ECA Newsletter 6-14-17
IT’S ALWAYS SUMPIN?
We keep reading about housing prices going up, Cities considering some sort of rent control to put some cost restrictions on rental prices, and now we are starting to hear that new home buyers should pay an “inclusionary housing fee” to fund “affordable (make that subsidized) housing” for the homeless and less affluent. At a time when we should be looking to cut housing costs and stimulate and incentivize developers to develop and buyers to buy, this seems to run contrary to what is needed. Let me be clear-this Soapbox “rant” is about the fact that if housing does not get built, it is going to affect my friends at the ECA. There will be less work for contractors to sitework subdivisions, and there will be less housing for your workers. It is my job, I believe, to point out things that might both positively affect your businesses, and/or negatively affect your businesses.
I have written before about what has caused the housing shortage that has led to an increase in price (supply and demand-when supply is low, demand is high, what do we think happens to the price?). We keep hearing that Sonoma County workers cannot afford to live here so they are opting to take jobs elsewhere. In the private sector, many firms cannot fill open positions without paying a big premium to the skilled workeer due to the high cost of living. What could possibly alleviate this “perfect storm” that we find ourselves in?
Build more housing. Duh.
What are our local agencies doing to spur housing starts? One local City recently hired a consultant to explain to the electeds that they could, by virtue of a State allowance, include “inclusionary” housing fees up to $81,000 (plus) for a typical 1800 sf new home purchase. I cannot tell you if the City will adopt that new fee. But surely you all reading this can recognize that there is a distinct possibility that some local electeds would like the concept of, in their minds, putting a fee on the “greedy” developer to make it seem like they are trying to solve the problem of a lack of affordable housing in our area. This has been a “tried and true” philosophy over the years to add all kinds of fees to new housing. The fallacy of this thinking is that the developer is not going to “eat” that extra cost. He is going to build it into the price of the home he is contemplating building and price it accordingly. Whammo! You are starting to see why this is a “bassackwards” approach to building more affordable housing aren’t you?
If the City issued zero permits for single detached housing starts in 2016, and they then add an inclusionary housing fee to the cost of the developer to absorb into the housing price, how many housing starts would they “encourage”? I am guessing they would go from zero to a “hell no zero” real quick!
How do you potential new home buyers feel about this? A typical home buyer will finance their mortgage over 30 years. The inclusionary housing fee would be made a part of that home price by the developer. Typically, financing a cost over 30 years is going to ultimately cost the home buyer three (3) times what the price was at the time of purchase. So if the local City that decided to impose the maximum allowable State inclusionary fee on housing starts of $81,000 for that “typical 1800 sf new home, well that would cost that buyer $243,000. As Roseanne Rosannadanna from SNL would say “It’s Always Sumpin”.
- I can hear you now. What can I do about this? Here is what you can do. Continue to support your little ole ECA so we can continue to let you know about these things. If you really want to do something else, talk or write to your local elected officials and tell them that trying to stimulate housing starts by putting fees on new housing in order to generate some sort of subsidized housing will not work. Subsidizing housing should be a community based problem to be solved. Do not try to put the fee on a new home buyer alone in order to solve the inequities of high priced housing. The builder will simply pass the fees on to the buyer, and then the only person paying for the affordable/subsidized housing is the new buyer.
That’s All Folks!
Follow Up On Project Labor Agreements:
On Tuesday afternoon, I attended the Santa Rosa Junior College Board of Trustees meeting where they were being asked to vote on directing their staff to begin negotiations for a Project Labor Agreement on a specific building as part of the $410 million worth of Measure H funded taxpayer monies. The vote passed 4-3 after lots of drama. The Press Democrat has the story of how it unfolded right here–
Followup On Sonoma County Budget Hearings For Road Funding
This is what you pay me for! After several months of discussions and emails and phone calls and collaboration with our Board of Supes in Sonoma County, the County Transportation and Public Works proposed their $20 million budget proposal for 2018-2019 and it passed unanimously. Our five Supervisors, have gone from hearing a report from Phil Demery some 7 years ago that stated “we will have to let many of our County roads just deteriorate back to gravel due to a lack of funding”, to a declaration that in 5-10 years we might “have the best roads of any County in the State”. I am proud to say that all five Supervisors are firmly on board for continuing to make fixing our roads a main priority. If you have the time, an email would go a long way towards cementing the relationship between these Supes and our Association and members. I would urge you to say something like this:
“Dear ________: I want to thank you for keeping your “eye on the ball” of fixing our County roads for the last few years. I recognize your commitment by the fact that Sonoma County spends more of its General Fund on fixing roads than ANY other County in the State! Keep up the good work! We appreciate your efforts and the results as we all can see nice newly surfaced roads more and more in the County. It is also obvious, that those newly paved roads held up very well in the last huge winter that we just experienced.
Sonoma County is comprised of 5 supervisorial districts.
District Supervisor: Susan Gorin—Susan.Gorin@sonoma-county.org
District Supervisor: David Rabbitt—David.Rabbitt@sonoma-county.org
District Supervisor: Shirlee Zane—Shirlee.Zane@sonoma-county.org
District Supervisor: James Gore—James.Gore@sonoma-county.org
District Supervisor: Lynda Hopkins—Lynda.Hopkins@sonoma-county.org
Please email the Supes and thank them for fixing our roads!
Is there any company out there that has plenty of workers right now and a future supply of workers to support their growing business?
I doubt it.
For years, we have been lamenting the aging workforce and the lack of young people opting for a career in the General Engineering Contracting Industry. We kind of got serious about it then the recession of 2008 hit and most firms were struggling to find work, rather than workers. Times have changed!
With the adoption of SB-1, our roads industry will see a steady infusion of dollars that will make a career in road building very stable in our area. Career! Not just for a few years, but an entire CAREER! We have a golden opportunity to attract young people right now.
So, what to do? Well, luckily, the Career Technical Education (CTE) for Sonoma County has teamed up with the North Coast Builders Exchange and local high schools, to institute the “Construction Corps”. High School age young people are currently finishing the first ever Construction Corps Class and are about to graduate! Eleven young people have gone through 18 sections of classroom and hands on field training to get to this week. Monday, June 12 started the 1st of 10 days of “Boot Camp” where the students go out in the field and work on a Habitat for Humanity project tearing down a deck and cover and rebuilding the same for an elderly couple in Santa Rosa. Many thanks to Ghilotti Construction, Mike Brown Electric, and Team Ghilotti for providing skilled craftspeople to lead these young people during this period.
A special thank you to Doug Hamilton and the crew over at OakGrove Construction for taking the lead in guiding this program from its inception, to the cusp of its first graduating class. I know Gail Cochran was instrumental in keeping this program going in its early stages as well with the folks over at RCX. I think it is time the ECA tacked on to their program an optional 40 hour training that we call the “Marv Soiland Academy” that would provide training and education to those Construction Corps graduates who want to pursue our industry. Then companies also need to step up and hire these graduates!
The ECA has helped this year. But we want to expand this program. And for that, it takes an investment from you good members. More to come. If you are interested in investing in your future workers in this manner, consider sending in a separate donation to the ECA that clearly states it is for the “Marv Soiland Academy” and let’s get the future workers coming our way!