San Diego County residential construction led a continued rebound in overall building activity during the month of June, helping the region post an overall 24.9 percent increase in new permit valuations from June 2009. However, a 48.7 percent rise in residential permits was partly offset by a 15.8 percent drop in valuation on the commercial side, according to data released July 26 by the Construction Industry Research Board. Borre Winckel, president and chief executive officer of the Building Industry Association of San Diego, said the first-half data — indicating starts on 1,381 new single-family housing units in the first six months of 2010, compared with 936 units for the same period of 2009 — represent the first glimmers of upbeat news that local home builders have seen in several months.
Archive for August, 2010
The San Diego County Board of Supervisors voted unanimously today to approve the Montecito Ranch Master Planned Community for the Western end of Ramona. Montecito Ranch was a charter member of the BIA’s Project Greenlight, a voluntary, member-driven effort to get development projects approved regionally and to get our members back to work!
Montecito Ranch spans 935 acres and will consist of 417 single-family homes, an 8-acre park and 576 acres of open space. The project spent 12 years in the county’s development services process.
The County Board of Supervisors gave the final go ahead for the Fair and Open Competition Initiative to appear on the November General Election Ballot. The initiative will prohibit mandatory Project Labor Agreements on all county projects. It was adopted on a 4 to 1 vote, with Supervisor Greg Cox again being to lone dissenting vote. It is anticipated that local labor unions will mount a campaign against the initiative heading into the November elections.
“The fundamental purpose of public policy is to protect the public’s health, safety, and welfare. Sometimes, that public policy comes at significant cost.” – an excerpt from The Smith Family House study.
Cities throughout the San Diego region, and across California, have a myriad of complex policies, ordinances, and regulations governing how, when and where homes are built, if any at all. These are the regulatory environments, inclusive of state and federal laws, in which builders must operate, and there is a price to pay to comply with these regulations. Ultimately, they determine product type and pricing, and who can afford to live in a community.
A variety of “specialists” spend several years responding to all these regulations, of which many are subject to constant change. Collectively the regulations have a major impact on the planning, design and building of today’s new homes. In this era of climate change hysteria that permeates Sacramento, it seems that regulations governing development are changing by the day. And compliance with Green House Gas reduction mandates called for in AB32 will only add to the complexity.
To comply with government regulation, homebuilders must engage real estate market analysts, design professionals (planners, architects, civil engineers, landscape architects, utility consultants), lawyers, environmental experts (geologists, biologists, traffic consultants, noise analysts), school financial consultants, and countless others.
It is a gross understatement to note that the housing industry is highly regulated. Some would argue that only the nuclear energy industry tops housing in regulatory requirements. We all get that the nuclear industry is highly regulated to prevent a catastrophe with serious consequences for the public’s health and safety. But what warrants housing to be a close second? The answer is simple. Housing is the sugar daddy of government when other revenue sources are politically, legally and economically not viable. New homes often fund new infrastructure (roads, parks, schools, natural habitat, bridges, art in public places etc.), affordable housing, libraries, courts, police and fire stations and a myriad of public facilities. New homeowners can’t vote on these exactions and the builder / developer faces the denial of the project if they refuse to pay. While this is an over simplification of the matter at hand, it doesn’t take an insider to see the underlying truth about the true cost of City Halls’ red tape. Unfortunately, these costs only go up.
A 1998 study conducted by the University of San Diego’s Real Estate Department found that the cost of government regulation in a local city (direct and indirect) totaled $96,301! That was 26% of the cost of the entire home at the time of the study. Imagine what that cost is today, 13 years later. You would be hard pressed to find a builder who thought government costs were less now.
Statewide, the story is no different. A 2009 study released by the Governor’s office described CA as “one of the worst places in the country to do business.” While not surprising to many builders/developers, the information was quantified in the first study to measure the aggregate quantitative impact of regulations in a particular state.
The study found that the total cost of regulation on the real estate sector was $63,141,397,472 (Direct: $12,490,080,128 and Induced: $50,651,317,344). Read the full study.
BIA San Diego exists in large part to defend and improve the business environment for today’s builders, commercial and residential. Its legislative staff, led by Matthew Adams, concentrates on regulations and fees that affect the building industry. Below is a summary of the core areas that BIA currently tracks and engages in on behalf of its membership:
• Water allocations and landscape ordinances
• Impact fee deferrals and reductions
• Fee levels of all kinds
• Extensions of tentative maps
• Homebuyer tax credit legislation
• Land use compatibility plans
• General Plan updates
• Building code changes
• Green building initiatives
• Environmental mitigation and species habitat planning
To learn more about the specific actions BIA takes on these issues, please contact Matthew Adams.
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