less aggressive legislation to increase height limits and densities. As part of the agreement, McGuire withdrew his bill and supported SB 50.

“A one-size-fits-all approach doesn’t work for every community in California, and the strategy of ‘no’ no longer works,” McGuire said. “No matter if you are a large city, a small city, an urban county, a rural county, everyone has to do their part to be able to combat this crisis of lack of affordable housing.”

Sen. Scott Wiener (D-San Francisco), the author of SB 50, said the changes made Wednesday would broaden the bill’s support in the Legislature. He emphasized that the new language would make it easier to build fourplexes on parcels zoned for single-family homes across the state.

“I think we have a very, very strong agreement on SB 50 that will help address the deep housing crisis that California faces,” Wiener said.

Negotiations over SB 50, which continued through the hearing Wednesday, revealed the difficulties in trying to craft statewide legislation that tackles zoning issues, which are largely the concern of cities and counties, and also don’t neatly fall along partisan lines.

Two Republican state senators, John Moorlach of Costa Mesa and Jim Nielsen of Gerber, support the bill, praising its promise to increase home building. Democratic Sen. Bob Hertzberg of Van Nuys spoke in opposition, saying the legislation was too complicated to move forward without a deeper study of its effects on neighborhoods.

Under the previous version of the bill, more than 40% of the developable land in the city of Los Angeles would have faced increases to density of some kind, according to a city study. In addition, wealthy suburbs such as Palo Alto and others in Silicon Valley along with affluent Marin County enclaves would have had to allow apartment construction in many single-family-only neighborhoods.

Though Wednesday’s revisions don’t appear to make dramatic changes to those rules in Los Angeles and Silicon Valley, the amended bill would make less of an impact in Marin County.

Lawmakers have faced substantial criticism for excluding Marin from some of the state’s strictest housing mandates. Two years ago, legislators allowed the county to place additional restrictions on development beyond those permitted in other regions. The legislation authorizing that change was inserted into a bill tied to the state budget and not required to go through the regular committee process.

McGuire, who represents Marin and Sonoma counties among other Northern California communities, said suburban and rural counties should be treated differently in housing policy.

“What works for downtown L.A. will not work for downtown Santa Rosa,” McGuire said. “More housing, more affordable housing, will be built under this bill respecting the population at hand.”

Despite the deal, opposition to the bill remains strong, predominantly from local governments that would lose some power to shape their communities and advocates concerned about gentrification and displacement.

David Reyes, planning director for the city of Pasadena, testified at the hearing that cities often spend significant time trying to engage residents before allowing large-scale changes to zoning, a process that wouldn’t happen under SB 50.

“What cities will do in response to a bill like this is sue the state,” Reyes said. “What cities will do is have chaos with respect to the democratic process.”

Wiener’s bill would delay implementation in neighborhoods at risk of gentrification for five years to allow those communities to develop their own plans to increase density. All new construction for projects larger than 10 units would have to set aside a portion for low-income residents. And developers who hope to take advantage of SB 50 would be prohibited from demolishing homes on properties where tenants have lived for at least seven years.

Still, Shanti Singh, a spokeswoman for Tenants Together, said the onus for enforcing those anti-demolition provisions would probably fall on renter advocates who don’t have the resources to ensure that they’re followed.

“We believe that the solutions to the housing crisis must be led by those who are victimized,” Singh said.

SB 50 continues to face a long road to passage and may not succeed if other housing bills don’t garner support.

Sen. Jim Beall (D-San Jose) voted for the legislation Wednesday but said he would only do so in the future if bills to increase spending on low-income housing and protecting tenants also advance.

“If we don’t have a package of this bill and the other bills, I don’t think this is a successful effort this year,” Beall said.

SB 50 has to clear the Senate by the end of May and the Legislature by mid-September. Gov. Gavin Newsom has yet to take a position on the bill.

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