California Governor Jerry Brown fully realizes that California real estate is too expensive, but is not certain that much can be done about it.
In a recent speech at a Urban Land Institute conference in San Francisco, Brown downplayed the effort at reforming two sets of regulations originally aimed at controlling land use in The Golden State.
Throwbacks to the 1970s, California Environmental Quality Act (CEQA) and Proposition 13 sought to protect California residents, but have caused side effects that could not have been foreseen 40 years ago. One hot-button reform issue: split roll taxes, aimed at making commercial owners pay more taxes than homeowners who already complain of an onerous tax burden due to outsized property values.
Earlier this year, the state of California issued a report in an attempt to more clearly delineate the issues. In it, the elaborate hurdles that make up the environmental review process for development can effectively kill projects. As the state becomes more built out, residents can and do exert increased pressure to stop new building projects that try to get off the ground.
Also, developers are more attuned to local governments’ thirst for tax revenue, which is easier to get from retail outposts and office complexes.
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It’s those taxes that are the target of recent Prop 13 reform efforts. Recent murmurs have suggested that commercial development should shoulder more tax burden, but Brown is on record as opposed to Prop. 13 reform.
And, according to a study by the Public Policy Institute of California, support for change to a split-roll is weak, since the state is now on more firm financial footing.
Brown has been talking about the topic for nearly four decades, as the measure passed during the first of his three terms in the governor’s mansion.
Middle ground cannot be found on proposed changes to the CEQA, which environmentalists insist protects the natural beauty of the state. Developers bemoan the extensive and expensive process to comply with the law. Brown also throws cold water on the idea of reform.
Brown was in office when these issues were first subject to legislative action but the political realities that become apparent after three terms in office seem to have turned him into a pragmatist. And, with a booming and expensive housing market that is hypersensitive to the law of supply and demand, it would take a constellation of factors to reverse course for Brown and the state now.
