Some of those challenges, including widespread homelessness and the state’s high cost of living, were well established before Gov. Gavin Newsom took office. Others, including a persistent multibillion-dollar budget deficit and a high unemployment rate, have become more pressing in recent years.

For Southern California and the Inland Empire, where housing costs, long commutes and economic pressures are daily concerns for many families, the question is not just whether California is struggling, but how the state compares with the rest of the country.

Two recent academic studies offer a clearer picture — and the findings are mixed.

One report, “State of the States,” comes from a broader “State of the Nation” research project sponsored by Tulane University’s Murphy Institute. The project aims to assess major public policy issues across the country using comparable measures, rather than partisan talking points.

California ranked first in the nation on the economy, third on trust, third on mental health and third on children and families, according to the study. But the state landed near the bottom in several major categories: 48th in work and labor force, 49th in inequality and 50th in environment. The report also found California ranked low on educational achievement, volunteerism and press freedom.

Those rankings complicate the image often promoted by California political leaders, including Newsom, who have described the state as a national model for economic opportunity, social equity and environmental policy. While California’s economy remains among the strongest in the country, the benefits are not evenly shared, and the state’s high costs continue to weigh heavily on residents.

The report also compared California with neighboring Western states and found that California outperformed them in only three of 14 broad topic areas. Still, the study noted that the state is improving over time on nine of 31 specific measures.

Texas, a frequent point of comparison for California, fared better in several areas where California ranked poorly, including press freedom. But Texas also showed significant shortcomings, including on environmental measures and voter participation.

One striking difference involved how residents view their own lives. Texas ranked near the top for residents’ satisfaction with their current circumstances, while California fell well below the national median.

A second set of findings came from the Berkeley Economy & Society Initiative, a UC Berkeley project supported by the Hewlett Foundation. Its reports focused on California’s affordability crisis and concluded that the state is “less affordable and poorer than it should be” given the size and strength of its economy.

The UC Berkeley researchers found that California is consistently more expensive than other places with similar median incomes. They also linked high costs to the state’s shift from a long-standing magnet for newcomers to a place many residents are leaving.

Since the 2008 recession, California has experienced sustained domestic out-migration, meaning more residents have left for other states than have moved in from elsewhere in the country. Between 2020 and 2024, California had the second-lowest net migration rate among states as a share of population, behind only New York, according to the report.

The Berkeley researchers argued that unaffordability is a major factor behind that reversal.

A follow-up report examined the causes of California’s high costs and pointed to a policy environment that makes it difficult to build the infrastructure needed for housing, energy, water and other essentials.

The report said growth restrictions increase costs primarily by limiting housing supply and driving up housing prices. Those restrictions also raise the cost of major infrastructure projects, contributing to higher energy and transportation expenses for consumers.

Among the solutions identified by the researchers were broader use of factory-built housing and new financing models to expand affordable housing production.

Taken together, the two studies present a familiar but sobering portrait of California: a state with a powerful economy and major institutional strengths, but also deep inequality, severe affordability problems and weak results in several areas that affect everyday life.

For the next governor and state lawmakers, the findings suggest that improving California’s standing will require more than celebrating the state’s economic scale. It will mean confronting the cost pressures and policy barriers that continue to shape life for residents across the state, including fast-growing and cost-burdened communities throughout Southern California and the Inland Empire.

Original source: CalMatters

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The measure, known as the Local Taxpayer Protection Act, has qualified for the November ballot with backing from the Howard Jarvis Taxpayers Association, the group long associated with Proposition 13. If approved by voters, it would restrict local real estate transfer taxes and raise the voter-approval threshold for new local taxes from a simple majority to two-thirds.

Supporters of local housing funding say the measure is gaining momentum in part because of backlash against several high-profile city transfer taxes that were adopted with the goal of generating money for affordable housing but have produced unintended consequences.

In Los Angeles, Santa Monica and San Francisco, voters approved higher real estate transfer taxes aimed largely at expensive property sales. Those measures were often described as “mansion taxes,” but critics say the costs have fallen heavily on commercial and multi-family property transactions — the kinds of deals that can affect future housing production.

Real estate transfer taxes are charged when property changes hands, typically as a percentage of the sale price. Counties and general law cities in California are limited to a 0.11% transfer tax. Some charter cities, however, have adopted much higher rates.

Los Angeles’ Measure ULA applies to property sales above $5 million. Critics say the structure creates a sharp cutoff: a property sold for just under the threshold avoids the tax, while a larger apartment building above the line can face a major added cost. An affordable eight-unit apartment building, for example, could owe more than $200,000 in transfer taxes, while a luxury home sold for $4.9 million would owe nothing under ULA.

Housing advocates argue that the measure has slowed sales and discouraged new apartment development. A UCLA analysis cited by critics found that Measure ULA may be costing Los Angeles city and county governments more in lost property tax revenue than it is producing through the transfer tax. Unlike transfer taxes, which are collected only when a property is sold, property taxes generate revenue every year for cities, counties, schools, fire districts and other public agencies.

Santa Monica’s Measure GS has faced similar criticism. The measure charges $56 per $1,000 on sales of $8 million or more, one of the highest rates in California. In the year after it took effect, residential sales above that amount reportedly dropped by half, while commercial sales fell from 18 to five. Revenue came in at less than half of projections.

San Francisco’s Proposition I, which imposes rates of up to 6% on the largest property transactions, has also been blamed for reducing sales and slowing housing activity. City leaders there are now pursuing a proposal to cut the tax in half.

The November ballot measure would address those local taxes by limiting transfer taxes statewide to 0.11%. But opponents say it goes much further by making it far harder for local governments to raise new revenue for basic services and housing programs.

That provision could have broad consequences for cities, counties and special districts throughout California. In fast-growing and infrastructure-stressed regions such as the Inland Empire, local governments often rely on voter-approved revenue measures to help pay for transportation improvements, fire protection, schools, housing programs and other needs.

Housing advocates are urging state leaders to negotiate a compromise before the June 25 deadline, when proponents could still withdraw the measure from the ballot. They argue that lawmakers can correct what they view as poorly designed transfer taxes in a few cities without imposing sweeping new limits on local governments statewide.

The debate places state leaders in a difficult position: balancing concerns over taxes that may be discouraging housing development with the need to preserve local funding tools at a time when California remains under pressure to build more homes and maintain essential public services.

Original source: CalMatters

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Assembly Bill 1751, carried by Assemblymember Sharon Quirk-Silva, a Fullerton Democrat whose district includes parts of Orange and Los Angeles counties, would remove certain regulatory barriers for townhouse construction. The measure is intended to speed approval of tightly built, multistory homes, a housing type often seen as a middle ground between single-family houses and large apartment projects.

In exchange for that streamlined approval, developers would have to pay construction workers at least $28 an hour. That is well above California’s current statewide minimum wage of $16.90.

But the proposed wage floor has drawn fierce opposition from the State Building and Construction Trades Council, which represents skilled trades such as electricians, plumbers and sheet metal workers. The council argues the bill could weaken higher wage standards already in place for many union workers on public or publicly supported projects.

At the center of the dispute is the concept of “prevailing wage,” a government-set pay rate that applies to many publicly funded construction projects, including a number of affordable housing developments. Prevailing wages are calculated through surveys of what workers in specific trades earn in different regions. Because union contracts often cover large numbers of workers, union pay scales can help establish those prevailing rates.

Quirk-Silva has insisted that her bill would not alter those standards.

“It does not replace prevailing wage,” she said during a tense Assembly floor debate earlier this month. “It does not undercut prevailing wage. This bill leaves prevailing wage exactly where it stands in current law.”

The building trades remain unconvinced. Their concern is partly technical: while the bill says California regulators could not use the new $28 wage standard when calculating state prevailing wages, federal officials conduct their own surveys and set their own rates for federally supported projects. Union leaders worry that if enough townhouse construction jobs are paid at $28 an hour, that lower rate could influence federal prevailing wage calculations.

Their broader objection is about precedent. For years, the building trades have pushed back against housing bills that ease development rules unless they include strong labor protections, such as prevailing wage requirements or “skilled and trained” workforce mandates that favor graduates of apprenticeship programs, most of whom are union members.

AB 1751 offers a different model: a required minimum wage that is far lower than what many skilled union tradespeople already earn.

Chris Hannan, president of the State Building and Construction Trades Council, said that approach could become the new standard in future housing legislation. If lawmakers begin treating a construction minimum wage as the labor concession needed to win support for development streamlining, he said, “that becomes the new go-to.”

On the other side of the fight are California’s unionized carpenters, who support the proposed wage standard. The rivalry between the carpenters and the building trades has become a recurring feature of housing debates in Sacramento.

The two labor groups clashed over a similar proposal last year, when Assemblymember Buffy Wicks, an Oakland Democrat and longtime ally of the carpenters, sought to include a residential construction wage floor of $28 to $40 an hour in a budget bill near the end of the fiscal year. The carpenters argued then, as now, that most workers building housing in California are not represented by unions, except on high-rise projects that require more specialized labor. A higher minimum wage, they said, would improve standards for those nonunion workers.

The building trades reacted strongly to that proposal. Union members packed a budget hearing to denounce the idea, saying it would mark a retreat from California’s traditional labor standards. One representative compared the measure to “Jim Crow” laws. The proposal was ultimately dropped after several labor-friendly Democrats expressed concern.

This year’s version has gone through a more public legislative process, though opponents still argue it has moved too quickly. When AB 1751 was introduced in February, it dealt only with townhouse regulations. The wage language was added in late April before the bill’s second committee hearing.

Quirk-Silva’s staff declined to make her available for an interview, citing personal family matters. On the Assembly floor, she said the timing was partly affected by serious health issues involving staff and family members.

Since the wage language was added, debate over the bill has centered almost entirely on labor. That is notable because the measure would also exempt townhouse projects from environmental review and remove local elected city councils and planning boards from parts of the approval process. In past years, that kind of land-use shift would likely have triggered a major Capitol battle on its own.

But California’s housing politics have changed rapidly. Last year, Gov. Gavin Newsom signed a law exempting most urban infill housing developments from environmental litigation, reducing some of the political shock around proposals that limit local review.

During an Assembly floor vote last month, Assemblymember Chris Ward, a San Diego Democrat, called the wage issue the “900-pound gorilla.” Like several Democrats, Ward said he generally supported the housing goals of the bill but remained concerned about unanswered questions over how the $28 rate might interact with existing labor standards.

The bill needed 41 votes in the 80-member Assembly to advance to the Senate. It passed with 47.

Quirk-Silva’s office attempted to address the prevailing wage concern by writing into the bill that the California Department of Industrial Relations could not use the $28 townhouse wage when calculating state prevailing wage rates. Those rates are based on the most common pay for each type of work in each region.

The building trades say that does not solve the federal issue. For example, the current federal prevailing wage for a residential roofer in Sacramento is $46.73 an hour, plus benefits. Federal officials base those numbers on the most common wage paid in an area, or on the regional average if no single rate covers at least 30% of surveyed workers.

Scott Wetch, a lobbyist for unions affiliated with the building trades, warned at an April hearing that federal officials would not be bound by the California bill’s language.

“The federal government won’t give a rat’s ass about what this bill says,” Wetch said. “And they will set the prevailing wage rate for all the crafts at $28.”

Kevin Duncan, an economist at Colorado State University Pueblo who has studied how prevailing wage rules affect construction costs, said the trades’ concern is not baseless. In a smaller market with limited union presence, he said, a large number of contractors paying workers exactly $28 an hour could potentially influence a wage survey.

“That would be the prevailing rate — and with zero benefits,” Duncan said.

Supporters of AB 1751 say that scenario is unlikely. They argue the bill applies to a specific category of townhouse construction and would not generate enough federally relevant wage data to substantially change prevailing wage rates. They also contend that few residential roofers work on federal public works projects in Sacramento or elsewhere in California.

Most roofers on privately funded residential projects are nonunion and many earn less than $28 an hour, said Danny Curtin, director of the California Council of Carpenters. Raising the floor for those workers, he argued, should not be portrayed as a threat to higher-paid union trades.

The claim that a $28 minimum wage would pull other workers’ pay down “defies comprehension,” Curtin said.

Original source: CalMatters

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WASHINGTON — As a part of ongoing efforts to end Veteran homelessness, the Department of Veterans Affairs published a Notice of Funding Opportunity for approximately $5 million in grants per year (for up to two years) to help Veterans experiencing or at risk of homelessness.

The funds are available through VA’s Homeless Providers Grant and Per Diem Program, which offers financial assistance to eligible community organizations that provide Veterans with transitional housing and case management — including connecting eligible Veterans to VA benefits, community-based services, and permanent housing. These special needs grants support homeless Veterans who are women, elderly, terminally ill, chronically mentally ill, or who have care of minor dependents.

Ending Veteran homelessness is a top priority of VA and President Biden, who has made supporting Veterans a key pillar of his Unity Agenda for the nation. Earlier this week, VA announced that it permanently housed 46,552homeless Veterans in 2023 — surpassing the calendar year goal to house 38,000 Veterans by 22.5%. Thanks in part to these efforts, the number of Veterans experiencing homelessness has fallen by 4% since early 2020 and by more than 52% since 2010.

“We won’t rest until every Veteran has the safe, stable home that they deserve,” said VA Secretary Denis McDonough. “These grants will allow VA — alongside community organizations —to help provide housing and wraparound services to more homeless and at-risk Veterans.”

VA’s efforts to combat Veteran homelessness are grounded in reaching out to homeless Veterans, understanding their unique needs, and addressing them. These efforts are built on the evidence-based “Housing First” approach, which prioritizes getting a Veteran into housing, then providing them with the wraparound support they need to stay housed, including health care, job training, legal and education assistance, and more. This initiative is part of the Biden-Harris Administration’s broader efforts to reduce homelessness.

Only the 16 existing special need grantees are eligible to apply. Awards will fund two years of operations starting fiscal year 2025 on Oct. 1, 2024, and ending Sept. 30, 2026. Grant applications must be received by 4:00 p.m. Eastern Time on April 15, 2024.

View the special need NOFO, and learn more about GPD or email GPDGrants@va.gov.  For more information about VA’s comprehensive efforts to end Veteran homelessness visit VA.gov/homeless.

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In 2021, four years after finishing her last jail term and living in transitional housing in Riverside County, Erica Smith was ready for a permanent home. She’d saved enough to cover a security deposit and the first and last month’s rent for an apartment for her and her daughter.

But after three months of searching, Smith ran out of money, having burned through $10,000 on stays in motel rooms. She’d never found a place to live. Smith had a series of drug-related and theft convictions on her record.

Numerous cities within Riverside had adopted laws called crime-free housing that aimed to prohibit landlords from renting to tenants with criminal histories. “It’s just terrible,” said Smith, 54. “Why am I not able to provide a place for me and my daughter to live?” Soon, Smith will have more opportunities for housing, courtesy of a new state law. Assembly Bill 1418, which takes effect Jan. 1, will ban local governments across California from enforcing crime-free housing policies.

Not only do crime-free housing rules stop landlords from renting to those with prior convictions, but many also call for the eviction of tenants based on arrests or contact with law enforcement. Dozens of cities and counties in California began implementing the laws during the wave of “tough on crime” measures in the 1990s, with local elected officials, police and prosecutors contending they helped keep neighborhoods safe. But crime-free housing policies have come under increasing criticism as unfair, unforgiving and racially discriminatory.

The blanket bans have prevented spouses and children of those convicted from accessing housing and forced evictions of domestic violence victims after police responded to their apartments. Under AB 1418, local governments will no longer be able to mandate landlords evict and exclude tenants for alleged or prior criminal conduct.

It does not prevent landlords from initiating nuisance-related evictions and screening prospective residents based on criminal histories of their own accord. More than 100 cities passed crime-free housing policies between 1995 and 2020, covering potentially 4.5 million renters, according to a new report by Rand Corp., a Santa Monica-based nonpartisan research institution.

The study found that contrary to proponents’ claims, crime-free housing did not lower crime rates. “Our overall finding is crime-free housing policies are completely ineffective,” said Max Griswold, an assistant policy researcher at Rand and the study’s lead author. In contrast, the analysis determined that the rules increased eviction rates on average by about 20%, an effect Griswold called “unexpectedly large.” The study found that cities with crime-free housing policies have a larger percentage of Black residents than those without. “They’re creating more segregation,” Griswold said of the rules. “At the end of the day, that seems to be their purpose.” Momentum to curtail crime-free housing laws has grown in recent years.

A 2020 Times investigation found the policies had disproportionately affected Black and Latino renters in California. Last year, the city of Hesperia and San Bernardino County Sheriff’s Department agreed to pay $1 million to settle a civil rights lawsuit filed by the U.S. Department of Justice alleging crime-free housing policies targeted Black and Latino residents for removal.

Citing The Times’ story and the Hesperia case, Assemblymember Tina McKinnor (D-Hawthorne) introduced AB 1418 in February. Soon after, California Atty. Gen. Rob Bonta issued formal guidance to local governments urging them to reconsider their programs on racial justice grounds. “Doing that on the heels of the big Hesperia case put cities on notice that the walls were closing in on them,” said Anya Lawler, a lobbyist representing the California Rural Legal Assistance Foundation and the National Housing Law Project, two nonprofits that are principal supporters of the bill.

Over the summer, California’s Reparations Task Force, in its recommendations for remedying the legacies of slavery and other more modern government-sanctioned policies that discriminated against Black residents, called for repealing crime-free housing laws. AB 1418 attracted no formal opposition. It passed both houses of the Legislature without a dissenting vote in a committee or on the Assembly or Senate floors. Gov. Gavin Newsom signed AB 1418 in October.

Among the new law’s backers is the California Apartment Assn., the state’s largest landlord organization, which contended that local governments shouldn’t require landlords to exclude or evict tenants. As AB 1418 made its way through the Legislature, the two largest cities in the Inland Empire, Riverside and San Bernardino, agreed to repeal their crime-free housing laws. San Bernardino did so as part of a settlement challenging the policy in a case filed by legal aid groups, and joined by Bonta’s and Newsom’s offices, on behalf of low-income residents in the city.

At a hearing on the policy in August, Michael Griggs told San Bernardino City Council members that he’d faced hurdle after hurdle trying to find housing. Griggs served six years in prison for robbery and assault charges related to a crime he committed as a teenager and was released in 2015. While incarcerated, Griggs began taking college classes. He earned a scholarship to Pitzer College and now is pursuing a master’s degree in social work at Cal State San Bernardino.

After his acceptance into graduate school in 2022, Griggs said, he spent six months searching for apartments throughout the Inland Empire only to have landlords reject him because of his criminal history. He said he found a place in Highland, a city with a crime-free housing policy about 10 miles from campus, only because the landlord’s background check did not extend to convictions that occurred longer than seven years prior. “People want to move forward with their life,” said Griggs, 34. “How can they move forward with their life without having the first fundamental thing, which is housing, a safe place to live?” Griggs said he’s looking forward to AB 1418 erasing crime-free housing policies on a broader scale. “It’s hard work to do this at the city level,” he said. “I’m happy that the state is stepping up.” Local officials in Riverside and San Bernardino said they had already scaled back enforcement of crime-free housing programs.

Ryan Railsback, a spokesperson for Riverside city police, said the department stopped dedicating an officer to overseeing crime-free housing rules in 2020 because of staffing shortages that emerged during the COVID-19 pandemic.

In San Bernardino, the discussions at the state and local levels about potential harms caused by crime-free housing rules led city leaders to reconsider them after three decades on the books, said Jeff Kraus, a city spokesperson. “The nature of crime has changed,” Kraus said. “The laws have changed. People’s opinions have changed. It’s probably a good time to review them now.” For Smith, who remains homeless and living in her car with her 12-year-old daughter, AB 1418 represents another chance.

She’s protested crime-free housing policies alongside advocacy groups locally and at the state level, and recently obtained a federal Section 8 housing voucher that would subsidize her rent. Smith has yet to find a landlord that will accept the voucher, but she is counting on that to change. “I’m excited and quite hopeful that because I’ve been dutiful in opposing these crime-free rules that part of the reward will be that housing for us is coming very soon,” Smith said.

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WASHINGTON (AP) — Long past its painful peak, inflation in the United States may be heading steadily back toward its pre-pandemic levels, without the need for further interest rate hikes by the Federal Reserve.

Such a scenario became more likely, if hardly guaranteed, after Tuesday’s surprisingly tame report on consumer prices for October. The Labor Department’s data showed a broad-based easing of inflation across most goods and services. The price of gas? Down. Appliances? Down. Autos? Down. Same for airfares, hotel rooms and doctors’ fees.

Overall inflation didn’t rise from September to October, the first time that consumer prices collectively haven’t budged from one month to another in more than a year. Compared with a year earlier, prices rose 3.2% in October, the smallest such rise since June, though still above the Fed’s 2% inflation target.

Excluding volatile food and energy prices, so-called core inflation was just 0.2% last month, slightly below the pace of the previous two months. Economists closely track core prices, which are thought to provide a good sign of inflation’s likely future path. Measured year over year, core prices rose 4% in October, down from 4.1% in September, the smallest rise in two years.

“The inflation fever has broken,” said Bill Adams, chief economist at Comerica Bank. “Rising petroleum production is holding down gas prices, house prices are rising more slowly after mortgage rates surged in 2023 and rents are also rising more gradually” as more apartment buildings are completed.

October’s milder-than-expected price figures make it much less likely that the Fed will impose another rate hike. Many economists now say that the Fed’s most likely next move will be to cut rates, likely sometime next year, though that would depend on whether inflation continues to cool.

WHAT’S DRIVING INFLATON LOWER, AND WILL IT CONTINUE?

A major factor has been a big improvement in the supply of many things — workers, housing and components for manufactured goods.

Millions of Americans have come off the sidelines in the past year and flooded back into the workforce, seeking and (mostly) finding jobs. Immigration has increased, too, and with it more people looking for work. With more hires available, businesses haven’t had to raise wages as much to fill jobs, thereby easing the pressure on those businesses to raise their prices.

At the same time, the largest number of new apartment buildings nationwide in decades are being completed, a trend that is helping slow rent increases. Rental costs, after a spike in September, rose at a much more gradual pace last month.

Rents and other housing costs are likely to keep coming down, economists say, as the cost of new leases continues to fall, according to real-time data providers such as Zillow. Those lower prices show up in the government’s data with a lag.

And the supply chains that were badly snarled during the pandemic have pretty much unwound. An ample availability of products, parts and components help keep a lid on their prices. Automakers, for example, are having a much easier time finding semiconductors.

Partly as a result, new car prices declined last month, defying fears that the now-settled autoworkers’ strike would reduce dealers’ inventories and send prices higher. Used car prices, too, are down. They fell for a fifth straight month in October and have tumbled 7% from a year ago.

“We’re finally undoing that and getting the benefits,” Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said Tuesday in remarks at the Detroit Economic Club.

Separately, consumers are widely expected to pull back on spending after a blowout summer, with credit card debts — and delinquencies — rising and average savings falling. Cooler demand should force businesses to compete more on price.

Gas costs have kept falling this month, with the national average price at the pump averaging $3.35 Tuesday, down 42 cents from a year earlier. Those prices declines could push overall inflation, measured year-over-year, below 3% by December.

BUT AREN’T THINGS STILL PRETTY EXPENSIVE?

Yes, inflation is still painfully apparent in many areas. They include auto and health insurance and some groceries, like beef and bread.

The average cost of auto insurance, which jumped 1.9% just from September to October, has soared nearly 20% from a year earlier. As new and used vehicles have grown more expensive, so has the cost of insuring them. And health insurance prices rose 1.1% last month, though that was largely due to a change in the government’s methodology.

But even as overall price increases slow, it doesn’t mean inflation is reversing or that most prices are falling back to pre-pandemic levels. The consumer price index, the most widely followed measure of inflation, remains about 20% higher than it was before the pandemic.

Milk prices, which have ticked down compared with the past year, are still 23% higher than they were pre-pandemic. Ground beef prices are 31% higher. Gas prices, despite a steep decline from a year ago, are still 46% higher than before the pandemic.

Many economists say a key reason why so many Americans hold a gloomy view of the economy despite very low unemployment and steady hiring is that these prices — on items that they buy regularly — remain much higher than they were three years ago.

ARE PAYCHECKS KEEPING UP?

Barring a deep and painful recession, prices aren’t going to fall to their pre-pandemic levels. Instead, economists say, Americans’ wages need to rise to help pay for the higher costs.

Wages and salaries trailed inflation in 2021 and 2022, exacerbating the pain of higher prices. Yet this year, as inflation has cooled, average pay has pulled ahead of inflation. By most measures, average paychecks, adjusted for inflation, are back to where they were before the pandemic.

Yet that essentially means that Americans, on average, have had scant real pay increases compared with three years ago. And while average pay may be back to pre-pandemic levels, many people have received below-average pay raises and are still behind inflation.

HOW MIGHT THE FEDERAL RESERVE RESPOND?

The Fed will likely welcome Tuesday’s report as evidence of further progress toward getting inflation back to its target of 2%. Fed officials, led by Chair Jerome Powell, are considering whether their benchmark rate is high enough to quell inflation or if they need to impose another increase in coming months.

Powell had said last week that Fed officials were “not confident” that rates were sufficiently high to tame inflation. The Fed has raised its benchmark interest rate 11 times in the past year and a half, to about 5.4%, the highest level in 22 years.

But the central bank has raised its key rate just once since May. Since its last meeting on Nov. 1, a government report showed that hiring cooled in October compared with September, and wage growth slowed, thereby easing pressure on companies to raise prices in the coming months.

Adams, the Comerica economist, said he thinks the Fed’s most likely next move will be to cut rates, likely by mid-2024.

The prospect that the Fed may end its rate hike campaign and eventually cut rates ignited a stock market rally Tuesday. The Dow Jones industrial average soared nearly 1.4% in mid-afternoon trading. The yield on the benchmark 10-year Treasury note fell to 4.46%, down from nearly 4.6%, reflecting investors’ expectations that borrowing rates will decline.

The Fed’s rate hikes have increased the costs of mortgages, auto loans, credit cards and many forms of business borrowing, part of a concerted drive to slow growth and cool inflation pressures. The central bank is trying to achieve a “soft landing” — raising borrowing costs just enough to curb inflation without tipping the economy into a deep recession.

“Things are proceeding in a way that is very consistent with what (the Fed) would want to see,” said Eric Winograd, chief economist at AB Global, an asset management firm. “They look like they are on course to generate a soft landing. There’s no guarantee that they will actually manage to accomplish it. But right now, that’s the story that the data are telling.”

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California lawmakers approved legislation on Monday to expand a housing law that has led to the construction of thousands of new homes, despite initial opposition from both labor unions and environmental groups.

Senate Bill 423 would extend by a decade a state housing law set to expire in 2026 that lets developers skip much of the bureaucratic process often blamed for blocking construction of multifamily projects, though only in cities that have fallen behind on state-mandated housing goals. The legislation now heads to Gov. Gavin Newsom, who has until Oct. 14 to sign or veto hundreds of bills. “If you are looking for an opportunity to support housing in your community, I can assure you this is the most consequential vote you will have this year, period, full stop,” Assemblymember Buffy Wicks, an Oakland Democrat and chair of the Housing and Community Development Committee, said Thursday before a vote in her chamber.

“This is the most important housing bill that we are going to put on the governor’s desk.” The Assembly approved the bill on a bipartisan 52-8 vote, and the Senate finalized it 27 to 7. When state Sen. Scott Wiener (D-San Francisco) introduced SB 423 in February, it faced fierce opposition from some of the state’s most influential labor unions, including the State Building and Construction Trades Council of California, an organization that has aggressively and successfully opposed housing proposals that lacked rigorous worker protections.

Though SB 423 mandates that housing developers offer union-level wages and some healthcare benefits, the Trades Council and dozens of local and state labor groups worried that the protections were inadequate and would fail to protect construction workers. Wiener addressed those concerns earlier this year with amendments that strengthened labor regulations on certain projects, easing some opposition. Wiener had help from the California Conference of Carpenters, which made an unusual break from other statewide labor unions to sponsor SB 423. “Without a doubt, housing affordability is the most destabilizing issue facing Californians. Working families, struggling from paycheck to paycheck, are staring homelessness in the face,” Daniel Curtin, director of the California Conference of Carpenters, wrote in a statement. “We look forward to making the case with Governor Newsom for his signature on this year’s major housing legislation. We’re proud to have played a role in this effort.”

Other roadblocks included opposition from environmental groups, which raised issue with parts of the bill that would allow construction in certain coastal and wildfire zones. The California Coastal Commission this summer argued against SB 423’s expansion into coastal areas exempted from development in the original law. The commission argued that more construction on the coast could worsen climate outcomes amid sea level rise and a changing environment. Areas that could see new multifamily housing projects under SB 423 include wealthier coastal cities such as Carmel-by-the-Sea and Malibu, Santa Monica, Venice, western San Francisco and San Diego. “I support affordable housing,” Assemblymember Al Muratsuchi (D-Rolling Hills Estates) said during the Assembly debate. “But not at the expense of California’s iconic coastline, and not at the expense of protecting Californians from wildfires.” Wiener accepted minor amendments to the bill to clarify that it would not apply to areas that are “environmentally sensitive or hazardous, such as those that could be affected by sea level rise.”

Dozens of cities still oppose SB 423, including several in Los Angeles County and other coastal cities in Southern California. Some of their concerns extend beyond environmental impacts and into local control over housing decisions in their communities.

The League of California Cities, which lobbies on behalf of hundreds of local governments in the Capitol, is particularly concerned with a provision of SB 423 that would let the California Department of General Services step in and develop housing on state-owned property in local jurisdictions. “And they’re not obligated to follow a lot of rules at the local level, like any other developers,” said Jason Rhine, a lobbyist for Cal Cities.

A recent UC Berkeley Terner Center for Housing Innovation report found that the 2017 law has helped lead to more than 18,000 proposed new units in California, nearly two-thirds considered 100% affordable. It’s a small dent in a state that must plan for 2.5 million new homes over the next eight years, with at least 1 million set aside for low- to very low-income households. Still, housing experts say it’s an important step toward alleviating a housing shortage that’s helped spur a homelessness crisis and made California a nearly impossible place for middle- and low-income residents to find affordable places to live. Senate Bill 423 helps build on a “track record of success,” said Ray Pearl, executive director of the California Housing Consortium, one of the measure’s sponsors. “There is no silver bullet. There is no one bill that is going to solve this,” Pearl said. “But each bill hopefully makes a dent, points us in the right direction, prioritizes the production of affordable housing.”

The Senate easily approved another major housing proposal on Monday, also by Wiener, that would allow nonprofit colleges and faith organizations such as mosques, synagogues and churches to quickly build affordable housing on their properties. That measure, Senate Bill 4, is expected to free up some 171,000 acres of land for development of affordable housing projects, according to another report from the UC Berkeley Terner Center for Housing Innovation. “Enacting SB 4 and 423 will add powerful tools to our arsenal in combating the housing crisis,” Wiener said in a statement after the votes. “Californians overwhelmingly want to see these homes built, which is why both bills passed by a wide margin with bipartisan support.”

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The belief that reaching the American dream starts with owning a home is at the heart of an idea that emerged with post-World War II prosperity and has remained a standard ever since. But the reality is that millions of Americans in cities and states around the country struggle to afford housing, either to own or to rent.

For nearly a century, homeownership has been the largest source of wealth for most American families. Safe, traditional mortgages have been pivotal to achieving financial security and independence. But as home prices and rents skyrocket — and because outdated policies make small mortgages expensive for lenders and often unavailable for borrowers seeking low-cost homes — many families are struggling to afford reliable housing.

This is a serious problem for people across all demographics, but Black, Hispanic, rural and Indigenous households are particularly affected. And some have turned to riskier and more costly alternative financing arrangements, such as land contracts, seller-financed mortgages, lease purchases and personal property loans.

Approximately 36 million Americans have used such arrangements to purchase a home. They are pitched to potential homebuyers as a pathway to homeownership when traditional mortgages are not available. But they often result in borrowers not achieving their goal of owning and can hurt their future homeownership and wealth-building opportunities.

To examine the barriers that borrowers face when trying to purchase safe and affordable homes, The Pew Charitable Trusts studied various alternative financing arrangements. One of the most important differences among these arrangements is the question of when the buyer receives full legal ownership of a property. In mortgage transactions, the deed — and therefore, full ownership — is typically given to the buyer at closing. However, in a land contract, for example, the seller keeps the deed and retains legal title to the property for the duration of the financing term, while the borrower typically holds what is called “equitable title.” This can create ambiguity about the buyer’s rights and responsibilities, such as who pays for taxes and upkeep, and lead to quick evictions that strip buyers of any potential home equity.

Financing challenges aren’t the only roadblock to homeownership. Many Americans who want to own a home are only able to rent for now. And as rents continue to climb, many of these are finding it difficult to save for a down payment in order to get on the path toward ownership. This comes against the backdrop of a national housing shortage, stemming largely from strict zoning and land-use policies that make it harder and more expensive to build new housing, which results in higher rents and puts homeownership further out of reach.

Pew has examined several jurisdictions that updated their zoning codes to allow more housing and found that this flexibility helped these jurisdictions add new housing stock faster than new households were being formed. And while rent remains detrimentally high in many communities throughout the country, this research shows that communities updating their zoning laws in this manner kept rent growth to less than 7 percent over the most recent six-year period, even as rents rose by 31 percent nationally.

The housing shortage is a major driver of both inflation and homelessness, placing a heavy financial burden on Americans from all walks of life. There is no one solution for U.S. policymakers, but helping people obtain safe and affordable home financing is a good start toward ensuring that households capable of handling a mortgage can obtain one.

Zoning reform that allows more housing to be built is also a necessary step in solving the housing crisis and ensuring that everyone has a roof over their heads.

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Gov. Gavin Newsom and top Democrats have repeatedly vowed to reform California’s landmark environmental protection law, which many blame for the state’s inability to build enough housing.

And after years of discussion, Sen. Scott Wiener, D-San Francisco, thought that a recent handful of high-profile housing developments that had been stalled by the California Environmental Quality Act, or CEQA, might provide an opportunity to overhaul the 53-year-old statute.

CEQA was originally envisioned as a way to keep new construction from harming the environment. In practice, it has also generated a half-century of litigation, empowered public efforts to block unpopular developments and tied projects up in lengthy environmental reviews.

Wiener had hopes of “modernizing” CEQA. But before he could introduce his plans, they were shelved.

A document obtained by The Sacramento Bee, and verified by Wiener, shows the senator was preparing to introduce some fairly substantial alterations to CEQA.

Wiener considered allowing public agencies to limit environmental review for certain infill housing — new housing in existing neighborhoods or subdivisions. He also wanted to empower state regulators to limit the scope of the law, according to draft amendments outlined in the documents.

Another element would have declared that the effects of population growth, including noise, congestion and new infrastructure, could not be considered environmentally significant under CEQA and used as grounds for a lawsuit.

“There were some good ideas, but we just decided this wasn’t the year to do it and there was more work to be done,” Wiener said.

Wiener’s abandoned attempt reveals the daunting challenges that stymie reform. Former Gov. Jerry Brown once described it as “the Lord’s work.”

As Wiener said: “In terms of more fundamental reform, the politics are very, very difficult.”

CALIFORNIA LEADERS CALL FOR CEQA REFORM

CEQA, signed into law by Gov. Ronald Reagan in 1970, is designed to protect the natural environment by requiring public agencies to weigh the impacts of development. Developers’ projects are subject to environmental impact reports, which local leaders review. The reports study possible effects on animal habitats, noise, traffic, air quality and other factors. Builders must consider alternatives to the project and show how they would mitigate adverse outcomes. It’s a lengthy and expensive process that can turn into years of hearings and litigation, ultimately quashing a project. If an individual or organization believes a public agency or developer failed to follow all the required steps, they can sue on grounds of a CEQA violation. Environmentalists, longtime champions of the law, are wary of any changes that could weaken such protections. But developers and housing advocates contend that CEQA has been weaponized by homeowners and anti-housing NIMBYs — a term that stands for ‘Not in my backyard’ — to legally challenge and delay housing projects they don’t like. For example, a neighborhood group recently sued the city of Rocklin to block the construction of a mixed-use development with 900 housing units — including a senior living community, single-family homes and apartments — on 108 acres of mostly undeveloped land. The lawsuit, which is likely to put the College Park project on hold for years, claimed the city failed to consider alternative sites and to adequately analyze negative environmental impacts on aesthetics, air quality and biological resources, among others. Lawmakers and Newsom have blasted the misuse of the statute and repeatedly vowed to fix it. Yet most attempts at significant reform have faltered. After a Feb. 24 state court ruling that UC Berkeley violated CEQA by failing to adequately study the potential for added noise and to consider alternative sites for a student and homeless housing project, Newsom said the law needed to change. He affirmed he was “committed to working with lawmakers this year” to make changes to the law. The governor has not elaborated since then. When asked what kind of reform proposals Newsom was referring to, the governor’s press office did not answer the question and declined an interview. Instead, spokesman Daniel Lopez provided a statement that read: “This important effort is ongoing and we will provide updates as they become available.”

CALIFORNIA ENVIRONMENTALISTS DIVIDED OVER CEQA REFORM

Getting major CEQA reform past the finish line would require buy-in from two powerful Democratic Party constituencies: labor and environmentalists. The law has proven difficult to dismantle due to strong support from influential environmental groups, litigators and some of the state’s most powerful unions. California building and construction labor have been a major reform obstacle, fighting any measure to change CEQA that doesn’t include wage concessions or a requirement to hire union workers. “CEQA has kind of been the third rail of California politics,” said Jim Moose, a CEQA litigator who supports reforming the law. “Without union support, there’s never been the political will to deal with the fundamental problems of CEQA so what happens is it just gets nibbled at around the edges.” Amanda Brown-Stevens, executive director of Greenbelt Alliance, is part of an evolving movement within the environmental community that is working with housing advocates to pursue policies that both protect the environment and ease barriers to new housing. An example is Assembly Bill 68 — referred to as The Housing and Climate Solutions Act — which would streamline approvals for new homes in areas that local governments have identified as a priority for infill housing. The legislation is co-sponsored by California YIMBY and The Nature Conservancy. As Brown-Stevens sees it, delaying or barring housing projects in urban areas will lead to sprawling development, increasing greenhouse gas emissions and jeopardizing open space. But the environmental justice community is not monolithic, and getting a large coalition on board for major changes to CEQA will be difficult, she said. “There are people who are rightfully nervous because we’ve seen environmental protections rolled back,” she said. “… But there are many cases where people use environmental lawsuits to delay projects. And pretending that doesn’t happen will not help anything as well.”

WHO LIKES CEQA?

Housing projects delayed and blocked by wealthy Californians and so-called NIMBYs alleging CEQA violations tend to receive the most attention and spark the greatest outrage. But proponents of the law like David Pettit, a senior attorney at the Natural Resources Defense Council, argue that it also serves as an important tool for low-income communities. In the Central Valley, for example, a number of warehouse projects have been litigated due to concerns about air quality and health impacts on nearby residents. “The fact that one case comes out the wrong way, doesn’t mean you should throw out the whole system,” Pettit said. “… If CEQA goes away, I think it’s going to hurt low-income and environmental justice communities more than any other, and that would be bad.” Pettit and other CEQA litigators also contend that the law is not one of the drivers California’s housing crisis. Recent studies by nonprofits Rose Foundation for Communities and the Environment and The Housing Workshop and the Senate Environmental Quality Committee have found that overall litigation rates involving CEQA are low — between about 1-2% of projects face legal challenges. Ellison Folk, a longtime CEQA litigator and partner with the San Francisco law firm Shute, Mihaly & Weinberger, blames the state’s housing crisis on high construction and land costs and local land use regulations. “I understand we do have a housing crisis in California but I don’t think exempting projects from CEQA is going to solve that problem,” Folk said. “Fundamentally, I think we need to put a lot more money into building affordable housing.”

TARGETED CHANGES TO CALIFORNIA’S LANDMARK ENVIRONMENTAL LAW

In lieu of comprehensive reforms, lawmakers have recently taken a piecemeal approach to alter CEQA. Measures introduced this legislative session include Assembly Bill 1449, which would completely exempt from CEQA affordable housing developments that meet certain labor and environmental standards. A bill from Assemblywoman Buffy Wicks, D-Oakland, would disallow noise from voices of residents as a significant environmental effect under CEQA for housing projects — a narrow provision crafted to address the UC Berkeley case. “I can’t believe that you have to write a bill that says human voices can’t be considered as a component, as per CEQA, to stop housing,” Wicks said. “But here we are. And that’s what we have to do.” Wicks is in favor of comprehensive CEQA reform. But she also believes previous housing bills she and Wiener have authored — which allow certain kinds of housing developments to bypass CEQA in exchange for paying higher salaries and hiring union labor — will make a difference. A measure she authored last year, Assembly Bill 2011, will let builders construct housing in commercially zoned areas with CEQA exemptions as long as they pay workers prevailing wage. Her bill takes effect in July. “I still think there’s a lot of different debate around it,” Wicks said of CEQA “I think there’s more willingness now by lawmakers and others to say we need reforms, which is good. And I think we’re on the precipice of what those are going to be.” A different bill from Assemblyman Phil Ting, D-San Francisco, would not directly amend the law. But Assembly Bill 1633 would specify that withholding CEQA clearance for a housing project that is legally entitled to approval is a violation of state law. Ting authored the bill in response to a San Francisco decision to deny two infill developments downtown. “We’re in a housing crisis,” Ting said. “I think we want to make it as easy to build housing as possible. And we want to continue to make sure that there is local review, local accountability. But at the same time, we’ve seen local governments all across the state kill housing for any number of different reasons. And it’s really making our state unaffordable.”

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LOS ANGELES (AP) — Democratic Mayor Karen Bass, who was elected in November after promising to take on the city’s out-of-control homeless crisis, announced Monday she would recommend spending what she called a record $1.3 billion next year to get unhoused people into shelter and treatment programs.

The funding to be included in the mayor’s upcoming budget could be used in part to buy hotels or motels that would be converted to housing, while the city combs through its inventory of properties for those that could be used for sheltering homeless people. The former congresswoman’s remarks, in an annual address to City Council on the state of the city, came roughly four months into her first term.

Bass added that the budget also would include funds for substance abuse treatment beds for the unhoused, but she did not specify how many. And her signature program, dubbed Inside Safe that offers homeless people motel rooms and a path to permanent housing with services, has over 1,000 enrollees so far, she said.

Meanwhile, Democratic Gov. Gavin Newsom has promised to deliver 500 units of temporary housing to the city, while the Biden administration has sent the city and county more than $200 million for homeless programs, she added.

“After years of frustration … we can see a clearer path to a new Los Angeles,” Bass said, speaking inside the ornate City Council chambers. And “we have finally dispelled the myth that people do not want to come inside. They do.”

However, Bass added that much work needed to be done. “I cannot declare that the state of our city is where it needs to be,” she said.

Bass’ overall optimism would be expected for a mayor in the early months of a first term, but it also belies looming challenges that could reshape her time in office.

The city has expanded spending on homeless programs for years — then-Mayor Eric Garcetti signed a budget in 2021 with nearly $1 billion in homeless spending — but the unhoused population has continued to increase. Bass’ challenge is in plain sight in just about any neighborhood: homeless people living in trash-strewn encampments or rusty RVs along streets, below underpasses and clustered around freeway exits.

About half the homeless population — totaling over 40,000 citywide — struggles with drug or alcohol addiction, and about a third have serious mental illnesses. Homeless deaths average five a day.

Some economists see a recession coming that could slash city tax revenue at a time when Bass is expanding homeless spending, though opinions are divided on the direction of the economy. A recent report from city Controller Kenneth Mejia outlined a series of other concerns, including the need to investment more in repairing crumbling streets and sidewalks and higher pension costs for retirees that “already consume fully 15% of the city’s general fund budget.” Meanwhile, crime rates have been climbing, including for car thefts and shootings, while the police department has seen its staffing levels drop. Bass warned the number of police officers could drop below 9,000 – a tally not seen since 2002.

Bass said her budget for the year that begins July 1 recommends hiring hundreds of officers, along with a recruitment campaign and incentives for new hires. It also funnels new dollars into a team of social workers and clinical psychologists who could respond to emergency calls when a police officer is not required.

“We know safety goes far beyond lights and sirens,” she said.

Bass, the first Black woman to serve as LA’s mayor who was on President Joe Biden’s short list for vice president, defeated billionaire businessman Rick Caruso in the November election. She anchored her campaign to getting homeless people off the streets and into shelters, reversing spiking crime rates and developing housing that working-class families can afford.

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