By allowing ads to appear on this site, you support the local businesses who, in turn, support great journalism.
Making housing affordable by giving cities power to seize it
flip house

Hold onto your wallet, barricade the doors, and pray for your kids. The California Legislature is in session.

The people who swore to uphold the constitution apparently confused the USSR with the USA.

How else do you explain the latest solution to “solve” the housing crisis that Sacramento creates by imposing draconian regulation upon regulation as well as empowering NIMBYism?

State Senator Nancy Skinner who happens to hail from Berkeley is pushing a law that would essentially empower local governments to use eminent domain to seize vacant housing. Once the government has seized the housing they can rent them or sell them to a nonprofit.

Being as reasonable as one can expect someone who utters the nine words Ronald Reagan said he feared the most — “I’m from the government and I’m here or help” — Skinner does add the proviso such housing has to be left unoccupied for 90 days before the folks from central planning, or is that city hall, seizes it.

And if they don’t want to go all the way, cities could simply fine owners of houses left vacant for 90 days  or more to underwrite homeless housing initiatives.

This is not Skinner’s first rodeo when it comes to trying to find ways to address housing needs in California. Last year she rolled out the Housing Crisis Act of 2019. Among other things it would have suspended the ability to increase housing fees a city that has high housing costs and a housing shortage collects through 2030. Those are fees that pay for such things as major streets, fire stations, parks, sewer capacity, water system capacity, and such that growth creates a need. They have a nasty tendency to go up annually at a pace that is higher than the rate of consumer inflation.

Skinner was inspired by Moms 4 Housing — the folks who illegally occupied a vacant home and were subsequently evicted — to cobble together her latest bid to fix housing problems the state through the California Environmental Quality Act created. That’s not to say CEQA hasn’t had solid, positive impacts on California. It’s simply to point out the root of the affordable housing quandary that is fanned by what Gov. Gavin Newsom this week says is 180,000 less homes being built a year than is needed in California is not the development community but the market restrictions government regulation has imposed.

If everyone in Sacramento can at least admit to that then whatever solutions they craft just might not make things worse.

So how bad can Skinner make things if her proposed law passes? After all, she is targeting “evil corporations” that she is 100 percent convinced are responsible for California’s housing crisis.

She is aiming the state’s firepower primarily at corporations that “flip homes”. Say corporation and visions of Wall Street hedge funds start dancing in most people’s minds. But the reality there are a lot of small and honorable “corporations” of one or two individuals that have been responsible for preserving and improving California’s more affordable housing stock.

There are also cities in California that are not heavily urbanized as are Berkeley, San Francisco and Los Angeles that have high housing costs and a housing shortage as defined by local wages because they have become de facto affordable housing solutions for heavily urbanized areas that create more jobs than housing. Manteca is one of those cities meeting that standard.

In the world that Skinner creates people —  many of whom have incorporated their businesses for tax purposes — over the past 12 years that have taken depressed property and “flipped” them after fixing them up cosmetically but more importantly up to code, could have property ripped out from under them by the government.

If the Housing Collapse of 2008 taught us anything it is that government is slow to respond, a good number of people that can’t afford housing trash it, and when the homeless commander property while ownership is sorted out they have a nasty tendency to tear it apart, start fires, and use every room as a toilet.

Even today in Manteca when there are affordable homes as defined by someone who can afford to pay a mortgage that are older and a good amount of work is needed the property will languish on the market even if it is under $250,000 while at the same time there is clearly an issue community wide of not enough housing to meet demand and high rents and high prices.

Those “evil” flippers that actually fix up properties instead of what people were doing between 2002 and 2005 when they’d buy a new home yet to be built in a subdivision and then flip it six months later when it was finished to pocket a $15,000 to $30,000 profit are responsible for improving housing stock and preserving affordable housing.

Under Skinner’s bill, if a small scale flipper that fixes up houses to make them livable and desirable took four to six months to make things work, the city would have the ability to either fine them or use eminent domain to take the house from them.

And unlike existing eminent domain that utilizes the median market appraisal, Skinner’s bill would allow a city to seize property by paying the lowest appraised price.

Given how dishonest appraisers were blamed in part for helping fuel higher and higher prices during the build up to the mortgage crisis collapse so they could continue to obtain business from lenders, in what world would you now expect the same thing not to happen in reverse by unscrupulous appraisers low balling in order to keep the businesses of cities eager to seize housing at the lowest possible price so they can rent it out or “flip it” to a non-profit?

Toss in the fact larger corporations don’t always act nimble and a few choice “seizures” of vacant property could teach the big guys that doing business in California buying depressed properties that need significant work to bring up to code so they can be sold or rented is akin to gambling and not investing given a city could swoop down at any minute once 90 days of its sitting vacant passes and seize it for bottom dollar.

If the legislature keeps coming up with bright ideas that ignore the reality that they helped create, the only affordable housing solution that is going to be left is pitching tents.