Blogging Bayport Alameda

April 6, 2015

Master of the houses

Filed under: Alameda, City Council, Development — Lauren Do @ 6:06 am

A few weeks ago the State of California’s Legislative Analysts Office released a report on how bad housing costs have become in California, but went one step beyond just stating the obvious.  The office attempted to explain why California is in the state that it is in with regards to housing costs.

Now before anyone tries to dismiss the LAO’s office as some super partisan group, it is — by design — non partisan.  From the website description:

The Legislative Analyst’s Office (LAO) has provided fiscal and policy advice to the Legislature for more than 70 years. It is known for its fiscal and programmatic expertise and nonpartisan analyses of the state budget. The office serves as the “eyes and ears” for the Legislature to ensure that the executive branch is implementing legislative policy in a cost efficient and effective manner

The office is overseen by the Joint Legislative Budget Committee (JLBC), a 16-member bipartisan committee. Currently, the office has a staff of 43 analysts and approximately 13 support staff.

This report is a big deal and makes the argument that supply is not meeting demand.   I’ll excerpt more from the report in a future post but didn’t want to give the information presented short shrift so I’ll cover it in multiple posts.  For today, I just want to post the short informational videos provided by the LAO on this topic:

The three videos are a short overview of the report, good to understand what is contained in the larger report without committing to reading the entire document.

For those not interested in viewing the video, this infographic gives a visual alternative of understanding the problem of housing costs as well.  Even if you are unconcerned by the affect on people and their families, here’s how high housing costs affect the economy:

economy

It will be interesting to see how our Alameda policymakers consume the information that has been presented by the LAO and use it to make policy decisions moving forward.

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24 Comments

  1. Spencer’s base don’t look like they are of working age. One of the biggest effects of restricted housing supply is a redistribution of wealth from the younger to the older. Her base doesn’t care about high housing costs, indeed they benefit from them. And Spencer herself either lacks even the most rudimentary grasp of economics or is disingenuous in her expressions of concern for tenants. Nothing will happen. Facts don’t matter.

    Comment by BC — April 6, 2015 @ 8:23 am

  2. Thanks for posting portions of an LAO report. When I was a California legislative staff person within another unit working for both Democrats and Republicans, we viewed LAO as the authoritative and straight-talking source of fiscal information and analysis. The LAO was headed for almost 30 years by Alan Post, a former Republican who changed to decline-to-state when he came to the LAO. When Post died, former Republican Governor Gov. George Deukmejian publicly stated that “You always had the feeling that [Post] and his staff were arriving at their positions simply based on the facts and not with any bias.” I view the LAO as continuing to be fact-based and thoughtful. And–they sometimes point to uncomfortable truths about the fiscal issues underlying our state’s public policy.

    Comment by KSD — April 6, 2015 @ 9:06 am

  3. BC ,
    I am glad to see that you are recognizing the financial gap from the younger to the older ,
    I could not have say it better , it is rather sad to have a Younger generation freeloading on the older one which have made what this Country , State and City are ,
    Most of them are now on a fixed income , far removed from the financial tantrum of all those high tech Co which are skewing the real estate market with abnormal wages , then coming around parading gentrification as if the area they are moving in where the jungle , let me remind you during the 1989 quake everyone help each other, irrelevant of their Ethnicity or Faith , it will to be a very different story today because under the pretense of gentrification , you have eliminated most if not all the manufacturing jobs on that side of the bay .
    This was the single most important moderating factor of society , You destroyed it .
    You have created a monster from which you don’t know how to get out .

    Comment by Arnold — April 6, 2015 @ 9:14 am

  4. Interesting presentation , now please explain if they are more people leaving California than coming “according to both State and Federal studies” , why do we need to built more houses ?
    This sound very much like a Suncal advertising ” sorry could not help” with the State natural resources at breaking point “water” what plan do they have in mind to address it , we cannot be the Country’s grocery basket and the largest housing in the same time .
    Look like we are going to be drinking sewage water much sooner than expected …..
    It is very much a BI Partisan issue . only difference Northern California will have less sun tan lotion than the South residue in it .

    Comment by Joel Rambaud — April 6, 2015 @ 9:32 am

  5. “Now before anyone tries to dismiss the LAO’s office as some super partisan group, it is — by design — non partisan.”

    Now before anyone tries to dismiss the LAO’d office as some super partisan group, it is — by design — partisan, since it has 10 Democrat members and 5 Republican members.

    Comment by jack — April 6, 2015 @ 9:45 am

  6. I think in the end Mother Nature will win. One more year of drought and we will be rethinking a lot of this. I have no problem with more housing but more housing means more water use. Aside from Political Posturing no one has come up with a solution.

    Comment by frank m — April 6, 2015 @ 10:32 am

  7. Frank, Actually more housing doesn’t necessarily mean more water use…larger population does. According to the Public Policy Institute of California, “With slightly more than 38 million people (according to 2013 estimates), California is the nation’s most populous state—its population is almost one and a half times that of second-place Texas (26 million). One of every eight U.S. residents lives in California. By 2050, California’s population is projected to reach 50 million people.”

    Comment by Jake. — April 6, 2015 @ 11:56 am

  8. Don’t the water lines generally have to be laid in before the housing can be marketed? This is becoming a problem in Pleasanton, where multifamily housing is mandated, but water is becoming scarce.

    Comment by vigi — April 6, 2015 @ 12:58 pm

  9. Since we are talking about facts on housing and water, here’s a article http://www.motherjones.com/environment/2015/04/everything-you-wanted-know-about-california-drought. “The water that’s used to grow the California almonds that are exported overseas in one year would be enough to fuel Los Angeles for nearly three years.” It’s nuts, not housing that is using up all the water.

    Comment by Alan — April 6, 2015 @ 1:40 pm

  10. I think that most of us have viewed the various articles on Water Use. A even more striking example is the export of Alfalfa Hay out of the imperial Valley for the Dairy Industry in China. However the Governor has made it clear that the Ag Industries has sustained enough cuts and really at this point is not subjecting them further. So if he was to announce that there must be a 25% reduction in Almonds that would be a start.. We have a serious water problem that is not being addressed. This problem is the biggest threat we have to the Economy of the State. No Water= No Economy.

    Comment by frank m — April 6, 2015 @ 2:58 pm

  11. most water for housing is not ground water. It seems that as the traditional water project supply has dwindled, the nut farmers and others have been drilling deeper wells which are completely unregulated with no regard for when they will deplete this resource which in many cases will not be replenished.
    http://billmoyers.com/content/invasion-hedge-funds-almonds/

    Without regard to restrictions on ag use, or drought, there is every reason to regulate ground water use and always has been. Brown has also failed to consider restrictions on fracking which is incredibly water intensive ( 2 million gallons a day). Even before fracking, oil companies have practiced pumping polluted waste water back into aquifers which finally caught the attention of regulators. Out of sight, out of mind! Cuomo finally declared a moratorium on fracking in New York.

    It is true that ag water, even if it includes inefficiencies which allow evaporation as well as poor crop choices, does not include golf courses or ornamental lawns which are certainly more expendable than food. The statistic which has been quoted in the media is that agriculture accounts for a mere 2% of California’s economy. It seems that with the % of world food supply we export, that statistic deserves more careful scrutiny. The same economy includes hugely inflated real estate market, the gigantic tech sector etc. What is ag in hard dollars? who is dependent on ag, etc?

    Comment by MI — April 6, 2015 @ 3:59 pm

  12. #8. Pleasanton and Livermore are in the Livermore/Amador Valley, which is a critical air and water basin. Water and sewer hook up limitations, as well as air pollution issues (no where for the bad air to go) have been serious for thirty years or more. There is still agriculture there. Agriculture uses much more water than homes, so it puts even more pressure on an already serious water and sewage deficit for additional homes to be built. We definitely have issues about water, but they are different than the Livermore/Amador Valley’s. Not a comparable situation. Even in good years, rain-wise, their sewer hook up’s have reached critical mass.

    Comment by Kate Quick — April 6, 2015 @ 4:44 pm

  13. How and why buyers from China are snatching up Bay Area

    homes

    http://www.sfgate.com/business/networth/article/How-and

    -why-buyers-from-China-are-snatching-up-5924991.php

    Nobody really knows how many U.S. homes are sold to

    foreigners. Buyers are not required to disclose their

    citizenship or residency status on the escrow and title

    closing documents filed with a county recorder’s

    office. Some foreign buyers purchase homes in the name

    of a limited liability corporation. Most have property

    tax bills sent to a U.S. address of a friend, relative

    or attorney.

    Some foreign buyers are coming into the country under

    the EB-5 program, which lets a limited number of

    foreign citizens obtain a green card if they invest at

    least $500,000 or $1 million, depending on location, in

    a business that creates or preserves at least 10 U.S.

    jobs. The program has become wildly popular with

    Chinese investors, who exhausted their allotment of

    EB-5 visas for fiscal 2014 before the end of the year.

    It was the first time any country used up its annual

    allotment.

    Chinese homebuyers are flocking to these U.S. states

    Chinese buyers are now the biggest international

    players in the U.S. housing market and some states are

    seeing billions of dollars in real estate deals as a

    result.
    More than half of the $22 billion Chinese buyers spent

    on U.S. homes during the 12 months ended in March was

    spent in California, Washington and New York, according

    to the National Association of Realtors.

    “The global real estate market is a reality,” she said.
    The influx of Chinese buyers has helped push home

    prices higher in places like San Francisco. That has

    forced less wealthy Chinese buyers to turn to nearby

    cities like Oakland and other less expensive areas,

    buoying those markets as well, said Appleton-Young.

    http://money.cnn.com/2014/07/23/real_estate/chinese-hom

    e-buyers/

    CHINA’S ELITE BUY BAY AREA PROPERTIES AT RECORD RATE

    http://abc7news.com/realestate/chinas-elite-buy-bay-are

    a-properties-at-record-rate/506609/

    It’s one of the most lucrative matchmaking events on

    the planet where realtors from 26 countries meet some

    of the wealthiest people in China. An invitation-only

    real estate trade show, highlighting elite properties

    from around the world, was held last December in

    Shanghai.

    But American realtors have the upper hand. Overseas

    Chinese spent $22 billion buying homes in the U.S. from

    March 2013 to the same period in 2014. That was up a

    whopping 72 percent from the year before and California

    is their most popular market.

    A burgeoning middle class is now looking to invest

    their money in a safe haven, away from China’s polluted

    air and political and economic uncertainties.

    Additionally, in China you never have home ownership.

    “In China, it’s a 70-year lease, so there are

    uncertainties. Nobody knows what’s going to happen 70

    years from now right?” said one realtor.

    That’s another good reason to buy American.

    Americans can’t afford to buy in CA

    Comment by Cobalt Black Keys Johnson — April 6, 2015 @ 11:59 pm

  14. This is a very informative discussion. I did a search for the word “water” in ABAG’s “Regional Housing Needs Plan” for 2015-2022, and it appears a couple of times on page 15. That’s it.

    It also states below that a lack of water and sewer capacity is “not used to inform” a city’s housing allocation. SCS stands for Sustainable Community Strategy, which appears to be the housing allocation. So water or the lack of it doesn’t count, which is odd. It doesn’t make any sense.

    “Local jurisdictions consider infrastructure requirements, including water and sewer capacity, when developing their general plans and neighborhood plans. Local plans and information about existing land uses are used to inform the SCS forecast. However, this information is not used to limit a jurisdiction’s housing allocation.”

    http://www.abag.ca.gov/files/ABAG_Final_RHNA_Publication.pdf

    Comment by Darcy Morrison — April 7, 2015 @ 12:57 am

  15. I think the focus will shift to water efficiency. One area of increased water efficiency is to expand the use of reclaimed water. Reclaimed water is highly treated wastewater and can be used for irrigation to extend our water supplies. Currently, up to 50% of a community’s drinking water is used for irrigation. Reclaimed water can also be used for street sweeping operations, power generation, and fire protection.

    And since 80% of our water supply is used for agriculture, I imagine we will see some efficiency in this area as well – perhaps like rethinking growing almonds in California or maybe even alfalfa – two crops that use the most water.

    The construction industry makes up about 25% of California’s economy, and it’s the housing recovery that is fueling the growth in this area. Likewise, I imagine we will see some efficiency in this area as well, like requirements to expand the use of reclaimed water in new developments, and perhaps developers will be required to pay higher fees to pay for the governor’s new water programs. Also, Prop 1 is on the November ballot – a water bond that will provide for water use efficiency and recycling, increased water storage, and groundwater clean up and management. The water bond has large support, and is backed by wildlife, agriculture and environmental groups.

    The governor seems to be making a strong case for water efficiency – and the 25% water reduction was the first step.

    Comment by Karen Bey — April 7, 2015 @ 4:10 am

  16. new development has the opportunity to meet the highest efficiencies. Was it the master developer who proposed the gondola who had an extensive grey water plan for landscape? I don’t remember about Sun Cal. I think we should look to EBMUD to lead on this. The water issue is fast changing and uncertain, but I don’t think it warrants total moratorium on construction at this point.

    Comment by MI — April 7, 2015 @ 7:49 am

  17. Wait for water shortages to be used, not as an argument for more water-efficiency (very doable), but as another item on the list of reasons to do nothing in Alameda. The thing is, like traffic, there are ways to address the problem while still providing homes, homes which we will continue to need should humans continue to reproduce and move to areas where there are economic opportunities. As an exhibit, see Spencer’s frosty reception to a BART station, which would undermine arguments to do nothing. It’s not about traffic or water really. It’s about preserving the town in aspic. Perhaps that is what people want, but let’s be honest in the debate at least.

    Comment by BC — April 7, 2015 @ 7:56 am

  18. 5. so we should completely disregard any of the information from LOA because of alleged bias? You’d be happier if a majority were registered Libertarian Party. Libertarians would approve of basic supply and demand premise for the conclusions. This is housing 101.

    Comment by MI — April 7, 2015 @ 8:03 am

  19. 18
    My point in #5 was that anyone who thinks a politically formed group that has a 10 to 5 majority of one party is non-partisan ought to retake common sense 101.

    Comment by jack — April 7, 2015 @ 9:14 am

  20. The so-called “water crisis” is because of liberal environmentalists’ insistence on preventing the building of a single new reservoir or a single new water conveyance system over decades during a period in which California’s population has doubled coupled with the same groups’ insisting on sending into the Pacific ocean close to a million acre feet of pure fresh water through the Golden Gate every year to save a bucket load of smelt.

    Comment by jack — April 7, 2015 @ 9:27 am

  21. #12: (critical mass…a nuclear term, what does it mean in terms of sewers, Kate? Don’t think they’re comparable) .

    Pleasanton is NOT comparable to Alameda. Exactly my point, which I have made every time Andrew Thomas stands at the podium and warns Planning Board/Council: “we don’t want to get sued like Pleasanton”. Yet slow-growth advocates in Pleasanton are fighting the same ridiculous ABAG mandates that Alameda is.

    Not exactly “agriculture”. Horses in Tassajara (some of the last beautiful horse country in Alameda County) are running out of water because the wells are going dry, and it is apparently illegal for EBMUD to sell Tassajara residents water. http://abc7news.com/news/tassajara-valley-running-out-of-water-options/628313/

    Comment by vigi — April 7, 2015 @ 9:57 am

  22. #20 That sounds like a direct quote from Carly Fiorina . http://www.huffingtonpost.com/2015/04/06/carly-fiorina-california-drought_n_7014468.html?ncid=fcbklnkushpmg00000013

    Comment by frank m — April 7, 2015 @ 10:54 am

  23. 19. whatever is available to get on with business.

    Comment by MI — April 7, 2015 @ 6:20 pm


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