It’s often said laws are like sausage – it’s better not to see them being made. It’s an accurate comparison for those not involved in the process. It’s confusing, hard to rationalize why and how certain deals get put together, and often doesn’t make sense unless you were part of the sausage-making process. This year, the Legislature has been churning out a lot of sausage. You need an enigma code-breaking machine to understand why an environmental bill would result in an affordable housing compromise or why a gas tax compromise would result in an anti-growth housing bill.
In any controversial legislative deal, you need to find leverage to help with your negotiations. It’s a simple mathematical equation – you need enough votes to get your legislation passed. The more significant the issue or the more you care about it, the more leverage each legislator has with his vote. This was the case when the Governor was trying to pass the gas tax, which required a two-thirds vote, early this year. It was a large, but desperately needed tax increase to help repair our dilapidated roads and bridges. It wasn’t easy for the Governor to get the votes. One Senator is facing a recall for his vote to raise the taxes. The Governor also uncharacteristically coughed up, and earmarked, $1 billion to four legislators for district projects to make the vote more palatable. What does this have to do with housing? Originally, we didn’t think anything, but then SB 106 appeared and it’s hard not to connect the dots.
SB 106 is a budget trailer bill that goes against everything the Governor has publicly said on the issue of affordable housing. He believes we need to build more housing units and build them faster. He has publicly stated he would not approve any new funding for affordable housing without some form of streamlining to help new housing units receive faster approval. SB 106 does the complete opposite. SB 106 changed the designation of Marin County and the Cities of San Rafael and Novato from metropolitan to suburban until 2023. In layman’s terms – the state just made it more difficult to produce critically needed affordable units in one of the most expensive counties in California. Marin County can continue to under-perform and not meet its basic housing needs without any push-back from the state.
It’s logical for everyone to assume this was to get votes for his transportation tax. No one has admitted it, and it’s not as transparent as the $1 billion that went to certain legislative districts, but why else would the Governor agree to something that goes against everything he has publicly stood against? To be fair, this bill has yet to be signed by the Governor as this article is being written. However, it’s widely expected to be signed soon. This political move hasn’t been well received in the press and there are a lot of people asking the Governor to veto the bill. It took two decades for someone to get enough votes to raise the gas tax and the Governor will likely give the same response he gave to those who criticized leveraging $1 billion in district projects to help get the votes – it’s well worth it.
With the current affordable housing crisis only getting worse in California, solving this issue is the priority for many legislators and they aren’t happy with the lack of a deal to do so this year. So, when another opportunity came up, the extension of the California Cap and Trade system, they found a way into the conversation. The Cap and Trade system is the state’s signature program in its fight against climate change — under which companies must buy permits to emit greenhouse gases — and the Governor wants a two-thirds vote to extend it. It’s a major priority for the Governor, so legislators have leverage. To secure the votes he needs, the Governor has agreed to simultaneously negotiate a package of affordable housing bills. There is currently a group of legislators working on a housing package and it will likely include a permanent source of funding, streamlining of the permitting process, and very possibly some new regulations on landlords or developers that we are opposing. Again, this article is being written prior to a final deal being made. It’s hard to predict what measures will make the final cut, and we expect some good and some bad. But one thing is certain, if the Governor didn’t have so much invested in the extension of the Cap and Trade program, the affordable housing package would look significantly different. Leverage is the key to any deal in the Legislature and you rarely have any leverage over the Governor. Currently, the Legislature is maximizing its leverage while they have it.