How will California Gov. Jerry Brown’s real estate fees pay for low-income housing?
A few weeks ago, California Gov. Jerry Brown took a major step to help the state afford to provide low-income housing for those who need it. Looking to solve the problem of how the state can pay for low-income housing, the governor took the initiative of signing a bill that will put new fees on real estate deals in the state, fees that, although not excessive on those buying or selling property, will nonetheless bring in between $200 million and $300 million annually.
Are the real estate fees going to discourage real estate transactions?
Not likely, since the fees are nominal. Fees of $75, up to a cap of $225 per transaction, will apply to documents like deeds and notices. Gov. Brown points out that, because the fees will be ongoing, they will provide a permanent source of funding for affordable, low-cost housing that the state badly needs. According to The Wall Street Journal, 1.8 million units are urgently needed to give the low-income residents of the state homes that are comfortable and safe.
The New Bill Is Not Without Opponents
The Wall Street Journal reports that not everyone is in agreement about Gov. Brown’s method of funding low-cost housing. Some county government and groups like the National Federation of Independent Business, the California Mortgage Association and the Howard Jarvis Taxpayers Association are definitely at odds with the legislators, most of them objecting to the fees which they felt would undermine real estate transactions and, therefore, business in general.
The Lengthier Project
According to the governor and those who follow his guidance, this is just the beginning of a lengthy project. The bill he signed most recently is only one of a number of bills designed to fast-track the housing package created to provide affordable housing for low-income residents. The hope is that the more quickly such programs are implemented, the more likely they are to bypass the Nimbyism of local neighborhoods, particularly since they won’t have to go through the usual public input process, but will be approved through a simpler administrative process known as “by-right.” The by-right process works when a low-cost housing project already adheres to existing regulations that set parameters for height, floor areas, etc. In Los Angeles, however, projects with 50 or more units must go through approval by the planning commission and City Council.
Are all these fees really necessary?
State Sen. Scott Wiener (D- San Francisco) is quoted as saying: “We have spent 50 years in this state digging ourselves into a deep hole by making it harder and harder to build housing, by coming up with every conceivable excuse in the book why we don’t need housing … by putting obstacle after obstacle in the way of new housing.” Because of the housing shortage, Wiener said, families are being forced to leave the state, people are being pushed onto the streets, businesses can’t expand, workers can’t find housing near jobs, and climate goals are undermined “by pushing people into crushingly long commutes.” None of this is beneficial to the real estate market or to any part of the business community.
“The California Dream Is in Danger”
Los Angeles Mayor Eric Garcetti added “the California dream is in danger” because families are struggling with high rent and monthly mortgage payments. “We saw it on our way here,” he went on, “You get off the freeway and you see the (homeless) encampments. You drive by the streets and you see the trailers.” Strongly agreeing with this viewpoint, Assemblyman Richard Bloom (D-Santa Monica) promised his audience: “Today we are here to tell those who are suffering that we hear you and are committed to making housing affordable again.”
