Assembly Housing and Community Development Committee, Wednesday, February 25, 2026
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Assembly Housing and Community Development Committee California State Assembly
Follow its sittingsSpeaker 2
And so I'm excited to have my bill be looked with a microscope on its efficacy and and see if it actually works. I think it's actually a really important part of this job that so many of us don't have the opportunity or take the time to do, so I'm I'm very honored to have my bill looked at and and hopefully, more of our bills as we move forward because, again, our electorate should expect more out of us in terms of actually solving problems, and that's what we're here to do. So I've watched AB twenty eleven out in the wild, and we've seen it work in certain places and not in other places. And so also understanding, you know, what are the opportunities where it can be most effective, where can we potentially make changes to make it more effective, Again, with the whole notion of how are we bringing in the cost of housing for our constituents that deserve it and need it. So I'm eager for the hearing.
Appreciate your leadership, chair, and obviously the staff who worked on this bill when I was housing chair and and so many others who are a part of this process.
Speaker 1
Thank you, Assembly Member Wix, and thank you, for your leadership. And this is indeed the first of these hearings that we are doing. This committee, will be doing three of these hearings. We'll be looking, at two other bills and their impact and implementation in a similar way, but AB twenty eleven is our first. And in in in in many ways, this conversation will set the tone not only for the future hearings that we'll do around oversight, but also for the work that this committee will do around continuing to hopefully pass laws that strengthen opportunities to get housing built faster, cheaper, and and and ultimately with the goal of improving the housing affordability and housing access opportunities for all of our constituents.
So with that, I want to get started. We'll have three panels that all bring different but important perspectives. And I wanna bring up the first panel, which includes Peter Calthorpe, who was instrumental in shaping a b 2011, David Garcia, the deputy director of policy for the Turner Center, and Jason Moody, managing principal at EPS. Each panel will have five minutes to present, and then we will open it up for questions and answers. And I know that there's been some some analysis that has been done, and and and this will, again, sort of set the tone for the rest of our conversation today, looking at some of the the numbers and and and and and how the implementation has has looked across the state.
So I believe we will start first with Peter.
Speaker 3
And I would like to start with slides because I have too many visuals and all very superficial, but not. And I'm gonna start by being rude and direct. I think housing is in a death spiral. The less we build, the more expensive it gets, whether it's supply chain for materials or workforce. We lose if you don't use it, you lose it.
And if you lose it, the costs keep going up. And I think there's a simple story between behind 2011, which is that the costs have gone up. We thought in '22, after COVID, they would normalize back to where the, you know, standard trajectory of cost hasn't, and that's a death spiral. And so something radical needs to be done to address this. Otherwise, it just gets worse for all forms, for all strategies, missing middle, TOD, what have you.
Now I'm gonna make the argument that this bill, the mixed income, appropriately located, should be the focus of the solution because it carries with it a whole raft of co benefits. You know, I'm not even gonna talk to my slides, so forget about them. I'm just gonna tell you what I think. You know, the the scale of this bill is a 100,000 acres. That's land equivalent of gross San Francisco times three.
So the reservoir of capacity here is big enough for the problem. The idea that it's mixed income is certainly the direction the state should take, and I know we have a huge infrastructure for delivering a 100% affordable projects. We all know that there's social and economic challenges to that. And quite frankly, the amount of money we spend on each unit is embarrassing. And I think maybe I don't need to list the numbers.
So mixed income is is one really big reason why this is it has the right scale, it has the right type of buildings, and it has the right quality. And it will build a future for us in terms of mobility. Don't forget, for the average American, 17% of household income goes to mobility now. 17%. And then when you get down to the 80% AMI, it's 20%.
The you know? And then you add that to the 33, 35, 40% that's going towards housing, and you look at what is really driving people's lives. So connecting those two things, I think, is really another thing at the heart here. The final thing is we need to go back to the suburbs we've wrecked, the environments that don't function very well, and make them better. And the arterial is the one place where it ain't so good and there's no property values.
So for many, many reasons, if you're going to reach for big solutions, they should be laser focused, not let's do it kinda here, there, and everywhere. Let's have missing middle and TOD and all this other stuff scattering it, you know, state lands, what have you. That's all good. But I think to be successful, you need to focus. Now I'll show you a couple slides.
Mixed income, I think I said all this. Next generation mobility. Have you all seen this graph? This is, a sea change. Prior to 2008, we were a suburban nation.
Single family, you know, subdivisions dominated. Four to one in California. Since then, it's one to one. We're we're trending the marketplace is trending towards more urban solutions. And, of course, household makeup, single person households, double income households, they represent 65% of households.
So the idea of a big house on a big lot in the middle of nowhere, I'm sorry, is no longer part of the solution. And you'll see here is as the lines the the orange is single family and the blue is multi. All of a sudden, the multifamily is gaining ground as fast as single family since that moment. And it it we have to adjust the way we think about what is the American dream and the paradigm. I think the American dream is to be in the community you work in and have access to those services and those jobs and not be a a long distance commuter.
This is a landscape of opportunity. The most undervalued land in in urban California is the strip, and I won't even bother to go on it. I already mentioned the three San Francisco's. Yes. We came back with numbers here that said we were around 2,000,000.
The 2,000,000, by the way, was market feasible out of zoned 10,000,000 units. So when you take that 100,000 acres over long periods of time, if the trend establish itself, could go way beyond 2,000,000. But you have to have building economics that function. You know? Otherwise, it doesn't okay.
And then I am a person who really believes in a diff you know, setting a vision. To me, Utopia is a is a is a destination, not not a place to get to. It's something you enjoy. And, you know, we're gonna get a new generation of transit, and that's gonna light up the viability of living on these boulevards. And only on boulevards can you have space for that union between mobility and, of course, place making.
We finally figured out how to make good urban streets, and we ought and quite frankly, the bill hidden in there in its form based code does this. You know? We didn't talk about it very much. Okay. This is the hard ass analysis, and, you know, I think the explanation is as you come down the the funnel there from 10,000,000 units, you get down to 2,000,000 because of today's no.
Because of the economics in '22. When these guys will talk more about the economics of where we are. But intrinsically, there's a huge property tax increase. So when you start talking about solutions, I think there are two directions we should be thinking. Both of them are incredibly radical.
Both of them already affordable housing already benefits from. One is affordable housing is subsidized. So why isn't the 15% that we've demanded out of this this this law also subsidized? Why is it expected to be somehow accomplished without a subsidy? Quite frankly, if we took the money that we spend on an average affordable unit and and used it in mixed income projects, you'd get six to one.
You'd get six workforce apartments, basically, internally supported by the one affordable unit. Because the six costs around half 1,000,000 a unit to build. Every developer tells me they can get that done. Maybe it's going up. Am I out of time?
Speaker 3
closer to the line. Know, so what is the average affordable subsidy? The second thing that affordable housing benefits from is property tax abatement. You know, if it's, you know, a 100% under 85% of AMI, it gets a tax why can't mixed income, which is a better way to deliver affordable housing, especially mixed income on boulevards, are embedded in our communities, why can't that those that pro those projects enjoy the same benefits that affordable housing does? I know there's a lot of political feathers that will be ruffled with these ideas, but because the you know?
But you you guys are the ones that can take on these kinds of things. Anyway, so I'll just, you know, I just want you to see what happens as a result. 700 miles of potential transit. And believe me, when when autonomous vehicles start running in dedicated lanes, you will have the most cost effective form of transit that, know, basically leaps over the shoulders of light rail and BRT and all the things that are too expensive to dream of these days. The environmental impact of putting people here versus letting them spread around is across the board, and we have numbers on that.
So there are huge benefits on other levels. All of which is why and this is LA. Just you know, you don't have to use a big imagination to see what happens when you build Grand Boulevards in LA. And I'll stop there. I hope I ran out of time.
Speaker 3
Where's that hook? Oh, by the way, that is what got built. Go back. That's in Redwood City Mountain View. Those are cities that zoned for this kind of boulevard redevelopment and got it before COVID.
So when when projects penciled, this kind of thing works. Enough. Oh, I see. You had to go through anyway.
Speaker 6
I might use it. They're definitely more interesting than mine. Mine are just charts.
Speaker 3
Look at that. That graph for, Washington State, we just completed. And since o eight, and the and the Great Recession, they now build twice as many multifamily as single family for the whole period.
Speaker 3
Have you all seen the Pew study on Minneapolis' endeavor? I didn't mention it, but there no. We'll kill we're killing time here, so I'll use it. So back in 2017, they passed the Grand Boulevard's law. It didn't have the affordable component.
It didn't and they also passed missing middle, and they also passed no parking, and they also passed know, you they did the whole pack. Let's see what works. And then Pugh comes along seven years later and studies it, and the numbers are stunning. The rents in the city of Minneapolis versus the state, the rents were up just 1% versus 14% rise across the state. So they arrested rising rents.
Homelessness went down 12% in the city, where it rose 14% in the state. 90% of the units were multifamily as per what we stipulate in Grand Boulevard. So there is proof of concept. You could probably go in there and, you know, poke around at it and see what else they did that was magical, but they did something that worked, and it's documented. Sorry.
Speaker 6
I I appreciate you filling filling this, filling in. So I'll go ahead and jump in for, for my portion here. So good morning, Shaheeney, member Wicks. Thanks for the opportunity to join today's hearing. My name is David Garcia.
I'm the deputy director of policy at UC Berkeley's Turner Center for Housing Innovation. So today, I'll be summarizing, our preliminary analysis of a b twenty eleven's impact to date as well as summarizing some of the research that we've published regarding the potential of converting commercially zoned land to to residential, think, is actually quite complementary to what mister Calthorpe just walked us through. So, ostensibly, AB twenty eleven was passed in hopes of getting more homes built on land at a zone for commercial retail uses. And about five years ago, the Turner Center published an analysis on how common such conversions have happened in California in recent years, and we found that commercial to residential conversions were fairly rare between 2014 and 2019, which is interesting because that was a period of time when the state's residential real estate market was relatively strong. And so, specifically, we looked at the state's four major metro areas and found that less than 1% of all commercially zoned parcels were converted to residential uses between 2014 and 2019, which yielded just about 38,000 units with most of those coming in Los Angeles County, or Los Angeles Metro Area, which actually makes sense because Los Angeles has many strong policies incentivizing the conversion of existing buildings and commercial land to housing.
But even in the Los Angeles region, commercial to residential conversions, made up just 13% of overall housing production during the five year analysis period. And so this report concluded with recommendations that in order to meet broader state housing goals, a legislate the legislature should consider the creation of statewide standards to allow residential development on commercially zoned land throughout the state.
Speaker 6
2014, 2019. Yeah. So these recommendations were reflected in a 2011, but what do we know about a b 2011 so far? Think that's why we're all here is to learn about what has happened since its inception. We don't have a full picture yet.
Right? The law was only passed in was only enacted in July 2023, and so it takes time for the market to adjust to new policies or other external factors, like rising construction costs and interest rates, which make it hard to build housing regardless of regulatory changes. That said, we do have some data and anecdotal evidence that shed light on where a b twenty eleven is being used. And what they show so far is that the uptake has been relatively modest. I'll go through that.
So our biggest source of information comes from the annual progress reports or the APRs, which detail development patterns at the local level. These reports are completed annually by each jurisdiction across the state and include a field for planners to denote where, when a housing project has applied for, been approved, or is permitted through a b twenty eleven. And so through this analysis of APR data as well as a scan of a b twenty eleven activity in local media and city documents, we found that roughly 5,800 new homes have been either per proposed, entitled, or permitted using a b twenty eleven. And of this activity, a little over half has been specifically for affordable housing. And as you can see, the activity has been relatively scattershot throughout the state with most development with a b twenty eleven happening in San Francisco and Los Angeles Counties.
So one important caveat to this information is that we only have state APR data through 2024, so we're likely missing most AB twenty eleven projects that would have been applied for in 2025 and this year as well. I should also note that APR data can be flawed or incomplete. Local planners may incorrectly note when a b twenty eleven is used, or they may omit information about 2011 activity entirely. So there are and there may be cases where projects could be double counted, such as when a developer resubmits a project with a new design. So to ensure that we are getting the best possible look, we checked a b twenty eleven activity in the APRs to ensure that reporter projects were eligible and were not being double counted in some way.
We also supplemented what we observed in the APRs with media reports of twenty eleven and mentions of twenty eleven in city documents. And so while the uptake may appear modest so far, it's still a relatively new law, and it takes time for legislation to impact the market. And just because developers are not invoking 2011 in large numbers yet, it doesn't mean it won't be used moving forward as economic conditions improve. And there are likely ways in which a b 2011 is has impacts that are not enumerated in data, such as impacting the behavior of localities that may be matching or exceeding a b 20 ambitions in their own local land use updates. So, again, we all know 2011 created a baseline standard for what can be built on commercially zoned land, and the results are limited, but it's still new.
And so I think it's too early to determine the full impacts. But that being said, I think the ambitions of 2011 were really in line with what we are trying to do as a state to build more homes overall. And so we are eagerly anticipating the twenty twenty twenty six release of new APR data so we can update these numbers and see what the impact has been more recently. So thanks again for the opportunity, and I look forward to the conversation.
Speaker 5
Got the glitter. Can you give me a glitter, please? Thank you. Jason Moody. I'm a managing principal at EPS.
For over thirty years for forty years, our firm has been providing helping cities and public and private sector clients plan, approve, and finance housing throughout California. So with that perspective, we work on both sides of the table. We we work with the cities on their housing elements, on their implementation of the of their general plan and other elements as we help with the private sector kinda navigate this labyrinth of state and local regulations and help finance and deliver their projects. So that perspective is what I'm gonna take to hear about what, to date, we've seen about AB twenty eleven working with these different entities. I'm gonna provide some market data along the way to kind of put it all in context.
So I think it's important to recognize on the market side that this twenty twenty to twenty four period, which I think is what I consider I often call the pandemic and post pandemic period because the pandemic was really an inflection point in housing for a variety of reasons, both on the demand side because remote work changed the way people behave to some degree, and also on the supply side tariffs and supply chain have really increased costs. So there has been some headwinds on that side, but if you can see here, even in net, despite those headwinds, there's actually been more development in the last twenty to twenty four than there were in the two previous periods, the period right after the Great Recession and that mid period, which was built up to the pandemic. There's been more housing, actually twice as much housing overall. But this is showing you how much of it is single family, multifamily. It's still more than half is single family.
So the brown bar is the true multifamily project, and then the other color, which I don't even know what color that is, is more of a townhome product. Is drilling down on the multifamily in particular. One thing we've noticed it too has gone up, but one thing you notice is that the affordable housing component is a pretty big chunk there, and it's actually increasing in the 2024 period. I think that's an important part. It's worth noting, and I do love the idea of inclusionary housing, but throughout this period, inclusionary housing has been a really small piece of the pie.
It's it's, you know, 2% perhaps of the total housing. So inclusionary housing hasn't, so far, been really moving the needle, and, you know, that's there's a variety of reasons for that, I think that Peter alluded to, which is not subsidized in any way. It's subsidized by the developer. So the next slide is really focusing I think this is the real story here. This is the market headwinds with regard to flat rents and increasing costs.
And you can see that 2024 period, those lines, the top one being cost, the bottom one being rents, that's an unsustainable outcome for multifamily. And this is just hard cost. It's not talking about the soft cost that we know. Interest rates have gone up, construction defect liability, and all the insurance issues that have been hitting. That's gotten worse too.
But this right here can't continue. So you either have to reduce costs or increase revenues. Increasing revenues means increasing rents, and no one really wants to increase rents because that doesn't make the situation any better for affordability. So how do we, you know, how do we get out of this situation is the key question because it's we we need that to change for this to materialize. Another metric I often look at is cap rates, which is really what developers it's really the best signal that developers have you have about the way developers look at housing.
As you can see, cap rates were going down, down, down. Now they're going up, up. Going up isn't good. That means a project that would be feasible in one period of time, exact same profile, rent and cost, will not be feasible in the next period of time because the investors do not feel comfortable that it's going to generate a long term revenue yield. So cap rates are going up.
That further kind of reflects this problem we have in today's market with regard to multifamily housing. Cap rates don't affect for sale or townhomes, for example, but they do affect the rental product. So this has contributed to a decline in new starts in recent years, and so this won't show up, unfortunately, until this year and next year. You're gonna see a much bigger reduction, unfortunately, in the in the delivery of homes. So we saw that twenty to twenty four, there was a big up shot, but now we're probably in the next two years going to see a decline because these are the new starts are are slowing because of all these headwinds we just discussed.
So now I want to talk briefly about the component of AB twenty eleven that has affected its usefulness as a tool to developers. And those are the two parts, which is the inclusionary requirement and prevailing wage. And so this is an example of a real project in a market today that is still building. It's very few markets that are still building high density multifamily today. But this is a Silicon Valley, a real project, and this is what the project looks like without either prevailing wage or inclusionary housing.
The blue line is revenue, the value of the project. The brown is the cost of the project, and so what you get here is a residual land value at the bottom. How much someone could pay. Without these two things, is a feasible project. This is $80,000 a door, $10,000 an acre.
You could build this project today in Silicon Valley in this market. Now this applies to this location. All these things I'm showing you are a real project, but they apply to a unique market, but the concept is still there. Now, when you take a look at you layer in prevailing wage. As you can see, the revenue side of the equation stays the same.
The costs go up. The cost of prevailing wage is real. It's undeniable. It has an effect. But in this particular case, the project is still it's not a home run anymore, but it's still it's still feasible.
In this particular case, the prevailing wage adds cost, and there's a lot of data about how much it costs, and it varies by product type significantly, but it does undeniably adds cost to a project. And I think in good markets, it can be overcome, but when you're in a tight market, slim margins today, these little changes can really affect the feasibility of a project. Now here, we're layering in, in addition to the prevailing wage, 15% inclusionary requirement. Now here, you still have, in this market, still have a positive project, but the land value is you have to buy the land for 2,200,000.0. You can't buy the land in Silicon Valley for 2,200,000.0 an acre.
So the project is essentially ultimately rendered infeasible in this scenario. So this is one example. I don't want to say it's wide spread, but it does show you that these are real impacts. And when you have a situation where development costs are going up and revenues are flat lining on the rent side, small changes like this will basically kill a project. However, when you have a stronger market, these things can overcome.
So I understand that these are good policies, but they do have real impacts that need to be considered when thinking about why AB 20 how effective AB twenty eleven is as a tool to developers. Now, with regard to that, want to just kind of get a little more of my experience on this issue, which is that our experience has been AB twenty eleven has been a useful tool, but its impact has been indirect. Its impact has primarily thus far been on entitlement, not on delivery of real projects. The indirect has been on the as bargaining chip with jurisdictions who say, Hey, we can do it my way, we can do it the easy way, we can do it the hard way. And so then essentially the jurisdictions will go, Well, we'll work with you and we'll make it work our way so we don't have to So it's a hidden effect that is positive, so I think it's great bill in that regard, undeniably.
I've actually been working with cities on planning and zoning policies, they actually basically dial their planning so that someone will come in and not have to invoke AB twenty eleven and still get what they want. So it's very difficult to disentangle all the other pro housing legislation out there and its impact and the unique isolated impact of AB twenty eleven. It's real and it's hard to measure, but it's been it's been effective. So I think it's important to recognize that today, the overwhelming factor is the economy. That's what's affecting all of this, and the in all these these interest rates and and costs and rents and the aftermath of pandemic is what we're we're dealing with today.
AB twenty eleven is highly positive, but its impact right now is difficult to measure.
Speaker 1
Thank you. Thank thank all three of you for for that analysis and for kicking us off with the numbers and also some some real talk about where we are and where we stand and and the different challenges that are that are still in front of us. I'm I'm gonna open it up first to to my colleagues and allow Assembly Member Wicks to start.
Speaker 2
Thank you. Thank you for all of that information. Super helpful. On just the last point, mister Moody, sort of the threat of 2011 is the tool in the toolbox, right, to to to be able to build. Is do you have any idea, like, how often that is used?
I mean, it's a hard thing to track, but
Speaker 5
I think where I have seen it being used the most is actually when cities are rezoning because they need to for arena requirements. They're rezoning a lot of different land and different locations. So first of all, they're looking directly at commercial corridors as an op an actual place because they know if they don't do it there
Speaker 5
it's gonna happen anyway there. So that's the best place to do it. So then they go in and they do a new specific plan, and they change the rules so that the project can go forward without invoking AB twenty eleven because they're gonna rezone it to make the the type of products that the that the developers want already a buy write allowable use.
Speaker 2
That's helpful. You know, I know when projects are being considered and land use attorneys and others are trying to figure out what's the best way to navigate to get to yes, there's a kind of consortium of tools available. Right? We've got SB 35, four twenty three, we've got twenty eleven, we've got and obviously, in other areas, three thirty, and all these different sort of tools we're trying to give folks to be able to build. How does twenty eleven compare to some of those other tools in terms of its efficacy and its usefulness?
Speaker 5
In my view, the biggest issue right now is the I would say the inclusionary and the prevailing wage have make it less direct effect. So what again, what's happening is there's an indirect effect. So the indirect effect is we can do this. You know we can do this, but we would rather not have to be have those two components in the project, so let's work something out. That's where the effect is right now.
I think if the market were stronger, then those two components of AB twenty eleven would be digestible, if you will, from a developer's perspective. The prevailing
Speaker 5
They would be in strong markets, could not most, but many markets where they're going to try to invoke AB twenty eleven would be able to accommodate those two factors. But today, when margins are slim, and we don't know when that's going to change, but just the way it is right now, it's just it it kind of makes it only in very few markets like San Francisco and Silicon Valley are they going to be over overcome those two components.
Speaker 2
And so it's your sense that the prevailing wage and the inclusionary are what make it sort of out of reach to be directly applicable for projects and useful for projects in its current form with the current conditions of the market in most of the state.
Speaker 6
Yeah. I'll add just a little bit there. It's really common from our conversations with practitioners and attorneys that twenty eleven is, to the extent it's being used, it's not used in isolation. It's being used in combination with other state laws as well. So it is it seems to be somewhat common for maybe twenty eleven to be combined with the density bonus and with senate bill three thirty, which creates early vesting rights and limits the number of public hearings.
So I think, as you mentioned, there's a there's a suite of tools available to people who would like to build housing now, and twenty eleven, you know, appears to be one that is used in combination with other laws, you know, right now and could be even greater in the future.
Speaker 2
And and I know when we passed this, it was done with s p six. Again, offering tools to be used to be able to build have we been tracking numbers on s p six as well?
Speaker 6
So the state APR data does have a field for denoting s p six usage. We haven't done the same kind of due diligence on s p six data as we've done with a p twenty eleven yet. But from what we can see right now, the usage of s p six seems far less prevalent than twenty eleven so far. But, again, with all the caveats that I had for the APR data for 2011, we'd have to do some more digging to see, you know, if we could validate those numbers.
Speaker 2
And how accurate is the APR data? And, like, where are the vulnerabilities there?
Speaker 6
Yeah. That's a great question. The APR data is as accurate as is it it is inputted by local planning staff. And so because we are dependent on local planners to populate the APRs, there can be some challenges, particularly in lower resource communities where they, you know, are hopefully working on permitting new units and not spending as much time on the EPRs. And so we have observed instances where, projects have been mentioned in the media, but were not mentioned, in the EPRs as having used a particular state law.
So we've looked at this beyond just a b twenty eleven. And so we've needed to, like, call planning departments directly to say, hey. You know, this project was reported in this outlet as having used this law, but APRs say that it hasn't. Can you, like, confirm that it did or did not use that? So there's a lot of data cleaning involved to get a real clear picture, particularly in places outside of the the high cost areas where cities maybe are less resourced.
Another issue with the EPRs is that the data is lagging. I think the state does a great job of getting it out when it does, but at the same time, like, I can't tell you about 2025 usage so far because we have to wait until the summer when we get that new information out. So so we do have a bit of a data lag problem too.
Speaker 2
Okay. I'm gonna take that as a call to action to all the housing nerds on the Twitterverse to make sure they're posting about the projects with, you you know, with using AB twenty eleven or other housing bills that we wanna track so that the fine folks at the Schirner Center can make sure we're getting all that data. Just one last question, and I'd love to just, like, kind of a rapid fire to all three of you. If there were, like you know, if you could wave a magic wand and make two, you know, two changes on the bill to make it more effective, what would those be? Well,
Speaker 3
I already mentioned what I would do. I would not jettison affordable. I mean, I think mixed income housing is the future we need to really solve systemic problems. But I would subsidize the affordable in a mixed income community the same way we subsidize it in a standalone, you know, not for profit. And we would I would give it the same tax abatement opportunity that an affordable project.
In other words, I would treat it like an affordable project because in a way, it's handling a part of our affordability problem, workforce housing, 80 to a 120% of median, which in this state doesn't get you very close to where you wanna be. That's as important an issue as the lower than 80. You know? So if you could level the playing field, I suspect you'd have a huge surge, which would, I think, lift up the whole industry because the supply chain and the workforce would start to rehabilitate itself because there'd be higher demand. Be a big move.
I mean, we spend a lot of money on affordable housing. Well, many people say not nearly enough. But if it were distributed to mixed income projects, the impact would be much larger. Politics of that, that's gonna be your business to sort out.
Speaker 6
So I would examine where 2011, excludes certain projects. So in conversations with practitioners and attorneys, we've heard that, things like the, you know, exclusion of projects that are I think I think it's within 500 feet of a freeway, or in certain high fire severity zones have made some of the projects that they've explored infeasible under 2011. And so, it may be worth taking a look at what is the universe of partials that otherwise would have been eligible for 2011 but aren't because of the current provisions of the law that bar certain locations.
Speaker 5
I I do agree with with Peter's comment that somehow we gotta mitigate the impact of the inclusionary. That's probably more important than the the prevailing wage impact. And how you do that, there's a you you could subsidize or you could reduce that inclusionary amount or you give some flexibility for an in lieu fee, for example, instead of doing it on-site. That's what most communities do is with an in lieu fee. So you can play with that in Luffy and and and and the amount and vary it by community.
But I think that's where you need to to look because right now, if you the costs are too high, and that's just another cost for the developer.
Speaker 3
Can I add one more thought? This is anecdotal, but I've run into it about five times now because I've been quizzing my developer friends. What? Why aren't you doing this? They don't understand the law.
We we were actually too clever for our own good. A form based code, they don't understand. They understand densities and FARs. That's the way they see stuff. So when I tell them, no.
You have an envelope. You can build smaller units. You can increase your your, which which is an affordability direction that the development community is very interested in. We build things that are too large. And, you know, if you have a density per acre limit, you'll build the biggest unit you can.
So they didn't understand that. Another group didn't understand when we put in a minimum 30 units per acre so we wouldn't squander the land on low density, you know, high end townhouses when it could be more. They just didn't understand the concept of a minimum density. They thought it was a maximum, and they said, no. We're not interested in this law.
So there is kind of an education problem.
Speaker 9
Exclusions. You said fire zones, and what were the other ones that you were talking about?
Speaker 6
Proximity to freeways is another one. And then I've also heard, in addition to those two, that the definition of industrial zone, apparently, it's it's very broad, and so you could have a area that doesn't have any contaminants on the side from any light industry, which could be excluded from the law. Thank
Speaker 9
you. I I came in late, so I didn't hear anything, but but I'm just trying to clarify here. So there is opportunities to maximize the use of twenty eleven, And yet, whether it's the economy, other barriers, it's not, can I say, being used to what was expected? Is that
Speaker 5
I think it's just too early to see. I mean, we just it was bad timing in when it was approved, so it's it's it's only about two and a half years. It takes sorry. Too too early to really make a a prognosis on on its effectiveness. Two and a half years in a very difficult economic economy.
I think it's just I think the verdict is still out. The the concept and the the the requirements, ministerial approval is awesome. So I think it is a it is a very effective tool that will be, in the future, be used more frequently.
Speaker 9
So with education, economy changing, there's a lot of prospects for future use. I've noted on some of the handouts here, again I don't I don't wanna go through the handout, but that I saw some of the tax credits being used on to get these projects moving, which we know is another tool, which will just give me the opportunity to state that as the budget sub chair sub chair five, we really have to continue to speak to the administration about making sure we're fully funding the low income tax credits, which has been a fight for the last three years. So not only along with, you know, having more capacity here, we also have to keep those tools in the toolbox. But thank you.
Speaker 1
Thank you. I'm gonna just throw a couple questions out there, and we have two more panels, so I am I'm sure we're gonna continue to discuss all of these pieces of this. One one is, you know, it seems like there really isn't a lot of housing being built generally. I mean, it's not just a 2011 thing. Right?
It's a we're seeing these larger trends that are related to a lot of factors that are not unique to to 2011. And so in terms of looking at an an analysis of why 2011 isn't being used and, you know, zeroing in on the prevailing wage piece or the the the the affordability requirement, I mean, how do you look at what's happening in different types of opportunities or projects where they don't have those different factors that 2011 requires? Is there, you know, if you if you isolate the the things that are unique about 2011 that we think maybe are creating some challenges, where those are not present, are we seeing housing getting built? I mean, projects that don't have affordability requirements, don't have don't have prevailing wage. It's not like we're seeing, you know, projects going gangbusters that that that have those factors.
Right? So it's it's hard for me to understand in light of that. It seems like it's these other set of factors that are really hamstringing both potential 2011 projects and a lot of other projects that that we'd see that don't have some of both the opportunities that twenty eleven provides, as well as some of the unique requirements of it. Is that how do you analyze sort of what's happening with non twenty eleven projects in light of the analysis you provided for for 2011?
Speaker 5
Yeah. It's, again, it's the I totally would say the it's the economy, stupid, as they say. That's this is these, I would say, pandemic and post pandemic inflection point that occurred in the last four or five years related to the cost of construction. It's been really significant. And on the revenue side, there's been some issues.
You know, I mean, the the changing ways people live and work has affected demand side, the demographic factors associated with, you know, the baby the the millennials getting older and wanting bigger houses. So all these things going on, and the fact that California's population in general is kind of slowing down, is affecting demand. So these are all kind of interrelated factors. When growth returns, when interest rates come down, then you're gonna see an upsurge. It's cyclical.
You're gonna see an upsurge of development. You're gonna see people utilizing, AB twenty eleven more, I'm pretty sure.
Speaker 6
I'll just add, you know, to your your first question. I think where we see, you know, the that make 2011 favorable are projects that are a 100% affordable
Speaker 6
That are accessing another form of a state or local subsidy that triggers prevailing wage already. And so that was a cost they were already factor factoring into their developments, you know, pro pro formas. So in those instances, 2011 makes a lot of sense. The ministerial review makes it really attractive. The other point I will mention is that I don't have the slide here, but going back to where activity is broken up by region, you see most of this activity is happening in San Francisco itself.
So I think it was, like, two point 2,700 units that have been identified in the APRs as using twenty eleven. And so that actually intuitively may may sink may might make sense because the the differences between market and prevailing wages there are not as stark as in other places. And so, actually, probably, not surprising that you see a lot of activity in, in San Francisco. And the other thing I will say is, you know, we're talking about the redevelopment of commercial corridors. So oftentimes, these projects will have significant commercial or retail components, which can help cross subsidize some of the extra cost.
Right? So there was a there's a project in Los Angeles where Costco is building, not just a new Costco, but also housing above it. Mhmm. And so that is not your typical kind of residential development project. And so in cases where you have have a multiuse project where the economics just pencil out better, twenty eleven looks really attractive as well.
Speaker 1
And that's a I appreciate both those points. One one of the other question I had was I don't I know we're sort of zeroing in on what we can do to make some of these more mixed use opportunities available and with with the market rate aspects of it, but it does seem that 2011 has been a hugely valuable tool for the 100% affordable projects or the the projects that were already relying on some sort of state dollars that would require some of these including the prevailing wage. Is that is that I mean, just zeroing in on the on the affordable housing aspect of this, I mean, how do you sort of rate its utility and usefulness? And I mean, we're kinda looking at some of the challenges for these other types of projects that we wanna see happen, but for affordable projects seems to be sort of unambiguously a very positive thing. Are they being used in most most affordable a 100% affordable opportunities where they could be used, and are there reasons why they're not being used in affordable projects?
What is it just sort of a a sensor on the on that specific thing?
Speaker 6
Yeah. I haven't looked specifically at the instances where affordable projects would, like, only use twenty eleven or or we would say compared to the overall pipeline of production, so it's hard to say. But I'll also say because the law is relatively new Mhmm. And the development of affordable housing takes a lot of time, there may be a lot of developers out there who are examining or are planning to use twenty eleven. They simply haven't submitted a plan yet.
Speaker 6
You know, obviously, affordable housing is contingent upon low income housing tax credits most of the time, and those resources are pretty scarce. And so the amount of affordable housing development in general is kind of, you know, limited by the amount of subsidy that's available. And so we don't know how many projects in the future that once they get their tax credits will actually use twenty eleven. So it's hard to say exactly yet. But, because of the unique financing nature of affordable housing, it may be that's, you know, there are other things holding up usage of twenty eleven and not just, like, any issues with the law itself.
Speaker 5
think that the ministerial component of AB twenty eleven is what makes it so attractive to affordable housing developers. Yeah. That's just a really it really helps them out a lot. And and right now, there's a number of cities where the only product that's being built right now is affordable housing because the market for market rate is just not there. If you go to LA or to Oakland, where I'm from, or San Jose, the only projects that are being built are affordable housing projects right now.
Speaker 1
Great. Well, I wanna thank all three of you for for your partnership on this, your analysis, and I'm sure we will have a lot more work to do together. I appreciate your time this morning, and it was really helpful to set set the conversation and and help us understand where we are and and and the work that still needs to be done. Thank you.
Speaker 1
I am going to bring up our second panel, and these panelists are folks who have are actually using 2011 to bring housing online. Daniel Golleb from who was a partner at Holland Holland and Knight, and William Goodman, principal at Strada, and Betsy McGovern Garcia, vice president of help help Self Help Enterprises. And this is going to be a moderate a moderated discussion. So I'm gonna ask we have two questions and
Speaker 1
I'm gonna Well, actually, I'm gonna ask the same question of all of you to start, and then and then we'll dig in a little bit further. So if we could hear from each of you, because you are now that we've heard some of the the opportunities and challenges and where this looks across the state, I'd like to hear from each of you what you think works well about 2011, particularly as folks who have taken advantage of it. So we can start with Daniel.
Speaker 4
My name is Dan Golub. I'm a partner at Holland and Knight where I specialize in land use and environmental law and, in particular, housing. I do ran represent a range of developers, nonprofits, for profits in a roughly equal measure, mostly housing, almost entirely housing, but lots of different kinds, multifamily, single family, and otherwise. So I think that's my perspective. I'll answer your question.
I did wanna say how much I appreciate the chair and the speaker and all members of the committee for conducting an outcomes review. It's really refreshing to see an interest in how the bills are actually playing out, and it's a real pleasure to be in front of my assembly member, assembly member Wicks, of whom I'm very proud to be a constituent and to thank her for her leadership and for Steve Wertheim and his willingness to get into the weeds of this. Okay. So here's my answer to your question. And I have a question in reserve about what's not working.
Mhmm. So there's two tracks to AB twenty eleven. There's the track for the 100% affordable projects, and there's the track for market rate well, mixed income projects, which we largely anticipate would be built by for profit developers, and I have clients in both those arenas. One of them is here today from Self Help Enterprises. I'm very proud to represent them.
It's been ex excellent for the 100% affordable projects. I think it's already been mentioned. If it's a project that is largely expecting to pencil on the basis of some form of public assistance that would trigger prevailing wage anyway, it's largely a sunk cost. Not entirely. I think there's some costs that are incurred by going to the AB twenty eleven model, but largely the labor costs are similar to what you would expect if you're expecting a public subsidy.
And the affordability requirements, of course, are no problem for a 100% affordable not for profit developer. That's their business. That's what they're trying to do. So Betsy can talk about some of the specific projects, but there are homes that are in the middle of being built for lower income households today because of this bill, and there are good paying jobs being created because of this bill that would not have been created without this bill. I can tell you that from direct experience.
I think we were the second to entitle a project through the a b twenty eleven process, and it wasn't long after it was enacted. There is the shadow effect that was sort of talked about. We do do this as a leverage play, if you wanna talk about it that way, where we say we could do a ministerial pathway or we could get a great rezoning. So that happens too. It's harder to measure, but I can measure in in in very significant numbers projects we've gotten all the way through and entitled through that process.
So that's my short answer to what's working. The 100% affordable pathway is working. It provides that CEQA exemption, that time limited process, and it gets projects entitled and constructed. And they're already been constructed, and the bill's only been in effect for a couple years. So I think that's a a considerable credit, and that's what's working about the bill.
Speaker 10
Will Goodman from Strata Investment Group. We're a developer based in San Francisco working all across the state. First of I wanna echo, Dan's, appreciation for inviting us here and willingness, as assembly member Wick said, to see how this is working in the wild. We are, I'm gonna focus on what's working and and really on the ministerial, approvals part of of AB twenty eleven. So, Strata, I think we are the most active builder of housing in San Francisco over the last several years.
We've delivered, about a thousand units of housing just in the last three years alone. AB twenty eleven has been an incredibly effective and powerful tool for getting projects approved quickly and efficiently. In 2025, on on the screen behind GEC, the the high rise towers there, we we, this is a site in San Francisco that had had been vacant for a long time. There was an office development that had been approved there. We came in and entitled 1500 units on the site in about seven months start to finish, which I think is a a land speed record for San Francisco.
I keep saying there should be a a metric for, like, entitlement days per unit because this this this one's gotta gotta be the winner. And just as as a comparison, we we recently built another project just less than probably half a mile from that site and delivered 600 units. It took us four years to entitle. So when you think about that that sea change there, the cost, the you know, how much changes during that period of time, that that that really, really was such an effective tool. The second thing, and, Chair Haney, I think you mentioned this earlier, is really about certainty.
For for us, having certainty in the timeline and the process for approvals is such a big deal. Our our capital sources for projects like the ones on the screen are state pension funds, banks, other private capital sources, and we just hear from them over and over again that lack of certainty and and, honestly, their their battle scars from entitlement fights in California have has really affects and cools their interest on being early stage, early movers in in development projects. We can now sit there and say to them, we now have certainty in in that process and and how this is gonna play out. So both of those things have just been been hugely effective.
Speaker 11
Well, good morning. As was mentioned, my name is Betsy McGovern Garcia. I'm the vice president of Self Help Enterprises. And Self Help Enterprises is a 60 year old nonprofit organization. Our home office is in Visalia, and we work only in the San Joaquin Valley Of California.
Our focus primarily can be distilled to two things, housing and water. We develop affordable rental housing, own and operate over 3,100 units of rental housing. We've developed over 6,700 units of homeownership housing. We run first time homebuyer programs, water delivery, permanent solutions for water, clean drinking, water in schools. And collectively, our impact has touched the lives over 8,700 families in the San Joaquin Valley.
Speaker 11
87,000. Yeah. Yes. Thank you. So I'm gonna talk a little bit about what has worked with a b twenty eleven, and if I can get the clicker to work.
I will say that all of our projects recently have used the Buy Right tools that have been made available to us as a developer. We've developed approximately 1,800 units in the last ten years in the San Joaquin Valley of 100% affordable housing. And all of those projects have used or the recent projects have used the tools available. So we've used SB 35 on two projects. We've used AB twenty eleven on three projects.
We've used AB one zero one to permit a navigation center. And recently, we took advantage of Builders Remedy to move forward a project in the city of Porterville. So if there is a tool that is available and we can use it, we will take advantage of it to develop affordable housing in the San Joaquin Valley. The first project I wanna talk about is River Glen in the rural community of Livingston, is in Merced County. River Glen is a unique project because it is located immediately adjacent to a federally qualified health clinic.
The health clinic called us and said, we want housing next to our health services. Will you come in and do a project? We said absolutely. We called Dan. He helped us arrange an AB twenty eleven entitlement package.
And the project is currently under construction and slated to open in November 2026. One other interesting aspect of this project, we heard Peter talk about the mobility cost faced by our low income families. This project is also financed by the Affordable Housing and Sustainable Communities Program. So within this project, we are developing high density housing immediately adjacent to a health care clinic across the street from commercial amenities. We are building sidewalks and bike lanes, and we're also funding micro transit and car share.
So our families have access to reduced cost micro transit demand service. Concurrently, with developing high density affordable housing, we're innovating transit. So in a lot of our rural communities, we don't need big buses with five or six riders on them. We need smaller vehicles, electric vehicles that can get our families where they need to go. So this is a really great example of a project that is high density affordable housing with transportation investments that utilized AB twenty eleven.
Oop. And I'm going the wrong way. So the next project I wanna highlight that took advantage of AB twenty eleven is Lakeview Terrace in Corcoran. This is an interesting site. It was a city surplus site.
Corcoran is in Kings County. It's also a rural community. So I get the joy of sitting in front of you and highlighting all of the non Oakland and San Francisco and LA projects that are taking advantage of this tool. Lakeview Terrace will be under construction in April. It is fully funded.
This site had a strip of commercial property adjacent to a main arterial going through the community. And so we were able to use AB 2011 to permit the multi family component of the project. Immediately adjacent to this project, we are developing 67 single family home ownership units. So this is a really great example for us of mixed use housing, where it's 100% affordable, but we're serving households at 30% of area median income all the way up to 80% of area median income. And then typically what we will do in these communities is we'll work with our families in rental housing, provide financial literacy, homeownership preparedness, and then we'll graduate our families in rental housing into homeownership housing, which really serves as an equity tool and breaks the cycle of poverty for those families.
And the final project I will highlight is Camino Del Rio. This is in Visalia. It's 94 units. This one is not yet fully funded. Hopefully, there will be a housing bond and investments in affordable housing in the future that will bring this project to fruition.
The interesting thing about this site is that it was donated to our organization from a farm worker education nonprofit that no longer is in operation. And Camino Del Rio was permitted with AB twenty eleven. Immediately adjacent, we have the Visalia Navigation Center that was permitted with AB one zero one. And then adjacent to that is an 80 unit farmworker project, which will be opening this weekend. 24 units of farmworker housing in an 80 unit project.
So just on this one site, we've been able to use a variety of buy right tools to bring all three of these projects forward.
Speaker 1
Thank you. Great. Thanks for your your, providing that important perspective, that is non San Francisco and Oakland, LA based. Now I wanted to ask each of you what could work better about it. What what maybe is preventing more folks from taking advantage of it?
What are things that we might do to improve on it? And I'll also start with you, Dan.
Speaker 4
Sure. So then there's the second track, which is the track that's available under a b twenty eleven for mixed income projects. We haven't seen a significant use of the tool for my for profit developer clients. And part of that's been talked about. So if you were planning your pro form a and your cost of construction on the assumption you're taking a public fund, that's one thing.
If you were planning on building a project and you were not planning on taking public assistance that would trigger prevailing wage, it's an enormous delta in the cost of construction. That's just a fact. I don't say this with any personal opinion. I happen to have personal opinions and support the labor movement and wanted to be as strong as possible. But as an attorney, I advise my clients.
I say, here are the costs. Here are the benefits. Here's the delta, and they run the numbers. And, the cost of construction right now in the state of California is so enormous that I have not had any significant number of for profit developer clients who say, sure. I can take on some additional construction costs and propose this project.
Doesn't matter how quickly it gets entitled. They're just they the project's underwater. So, that's what we found. I have some tweaks, maybe the second, third round of questions. I'll I'll some high level things that I think would improve the efficacy of the statute.
But if you're talking about getting a very strong interest in the for profit development community, I don't think those change the dynamic until something significantly changes about the cost of construction.
Speaker 4
Oh, you want those now for this one? Okay. Well, then then I'll wrap this part up. I will say there's an exception. We're just starting to see a glimmer of interest in the highest rent jurisdictions we're talking about, where you are seeing unions and some of my clients actually willing to say, you know, this is a dense enough project, a tall enough project, and a jurisdiction where we're largely expecting probably to go late, go with labor on a project of that size, that we're gonna go for it for a b twenty eleven.
We are talking about San Francisco, maybe some of the highest rent areas of Los Angeles, and it's been interesting to see labor and for profit developers come together to propose a few of those projects. If that's gonna happen, the process has to be truly ministerial. It has to be truly speedy. You cannot have localities throwing up roadblocks or coming up with strained arguments about why it doesn't qualify for a b twenty eleven. If even a project like that you know, I'm talking about labor, for profit developers saying we will build a dense project with union labor all the way, it has to be truly ministerial.
And if it isn't, I think that'll be the end of the efficacy of the statute. Because if my clients make that kind of commitment and then still find that they're stuck in the process, they're gonna abandon the statute. I don't think it'll be useful. So that's that's my expectation of the dynamic for those projects. I don't think you want all the things on this list, but I'll give you highlights, then I'll talk to Steve about them unless you want.
But here are a few things that I think would help. The substantially surrounded by urban uses requirement, it's too tight. We've looked at projects that are clearly infill under anybody's real understanding, but I can't quite get there. There's a new standard from a b one thirty that's more forgiving, and you should take a look at whether at least that might be good. There's a prohibition on adjacent industrial uses, also a little too tight.
Right now, the definition is that anything that requires an air district permit is an industrial use. A generator requires an air district permit. No one thinks that's makes something an industrial use. And there's also a carve out that could probably be carved back out. I wanna talk about homeownership, which I think we should be talking about with this bill and many other bills.
The bill as written implies that you would only have either homeownership or rental. Some of my clients wanna do both, and it might be worth, you know, clarifying that that's permissible either through HCD guidelines or a statutory amendment. And subdivision approvals are so important. I think a b 20 eleven's clear enough about this, but many of the streamlining laws don't make clear that you can get your subdivision approval through the same process as the otherwise streamlined approval. And because of that, you have people proposing rental projects, and then they say, well, can I get my condo map on that?
And you say, well, we're not sure. And then they say, well, then I guess we gotta do rental. And we shouldn't be disincentivizing homeownership in that way. It should at least have parity. And then that brings me to a point.
There's a minimum density in a B 2011. It's mentioned. I'd really encourage reconsideration of whether you wanna force a minimum density on a project that doesn't wanna do it, especially a homeownership model. These townhome projects might just pencil just pencil, but I am not seeing people, I have a developers turning down density. There's a there's an assumption that if you give my clients more density, they make more money.
Very often, that's not the case. And just query, do we really do you really want something in the build that's prescriptive that if a developer doesn't wanna do that minimum density and otherwise has a project that pencils, you're gonna force it on them? I guess I've made my opinion clear. I don't think you should. Commercial corridor, there's a you have to be on a commercial corridor for the mixed income.
Some clarity about whether the grassy median in the middle of the corridor counts. That's a big issue in the South Bay. I think it does. Statute doesn't quite say. Be useful to have some clarity on that.
I think those are my primary issues. We could use a little more clarity on whether a principally permitted use, you know, what that is in terms of retail. Is that a restaurant? Is that a car dealership? And then I think I have a few other things on here.
Oh, and people have have talked about this before, which is that there's a set of site criteria that applies to a b twenty eleven and most of the other streamlining laws. It lives in government code section six five nine one three point four eight six, but then it's been cross referenced. Well, we all knew that. Right? Everybody knew that.
Top of their head. You can see that I'm in these laws at a pretty high level of weeds, but it came from s b 35. And, some of those requirements weren't revisiting the fire. You know, there should be some way to propose a project in a fire zone with appropriate mitigation, flood zones, and then the Cortese list, exception. Some sites got on the list, and they can't find their way off.
There ought to be a decent way to clearly get cleared, once it has been established that the project is or could be appropriate for residential use. That's a high level of my thoughts and tweaks with my great appreciation to everyone on the committee for willing being willing to listen to all that.
Speaker 1
say, which is fair. If you have room in your bill package or at least something. Thank you, mister Goodman. Thank you. Go ahead.
Speaker 10
Yeah. Thanks. I I have a few thoughts. One one is in response to what Dan said. I it is true that where we're using a v eight twenty eleven in in places like San Francisco or or looking at in places like San Diego, we are already assuming for a high rise development like the one you saw on the screen, at least prevailing wage, probably full union job.
Those cities already have inclusionary affordable requirements, so doing 10% is what we're doing anyway. So these are not added costs to a project like that. We we can and maybe should talk more about the state of the market and and cost and other factors, but but that that is definitely true of how we're looking at where where this this bill makes sense or doesn't. A couple of the things that that Dan mentioned, absolutely, we have come across as we've been evaluating sites for a b twenty eleven. The the use restriction, and and particularly the industrial use restriction issue, I think, you know, a lot of good thoughtful urban planning, intention went into the bill.
But we've we've we've had circumstances where we had a property that was adjacent to a brewery wine bar, which I think is exactly the kind of use you would want in a mixed use commercial neighborhood. But there was a question of whether that triggered, the industrial use restriction. And so limiting that to narrowing that to more heavy industrial uses, I think, would be very helpful. I I do think the minimum density thing is interesting. A lot of what pencils today in the market, a lot of what we are working on outside of, you know, the urban infill locations are townhome or mixed housing typology, mixed tenure, homeownership, and and rental projects.
And these are not, you know, super low density, large single family home lots. They're actually fairly dense townhomes, but they might be at 20 units to an acre, not 30 or 40 units to an acre. We see that as, you know, for first time homebuyers, for young families. It's a really great housing typology. I think it is part of a mixed use community, and we'd love to use a b twenty eleven in some of those cases, but we can't because because of the minimum density issue.
So I I think those are are two tweaks in particular that would would really make this work in a broader set of sites for us.
Speaker 11
Yeah. So I appreciate this question. I'm on the board of Housing California who I'm here today representing and a member of the California Housing Coalition, and we talk about these things often. And I wanna just give two examples to the points that Dan made previously. So sites are imperfect, especially infill sites and especially rural sites.
We had a site in Goshen that was 73.6% surrounded by existing uses. And because we did not meet the 75% threshold for adjacent to existing uses, we were not able to use AB twenty eleven. Many of these sites have existing uses on three sides, but the fourth side happens to be the long end of the rectangle, and so the math just does not work out. Some of the most effective definitions of infill trying to accomplish the same thing that this is trying to accomplish allow for flexibility three out of four sides, lowering that threshold to 50%, really looking at the surrounding uses. Additionally, we've had sites that were adjacent to another vacant parcel that was being developed in the future, but 100% of those two parcels were surrounded by existing uses.
And simply because it was adjacent to a site that was going to have future development by the school district, we did not qualify for AB twenty eleven. Also want to hit on the homeownership challenge. We believe that homeownership is one of the most effective tools for breaking the cycle of poverty, creating equity for families, and allowing families of color to achieve the dream of homeownership. It would be nice to have some buy right tools that worked for homeownership projects. We actually have a 37 unit subdivision in the city of Modesto that we had hoped to use AB twenty eleven, but because it wasn't clear on the availability or the applicability, the ability to use it with homeownership, we were unable to move forward.
We have spent seven months doing the zone change and the mapping for the site. I could have had homes already completed if AB twenty eleven were available as a tool for that homeownership project. Fully endorse Stan's recommendation to do a carve out for homeownership, set aside a density for homeownership projects to allow those projects to move forward.
Speaker 1
Thank you. Thank you so much for for all of those recommendations and both the good and the bad colleagues. Assembly member Wicks.
Speaker 2
I have just one one question. It was very thoughtful. Thank you for both the the good and opportunities for change. No problem. I am very supportive of a lot of what was discussed.
You mentioned, mister Golub, the there are moments where in times when the unions are working with the developers to actually try to make this all work. And, obviously, that's what we wanna see in an ideal world. That just made me think about, you know, as the politics around this were tough the first time around and and relatively contentious. From your all's vantage point, when when AB twenty eleven is being used, is it primarily carpenters are the beneficiaries on the labor side or the building trades or both? What's your sense of kind of like the the labor movement is not monolithic, but how are they all approaching, a v twenty eleven?
Speaker 4
I'll actually demur a little bit on, the negotiations, which usually my clients do. I certainly advise them of of, you know, what's required. You know, there's nothing in the statute that says you have to sign up with this particular labor union, but I obviously know there's a bridge between prevailing wage and some of the other kinds of requirements that other unions like to see on a project. Sometimes it comes out in the wash in the sense that you just kind of expect it's gonna be a PLA project, and that you expect that the, you know, different unions but it's especially frustrating, obviously, for our clients to feel like, well, I've signed up with one of the unions, but another is not on board. And then you kinda feel like I've gotten the worst of both worlds.
But I largely leave those to them. I certainly advise them of their options. I I think when you go entirely prevailing wage on a project, you know, you're somewhat of the way there in terms of what other unions might be expecting on a project. But we haven't seen it a lot, to be honest, with the market rate. So just to be clear, I think we're just starting to see an interest in in doing that sort of project.
Speaker 4
Well, there's more than one. Yeah. I think, you know, Williams Crossing wants.
Speaker 10
Yeah. In in San Francisco, where where we're using it, again, these are projects that will be built with a 100% union labor anyway. So it so we don't have that sort of differentiation between, for instance, carpenters and building trades. But I will say it's an active an active discussion because we have some other projects that are not high rise, kind of more more, you know, middle middle density, you know, an 85 foot building, for instance, where there there are active discussions going on. And I I don't yet have the example of of how it's gonna play out, but but it's happening.
Speaker 12
Thank you to our chair for convening this, to our speaker, of course, for putting this together, and excited always to talk about miss Wickes' housing bills. But I wanted to specifically talk about Los Angeles. So I represent Northeast LA, East LA, South Glendale, Echo Park, Silver Lake, Dodger Stadium area, of the most areas with the most expensive rent in Los Angeles, with a lot of young people who can't afford to live anywhere else, are moving further and further away. I have a lot of college students as well who are trying to live in the hipster parts of Los Angeles. And I wanted to just ask what the conclusions were that you're drawing from kind of where the implementation of AB twenty eleven is shaking out.
I'm seeing a lot of things in San Francisco, in the Bay Area. I'm not seeing as many things. And I think I make this point a lot in housing committee in Los Angeles. And why is that? What what can we be doing to, you know, crack that nut in Los Angeles?
Can you I I really wanna hear your feedback.
Speaker 11
Yeah. I I don't know how to answer that because I've never developed in Los Angeles. But I can tell you that what has worked for us, one, we're paying prevailing wage already in our projects, And so it's an easy decision for us. Our jurisdictions lean in and really take advantage of the tools and find creative ways to use the tools. And so I think just educating developers and creating the opportunity and the pathway for them to access buy right tools and take advantage of them really has worked in the jurisdictions where we are.
And then also continuing to support affordable housing financing tools. There's the housing bond that's coming on the horizon, the governor's realignment and establishment of the new department, the finance, agency, and really making sure that all resources have the opportunity to reach all areas of the state, including investments in Los Angeles.
Speaker 10
I I can comment a little bit. As as we look at opportunities in the LA area, there was a there was a chart that was shown on the earlier pattern about or, sorry, the earlier panel that showed costs and revenues and the gap between costs and revenues over the last, you know, five, six years. And in a lot of ways, I think that's that's the biggest story and and the biggest impediment to building housing today in San Fran in places like San Francisco, Silicon Valley, where what is happening really in the last year, in the last six months, the the revenue side of that equation has really picked up. I mean, you see the reports now highest rent growth in the country is in is in the Bay Area. A lot of that's driven by AI and, you know, everything happening in the Bay Area economy.
So that gap is getting a little bit smaller in the Bay Area. L LA still does not yet have that gap closing from the market rate development perspective, making it harder for those projects to pencil. So from, you know, the the entitlement approval standpoint, a b twenty eleven remains this really powerful tool, but but the cost environment and and the economics of of building market rate housing are just still challenging.
Speaker 4
We do build in Southern California. I grew up there, but I think my answer is largely the same with respect to the other projects, which is that except in an extremely high rent area, I'm not seeing a lot of uptick in a b twenty eleven from the market rate perspective. I would think it would be largely available for nonprofits that are active. I've advised some in the past about how to use those streamlining tools in Los Angeles. A community of friends does really great work there, and I've been proud to represent them.
I'm sorry. Were you about to
Speaker 4
Oh, okay. And and the other thing I'll say is that, you know, local government leadership and politics are as important. Some of the jurisdictions really lean into the state housing laws and try to use them as much as possible. Some jurisdictions haven't shown that same feeling about the state's involvement in housing, and that can change with every every election.
Speaker 12
Yeah. No. And I think that's just like a a general comment that I'll I'll continue to make and really, you know, an an opportunity that I see, and for folks listening or if you're on this panel or the last panel, that if you have things really specific to Los Angeles, how we can really improve the uptake of critical bills like AB twenty eleven and other bills. However, I can be helpful to better educate whether it's on the developer end or work with our local, you know, elected officials there. You know, I welcome that.
I just I consistently notice extreme favoritism here in San Francisco and Oakland for these housing projects, and so just wanted to register my disapprove my my both approval and disapproval of that, just wondering how can we get more housing in Los Angeles. And so that's really, I think, the the challenge specifically that I know I'm always asking myself, so I I welcome any thoughts that anyone may have on that specifically. Thank you.
Speaker 8
I have two points I wanna just tease out. So, William, you just you were just talking about how 2011 is much more appealing to for profit developers in high rent markets. Right? So I live in and I represent the Silicon Valley. I live in San Jose, the most unaffordable city in this, like, country now at this point or something.
And so, again, just if I could tease that point out, you said and I I think you were referencing this chart, right,
Speaker 8
The one about the cost of construction and then the the value, right, the value in which you can charge a property. So is that what you're saying is in the high rent markets, it's more lucrative to use things like 2011, what
Speaker 10
I I just mean that in high rent markets where you're looking at that, you know, can you make a project pencil, which is really the revenue support the cost to build in that market, you know, given that construction costs have Sure. To go up. It sort of has to be in one of those places where the revenues are high enough. And that's somewhat irrespective of maybe 2011. It's Right.
Just the nature of of building housing today.
Speaker 8
And the the cost of construction is pretty stable, whether it be LA or Silicon Valley or some other state. Right? It's relatively stable and it's high high and
Speaker 10
expensive It's high across the board, but but there are certainly jurisdictional differences when you look at impact fees, for instance. Okay. Right. You know, that that varies a lot by by jurisdiction. That's local impact fees, utility district impact fees, those kinds of things that that are just part of that cost equation.
Speaker 8
Right. Because I just assembler on Khalil's point, you know, we don't want to see only the uptick of bills like this only when it's a high rent growth market, which is contradictory to our public policy goal of having it be a low rent growth market. Right? Because where I live, the rents and stuff are too expensive, but these are places that are more lucrative for it. Although I was a bit surprised that Santa Clara County has zero of the twenty eleven projects, so I thought there are much more commercial conversions.
Even though those are happening, perhaps they're happening outside the realm of a b twenty eleven. So to my second part with mister Golub, you were talking about how, like, the median issue you saw in the South Bay and, like, the brewery issue, who is disputing you on these issues? Is it the cities? Or I'm just trying to get an understanding who's bringing these issues up.
Speaker 4
No. It's a great question. So some of it is a conversation that I have with the client who's being cautious. Right? Okay.
So sometimes it's, you know, we'll disclose any particular, attorney client privilege communications that I have, but we always look at the laws and say, think we've got a winner on every single one. This one's debatable. Are we willing to take a shot? But yeah. No.
Sometimes it would be we put the application in, we get a letter back from the city. We think you do not qualify for a b twenty eleven because you missed this spec. I think it's arguable, and we have to decide if we're gonna spend a couple years arguing. That's why I mentioned the point that I mentioned earlier about if you do have one of these projects, we can't go six rounds with the locality about whether urban uses really means what it says or whether they're gonna dispute some small aspect of the density bonus law applying to the project.
Speaker 8
But without, you know, compromising your confidentiality aspect, is there a city in the South Bay that is more guilty of doing this than the other? Because I'm just I'm just Yes. I know what you're trying to say. That Santa Clara County, we have so many big things that are happening, and it did not use a single one. Yeah.
So I'm just wondering if is this a pattern? Is it consistent? Or is there one that's, like, Jose, that is more than the others?
Speaker 4
Yeah. So I'm I'm honestly racking my brain and not trying to hide anything. I'm not aware of any having considered an AB twenty eleven project. That's just a question of whether someone
Speaker 4
Has come to me about it. I'm doing Builders Remedy projects in San Jose. I put them somewhere in the media in terms of their excitement about that happening. I think they recognize that it's applicable. So I'm doing streamlining tools in San Jose.
I can't tell you that off the top of my head, can think of an AB twenty eleven project.
Speaker 8
Right. I just find an interesting case setting example where you have a lot of these projects in 2011 I'm sorry, in San Francisco, and, of course, there's a lot of different laws out there and bonuses that developers utilize. But you have it in Marin, you have it in Alameda, you have it in San Francisco, But you don't and even Contra Costa and Solano, but you don't have it in Santa Clara County, which is the most tiring, which is the most lucrative in that sense. You don't have it utilized. So that's why I wanted if we could follow-up just teasing out what are the particularities, because I also wanna get a sense is are the cities effective enough at, I don't know, gaming the system in a way too?
Because, you know, the difference in some of these counties, we have also very large cities, San Jose. Right? I they've also been they have interesting positions on some of how we do things in the state, so I think that's just something for further conversation. So I appreciate your testimony today and maybe something more can tease out later. So appreciate it, mister chair.
Speaker 9
Thank you for your presentation. Yeah. I wanted to remark on the this is Betsy McGovern Garcia. It is exciting to see the usage that, you are attaining units, through 2011. And, your remarks, show me that, obviously, you're very invested in these strategies, but multiple strategies to build these units, which I think probably is one of the key takeaways that there's many ways to get to these projects and combining them.
But you also mentioned that you are on the Housing California and Housing Coalition, and that you're speaking about these issues of, I'm assuming, attaining units in a timely manner and as quick as possible. What are some of the things in these groups that you are participating in that they would say to us as legislators, either keep doing or get out of the way. Because in my tenure here, obviously, there's been a slew of legislation in this space, Some may be more productive than others. But do you have any, just say, top three that you're constantly hearing from these groups? Yeah.
Definitely. Thank you for the question, and thank you
Speaker 11
for the wonderful recap of the work that we're doing. You're going to hear from the California Housing Consortium on the next panel. So certainly, they will summarize some of those things that we're working on. A big thing right now, I think, really is with the establishment of the Housing Development and Finance Committee under the governor's reorganization plan. There's contemplation of moving bond resources under that new committee HDFC.
And really a focus for us primarily in the San Joaquin Valley and representing many rural communities is ensuring that there's an equitable and fair distribution of resources across the state. So, for example, for us in the San Joaquin Valley, we've been getting an average of five per 5.6% of state resources. And if you look at our demographics, our share of the regional housing allocation, we should be closer to 10%. So I think really paying attention to the methodologies of resource allocation under HDFC is gonna be very important going forward. And then I mentioned the housing bond and allocation of state resources within the context of the state budget, continuing to invest in programs like the multifamily housing program, supporting the affordable housing and sustainable communities program, supporting the housing bond, which we're hoping will be on the ballot in November, and continuing to invest in state tax credits, which can then be paired with federal tax credits, to maximize their impact.
So those are some of the things that we're talking about and actively working on.
Speaker 9
And I appreciate that. Through our committee, we'll be vetting some of these issues a little bit more as you might have followed last year as we wanted to understand more the entire scope of what we're doing in the state, which I think is much more complex than most people understand. I'd also say, going back to the first panel, this education, it it it appears to me, depending on the city, the developer, the nonprofit, or even pro pro for profit, that it really depends on how invested they are on all of the programs to make these projects work. And one area that maybe we don't do as well as we could at the state is really giving them the blueprint of here are your options or a menu, and these are the ways you can put these projects together. And that would be continued education.
And we just assume planning departments, individuals know how to do this, and it's very complex if you just even think about your own, you know, people trying to build an ADU. I mean, these are much different projects, but navigating these systems we've built, it depends on who's at the check count counter. All of these things that could either speed up a project or delay it by months. So I appreciate I can clearly see you know how to navigate, all of you, but thank you so much.
Speaker 1
Thank you to all three of you for your work and for for using this law and and and for letting us know how we can strengthen and improve on it, and appreciate your time. Thank you.
Speaker 1
Alright. We will bring up our last panel, which are the original bill sponsors of a b twenty eleven. Danny Curtin from the California Conference of Carpenters and Marina Espinoza, the policy director at the California Housing Consortium. And you will each have five minutes.
Speaker 14
can go ahead and get Good morning, Mr. Chair and committee members. Marina Espinoza with the California Housing Consortium. We are an affordable housing advocacy organization that focuses on the production and preservation of low income housing. And we're very proud to have been a co sponsor of AB twenty eleven.
We remain grateful to Assembly Member Wicks for her leadership and partnership on this bill, and we really appreciate the opportunity to be here today to reflect on its impact. And, first, I'd like to provide a little bit of background on what we were trying to accomplish with 2011 and what it meant to CHC. Our goal was to craft a policy that would significantly boost housing production and also help to support the construction workforce. As was mentioned earlier, projects that benefit from the streamlining tool created by the bill are subject to various labor requirements, including prevailing wage, health care expenditure, apprenticeship, and enforcement requirements. And, we thought that this streamlining tool paired with these labor requirements struck the right balance.
The bill received support from a very broad coalition of stakeholders, including housing developers, labor groups, the business community, environmental groups, social justice advocates, and faith based organizations. It really marked a pivotal moment for CHC and the affordable housing industry as a whole. It was the first time that housing developers came together with our labor partners in a statewide effort to open up new sites for housing construction. Today, you've heard some of the pipeline data and some of the success stories for 2011. And overall, we believe that, the law has been helpful in streamlining projects that may not have otherwise moved forward.
It has made it possible for projects to avoid the barriers that some communities impose on housing development. And while AB twenty eleven has created a pathway for some projects to move forward, we believe that it could have a much more transformational reach with, some changes to it. California is facing a shortage of more than 1,000,000 affordable homes, and we need to work on solutions that address the full scale of the need. In a good year, developers built approximately 20,000 affordable units, and that's not anywhere near, what we need to build to address the housing shortage. To make 2011 more effective, we need to reduce the cost of construction in a meaningful way, as was mentioned earlier.
And, CHC has been looking into the factors that drive up the cost of building housing. Some of the feedback that we've gotten on 2011 is that the costs associated with the labor requirements attached to the bill still outweigh the streamlining benefit in some cases. And, for affordable projects, these requirements can be cost prohibitive, especially at a time when state investment in housing is unreliable. At CHC, we always look for opportunities to thread the needle, and we understand the legislature's interest in making sure workers receive fair wages and labor protections. We also share that goal.
And we welcome an opportunity to work with our labor partners and the legislature to revisit the requirements attached to 2011 and to come up with a creative solution that reduces the cost of construction and also continues to support the construction workforce. It's important for me to note that we are also looking at some of the other cost drivers for housing development. We're looking at building code requirements. We are in the conversations around promoting factory built housing. Also know that impact fees are a cost driver.
And I just also wanna mention that we need a reliable ongoing source of funding to make it projects as possible for these projects to pencil once they are entitled. And we're working with a coalition that's pushing for the affordable housing bond, also need funding in the state budget. Again, we appreciate this committee's interest in reviewing the outcomes of 2011, and thank you for the opportunity to be here today.
Speaker 13
Thank you. Danny Curtin, California Conference of Carpenters. Nice to see you all. And, really, I wanna thank you, the members of this committee, for the incredible work that's being done in housing. And you've heard me all of you have heard me before about the destabilizing impact of housing costs, so I won't get into all that.
I heard a lot about COVID destabilizing the cost or at least in the wrong direction, but the 2008 subprime mortgage crisis was also a major factor in changing how housing is developed by equity funds as opposed to homeowners getting the benefit. So I had other stuff, but I go over a few things quickly because I think we wanna get to the root nub of the issue that was being discussed here a minute ago. Our motivation as the carpenters, oh, by the way, the this chart, this is not directly the housing chart, but it is part of the nature of the problem, and I'd be happy to talk about it. The the wealth gap, the and union density, as you can see, in the Great Depression, was about where it is now. So we are not in a healthy position as a labor movement and and as a concentration of wealth in America.
And this other side is the the wage hourly compensation issue, which generally tended to go along with productivity, but somewhere around nineteen eighties decided to stall out. So, basically, hourly compensation in this country is about the same as it was forty five or fifty years ago. Meanwhile, productivity has gone up dramatically as union membership has declined. So that's just the backdrop. I'll get into the more details in a minute.
So the motivation with the carpenters coming from the top is basically a union carpenter at the top of their game makes a $100,000. They get health care. They get benefits. They get pensions. That's all great.
But they do not qualify for a mortgage thirty year mortgage for a bottom tier house in California. There's something dramatically wrong with that picture. That's what's driving our our our motivation here. You know about the home prices, $800,000 median home, so on and so forth. It's gotta change.
But I I wanna do this one comparison. In 1970, which I remember actually, a dollar 65 minimum wage, $3,300 a year income. The average house in California, hold on to your hats, $24,000. Today, 2025, the minimum wage is $16.50, 10 times what it was in 1970, and the average house is $840,000. That's 34 times higher than the minimum wage, where in 1970, it was seven and a half times higher.
So
Speaker 13
a whole generation of out from homeownership that you have discussed in the generational wealth, like myself, which put my kids through college. And if they were legislators, they'd be joining the legislators that cannot afford a home in California caucus, which I think is really a great thing. So let me just talk about the workforce for a minute, and that's gonna be the conversation I think we wanna get to. There's about a million construction workers in California. You'll hear all kinds of numbers.
300,000 of those or so, probably a little more, are in the private housing market. Virtually, if not literally, union free. They're the lowest paid workers in the construction industry. Theft in the housing construction industry is really through the underground economy is described as rampant by the Department of Industrial Relations. Right now, workers in the housing construction industry in the nonunion sector receive about $5,000,000,000 in social support every year.
And since it's cash pay in many, many cases, there's about another billion and a half, $2,000,000,000 in taxes and workers' comp benefits that are not being paid. So that is technically a $7,000,000,000 subsidy by government to the worst construction players in the marketplace. $7,000,000,000. If you would turn around and take that $7,000,000,000, you could do a lot with it. So the other thing is the Department of Industrial Relations, which I was undersecretary for a couple years, their joint enforcement task force five years ago said, the odds of being inspected by a joint enforcement task task force in the construction industry is once every 3,000.
There's so many projects and so little enforcement. That's why we have pushed very hard for the enforcement. Okay. So in 2011 and other bills prior to that and since, we supported prevailing wages in that bill, and we supported the strong enforcement mechanisms that have been included to allow for joint labor management enforcement. So what you've heard today and what I've been hearing pretty regularly is the testimony is that it's working in the nonprofit area where people are used to paying prevailing wages, in the high rise construction area where you have a different level of skill sets over 85 feet is the I believe what we call for skilled and trained.
And that was the testimony by mister Golub. It's working. There's a lot of work going on through 2011. But once you get to the private sector, it's a whole new story. So that's why we've evolved.
That's why we've changed our position. And many of you may remember the conversation about the fam famous a b one thirty bill where we had a different approach, which became a bit of a fire drill, and we are gonna reiterate that approach as we move forward. What we wanna call for, and I and I hope, assembly member Coloza this is this goes to the point of your question, I believe, at some point. We want a livable minimum wage in the housing construction area, not in the high rise section, not in the communities that have a prevailing wage culture, and that's basically San Francisco and in some cases other areas. And you heard about all the penciling out, and if it doesn't pencil out, they don't build it.
And how do you make it pencil out? Well, you raise the rents. You get more income from the rents and it might pencil out. There's another way to do it. If you're requiring per prevailing wages in these bills, they're not gonna be used.
So we're calling for a reasonably livable minimum wage, and that definition is gonna be a little variable depending on where you you are, certainly with a health care provision. Because without a health care provision, you just become another subsidized person in California. So the element here that we're talking about will help stabilize the worst conditions in the construction industry, which is in housing, basically nonunion for profit housing. That's mission critical. Because if you're an honest contractor, even a low wage contractor, it's very hard to compete against an industry where cash pay is the is the way things happen.
You just can't do it. Just paying taxes and etcetera puts you out of the marketplace. Marketplace. So I do wanna say though that we're not calling for a change in prevailing wages. The fact the bill that we had, a b one thirty, specifically pointed out that prevailing wages are when prevailing wages are called for by public funding.
So that's not touched. I wanna reiterate that. So I also wanna reiterate the support that this committee and the legislature in general has given to the union sector in terms of their wage support. I mean, we wanna do that too. We wanna make it the healthiest we possibly can, and we appreciate the fact that you've done that.
But you cannot turn around an industry like housing, which is the Wild West in the private sector. And I'm not saying all private sector for profit companies do this, but it's rampant according to the Department of Industrial Relations. So just like trying to change that, you cannot do it overnight. Just like you can't build 2,000,000 units overnight, it's gonna take a decade, if not more. It's the same with rebuilding the workforce in the housing industry.
And what we're saying, it's a time for now you to take a look at what we would call tough love. This is not something we would be normally saying, gee, just, you know, if it were strip malls, no. The heck with that. But this is housing. This is the crisis of our generation, aside from climate change, which it fits into as well.
If you include prevailing wages in market rate housing reform, you won't build much private sector market housing. We've heard that. Doesn't work. Doesn't pencil out. I cannot see the economy changing to the point where the housing is gonna be so cheap that it pencils out.
It's just not gonna happen. Without a workable minimum wage standard, and I say a living minimum minimum wage standard in market rate housing, you will continue the race to the bottom for the workforce in the housing industry. It's the most exploited construction workforce. With a minimum wage standard, and I say minimum, I don't mean $16.50 or $16.90, whatever it is, somewhere close to the actual market, but honestly paid with payroll records, etcetera, You will help hundreds of thousands of workers at the bottom of the economic ladder who are in that industry now. They will get a raise.
They will get taxes paid. They will get Social Security paid. That's not happening now. And we know how we know who those workers are, and we know that pressure that's being put on those workers now from the federal government. That's a standard that we can do here.
We can raise that standard not to the top of of the ladder on prevailing wages. And so for those of you who haven't I shouldn't say that. Everybody in this committee knows where I am on this and where the carpenters are. We are strong and fully supportive advocates for manufactured housing industry, But we want it built in California. We don't want it imported.
As the economy changes, as climate change change has impact on the economy, we are gonna need the jobs that manufactured housing will provide in the places that need the jobs the most. And I believe the Central Valley, housing person would be able to explain that to you. And, you know, if you wanna expand a little bit, if we do this right, we can rebuild a environmentally sound timber products industry. We're gonna need wood. Rather than bring it in from Canada where they clear cut, etcetera, etcetera, let's do it here.
So I'm sort of getting off the thing. I may get in a little trouble, but let's get to the point on the wages. Thank you, by the way, for tackling this crisis once again, and I'll leave it at that.
Speaker 1
Thank you. Thank you both for that. Colleagues, questions, comments? Assemblyman Wicks.
Speaker 2
Thank you to both of you for participating, and you were the original bill sponsors for the bill. So, we've been in the foxhole together on this one for a long time. So I just wanna make sure I'm understanding what you're articulating, mister Curtain.
Speaker 2
That on the affordable affordable projects, those seem to be working well as we've discussed. None of those provisions would be touched, or at least on the labor side, maybe there's other tweaks that have been discussed. But on in terms of the labor standards, keeping those where they're at, keeping the prevailing wage exactly where it's at, is your recommendation.
Speaker 13
And so 2011 makes those jobs move rapidly, which is absolutely perfect.
Speaker 2
What you're calling for here is on the, market rate, private, side, at a a essentially a renegotiation of of the wage floor that, you know, as has been discussed, one of the challenges is the prevailing wage. The carpenters are interested in exploring something like a minimum wage, residential wage, some other type of wage floor that allows these projects to to pencil in a much more effective way.
Speaker 13
Oh, I could make up some numbers, but, you know, I don't know. Let's say in Fresno, and you should probably bring that person representing there. $28 an hour is a pretty good wage, but not very good. But you put a health care package to that, and I don't know how exactly you would define that, and you almost have a living wage.
Speaker 2
Would be that this is some of the most exploited workforce probably in the state.
Speaker 2
We're trying what you would be trying to do there is to lift up the wages for their lowest income workers that are
Speaker 13
Becomes a little bit more than $28, which has to be thought about. And literally, forty, fifty years ago, fifty, sixty years ago, there was unions in the housing industry. And as you see by these charts, things have changed. We'll have to go back and do it the good old fashioned way, which is if you bring up a minimum wage and have honest contractors, then we have to outwork them in terms of efficiency, and we have to bring a wage level down that can be competitive. Competitive.
Speaker 13
But you can't go to a $100 an hour package or a $90 an hour package in a housing area that doesn't just doesn't work.
Speaker 1
Alright. Well, clearly, we have a lot more to talk about, and I appreciate your original sponsorship of this bill and your continued partnership with us to to make sure we can get it right. And for this overall, for everyone who's participated, thoughtful and and substantive discussion, generally. Thank you again, Assemblyman Wickes, for your leadership and your commitment to do these cleanup bills on some of these issues that we've talked here. But certainly for our committee, this will continue to be a priority for us to make sure that we actually unlock the housing production that was a part of the the vision and the promise of this bill and and many of the bills that we've put forward.
And we're looking forward to continuing this conversation as well as the overall outcomes review process and much gratitude to to our our speaker for for putting forward this process and to for the staff too as well. Let me also open it up for public comment before we close, and thank this this panel for for joining us and for their their partnership and comments. Please.
Speaker 16
You for this hearing. Is this on? Holly Fermini De Jesus with Lighthouse Public Affairs. I'm here today on behalf of Abundant Housing Los Angeles and Spur. We're proud supporters of the original AB twenty eleven and really appreciate this hearing about the outcomes because we have many, members on both of these organizations that represent developers.
We have a lot of relationships in Los Angeles and the Bay Area and can attest that there's quite a few of them actively using and seriously considering the use of this tool to deliver more mixed income housing projects throughout the site throughout the state in high opportunity areas. But we too hope that it can be in more areas than just those high rent communities throughout the state. Today's hearing appropriately highlighted quite a few of the challenges and economic challenges. But as with many major housing policies that this committee and this body has continued to reform over the years, We hope that some of these policies this year will be considered to address these feasibility issues. And we look forward to our continued collaboration to strengthen this important tool with some cleanup legislation authored by either the original author or some of other colleagues throughout the session to address some of these feasibility issues.
So thank you for the hearing today and look forward to the opportunity and the support this year.
Speaker 17
Good morning, mister chair, and what members stuck around. My name is Matti Hyatt from Capital Access. My grandfather worked for the Carpenter's Union all his life, and my father took care of, my family as a general contractor all his life, but I digress. We represent the Alternative Housing Alliance, a nonprofit organization focused on innovative and scalable housing solutions in the Sacramento Valley, including modular and alternative construction models. We do this to help address California's severe housing shortage.
First, we appreciate the committee holding this informational hearing As the testimony heard today reflects, implementation of a b twenty eleven has been modest with concentration largely in San Francisco and Los Angeles, and feasibility challenges remain, particularly with mixed income projects. From the development community's testimony to today, it is clear that mixed income and workforce housing projects are struggling under current economic conditions. Developers consistently point to three issues: prevailing wage cost impacts, rigid inclusionary requirements, and minimum density standards that do not always align with market feasibility. In today's financing environment, with compressed cap rates and higher construction costs, these layered requirements can push otherwise viable projects out of reach. As was noted, developers ultimately must either reduce construction costs or increase rents.
This creates a catch 22 that can stall projects. The Alternative Housing Alliance looks forward to working with the committee and stakeholders on practical amendments to level the playing field for subsidized mixed income housing, provide flexibility and inclusionary requirements, including in lieu of free options, reexamine the provisions that unintentionally exclude viable sites, and ensure AB twenty eleven works not only in high rent coastal markets but also statewide. AB twenty eleven is an important tool with targeted refinements refinements. Sorry about that. It can become a more effective production engine, particularly for innovative housing models and workforce developments that serve the missing middle.
Thank you.
Speaker 15
Good morning. I just wanted to say a very brief thank you to the committee, particularly to assembly member Wicks for your continued work and attention to a b twenty eleven and assembly member Haney to holding this hearing today so that we can evaluate the outcomes of the bill. We're really pleased to hear the amazing ways that AB twenty eleven is being used, especially by affordable housing developers throughout the state. But I think as we heard today, there's still opportunities for refinement. So we look forward to continuing to work with you all to make sure that the tool produces as much affordable housing as possible.
Thank you so much.
Speaker 18
Good morning, chair members. Chris Lee here on behalf of the Sacramento Area Council of Governments with a perspective from the suburbs where AB 2011 hasn't been used as much. And one of the things that we've been doing regionally here is trying to tackle this from the same perspective you are, which is looking at the zoning and looking at the policies, but also digging down in these old commercial corridors and looking at the underlying infrastructure, which in most cases was not built to accommodate the type of development that we've had. So we've had focused investments in infrastructure aligned with planning, and it's resulted in huge increases in housing starts in this region. So total housing permits up about 50% in five years, but in these green zones where we're aligning infrastructure investments and changes in zoning and planning, we're seeing housing permits up over 300%.
So as we look at this broader issue of how do we do redevelopment, how do we do infill, how do we do it in markets that don't have the highest rents, unlocking the development potential through focused investments of infrastructure is a great way to do it, and regions have track records of success in that area. So thanks for an informative hearing and for listening to my perspective.
Speaker 7
Good morning. Graciela Castillo Cranes here on behalf of Enterprise Community Partners. Thank you so much for the hearing. One of the things that I wanted to highlight is what some of the panelists were saying that we are actually seeing more entitled projects when it comes to affordable developments, but I just wanted to kinda highlight that without additional funding, those entitled projects are not actually gonna be completed. So that is one of the reasons the bond is gonna be so critical and important.
So just wanted to clarify. Thank you.
Speaker 1
Alright. Anyone else? Not seeing anyone else, but closed public comment. Assembly member Wicks, any final
Speaker 1
Alright. Thank you all. Lots of work to do. We'll we'll adjourn the hearing. Thank you.
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