A new law meant to change the way California builds itself in the future could cause people to leave the Golden State in their past.
As of July 1, 2020, housing construction projects are no longer billed according to the congestion they generate. Instead, a “miles driven per vehicle” calculation is now applied. Developers need to consider how many miles a potential buyer can drive, and then compensate for those miles above a given threshold. Critics say the change will add costs to many housing projects.
Dan Dunmoyer is President and CEO of the California Building Industry Association. He tells GV Wire℠ that since the new law came into effect, there has been a dramatic slowdown in the construction of new homes.
“Move. Move to another state. You really can’t do that here.–Dan Dunmoyer, CEO of the California Building Industry Association Regarding Potential Middle Class Home Buyers in California
“We are seeing a substantial delay because cities and regional governments were not ready for VMT,” said Dunmoyer. “WWe call it the big pause button, which is exactly the wrong thing we need right now in California for housing and the housing crisis.
As for what that means for the middle class who want to buy a home in the Golden State, Dunmoyer is not mince words.
“Move around. Move to another state. You really can’t do that here,” Dunmoyer said. “We can build houses. These are just houses for millionaires.
He points to places like Idaho, Texas, and Arizona as places where builders are actively pursuing people seeking to leave California.
GV Wire℠ met with Senator Melissa Hurtado, D-Sanger, to ask her questions about the impact of the VMT law.
Last year, Hurtado co-signed a letter with other Valley officials asking Gov. Gavin Newsom to delay implementation of the law for two years. Despite the signatures of 20 senators and members of the assembly, the law entered into force on July 1.
“It’s a challenge that even I am facing right now in terms of wanting to own my own home, ”says Hurtado.
While she says there may be good elements of VMT, if it hurts housing supply, she is not averse to asking the governor to reconsider it.
“It’s a challenge that even I am facing right now in terms of wanting to own my own home. “–Senator Melissa Hurtado, D-Sanger
“We really have to watch all of this and be comfortable with being wrong. If there have been any wrongdoing in terms of political decisions that put us here, ”says Hurtado.
GV Wire℠ asked him: “Do you think you would encourage the governor to take another look at VMT?” “
“Absolutely,” Hurtado replied.
The miles traveled by vehicles The law still cloudy
“Even the cities that have tried to do it haven’t quite figured out how to do it,” Dunmoyer said.
VMT is the implementation plan for Senate Bill 743, which Governor Jerry Brown enacted in 2013. VMT supporters say it will be an effective tool in reducing greenhouse gas emissions.
For example, if a person goes to several places per day – work, store, soccer practice, etc. – all these kilometers are counted. Then a fee is calculated for the development, with the funds used to subsidize things like vans, transit passes, and bike paths.
An official with the Fresno-Madera Counties Building Industry Association told GV Wire℠ last year that he estimated VMT’s fee for a 20-unit project in Clovis would be 460,000. $ over 30 years, or $ 23,000 per unit. And, while the developer bears the initial costs, they are passed on to buyers and tenants. In San Bernardino County, builders expected homes to have additional costs of $ 400,000 due to VMT.
Dunmoyer says it’s still too early to tell if those cost estimates are too high. “We still think these are rational and viable numbers,” he says.
The City of San Diego recently tried a calculator to estimate VMT costs for a development.
“The fee that came out of the calculator was fifty million dollars for a land project worth thirty-two million dollars,” says Dunmoyer. “So the city is going to pull out their calculator because it didn’t work.”
Law applied despite COVID-19
“California, Oregon and Washington have started taxing people.” – Georgeann Hoover, Realtor Coldwell Banker
Dunmoyer says his industry thinks it was just “nasty” to launch the new regulations during the COVID-19 crisis.
“If you listen to the governor’s office for planning research, they’ll tell you we’ve had seven years to implement it. We didn’t, ”says Dunmoyer, referring to what he describes as a lack of information from the OPR before July 1, 2020.
He believes that moving forward with rules that could drive up the cost of housing and make developments less feasible has not worked for builders in his association.
“We actually pulled 10 percent fewer permits last year than the year before, ”Dunmoyer said of the data that is expected to be released soon. “SSince Governor Newsom has been governor, we have declined by about 10% per year.
The CBIA has backed down on the RPO since the law came into effect and called for its postponement. The OPR wants the CBIA to tell them how it’s going.
He says the OPR has discussed forming a “strike team” to help municipalities and builders try to figure out how to manipulate the new regulation.
But, Dunmoyer says COVID-19 makes it difficult for the governor’s office to focus on other issues like VMT.
City of Clovis Cutting trend
According to statistics provided by the town of Clovis, the local community is a bit aberrant.
Residential building permits actually increased after the implementation of VMT, based on year-over-year data.
- 590 units from July 1 to December 31, 2019
- 604 units from July 1 to December 31, 2020
Some of the answers to the reasons were discussed at a recent Clovis City Council Candidates Forum hosted by GV Wire℠.
“We are working on through routes in both Clovis and Fresno,” said sitting board member Lynne Ashbeck. Some of the ways to mitigate VMT’s costs are to build near public transit.
The other holder of the panel, Vong Mouanoutoua, said the city had closely analyzed the VMT in advance in preparation for its preparation.
“How can we improve our transit so that it becomes eligible for VMT so that it lowers VMT (fees)? Mouanoutoua asked rhetorically.
Californian exodus could reshuffle the political map
The San Jose Mercury News reports that California is likely to lose a congressional seat for the first time in history after this year’s census, as the state’s slowing growth rate reduces its political clout, analysis finds new demographic data released this week.
The planned drop from 53 to 52 seats in the House of Representatives will lead to a reshuffle of the state’s political map and potentially conflicting congressional races between incumbents in 2022.
Scripps reports that several states could lose seats, while others gain them. Analysis by William Frey, a senior researcher at the Brookings Institute, estimates that Texas will gain three House Representatives, Florida will gain two, and Arizona, Montana, Colorado, North Carolina and Oregon will gain. a.
Meanwhile, Alabama, California, Illinois, Michigan, Minnesota, New York, Ohio, Pennsylvania, West Virginia and Rhode Island could all lose a representative.
Price Rise in Arizona
“They are done with everything in California.”– Liz Miller, Real Estate Agent Coldwell Banker
The CBIA says there are housing developments in Arizona that are seeing an influx of nearly 100% of California buyers.
Liz Miller is a Coldwell Banker Realty agent serving Scottsdale and Phoenix. She says nine out of ten shoppers looking in Lake Havasu City are from California. In the Phoenix area, about 70% of its buyers are from California, she said.
“A lot of them are people ready to retire,” Miller tells GV Wire℠ over the phone. “These are people who are about to retire and are done with taxes. They’re done with everything in California.
She says the lower cost of living in Arizona is a major factor. “Property taxes are lower. Energy. Everything is lower, ”says Miller.
Lake Havasu City doesn’t have a lot of subdivisions Californians are used to. Most constructions are done by custom builders. There are five or six housing estates in the area. “These are supported by California,” says Miller.
Prices in Lake Havasu have increased 18% in the past year, according to Miller. She says stocks are extremely low and this is creating a “binge eating.”
She says a development called “Wickenburg Ranch” is the most recent hot spot.
“This place is crazy,” Miller says.
Originally a ranch owned by famous artist Merv Griffin, the Wickenburg Ranch is just over an hour northwest of Phoenix. Californians are not afraid of the price tags of $ 600,000 and more.
“Probably in the $ 800,000 range is the norm,” Miller says. She says people fleeing California “cash in”, buy these homes, and still have money in the bank.
Arizona: hurry up and wait
Georgeann Hoover, another agent for Coldwell Banker Realty in Lake Havasu City, told GV Wire℠ that there is so much demand for housing that builders cannot keep up.
“They’re typically 18 months to two years in construction,” says Hoover. “I mean, you can’t even get a pool built here in a year because of the amount of new construction and new pools being built. “
Hoover is aware of the new VMT regulations that came into effect in California last year. She doesn’t hear of this as a driving force so much as it does from builders facing water supply issues and other factors.
“California, Oregon and Washington have started taxing people,” she says. Hoover says her buyers aren’t just people ready to retire, she sees people moving because of their ability to telecommute now.
Hoover reports a recent case where a Washington homeowner received an offer $ 100,000 higher than the asking price. “IIt’s just a crazy time, ”she says of the influx of people from the West Coast to Arizona.