California Lawmakers Spar Over Bills to Ease Housing Shortage

As the California legislature enters its final week of this year's session, lawmakers are battling over a series of bills designed to ease the state's worsening housing shortage, which is driving up prices and pushing low- and middle-income residents out of cities from Oakland to Los Angeles.

Democrats, who control all branches of government in California, are hoping to bring the package of bills to a vote this week. The legislation would ease regulation and allow for a $4 billion bond issue to pay for low-income housing development and home loans for veterans.

The sticking point, according to multiple officials in Sacramento, is another part of the package that would add a $75 fee onto some real-estate transactions in order to create a permanent source of funding for low-income housing. Republicans have said the fee amounts to a tax increase that would do little to ease the housing shortage. Some Democrats have also balked.

While Democrats hold two-thirds majorities in both houses of the legislature, they haven't yet locked up enough votes to pass the housing package. Lawmakers in the party are spending the final days of the session trying to convince holdouts to support the bill establishing the $75 fee, put forth by Toni Atkins, a state senator from San Diego.

"Homelessness is an epidemic, and too many people who have homes are spending far too much of their income on rent or the mortgage," Ms. Atkins said. "The legislature has a duty to act right now."

Some Republicans have supported the bill to ease regulation and the bond measure, which would first have to be approved by voters in a referendum. But Republicans have lined up against the $75 fee, which they said would do little to fix the lack of housing.

"Housing is one of the top three things that people are concerned about, " said Rocky Chávez, an assemblyman representing San Diego County who opposes all three of the measures in the housing package. "We think there needs to be a more expansive view, looking at housing for low-income people, but also for families making good money," he said, adding that even some families making six figures can't afford to buy a house.

California in some ways mirrors the national trend of millennials flocking to apartments in big U.S. cities, where jobs and public transit are plentiful. But California has the added problem in that its most desirable precincts, including San Francisco and Los Angeles neighborhoods like Venice Beach, are low-rise areas filled with older structures and where residents have generally fought any new construction.

Venice Beach had about 700 fewer housing units in 2015 than in 2000, according to an analysis of housing data conducted this year for The Wall Street Journal by Issi Romem, chief economist at BuildZoom, a website for contractors.

The causes are twofold: Apartment development stalled while wealthy homeowners bought adjacent homes for more land. Overall, home prices in the ZIP Code jumped 246% over that 15-year period, compared with the national average of 52%, according to Mr. Romem's analysis.

The $75 fee requires two-thirds approval, and if lawmakers fail to approve it this year, it would face more difficult prospects next year, when members are up for re-election. Mr. Chávez said he hoped the legislature would try for a more bipartisan solution next year.

Scott Wiener, a state senator from San Francisco who authored one of the bills in the housing package, acknowledged that the bills wouldn't solve the state's housing problems, which he said have developed over half a century. But the legislature, he said, had to act.

"This package is a healthy down-payment, as part of a long-term solution, " Mr. Wiener said. "We're in position to pass some very difficult bills -- all of them, even a few years ago, were not politically possible -- because the problem has gotten so bad."

Asked if the votes would be there, he said, "We've all been working at it, and it has been trending in a very positive direction."

Write to Ian Lovett at Ian.Lovett@wsj.com

(END) Dow Jones Newswires

September 10, 2017 15:06 ET (19:06 GMT)