With California facing a budget deficit of up to $14 billion, a shortfall caused largely by the subprime mortgage meltdown and subsequent housing slump, home builders in the state want to help the legislature get the housing industry moving again.
"We can't tell the state legislature how to cut the budget, but we can ask them to clear away some of the bureaucratic hurdles," said Bob Rivinius, president and CEO of the California Building Industry Association, in an interview with BUILDER Online.
Rivinius said CBIA has formed a task force on fees headed up by Mick Pattinson, CEO of Barratt American, to explain the industry's position to state legislators. Rivinius said possible ways to make housing more affordable include increasing the supply of land, collecting fees later in the building process, and making it more difficult to stop housing projects.
"People don't realize that for $175 a person can file a lawsuit and stop a project in this state," Rivinius explained. As for building fees, he said that total fees in one Bay Area community recently reached $156,000 per house.
California's fiscal crisis made news last Friday when Gov. Arnold Schwarzenegger, during a speech on health care reform at Long Beach Medical Center, indicated he would call a special session of the state legislature to declare a "fiscal emergency" and address the budget shortfall.
H.D. Palmer, a spokesperson for the state finance department, told BUILDER Online the special session would take place by early January. Gov. Schwarzenegger is scheduled to submit his 2008-2009 fiscal year budget on Jan. 10.
Palmer said the housing downturn has had a profound impact on California. From October 2006 to October 2007 the state lost 31,000 construction jobs and another 13,000 in the financial services sector, he said.
Moreover, Palmer added, when the housing market slumps, people buy fewer durable goods, such as washing machines and dryers, hurting sales tax receipts. Fewer housing starts also mean the state collects less money from building fees and real estate transfer taxes.
Said CBIA's Rivinius, "The Governor realizes that housing's impact is huge, so hopefully this budget situation is raising some eyebrows and will lead to discussions in which we can help housing as opposed to making it unaffordable."
Learn more about markets featured in this article: Los Angeles, CA.