Assembly Standing Committee on Housing and Community Development

All right. I'm going to call this hearing to order. Good morning, everyone, and welcome to today's Outcome Review hearing focused on AB 2011. I want to thank Assembly Member Wicks for her leadership and partnership and to acknowledge Speaker Rivas's new Outcomes Review initiative. This process reflects a simple but important principle.

Passing a bill is not the end of our job. Bill signings are important, but impact is what matters and it is what our goal is, especially when it comes to solving the housing affordability crisis that is affecting all Californians.

Our responsibility is not only to pass laws, but to evaluate whether they are working, whether they are being implemented as intended, and whether they are delivering real results for Californians. Over the past several years, the Legislature has taken unprecedented action to address the housing crisis.

We have passed sweeping reforms to streamline approvals, expand accountability, and create new opportunities to build housing, especially affordable housing. AB 2011 was one of those major reforms that was passed with much optimism and the help of an unprecedented coalition of housing and labor. But despite this progress, the housing crisis remains severe.

Californians continue to face some of the highest housing costs in the country, and we are still not producing housing at the scale needed to meet demand. And the consequences, which include displacement, homelessness, economic strain, are felt in every region of the state.

We also know that the development landscape has shifted even since this bill was passed in 2022, and that this bill is still in its early years. Rising interest rates have made financing significantly more expensive. Construction costs remain elevated. Labor shortages and climate-related disruptions add additional pressure.

These are real headwinds and they make it even more critical that the policy tools we create are clear, functional, and capable of performing under challenging conditions. If we create a streamlined pathway, it must be actually usable.

If it's not, we need to evaluate why. AB 2011, which was also known as the Affordable Housing and High Road Jobs Act of 2022, created a ministerial by-right pathway for qualifying affordable and mixed-income housing on commercially zoned land. The intent was to unlock underutilized commercial corridors for housing production.

It paired streamlining with strong labor standards and meaningful affordability requirements. The promise of AB 2011 was certainty, speed, feasibility, while maintaining high standards. Today, we are asking straightforward but important questions. Has 2011 been used as anticipated? Are jurisdictions implementing it consistently? Are permitted and entitled projects moving forward to construction?

Are the affordability and labor provisions functioning as designed? And where are the friction points? This hearing is not about re-litigating the bill. It is about measuring outcomes. If something is working, we should understand why. If something is not working as intended, we should be candid about that and consider how to improve and strengthen that.

With that, I want to invite Assembly Member Wicks, a strong statewide champion of housing, and of course, the author of AB 2011, to share her perspective on the legislative intent behind the bill and what we hope to learn through this review. Assembly Member Wicks.

Thank you, Chair, and thanks everyone for being here today and for those that are tuning in to this hearing. You know, this bill was passed in 2022, I believe. It feels like a generation ago, legislatively, and it was a very difficult and fraught process to pass AB 2011, but I think a really critical one and one of-- I think, one of the key moments in the Legislature, certainly since I've been here, where we really focused on how are we streamlining production but doing it in a way that still enables us to have strong labor standards and, you know, environmental review, where we think it's important and necessary but getting rid of some of the bureaucratic hurdles and challenges when it comes to building.

A lot went into that bill, and I've said this before, and I still believe it. I am done with bill-signing ceremonies. I want ribbon cuttings. Meaning, it's one thing to pass the bill; it's a whole other thing for it to actually solve the problem.

And we, elected officials, should be held to account on are we actually solving the problem, not, are we just passing bills? We can pass bills all day long, but if we're not solving the problem, then what are we doing here? And to me, that's the fundamental question. And why?

I think it's actually very important for this legislative body to take a hard look and an analysis of, we spend a lot of political capital, we spend a lot of staff time, we spend a lot of our intellectual capacity and all the other things trying to get these bills passed, but are they working?

And so, I'm excited to have my bill be looked with a microscope on its efficacy 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 very honored to have my bill looked at, 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 2011 out in the wild, and we've seen it work in certain places and not in other places, and so also understanding 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, eager for the hearing. Appreciate your leadership, Chair, and obviously the staff who worked on this bill when I was Housing Chair, and so many others who are a part of this process.

Thank you, Assembly Member Wicks, 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 2011 is our first, and 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 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 want to bring up the first panel, which includes Peter Calthorpe, who was instrumental in shaping AB 2011, David Garcia, the deputy director of policy for the Terner 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 analysis that has been done, and this will, again, sort of set the tone for the rest of our conversation today, looking at some of the numbers and how the implementation has looked across the state. So I believe we will start first with Peter.

And I would like to start with slides because they have too many visuals, and all very superficial, but not. And I'm going to 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 standard trajectory of costs-- 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 going to 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 going to talk to my slides, so forget about them. I'm just going to tell you what I think.

You know, the scale of this bill is 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 this state should take. And I know we have a huge infrastructure for delivering 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 one really big reason why-- 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. Seventeen percent.

And then when you get down to the 80% AMI, it's 20%. And then you add that to the 33, 35, 40% is 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 kind of 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 of slides. Mixed income, I think I said all this. Next generation mobility. Have you all seen this graph? This is a see change. Prior to 2008, we were a suburban nation.

Single-family subdivisions dominated, 4 to 1 in California. Since then, it's 1 to 1. 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 orange is a single-family and the blue is multi--all of a sudden, the multi-family is gaining ground as fast as single-family since that moment.

And 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 long-distance commuter. This is a landscape of opportunity.

The most undervalued land 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 million. The 2 million, by the way, was market feasible out of zoned 10 million units.

So when you take that 100,000 acres over long periods of time, if the trend establishes itself, could go way beyond 2 million. But you have to have building economics that function, you know. Otherwise, it doesn't matter. Okay. And then, I am a person who really believes in a different-- you know, setting a vision.

To me, utopia is a destination, not a place to get to. It's something you direct-- and you know, we're going to get a new generation of transit and that's going to 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 funnel there from 10 million units, you get down to 2 million because of today's-- no, because of the economics in '22. 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 law also subsidized?

Why is it expected to be somehow accomplished without a subsidy? Quite frankly, if we took the money that we spent on an average affordable unit and used it in mixed-income projects, you'd get 6 to 1. You get six workforce apartments basically internally supported by the one affordable unit because the six costs around half a million a unit to build. Every developer tells me they can get that done. Maybe it's going up. Am I out of time?

No, I just need you closer to the mic.

Okay. You 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, 100% under 85% of AMI, it gets a tax.

So why can't mixed income, which is a better way to deliver affordable housing, especially mixed income on boulevards, which are embedded in our communities, why can't 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, you know--but 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 autonomous vehicles start running in dedicated lanes, you will have the most cost-effective form of transit that, you 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. 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 projects penciled, this kind of thing works. Enough. Oh, I see. You had to go through anyway.

Exactly.

You can use my slides again.

They're definitely more interesting than mine. Mine are just charts.

Look at that. That graph for Washington State we just completed, and since '08 and the Great Recession, they now build twice as many multi-family as single-family for the whole period.

All right. Do I need to click through these or-- okay.

Sorry.

Oh, you do have to.

All right. One moment please.

Have you all seen the Pew study on Minneapolis's endeavor? I didn't mention it, but we're killing time here, so I'll use it. So back in 2017, they passed the Grand Boulevards 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, you know, they did the whole package. Let's see what works. And then Pew 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.

I appreciate you filling in. So I'll go ahead and jump in for my portion here. So good morning, Chair Haney, 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 Terner Center for Housing Innovation.

So today I'll be summarizing our preliminary analysis of AB 2011's impact to date, as well as summarizing some of the research that we have published regarding the potential of converting commercially zoned land to residential. I think it's quite complementary to what Mr. Calthorpe just walked us through. So, ostensibly, AB 2011 was passed in hopes of getting more homes built on land is a zone for commercial and retail uses.

And about five years ago, the Terner 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, the Legislature should consider the creation of statewide standards to allow residential development on commercially zoned land throughout the state.

What were the years of that?

2014-2019? Yeah. So these recommendations were reflected in AB 2011. But what do we know about AB 2011 so far? 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 and 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 AB 2011 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 AB 2011.

And so through this analysis of APR data, as well as a scan of AB 2011 activity in local media and city documents, we found that roughly 5,800 new homes have been either proposed, entitled, or permitted using AB 2011. 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 AB 2011 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 2011 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 AB 2011 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 AB 2011 activity in the APRs to ensure that reported 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 2011 and mentions of 2011 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 doesn't mean it won't be used moving forward as economic conditions improve.

And there are likely ways in which AB 2011 has impacts that are not enumerated in data, such as impacting the behavior of localities that may be matching or exceeding AB 2011's 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 2026 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.

Thank you. Jason Moody, I'm a Managing Principal at EPS. For over 30 years, 40 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 general plan and other elements, as we help with the private sector kind of navigate this labyrinth of state and local regulations and help finance and deliver their projects.

So that perspective is what I'm going to take to hear about what to date we've seen about AB 2011 working with these different entities. I'm going to 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 2020-24 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 that during, despite those headwinds there's actually been more development in the last 20 to 24 than there were in the two previous periods, the period right after the Great Recession and that mid period, which was build 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, 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.

This 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 just, 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, as 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 get out of this situation is the key question, because 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. So that 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 long term revenue. 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 delivery of homes. So we saw that 20 to 24, there was a big upshot.

But now we're probably in the next two years going to see a decline because these are the new starts are slowing because of all these headwinds we just discussed. So now I want to talk briefly about the component of AB 2011 that has been 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 are still building a 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 the, is the revenue, the value of project. The brown is the cost of the project. And so what you get here is a residual land value at the bottom. The difference between this is how much someone could pay.

This is a very, without these two things, this 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 is applies to this location. All these things I'm showing you are 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 costs and there's a lot of data about how much it costs and it varies by product type significantly, but it does, it does add, 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, the affordable 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 2.2 million. You can't buy the land in Silicon Valley for 2.2 million 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 widespread, but it does show you that these are real impacts. And when you have a situation where development costs are going up and reven revenues are flatlining on the rent side, small changes like this will basically kill a project. However, when you have a stronger market, these things can be overcome.

So I understand that these are good policies, but they do have real impacts that need to be considered when thinking about how effective AB 2011 is as a tool to developers. Now, with regard to that, I want to just kind of get a little more of my experience on this issue, which is that our experience has been AB 2011 has been 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 as a bargaining chip with jurisdictions who say, hey, we can do it my way, we can do it the easy way, or 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 a great, it's a great bill in that regard, undeniably. And I've actually been working with cities on planning, on planning and zoning policies and they actually basically dial their planning so that someone will come in and not have to invoke AB 2011 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 2011. 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 all these interest rates and costs and rents and the aftermath of pandemic is what we're dealing with today. AB 2011 is highly positive, but its impact right now is difficult to measure.

Thank you. Thank all three of you for that analysis and for kicking us off with the numbers and also some real talk about where we are and where we stand and the different challenges that are still in front of us. I'm going to open it up first to my colleagues, and we'll allow Assembly Member Wicks to start.

Thank you. Thank you for all of that information. Super helpful. On just the last point, Mr. Moody, sort of the threat of 2011 is the tool in the toolbox, right, to be able to build. Do you have any idea like how often that is used? I mean, it's a hard thing to track, but...

I think where I have seen it being used the most is actually when cities are rezoning because they need to for RHNA 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 actual place because they know if they don't do it there, it's going to 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 2011 because they're going to rezone it to make the type of products that the developers want already a by right allowable use.

That's helpful. You know, I know, you 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, 423, we've got 2011, we've got, and obviously in other areas, SB 330, and all these different sort of tools we're trying to give folks to be able to be able to build. How does 2011 compare to some of those other tools in terms of its efficacy and its usefulness?

In my view, the biggest issue right now is I would say the inclusionary and the prevailing wage have make it less direct effect. So again, what's happening is 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. So that's where the effect is right now. I think if the market were stronger, then those two components of AB 2011 would be, would be digestible, if you will, from a developer's perspective.

The prevailing wage and the inclusion?

They would be, in strong markets, they could, most, not most, many markets where they're going to try to invoke AB 2011 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 kind of makes it only in very few markets like San Francisco and Silicon Valley are they going to be over to overcome those two components.

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?

That's correct, yes.

I don't know. Mr. Garcia, did you want to add to that?

Yeah, just a little bit there. It's really common from our conversations with practitioners and attorneys that 2011 is, to the extent being used, it's not used in isolation. It's being used in combination with other state laws as well.

So it seems to be somewhat common for AB 2011 to be combined with the density bonus and with Senate Bill 330, which creates early vesting rights and limits the number of public hearings. So I think, as you mentioned, there's a suite of tools available to people who would like to build housing now. And 2011 appears to be one that is used in combination with other laws right now and could be even greater in the future.

And I know when we passed this, it was done with SB 6, again, offering tools to be used to be able to build. Have we been tracking numbers on SB 6 as well?

So the state APR data does have a field for denoting SB 6 usage. We haven't done the same kind of due diligence on SB 6 data as we've done with AB 2011 yet. But from what we can see right now, the usage of SB 6 seems far less prevalent than 2011 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 if we could validate those numbers.

Okay, and how accurate is the APR data and where are the vulnerabilities there?

Yeah, that's a great question. The APR data is as accurate as 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 APRs.

And so we have observed instances where projects have been mentioned in the media but were not mentioned in the APRs as having used a particular state law. So we've looked at this beyond just AB 2011. And so we've needed to 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 high cost areas where cities maybe are less resourced. Another issue with the APRs 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, 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 we do have a bit of a data lag problem too.

Okay, I'm going to 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 know, using AB 2011 or other housing bills that we want to track so that the fine folks at the Terner Center can make sure we're getting all that data.

Just one last question, and I'd love 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, you know, two changes on the bill to make it more effective, what would those be?

Well, 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 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 120% of median, which in this state doesn't get you very close to where you want to be.

That's as important an issue as the 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 going to be your business to sort out.

Thank you.

So I would examine where 2011 excludes certain projects. So in conversations with practitioners and attorneys, we've heard that things like the exclusion of projects that are I think it's within 500 ft 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 parcels that otherwise would have been eligible for 2011 but aren't because of the current provisions of the law that bar certain locations.

Sorry, if I could have, Mr. Moody also for the last...

I do agree with Peter's comment that somehow we gotta mitigate the impact of the inclusionary. That's probably more important than the prevailing wage impact. And how you do that, there's, you know, 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 in-lieu-fee. So you can play with that in-lieu-fee and the amount and vary it by community. But I think that's where you need to look because right now the costs are too high and that's just another cost for the developer.

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 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... 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.

Thank you.

Ms. Quirk-Silva.

Yeah. You just mentioned... I'm sorry, Daniel? David. The exclusions, you said fire zones, and what were the other ones that you were talking about?

Proximity to freeways is another one. And then I've also heard in addition to those two, the definition of industrial zone, apparently it's very broad and so you could have an area that doesn't have any contaminants on the site from any light industry which could be excluded from the law.

Thank you. I came in late so I didn't hear anything, but just trying to clarify here. So there is opportunities to maximize the use of 2011, and yet whether it's the economy, other barriers, it's not, can I say being used to what was expected. Is that...

Think it's just too early to see. I mean, we just—it was bad timing in when it was approved, so it's only been two and a half years, and it takes—sorry—too, too early to really make a prognosis on its effectiveness. Two and a half years in a very difficult economic—economy.

I think it's just—I think the verdict's still out, and the—the concept and the—the—the requirements. Ministerial approval is awesome. So, I think it is a very effective tool that will, in the future, be used more frequently.

So, with education, economy changing, there's a lot of prospects for future use. I noted on some of the handouts here.

Again, I don't want to go through the handout, but I saw some of the tax credits being used 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.

Thank you. I'm going to just throw a couple questions out there, and we have two more panels, so I'm sure we're going to continue to discuss all of these pieces of this. One is, it seems like there really isn't a lot of housing being built generally. I mean, it's not just a 2011 thing. Right.

We're seeing these larger trends that are related to a lot of factors that are not unique to 2011.

And so, in terms of looking at an analysis of why 2011 isn't being used, and zeroing in on the prevailing wage piece or the—the affordability requirement, 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 isolate 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 a prevailing wage, it's not like we're seeing, you know, projects going gangbusters that have those factors. Right. So, 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 2011 provides, as well as some of the unique requirements of it, is that, how do you analyze sort of what's happening with non‑2011 projects in light of the analysis you provided for 2011?

Yeah, it's—again, it's the—I totally would say it's the economy, stupid, as they say. 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 has been really significant. And on the revenue side, there's been some issues.

You know, I mean, the changing ways people live and work has affected demand side, the demographic factors associated with, you know, the baby—the millennials getting older and wanting bigger houses. There's 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 going to see an upsurge—it's cyclical—you're going to see an upsurge of development. You're going to see people utilizing AB 2011 more, I'm pretty sure.

I'll just add to your first question. I think where we see the conditions that make 2011 favorable are in projects that are 100% affordable, 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 factoring into their development, you know, performance.

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 2.2700 units that have been identified in the APRS as using 2011. And so that actually intuitively might make sense because 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 San Francisco.

And then 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. And so that is not your typical kind of residential development project. And so in cases where you have a multi use project where the economics just Pencil out better 2011 looks really attractive as well.

And that's a. 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 would 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 projects that were already relying on some sort of state dollars that would require some of these, including the prevailing wage. Is that, I mean, just zeroing in on the affordable housing aspect of this?

How do you sort of rate its utility and usefulness? And I mean we're kind of looking at some of the challenges for these other types of projects that we want to see happen. But for affordable projects seems to be sort of unambiguously a very positive thing.

Are they being used in Most, most affordable, 100% affordable opportunities where they could be used and are there reasons why they're not being used in affordable projects? What is just sort of a sense on that specific thing?

Yeah, I haven't looked specifically at the, the instances where affordable projects would only use 2011 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 and the development affordable housing takes a lot of time.

There may be a lot of developers out there who are examining or are planning to use 2011, but they simply haven't submitted a plan yet. 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 2011.

So, it's hard to say exactly yet, but because of the unique financing nature of affordable housing, it may be that, you know, there are other things holding up usage of 2011 and not just, like, any issues with the law itself.

Great.

I think that the ministerial component of AB 2011 is what makes it so attractive to affordable housing developers. That's just a really—it really helps them out a lot. 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 being built are affordable housing projects right now.

Great. Well, I want to thank all three of you 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 such a conversation and help us understand where we are and the work that still needs to be done. Thank you.

All right, I am going to bring up our second panel. And these panelists are folks who are actually using 2011 to bring housing online. Daniel Golub was a partner at Holland and Knight, and William Goodman, principal at Strada, and Betsy McGovern Garcia, Vice President of Self Help Enterprises. And this is going to be a moderated discussion.

So, I'm going to ask—we have two questions, and you can use that microphone. Okay, I'm going to—well, actually, I'm going to 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 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.

Sure. 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 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 want to 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 the and how the bills are actually playing out.

And it's a real pleasure to be in front of my Assembly Member, Assemblymember 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. So, there's two tracks to AB 2011. 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 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 2011 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 AB 2011 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 want to 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 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 being constructed, and the Bill's only been in effect for a couple years. So, I think that's a considerable credit, and that's what's working about the Bill.

Will Goodman from Strada Investment Group. We're a developer based in San Francisco, working all across the state. First of all, I want to echo Dan's appreciation for inviting us here and willingness, as Assemblymember Wicks said, to see how this is working in the wild.

I'm going to focus on what's working, and really on the ministerial approvals part of AB 2011. So, Strada—I think we are the most active builder of housing in San Francisco. Over the last several years, we delivered about 1,000 units of housing just in the last three years alone.

AB 2011 has been an incredibly effective and powerful tool for getting projects approved quickly and efficiently in 2025. On the screen behind you, you see the high‑rise towers there. This is a site in San Francisco that had been vacant for a long time. There was an office development that had been approved there.

We came in and entitled 1,500 units on the site in about seven months, start to finish, which I think is a land‑speed record for San Francisco. I keep saying there should be a metric for, like, entitlement days per unit, because this one's gotta be the winner.

And just as a comparison, we recently built another project just less than probably a half a mile from that site and delivered 600 units. It took us four years to entitle. So, when you think about that sea change there—the cost, how much changes during that period of time—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 us, having certainty in the timeline and the process for approvals is such a big deal.

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 honestly, their battle scars from entitlement fights in California—have really affected and cooled their interest in being early‑stage, early movers in development projects.

We can now sit there and say to them we now have certainty in that process and how this is going to play out. So, both of those things have just been hugely effective.

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 of over 8,700 families in the San Joaquin Valley. Thousand—87,000.

Yes, thank you. So, I'm going to talk a little bit about what has worked with AB 2011, and if I can get the clicker to work, I will say that all of our projects recently have used the by‑right tools that have been made available to us as a developer.

We've developed approximately 1,800 units in the last 10 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 2011 on three projects. We've used AB 101 to permit a navigation center.

And recently we took advantage of Builder's 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 want to talk about is Riverglen in the rural community of Livingston, which is in Merced County. Riverglen 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 2011 entitlement package and the project is currently under construction and slated to open in November of 2026. One other interesting aspect of this project, we heard Peter talk about the mobility cost faced by our low income family.

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 costs, 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 2011. Oop, and I'm going the wrong way. So, the next project I want to highlight that took advantage of AB 2011 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 multifamily component of the project. Immediately adjacent to this project, we are developing 67 single‑family homeownership 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 farmworker education nonprofit that no longer is in operation. And Camino Del Rio was permitted with AB 2011. Immediately adjacent, we have the Visalian Navigation Center that was permitted with AB 101.

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 by‑right tools to bring all three of these projects forward.

Thank you. Great. Thanks for your providing that important perspective that is non–San Francisco and Oakland and LA‑based. Now, I wanted to ask each of you, what could work better about it? What maybe is preventing more folks from taking advantage of it? What are things that we might do to improve on it?

And also start with you, Dan.

Sure. So, then there's the second track, which is the track that's available under AB 2011 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 forma 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 a 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 want it 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 more additional construction costs and propose this project. Doesn't matter how quickly it gets entitled, the projects just underwater.

So, that's what we found. I have some tweaks—maybe the second, third round of questions—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. You can share those now. Oh, you want those now? For this one? Okay, well 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 with labor on a project of that size, that we're going to go for it for AB 2011.

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 going to 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 AB 2011. 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 going to abandon the statute. I don't think it'll be useful. So, 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 AB 130 that's more forgiving, and it 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 makes something an industrial use. And there's also a carve‑out that could probably be carved back out.

I want to 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 want to do both, and it might be worth clarifying that that's permissible either through HCD guidelines or a statutory amendment.

And subdivision approvals are so important. I think AB 2011 is 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 got to 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 AB 2011. It's mentioned. I'd really encourage reconsideration of whether you want to force a minimum density on a project that doesn't want to do it, especially a homeownership model. These townhome projects might just pencil—just pencil. But I am not seeing people. I have developers turning down density.

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 bill that's prescriptive, that if a developer doesn't want to do that minimum density and otherwise has a project that pencils, you're going to force it on them? I guess I've made my opinion clear. I don't think you should. Commercial corridor.

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. The 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 talked about this before, which is that there's a set of site criteria that applies to AB 2011 and most of the other streamlining laws. It lives in Government Code Section 65913.486, but then it's been cross‑referenced. We all knew that, right? Everybody knew that off the top of their head.

You can see that I'm in these laws at a pretty high level of weeds. But it came from SB 35, and some of those requirements warrant 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 being willing to listen to all that.

Sounds like an Assembly Member Wick's cleanup Bill to me.

She just cleaned it up is what

She's going to say, which is fair if you have room in your Bill package. Thank you, Mr. Goodman. Thank you. Go ahead.

Yeah, thanks. A few thoughts. One is in response to what Dan said. It is true that where we're using AB 2011 in places like San Francisco, 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 can, and maybe should, talk more about the state of the market and cost and other factors.

But that is definitely true of how we're looking at where this bill makes sense or doesn't. A couple of the things that Dan mentioned—absolutely. We have come across, as we've been evaluating sites for AB 2011, the use restriction 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, narrowing that, to more heavy industrial uses, I think, would be very helpful. 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 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 home buyers, 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 AB 2011 in some of those cases, but we can't because, because of the minimum density issue. So, I think those are two tweaks in particular that would really make this work in a broader set of sites for us.

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 want to 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 2011. 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%, or 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 2011.

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 by‑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 2011, 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 2011 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.

Thank you. Thank you so much for all of those recommendations, and both the good and the bad, colleagues. Assemblymember Wicks...

Well, I thought you were—I have just one question. It was very thoughtful. Thank you for both the good and opportunities for change. I am very supportive of a lot of what was discussed. You mentioned Mr. Golub.

There are moments where, in times when the unions are working with the developers to actually try to make this all work—obviously that's what we want to see in an ideal world. That just made me think about the politics around this were tough the first time around and relatively contentious. From your all's vantage point—

When AB 2011 is being used, is it primarily carpenters? Are the beneficiaries on the labor side the building trades, or both? What's your sense of—the labor movement's not monolithic—but how are they all approaching AB 2011?

I'll actually demur a little bit on the negotiations, which usually my clients do. I certainly advise them of what's required. 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 going to 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 kind of 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 think when you go entirely prevailing wage on a project, you know, you're somewhat of the way there's 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 doing that sort of project.

And where have you seen it?

San Francisco.

Is this the Marina project?

Well, there's more than one, I think, you know, Williamsburg.

Yeah.

In San Francisco where we're using it again, these are projects that will be built with 100% union labor anyway. So we don't have that sort of differentiation between, for instance, carpenters and building trades.

But I will say it's an active, it's an active discussion because we have some other projects that are not high rise, kind of more, more you know, middle density, you know, an 85 foot building, for instance, where there are active discussions going on.

And I don't yet have the example of how it's going to play out, but it's happening first.

Ms. Coloza.

Thank you to our chair for convening this, to our speaker, of course for putting this together and excited always to talk about Ms. Wick's 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, some 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, you know, the implementation of AB 2011 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 can we be doing to, you know, crack that nut in Los Angeles? Can you.

I really want to hear your feedback.

Yeah, 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.

And so I think just educating developers and creating the opportunity and the pathway for them to access by 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 realignments 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.

I can comment a little bit. As we look at opportunities in the LA area, there was a chart that was shown on the earlier pattern about, sorry, the earlier panel that showed costs and revenues and the gap between costs and revenues over the last 56 years.

And in a lot of ways I think that's the biggest story and the biggest impediment to building housing today in places like San Francisco, Silicon Valley, where what is happening really in the last year, in the last six months, 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 the Bay Area. A lot of that's driven by AI and everything happening in the Bay Area economy. So that gap is getting a little bit smaller in the Bay Area.

Louisiana still does not yet have that gap closing from the market rate development perspective, making it harder for those projects to pencil. So from the entitlement approval standpoint, AB 2011 remains this really powerful tool. But the cost environment and the economics of building market rate housing are just still challenging.

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 AB 2011 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. Okay.

I was more sighing.

Okay.

And the other thing I'll say is that, you know, local government leadership and politics is 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.

Yeah, no, and I think that's just like a general comment that I'll continue to make and really 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 2011 and other bills.

However, I can be helpful to better educate whether it's on the developer end or work with our local elected officials there. I welcome that. I consistently notice extreme favoritism here in San Francisco and Oakland for these housing projects. And so just wanted to register 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 that the challenge specifically that I know I'm always asking myself. So I welcome any thoughts that anyone may have on that specifically. Thank you,

Mr. Lee.

Two points I want to 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 country now at this point or something.

And so again, just if I tease that point out, you said, and I think you were referencing this chart, right, earlier. Yeah, yeah. The one about the cost of construction and then the, the value. Right, the value in which you can charge a property.

So as I was saying is in the high rent markets it's more lucrative to use things like 2011. What are you saying?

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 revenues support the cost to build in that market?

You know, given that construction costs have continued 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 AB 2011. It's just the nature of building housing today.

But the cost of construction is pretty stable, whether it be LA or, or Silicon Valley or some other state. Right. It's relatively stable and it's high and expensive.

It's High across the board. But there are certainly jurisdictional differences. When you look at impact fees, for instance, that varies a lot by jurisdiction. That's local impact fees, utility district impact fees, those kinds of things that are just part of that cost equation.

Right. Because I just, to assembler Coloza's point, 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 2011 projects. So I thought there were much more commercial conversions. Even though those are happening, perhaps they're happening outside the realm of AB 2011.

So to my second part with Mr. 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 at the cities or. I'm just trying to get an understanding of who's bringing these issues up.

No, it's a great question. So some of it is a conversation that I have with a client who's being cautious. Right. Okay. So sometimes it's, you know, I won't disclose any particular attorney client privileged communications that I have. But we always look at the laws and say, I 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 AB 2011 because you missed this spec. I think it's arguable.

And we have to decide if we're going to 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 going to dispute some small aspect of the density bonus law applying to the project.

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 just, I just, I know what you're. I'm just very amazed 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 sounds a. That is more than the others.

Yeah. So I'm honestly racking my brain and not trying to hide anything. I'm not aware of any having considered an AB 2011 project. That's just a question of whether someone come to me about it. I'm doing builders remedy projects in San Jose. I put them somewhere in the median 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, I can think of an AB 2011 project.

Right. I just find it interesting case studying 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 in San Francisco, but you don't.

And even Contra Costa Solano, but you don't have it in Santa Clara County, which is the most high right now, 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 want to 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 city San Jose.

Right. They have also been. They have interesting positions on some of how we do things in the state. So I think that's just something for the conversation. So I appreciate your testimony today and maybe something more we can tease out later. So appreciate it, Mr. Chair

Ms. Quirk-Silva. And then we should move on because.

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.

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 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 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 going to 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 bonds, 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.

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 appears to me, depending on the city, the developer, the nonprofit, or even 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 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. Thank you. Thank you, Senator.

Thank you to all three of you for your work and for, for using this law and for letting us know how we can strengthen, improve on it and appreciate your time. Thank you.

Thank you so much.

All right, we will bring up our last panel, which are the original bill sponsors of AB 2011, Danny Curtin, from the California Conference of Carpenters, and Marina Espinosa, the policy Director at the California Housing Consortium. And you will each have five minutes.

Yes, I can go ahead and get started. Good morning, Mr. Chair and Committee Members. Marina Espinosa, 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 2011.

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. And 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 2011 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 million 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 want to 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.

Thank you. Danny Curtin, California Conference of Carpenters. Nice to see you all. And really, I want to thank you 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 costs or at least in the wrong direction.

So.

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 want to get to the nub of the issue that was being discussed here a minute ago. Our motivation as the carpenters.

zero, by the way, 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 wealth gap 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 as a concentration of wealth in America. And the other side is the wage hourly compensation issue, which generally tended to go along with productivity but somewhere around 1980s decided to stall out.

So basically hourly compensation in this country is about the same as it was 45 or 50 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 $100,000. They get health care, they get benefits, they get pensions. That's all great, but they do not qualify for a mortgage. 30 year mortgage for a bottom tier house in California.

There's something dramatically wrong with that picture. That's what's driving our motivation here. You know about the home prices, $800,000, median home, so on and so forth. It's got to change. But I want to do this One comparison. In 1970, which I remember actually.

$1.65 minimum wage, $3,300 a year income, the average house in California, hold to your hats, $24,000 today, 2025. The minimum wage is 165010 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 this leaves a whole generation of out from home ownership that you have discussed into generational wealth like myself, which put my kids through college. And if there 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 going to be the conversation I think we want to 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 non union sector receive about $5 billion in social support every year.

And since it's cash pay in many many cases, there's about another billion and a half, $2 billion in taxes and workers comp benefits that are not being paid. So that is technically a $7 billion subsidy by government to the worst construction players in the marketplace. $7 billion.

If you would turn around and take that $7 billion, you could do a lot with it.

So the other thing is the Department of Industrial Relations, which I was undersecretary for a couple of years, their joint enforcement task force five years ago said the odds of being inspected by a joint enforcement task force in the construction industry is once every 3,000 years. 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, 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 85ft is I believe, what we call for skilled and trained.

And that was the testimony by Mr. Golubov. It's working. There's a lot of work going on through 2011. But once you get to the private sector, that'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 famous AB130 Bill where we had a different approach which became a bit of a fire drill. And we are going to reiterate that approach as we move forward.

What we want to call for, and I hope Assembly Member Colozza, 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 you make it pencil out. Well, you raise the rents, you get more income from the rents than it might pencil out. There's another way to do it.

If you're acquiring prevailing wages in these bills, they're not going to be used. So we're calling for a reasonably livable minimum wage. And that definition is going to be a little variable depending on where you are. Certainly with a health care provision, because without a health care provision, you just become another subsidized wage 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 non union 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 way things happen.

You just can't do it. Just paying taxes and et cetera puts you out of the marketplace. So I do want to say though that we're not calling for a change in the prevailing wages. The fact the Bill that we had, AB130 specifically pointed out that prevailing wages are when prevailing wages are called for by public funding.

So that's not touched. I want to reiterate that. So I also want to reiterate the support this Committee and the Legislature in general has given to the union sector in terms of their wage support. I mean, we want to do that too. We want to 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 million units overnight. It's going to 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 it doesn't work, doesn't pencil out. I cannot see the economy changing to the point where the housing is going to be so cheap that it pencils out.

It's just not going to happen Without a workable minimum wage standard. And I say a living minimum wage, 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 1650 or 1690, whatever it is, somewhere close to the actual market, but honestly paid with payroll records, et cetera, 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 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 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 going to 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 want to expand a little bit, if we do this right, we can rebuild a environmentally sound timber products industry. We're going to need Wood rather than bring it in from Canada where they clear cut, et cetera, et cetera. 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.

Thank you. Thank you both for that. Colleagues, questions, comments, Assemblyman Wicks, 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 want to make sure I'm understanding what you're articulating, Mr. Curtin. Okay.

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 in terms of the labor standards keeping Those where they're at, keeping the prevailing wage exactly where it's at is your recommendation.

So they are by law already prevailing wage jobs. Right. And so 2011 makes those jobs move rapidly, which is absolutely perfect.

What you're calling for here is on the market rate private side and a essentially a renegotiation 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 pencil in a much more effective way.

Absolutely.

And do you have a sense yet of what that would look like?

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 healthcare package to that and I don't know how exactly you would define that.

And you almost have a living wage.

And the idea would be that this is some of the most exploited workforce probably in the state.

Definitely the most exploited workforce.

And we're trying. What you would be trying to do there is to lift up the wages for their lowest income workers that are. And pay taxes and pay.

And then the wage protections becomes a little bit more than $28, which has to be thought about. And literally 4050 years ago5060 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, but you can't go to $100 an hour package or a $90 an hour package in a housing area that doesn't.

Just doesn't work.

All right, thank you.

And the high rise is obviously in a different category.

Right, thank you.

All right, well, clearly we have a lot more to talk about and 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 substantive discussion generally.

Thank you again, Seminary Wix, 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 prior for us to make sure that we actually unlock the housing production that was a part of the vision and the promise of

this Bill 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 our speaker for putting forward this process and 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.

Thank you for this hearing.

Is this on Holly Fraumeni de Jesus, Lighthouse Public affairs here today on behalf of Abundant Housing Los Angeles and SPUR, we're proud supporters of the original AB 2011 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 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 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.

Good morning Mr. Chair and what Members stuck around. My name is Matty Hyatt from Capital Access. My grandfather worked for the Carpenters 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 AB 2011 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 today, it is clear that mixed income and workforce housing projects are struggling under current economic conditions.

Developers consistently point to three 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 2011 works not only in high rent coastal markets, but also statewide. AB 2011 is an important tool with targeted 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.

Good morning. I just wanted to say a very brief thank you to the Committee, particularly to Assemblymember Wicks, for your continued work and attention to AB 2011 and Assemblymember 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 2011 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.

Good morning Chairmembers 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.

Good morning. Gracia la Castillo Krings 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 kind of highlight that without additional funding, those entitled projects are not actually going to be completed. So that is one of the reasons the bond is going to be so critical and important. So just wanted to clarify. Thank you.

All right, anyone else? Not seeing anyone else, but close Public comment. Assemblymember Wicks. Any final thank you. All right. Thank you all. Lots of work to do. We'll adjourn the hearing. Thank you.