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Chamber: AB 199 would destroy housing industry in California

Chamber: AB 199 would destroy housing industry in California


POSTED March 15, 2017 9:33 a.m.

Saying it could require higher labor and housing costs on new apartments and housing in California, the Ceres Chamber of Commerce announced Monday it opposes AB 199 and its mandated prevailing wage.

"As the cost of construction skyrockets, projects may become unfeasible and new for sale and rental housing projects will be abandoned," said Ceres Chamber of Commerce President Renee Ledbetter. "Plus, this detrimental bill could result in tens of thousands of jobs killed."

Also opposing the bill are the California Chamber of Commerce, the California Building Industry Association, the California Business Roundtable, the California Manufacturers, and businesses.

The following are portions of a letter Ledbetter wrote to Assemblyman Kansen Chu, a San Jose Democrat, attacking his AB 199, called the Prevailing Wage on Private Residential Construction bill.

"AB 199 would eliminate the long-standing residential exemption from prevailing wage rates and thereby make private, market-rate residential development a public work project for which a prevailing wage would be paid. This measure would have dramatic negative cost implications for newly constructed and privately financed housing in California and it could not come at a worse time.

"Countless newspaper articles and recent reports have highlighted the dire condition of housing in California. California's Department of Housing and Community Development estimates that we must build at least 180,000 units to keep pace with demand, not accounting for the backlog of 2 million units that has accrued over the past several decades. Homeownership rates are at abysmal levels - the lowest level since the 1940s - currently 49th nationally.

"The Legislative Analyst Office found that 1.) California's average housing costs are two and a half times the national average; 2) faced with high housing costs, commute distances and the resulting adverse environmental consequences are significantly increased as they search for more affordable housing; 3) higher housing costs shift spending away from paying health insurance resulting in adverse health consequences, increased likelihood of becoming homeless, increased dependence on government subsidized services and shortened lifespan.

"With the current crisis of undersupply, highest-in-the-nation housing costs, and exploding un-affordability ranking at the top of the state's most pressing political, social and economic concerns, it would seem that a proposal to add as much as 45-50 percent to the cost of a newly built home is ill-advised as it will definitely hamper housing production in the state and make housing more expensive and more out of reach for an ever-growing number of Californians.

"Given that for every $1,000 increase in the cost of a home, 15,000 California households are priced out of the market, this measure would directly impact hundreds of thousands of Californians and their ability to attain the American dream of homeownership, disproportionately impacting teachers, firefighters, police, nurses, service employees in the public and private sector, minorities and millennials. This can only increase inequality in California.

"AB 199's mandate to pay prevailing wages for private residential projects constructed on private property would undoubtedly devastate the housing industry. For these reasons, we voice our ardent opposition to this measure."

 

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