'buckshot’ Or Moonshot? Dem Candidates To Replace Newsom Offer Grand Plans For More Housing

When it comes to fixing California’s housing problems, Democratic gubernatorial candidates can’t resist a big, round number. And that could be a problem.

Tom Steyer is promising to build 1 million new homes in four years — a rate of construction the state hasn’t seen in nearly 40 years and one researchers are dubious he can hit.

In his first 100 days, Xavier Becerra said he’ll expedite construction of what he called 40,000 “shovel ready” homes. To do so, according to the report where Becerra got the figure, it’ll cost more than $4 billion.

And Katie Porter is pledging to lower housing construction costs by 20 percent. While experts said her plan could work, it will require reforming thorny fee and permitting issues largely controlled by local governments.

The candidates would be wise to heed the cautionary tale offered by Gov. Gavin Newsom, who has felt the sting of overpromising and underdelivering. In his 2018 campaign, Newsom vowed to build 3.5 million new homes in seven years. Despite signing hundreds of new housing laws and dedicating tens of billions of dollars toward low-income housing, the governor will finish his time in office likely meeting just a quarter of his goal.

Even groups who push politicians to build as many homes as possible now say it’s inadvisable to promise a specific housing production goal.

“The distance between the governor’s office and the carpenter might as well be to the moon,” said Matthew Lewis, a spokesperson for California YIMBY, a housing advocacy organization that has not endorsed in the gubernatorial race.

With eight major candidates in an open primary in an overwhelmingly blue state, POLITICO assessed the housing plans of the four leading Democrats: Steyer, Becerra, Porter and San Jose Mayor Matt Mahan. The general election, which could include one of the Republicans running, former Fox News host Steve Hilton or Riverside Sheriff Chad Bianco, provides another opportunity to compare housing proposals.

As part of POLITICO’s survey, Steyer, Becerra, Porter and Mahan were asked to choose between four options for what they believed was the primary driver of California’s affordability problems: a housing shortage for people of all incomes, Wall Street speculation and investment in the market, a lack of tenant protections or something else. Three said housing shortage, and the fourth, Steyer, said it was barriers to construction and “Wall Street and corporate developers ripping off working people and families.”

Additionally, POLITICO asked if Newsom and the Legislature’s actions to reduce the authority of local governments over housing decisions were too little, too much or just right. All four candidates agreed the moves had been appropriate.

Whoever takes over from Newsom will inherit an intractable problem. According to federal data, rental housing in California is nearly as scarce as when Newsom took office and today a higher percentage of tenants spend more than half of their income on rent than in 2019.

“Vacancy rates and affordability metrics alike suggest that while supply has grown, it is not yet high enough to eliminate the state’s housing shortage,” a recent report from the nonpartisan Public Policy Institute of California found.

While Newsom did manage to push the state into a more activist role on housing, many factors that go into building homes are largely outside a governor’s control. The governor, for example, can’t set interest rates and has little sway over the cost of labor and materials. Most of the funding for low-income housing, meanwhile, comes from the federal government. And, because of market conditions, policy and zoning changes made today might not yield new development for years, if ever.

Tom Steyer

The last time California was polishing off the construction of one million homes in four years, protesters stood atop the Berlin Wall, the Oakland A’s swept the San Francisco Giants in an earthquake-marred World Series and pop star Taylor Swift was a newborn.

The state’s housing production hasn’t come close to matching this stretch between 1986 and 1989 since, according to U.S. Census data. To meet his goal, Steyer would need to more than double the current rate of building.

Even with what he called a “World War II-style mobilization,” housing economist Jason Ward was doubtful it could be done. For one, back in the ‘80s, developers were still replacing orchards and pastures with suburban subdivisions en masse.

“Where are you gonna build a million homes?” said Ward, who leads the RAND Housing Center and studies housing production in California. “You’re not just going to do that through just selective infill building. It’s going to be exurban sprawl.”

That’s not what Steyer wants. A billionaire climate investor, Steyer has called urban sprawl “environmentally disastrous” in response to surveys from housing groups. (His campaign did not answer a question from POLITICO on the issue.)

Steyer recognizes that building 1 million homes is a challenge, campaign spokesperson Danni Wang said.

“We must mobilize the full force of state and local leaders, working people and communities to build homes Californians can afford,” Wang said.

Like other major Democratic candidates Steyer has experience in housing policy. He and his wife founded a mission-driven bank that has financed more than 17,000 affordable housing units.

Steyer’s plan relies on multiple strategies — what he calls “silver buckshot” rather than a silver bullet.

He’s pledging to deepen Newsom’s efforts to loosen zoning rules in already developed areas and crack down on cities that deny projects.

Steyer also wants to cut fees and taxes on new housing and real estate sales. To make up for the lost dollars, Steyer has proposed a ballot measure to increase property taxes on commercial sites, which he estimates could raise $20 billion annually. The idea is a priority for Steyer, who said he would consider calling a special election in his first year in office to get it done.

On the construction side, Steyer leans on factory-built housing, saying the state will invest in modular firms and purchase ready-made student housing, emergency shelters and other projects. The resulting pipeline will provide an economy of scale that will cut construction costs by one-third to a half, according to Steyer.

But the modular industry, which now makes up less than 5 percent of residential construction nationwide, has not proven it can deliver cost reductions close to those numbers. A March study from UC Berkeley’s Terner Center for Housing Innovation, which Steyer cites in his housing plan, says that off-site construction has achieved savings of “up to 20 percent.”

In one instance, a modular affordable housing development in San Francisco saw 25 percent cost savings, but that project benefited from streamlined permitting and financing that contributed to the lower price tag as well, said Ben Metcalf, the Terner Center’s director and former head of the California Department of Housing and Community Development.

“To basically squint and say you can achieve that level of savings across every home built by modular, there are some leaps of faith that have to happen,” Metcalf said.

Xavier Becerra

Becerra’s housing plan is the least detailed of the four major Democratic candidates. He expects to release a formal platform Thursday, a campaign spokesperson said, less than a month before Election Day and after voters have received their ballots in the mail.

In debates, the former U.S. Health and Human Services secretary has pointed to one statistic repeatedly: 40,000 “shovel ready” housing units waiting to be built that he says he would accelerate in his first 100 days in office.

“They just need a little kick over the finish line,” Becerra said in a televised debate last month. “I would make sure we do that, whether it's a small tranche of money they need or getting rid of some of the licensing requirements they need.”

According to Becerra’s campaign, the 40,000 number comes from a report tallying up all the low-income housing developments that have applied for or received state funding. To fully finance the projects, the state would need to come up with $4.1 billion in grants, loans and tax credits, the report found.

Advancing that amount of funding immediately would mark a significant departure from the Newsom administration, which is not planning to allocate new low-income housing dollars in programs referenced in the report because of concerns over balancing the state budget.

Becerra recommitted to the pledge in response to questions from POLITICO.

“These 40,000 units are getting built, and Becerra will find the funding to do it,” campaign spokesperson Jonathan Underland said.

As California attorney general in 2019, Becerra filed suit against Huntington Beach over allegations the city violated state housing law, the first such litigation against a city in a decade. The suit came at Newsom’s urging, and Becerra is pledging to deepen the relationship between the governor and attorney general to hold local governments accountable to their state-mandated housing goals.

“California has the laws, now what we need is a leader who can make them work,” Becerra said.

Becerra’s other proposals include lessening regulations, increasing modular construction and continuing to reform local zoning codes.

Katie Porter

Porter’s goal to bring down multifamily construction costs by 20 percent comes from a 2025 RAND study that found the pace of building in California lags other states and contributes to high price tags.

Ward, the report’s lead author, said Porter’s idea to speed up construction would likely result in the savings she’s projecting.

“That’s a pretty conservative estimate,” he said. “Those costs are really quite quantifiable.”

The report proposes multiple policy changes that generally fall under the control of local governments: requiring set times to approve permits, cutting development fees, synchronizing inspections across city departments.

Porter said she’d provide new funding to local governments and use other levers at the state’s disposal to encourage action.

“We are not going to build the amount of housing that we need unless we have a governor who is willing to make the right decisions and lead our state forward with both incentives and accountability for building,” Porter said in response to questions from POLITICO.

Porter’s other ideas call for more modular construction and greater state investment in land and infrastructure that supports development.

Before her election to Congress in 2018, Porter, a law professor, served as independent monitor of the state’s multi-billion-dollar settlement with large banks over foreclosure practices that contributed to the Great Recession. She said reducing housing costs was her top priority and contended her background and understanding of the issues ensured she could execute her plan.

“It's going to be primarily a question of focus,” she told the California Association of Realtors at a March forum. “That's why I'm proud of my housing track record and the length and depth of it.”

Matt Mahan

Unlike others in the race, Mahan is not calling for an explicit housing production target.

“Those promises are empty promises, and we’ve seen that over and over again,” Mahan said in an interview with POLITICO. “Every time I hear a politician throw out some giant number of homes they’re going to build, my eyes roll as do the eyes of every voter in the state of California.”

A more realistic approach, he said, is to focus on bringing down costs so construction is less risky and faster. Mahan has a 15-point housing plan covering tax and fee cuts, speeding up permit processing, modular construction, simplifying building codes and other policy changes.

Mahan’s proposals do not call for new revenues. To make up for reducing local taxes and fees, he wants to reinstate a state redevelopment program that allowed cities to keep a larger share of property tax dollars.

As mayor of the state’s third largest city, Mahan has made office-to-residential conversions easier and implemented other tax and fee incentives that have spurred growth. He has not always supported more homes in every part of the city, however. When he was a city councilmember, Mahan opposed SB 9, a high-profile and controversial 2021 law that effectively ended zoning restrictions to allow duplexes, triplexes and fourplexes across California in areas once reserved for single-family homes. At the time, Mahan said the law would “usurp local control” and risk backlash from neighborhood groups against development.

Mahan said that as governor he would not roll back SB 9, which has had limited effect on housing construction. Instead, he wants the state to hold cities accountable for meeting housing goals, while allowing them leeway with zoning codes to define their plans.

“It’s a real mistake to continually hand down one-sized-fits-all mandates,” he said.