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California thinks it can make housing more affordable by raising costs

The Orange County Register

California thinks it can make housing more affordable by raising costs

By: John Cox

Sept. 28, 2017

Just like college students cramming for finals, our elected state representatives were up until the wee hours the last couple nights of California’s 2017 legislative session, arm twisting their colleagues to pass legislation that could only be supported by those who had been broken by exhaustion and caffeine overloads.

Two of those were Senate Bill 2 and Senate Bill 35, deceptively packaged and sold as measures to bring affordability to California’s highest-in-the-nation rents and mortgages.

Before you start thinking about escaping from your $3,000 per month, 600 square-foot studio apartment, we should consider what exactly these measures allegedly do to alleviate the economic plight of millions of Californians. Unfortunately, for the 56 percent of Californians who, according to a recent UC Berkeley Institute of Government Affairs survey, said they were considering moving to escape the outrageous cost of housing, the Legislature’s fix is a cruel joke.

Our legislators did what they usually do — after regulations and taxes drive up the cost of a necessary item (in this case, housing) they pass bills creating subsidies for favored groups and then hand out benefits to campaign contributors that drive up costs even more. True to form, while the headlines discuss new “affordable housing credits and subsidies,” SB2 by Sen. Toni Atkins, D-San Diego, creates a new $225 fee on real estate transactions. As if that wasn’t enough to make housing more expensive, buried in SB35 by Sen. Scott Wiener, D-San Francisco, is a new requirement that non-government employees on housing projects be paid a prevailing wage, which adds dramatic increases to building costs.

To clarify, California Democrats believe that increasing the cost to buy, sell and build on real estate will somehow miraculously drive down the costs. Only someone under duress could buy into this logic.

SB2 is projected to collect $1.2 billion in the next five years, but where will that money go? Fifty percent goes to local governments to update planning documents and the other 50 percent goes to housing for the homeless. I have done a lot of work through charities and my church over the years to help alleviate and address the issue of homelessness, and have seen good and bad solutions firsthand. In my experience, government just throwing money at this serious issue generally results in poor outcomes.

As previously mentioned, SB35 establishes prevailing wage requirements, which force private companies to pay their employees “prevailing” wages as established by the Director of Labor Standards in that geographic location. You can likely surmise that this bureaucrat (a politically appointed one at that) will dictate wages that drive up the costs for builders and create a friendly atmosphere for union workers who just happen to favor certain politicians of a certain political party.

Winston Churchill once said, “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” California Democrats don’t seem to see the problem.

Rather than raising costs, the best way to lower our cost of living is liberating California’s powerful economy by reducing the regulations on construction, fostering a competitive marketplace of products and labor, removing harmful rent-control policies, reforming CEQA and finally putting an end to corruption and cronyism in Sacramento.

California is the Golden State and the envy of the world. There will never be a shortage of people wanting to live here. There is, however, a shortage of good people who can afford to live here and that’s a problem that we can solve, as long as we stand outside the bucket and lift it together.

John Cox is an entrepreneur, businessman and a Republican candidate for governor of California

Paid for by John Cox for Governor 2018