California

As home construction sputters, Gavin Newsom calls for rent caps and less red tape

Find out why Governor Newsom feels ‘the California dream is in peril’

Governor Gavin Newsom held a panel discussion about housing affordability and rising rents on Tuesday, March 26, 2018 in Sacramento.
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Governor Gavin Newsom held a panel discussion about housing affordability and rising rents on Tuesday, March 26, 2018 in Sacramento.

Gov. Gavin Newsom on Thursday called for California lawmakers to send him bills to limit rent spikes and cut building regulations before their 2019 legislative session ends next month.

He said capping rent increases is a “top priority” for him over the next month. He made the remarks during a Thursday discussion on housing affordability in San Francisco, where housing prices are famously high, but said he could have had the same discussion anywhere in the state.

“The California dream is in real peril if we don’t address the housing crisis,” he said. “We need to see more permitting, we need to see more housing being constructed.”

He acknowledged there’s a patchwork of regulations on rent control and tenant protections throughout the state, and said there needs to be more statewide regulation protecting Californians from rent spikes.

“We’re working with the Legislature to get a rent gouging ordinance to my desk,” he said. “This is one of my top priorities for the next few weeks before the legislative session ends.”

The rent-gouging bill moving through the Legislature, Assembly Bill 1482 by Assemblyman David Chiu, D-San Francisco, would cap annual rent increases to 7 percent plus inflation.

He also said he hopes lawmakers pass Senate Bill 330 by Sen. Nancy Skinner, D-Berkeley, which would suspend some local development rules to speed up housing permitting. Newsom said the measure aims to streamline local regulations and crack down on “abuses” by local governments that are trying to avoid building new housing.

Newsom called for the Legislature to pass his plan to steer $331 million the state received in 2012 from a lawsuit against financial institutions over unfair mortgage practices. Courts determined the state initially misspent the money and ordered Newsom and the Legislature to fix it.

During his campaign, Newsom set an ambitious goal to build 3.5 million units by 2025.

He faces significant headwinds to hitting that target.

The rate at which cities and counties are approving housing permits is down more than 15 percent during the first half of the year compared with the first half of last year, according to the data from the state’s Department of Finance.

If approval rates continue as they have during the first half of the year, the state is on track to approve just 107,000 housing units this year, far less than the state would need to build to reach Newsom’s goal.

The state’s severe housing shortage is driving up housing prices and “skyrocketing” homeless populations in California, Newsom said. In Sacramento alone, researchers estimate the homeless population has increased nearly 20 percent over the last two years.

The shortage has been decades in the making, Newsom said, pointing to building regulations and opposition from cities and counties as barriers to building more housing in the state.

Meanwhile, home prices in California continue to rise. In June, for the third straight month, median home prices hit a record high of $611,420.

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Sophia Bollag covers California politics and government. Before joining The Bee, she reported in Sacramento for the Associated Press and the Los Angeles Times. She grew up in California and is a graduate of Northwestern University.
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