The Legislative Analyst’s Office recently released a report, “How Will Aging Baby Boomers Affect Future Property Tax Revenues?” It finds that, property sales and growth and tax revenue have historically been depressed by aging — as Prop. 13 has keep tax rates relatively static — and that this pattern may continue even as boomers age out of their homes. Since 2004, property turnover has been on the decline and there are more homeowners in the 55-75-year-old demographic are up to 41 percent from 31 percent in 2005. In the same time period, the 35-to-55 age group has dropped from 46 percent to 38 percent as a share of the state’s population. Additionally, the report finds homeowners in the 55-75 age group are less likely than other groups to sell their homes, and they are likely to take advantage of provisions in Prop. 13 that prevent the state from capturing more tax revenue. A challenge to the state’s ability to generate revenue is that the passing of home from parents to children as this transfer does not reset the taxable value of the home. The report finds over the past decade, around 10 percent of property transfers have taken advantage of the parent-to-child exclusion to prevent an increase in property tax payments. This has led to an estimated $1.5 billion tax revenue loss statewide.
Delta Tunnels Clear Major Federal Hurdle
The National Marine Fisheries Service and the U.S. Fish and Wildlife Service released environmental documents approving the nearly $17.1 billion plan to build two 35-mile-long tunnels in the San Joaquin Delta. The reports show the projects will not jeopardize endangered fish and wildlife as the plan calls for restoration of 1,800 acres of habitat that is extraordinarily important for Delta smelt and other fisheries. These types of biological opinions help shape the operating rules for the diversions, meaning how much water the tunnels carry to the big delta pumps. Metropolitan Water District of Southern California, Westlands Water District, and others must first decide whether the tunnels stabilize their delta water deliveries enough to justify the high cost. The ratepayers of these water districts will be paying the costs. Digging may begin in 2021 and construction is expected to take ten years. However, there are still a number of approvals from state and federal agencies before the project can move forward.
Housing Costs Reach New Records Statewide
Across the state housing prices reached a record high in May for the second month in a row. In the Bay Area, single-family homes reached a median all-time high of $818,000. Santa Clara County reached median prices of $1,093,000 (up 9.3 percent from last year), Marin County median of $1,250,00, Alameda County all-time high of $805,000 and Sonoma County median $600,000. Santa Cruz County also soared to new records to a median price of $875,000 up from April’s $830,000. However in the Bay Area regional job growth, high consumer confidence and low mortgage rates pushed prospective homeowners into the marketplace. All of Southern California saw the median home price increase 7.1 percent to $492,000. San Diego County median home prices hit a nominal record at $530,000, 8.2 percent higher than a year ago. San Bernardino County saw the largest percent increase, 8.8 percent, to a median price of $310,000. Throughout the state, new housing construction doesn't come close to meeting demand. UCLA Senior Economist Dave Shulman wrote a report, “Housing Activity Grinds Higher” about the high-income people who can afford the extraordinarily expensive housing pricing out the low and middle-income people, like teachers. The report calculates that six of the seven least affordable cities in the U.S. are in California, and two, San Jose and San Francisco, are in the Bay Area. Affordability is not only the cost of buying or renting a home, but the gap between home prices and median income.
Harvard Report Identifies California Housing Among Nation’s Costliest
Harvard’s Joint Center for Housing Studies released its State of the Nation’s Housing 2017 report. The study finds that, in California and other coastal states, home prices are over 40 percent higher in December 2016 than January 2000. For instance Los Angeles, between 2005 and 2015 has added significantly more units in the $1,200+ range and fewer units than 2005 in the $400-$1,200 range. San Francisco more than doubled its 2005 amount of $2,400 rental units in 2015. The percentage of households that can afford the median-priced single-family home in the U.S. In coastal California cities, it is less than 33.3 percent while inland it is 50-66.5 percentage of households. By comparison, the values in the Midwest have declined up to 46 percent over the same time period. As the report notes, there are a variety of factors holding back a more robust supply of housing. These include substantial drop in construction workforce, stricter requirements for financing of the limited land available, and slowdown in creation of new households by millennials. As the report notes, 35.6 percent of millennials, those between 18-34, are still living with parents or grandparents in 2015.
Guidelines for Expenditure of L.A. Transportation Monies Approved
The board of Los Angeles Metro board approved guidelines that will direct the expenditure of funds from Measure M, the half-cent sales tax approved by county voters in November. One modification changes the current LOS, car-centric approach, to VMT measures, which evaluate the efficiency of the transportation system that has more high-capacity modes like transit. The new motion would replace LOS with VMT so “that these funds may be spent on operational improvements for movement of people traveling on foot, by bike, or by transit, in addition to automobile travel, in order to optimize the movement of people by all modes, not just vehicular travel.” Other modifications that were approved were eliminating restriction that mandated highway funds be spent on streets within one mile of a state highway, allowing private organizations to receive “Visionary Project” seed funding, matching non-local-return funding sources for major transit projects, including relinquished state highways in eligible highway funding, and clarification of percentage for ADA paratransit, student, and senior pass discounts. LA County taxpayers began paying Measure M’s half-cent sales tax July 1.
San Diego County Approves Affordable Housing Plan
San Diego County Supervisors unanimously approved three measures to increase the supply of low-cost housing. The measures use government-owned properties and more than $25 million in public money to work with private groups and developers to create homes for seniors, veterans, people with disabilities, and others who are financially vulnerable or at risk of becoming homeless. The first component is $500,000 transferred from community grants program towards studies and pilot programs to test innovative ways to provide affordable housing. The second measure was a $25 million trust fund to purchase services and supplies, pay permits and regulatory fees, repay loans, buy property, lease equipment, and other expenses related to affordable housing. The final measure designated 11 excess properties for new affordable homes.
State Seeks to Undo Regulations on Development on S.F. Waterfront
The State Lands Commission, chaired by Lt. Gov. Gavin Newsom, is suing to overturn the Sierra Club-spnosored Prop B, passed by 59 percent of San Francisco voters in 2014, that requires voter approval for any waterfront project that exceeds the city’s height limit. San Francisco Superior Court Judge Suzanne Bolanos rejected the Lands Commission’s request to immediately invalidate Prop B without a trial. The two sides will go to trial in September to decide whether voters anywhere in California can have a say in coastal development. Newsom argued the commission was not targeting San Francisco and was instead keeping pro-development voters elsewhere in California from approving projects on the coast.
Two Community Plans in South L.A. Move Forward
The City of Los Angeles Planning Commission unanimously recommended approval of updated community plans for South and Southeast LA. The two plans cover more than a dozen different neighborhoods including Historic South-Central, Vermont Square, Florence and Watts. There will be a focus on transit-oriented development, revitalization of commercial corridors, and the elimination of public health hazards from proximity to industrial sites. Those opposed to the plans, including United Neighbors in Defense Against Displacement (UNIDAD) released its own plan, which emphasizes preservation and development of affordable housing, community-focused economic development, and parks and health facilities. The plans must now be reviewed by the City Council’s planning committee and afterwards approved by the council itself.
Quick Hits & Updates
Quelling a statewide anxieties about the fate of cap-and-trade, the California Supreme Court declined to consider an appeal from business groups who consider the program to be an unconstitutional tax. This ends more than four years of legal challenges to the program. However, Gov. Jerry Brown is pushing lawmakers to extend the program past 2020 with new legislation, “with this Supreme Court victory, now it’s up to us to take action extending California’s cap-and-trade system on a more permanent basis.”
Los Angeles City Council approved a proposal from Councilmember Gil Cedillo to study extending the just cause requirement for evictions to non-rent-controlled buildings. As Cedillo says, “ I am not getting why we have evolved into a two tier system of eviction protections.” While in rent-controlled apartments just cause for an eviction must be given, unregulated buildings can end a month-to-month tenancy without providing a reason. The City Attorney and the Housing and Community Investment Department have 30 days to give recommendations, then the Council would have to tell the City Attorney to draft an ordinance which requires a separate vote.
City of San Jose City Council unanimously approved a master plan for a 4.9-mile stretch of the intra-urban Guadalupe River. The Master Plan calls for a 12 foot wide asphalt concrete trail, interconnected and loop trails, bridges, crossings at different grades, and various gateways, signages, and place markers. Design work for the trail is expected to start later this year and construction will take place in phases.
The City of Mountain View City Council members and Environmental Planning Commission found that even with traffic improvements, the proposed North Bayshore Google campus can support only 1,500-3,000 housing units instead of the planned 10,000. However, the memo to the mayor notes the proposal for greatly reduced housing number does not prevent the City Council from approving the earlier plan. Many housing groups in the area are calling on the City Council to approve the 9,850 units proposed in the draft plan.
The City of Sacramento is re-envisioning Old Sacramento and the waterfront. City Riverfront Manager Richard Rich will ask the City Council to form a committee of artists, business leaders, and others to explore how a large monument could be funded and built in Old Sacramento. Rich, a former Disney creative thinker, says the monument should celebrate the rail history.
The City of Carson has launched a $1.1 million future-planning process that will better integrate its industrial, commercial and residential communities. The City Council hired Dyett & Bhatia earlier this month to oversee public outreach and rewrite the 2004 General Plan. The City is currently half zoned for industry and the other half between commercial and residential. Most of the developable land is contaminated by closer landfills or industrial waste.
Superior Court Judge Richard Ulmer ruled that San Francisco Treasurer and Tax Collector Jose Cisneros had legal authority to demand the information and was not violating the rights of Uber or its drivers. Uber had provided information voluntarily last year, but stopped in December saying further disclosures would violate drivers’ right to privacy. Uber must now provide names and addresses of its San Francisco drivers, who will be notified about their business licenses.
The Fremont City Council unanimously agreed to impose new impact fees on commercial developments to generate more funds for affordable housing. Residential developers had previously been paying fees, but now many types of offices, retail, warehouses, and manufacturing facilities are paying as well. Starting next year, the city will collect $1 per square foot, which will increase to $3 in 2019 and $4 in 2020.
New numbers from SacRT show ridership on buses and trains fell 12 percent since last summer. While the opening of the Golden 1 Center was seen as an opportunity for the Transit agency to attract new riders, it has realized the challenges are bigger than an arena. The light rail trains carry about 1,700 fans on arena nights, however this is only about 2 percent of daily transit travel. Factors of this loss can be low gas prices, poorly funded transit agencies, and ride-hailing services.
