New California regulations are burdensome to homebuilders and residents
By Jeff Montejano
New York and California are two great states that are uniquely different today, but that may begin to change soon.
On July 1, the state of California officially approved a new set of burdensome regulations, which will dramatically change the future of housing construction in neighborhoods throughout the state by adding high-density housing and creating a greater dependence on mass transit (buses and trains) for daily commuters. For Californians who prefer their cars, they’re going to pay more.
Best described as imposing a “New York State of Mind” approach to housing, these new regulations will levy a fee on new home construction as part of an effort to compel more compact and expensive high-density housing similar to what you would find in New York City.
Known as Vehicle Miles Traveled (VMT), these costly fees will be applied to new housing projects based on the number of miles that residents are anticipated to drive throughout the course of the day. This includes commuting to work, trips to the grocery store, or picking up the kids from school. The more miles residents drive each day, the higher the fee for each new home that is built.
This deeply flawed approach to housing construction rests on the ideology held that California’s ever-increasing greenhouse gas emission goals can be met by forcing people out of their cars by building more high-density housing in neighborhoods that are close to jobs and public transit.
While there is a role for new multi-family housing near jobs and public transportation, it should not be the overwhelmingly dominant form of housing construction in California over the next several decades.
With the new VMT regulations, government is essentially penalizing residents who simply want to buy a new home in neighborhoods located outside of crowded cities. According to the law firm K&L Gates, “VMT will likely have a significant impact on new residential developments in suburban and rural areas. Outside of urban settings, some estimate that VMT mitigation could increase the cost of a project up to $80,000 per residence.”
As a result, homebuilders will be forced to pass these costs on to the consumer or not build at all. Either way, the new VMT regulations will only worsen the state’s affordable housing crisis, especially in suburban and rural areas of the state where land is attainable and more affordable to build on.
Not only does this approach ignore market realities, but it is also fraught with risk in light of the impacts to our economy and public health caused by the coronavirus pandemic. Considering the critical role that social distancing has played in slowing the spread of coronavirus infections, it makes little sense to impose new government policies that force residents and their families into costly high-density housing and onto overcrowded public transportation.
As Lawrence Yun, chief economist at the National Association of Realtors, told USA Today, “People will be much more cautious about living in high-density areas with so many people nearby.” Yun’s assessment is supported by the results of a Harris Poll conducted earlier this year that found that nearly a third of Americans are considering moving to less densely populated areas in the wake of the coronavirus pandemic.
VMT also fails to take into account that many California business leaders anticipate that remote working will continue to play a significant role in the way businesses of all sizes operate in the future. This means that regardless of where they live, California’s workforce will be spending less time commuting in their cars or by public transportation.
The Building Industry Association of Southern California, along with a diverse coalition of business groups, as well as numerous cities and counties, strongly encouraged Governor Gavin Newsom and the state Legislature to approve a one-year delay on the implementation of the VMT regulations. The state’s decision to ignore requests for a delay means that projects are now being forced to comply with rules that are simply outdated and financially unrealistic for builders.
Because of issues like VMT, BIASC has implemented an aggressive digital advocacy program that gives our members a stronger and more prominent voice with our state and local elected officials. With over 150,000 emails sent to state and local policymakers since March, we are working tirelessly to let our elected leaders know that just as residents and businesses have adapted to the dramatic changes brought about by the coronavirus pandemic, government must adapt as well.
Jeff Montejano serves as CEO of the Building Industry Association of Southern California. Headquartered in Irvine, the Building Industry Association of Southern California is a leading advocate for thousands of building industry leaders.