California’s housing crisis is a big focus of attention at the State Capitol as studies highlight two elements of the crisis that are inextricably linked—supply and affordability.
The Department of Housing and Community Development estimates that California must build at least 180,000 units a year to keep pace with demand, not accounting for the backlog of approximately 2 million units that has accrued over the last several decades.
The supply shortage has sent home prices and rents soaring, resulting in many individuals and families being priced out of the market and leading to overcrowding, homelessness, substandard housing conditions, and an exodus of Californians to other states.
For every $1,000 increase in a California home, 15,000 buyers are priced out of the market, according to a recent study by the National Association of Home Builders.
Based on pending legislation, lawmakers are concentrating on things like local land use, funding affordable housing, or expedited permit processing.
Local Land Use Decisions
The Legislature will grapple to define the scope of the state’s role in local land use decisions. One of the driving issues in the crisis is the reluctance of local governments to approve new housing projects due to “not in my backyard” (NIMBY) resistance.
Several bills have been introduced to hold local governments accountable for meeting their affordable housing elements. Such bills include SB 167 (Skinner; D-Berkeley) and AB 678 (Bocanegra; D-Pacoima), both supported by the California Chamber of Commerce.
These bills require a local agency to make relevant findings if it denies a housing development, clarify provisions of the Housing Accountability Act (HAA), and impose added penalties on agencies that violate the HAA by failing to make appropriate findings.
Another CalChamber-supported bill, AB 943 (Santiago; D-Los Angeles), seeks to increase the vote required to pass an ordinance that would reduce density or stop development or construction of parcels located less than one mile from a major transit stop, in an effort to limit the NIMBY effect.
AB 1397 (Low; D-Campbell) further attempts to ensure that sites contained in a local government’s housing element can realistically be developed to meet the locality’s housing needs by requiring that such sites have sufficient infrastructure available to support housing development.
Funding Affordable Housing
Another focus is funding for state subsidies to develop affordable housing. The two bills getting the most attention are:
Other proposed funding methods include taxes:
Both these tax bills have been identified as job killers and have not moved through the legislative process at this juncture.
While the state places significant focus on funding, according to the Legislative Analyst’s Office report, it would have to raise upwards of $250 billion to subsidize itself out of the housing crisis—a feat that cannot be accomplished.
Several bills aim to streamline permit processing, which is much needed to stimulate development; however, the bills’ limitations or prevailing wage requirements make them unlikely to have much impact on the ground. Other bills attempt to relax rules for granny flats (accessory dwelling units) and home additions.
Fortunately, three “wrong way” bills have been taken out of the equation.
Three potential key factors in addressing the housing crisis that do not appear to be getting much attention are the potential for Proposition 13 property tax and CEQA reform, and revival of some version of California’s redevelopment agencies.
Although there is no silver bullet to tackle the housing crisis, the Legislature will need to consider all available and possible avenues to increase supply to address the state’s housing crisis—the stimulation of actual construction being of the utmost importance.
Louinda V. Lacey presents a recap of housing bills at the CalChamber Capitol Summit.
The California Chamber of Commerce is reminding employers with 10 or more employees that they are required to electronically submit employment tax returns, wage reports, and payroll tax deposits to the Employment Development Department (EDD).
The requirement began January 1 for employers with 10 or more employees. All remaining employers are required to begin reporting and paying electronically with their 2018 payroll or as soon as they report having 10 or more employees, whichever happens first.
Unemployment Insurance and Electronic Reporting
AB 1245 (Cooley; D-Rancho Cordova, Statutes of 2015) requires electronic reporting for unemployment insurance reports submitted to the EDD. It also requires employers to remit contributions for unemployment insurance taxes by electronic funds transfer.
Any employer required under existing law to electronically submit wage reports and/or electronic funds transfer to the EDD remains subject to those requirements. For more information, visit FAQs – E-file and E-pay Mandate for Employers.
The EDD encourages employers to enroll in e-Services for Business to meet the requirement.
For more information about the e-file and e-pay mandate, please visit: www.edd.ca.gov/EfileMandate
Benefits of Electronic Filing and Payments
File and Pay Electronically with e-Services for Business
Employers can use e-Services for Business to comply with the e-file and e-pay mandate. e-Services for Business is a fast, easy, and secure way to manage employer payroll tax accounts online. With e-Services for Business, employers can:
This mandate contains a waiver provision for employers who are unable to electronically submit employment tax returns, wage reports, and payroll tax deposits.
The EDD began accepting waiver requests from employers in July 2016. To request a waiver, employers must complete and submit the E-file and E-pay Mandate Waiver Request (DE 1245W).
Here are the ways to obtain a DE 1245W:
Waiver requests can be submitted by mail or fax:
Employment Development Department
Document and Information Management Center
P.O. Box 989779
West Sacramento, CA 95798-9779
Fax: (916) 255-1181
Employers will be notified by mail if their waiver is approved or denied. An approved waiver will be valid for one year. Upon the expiration of the approval period, an employer must start to electronically file and pay, or submit a new waiver request to avoid a noncompliance penalty.
Penalties for Not Complying with the E-file and E-pay Mandate
Penalties will be incurred for noncompliance with this mandate. To avoid the penalties, enroll in e-Services for Business.
The California Chamber of Commerce-supported California WaterFix project has achieved the next crucial milestone on the road to securing the state’s future water supplies.
The long-awaited plan to fix the state’s aging water distribution system received approval from the state Department of Water Resources—a Notice of Determination (NOD)—which is the final approval needed at the state level under the California Environmental Quality Act.
In June the federal procedural step was met when the biological opinions (BiOps) from federal agencies responsible for protecting species listed under the federal Endangered Species Act (ESA) signed off. After extensive environmental reviews that started under the Obama administration, the new BiOps released June 26 from the National Marine Fisheries Service and the U.S. Fish and Wildlife Service found the construction and operations of WaterFix would not jeopardize the future existence of ESA-listed species.
Over the last six months, critical strides have been made in moving WaterFix forward, including the issuance of the final Environmental Impact Report (EIR) on December 22, 2016.
The exhaustive review process for California WaterFix reflects nearly a decade of scientific and public analysis, including nearly a year of public review of the EIR, 600 public meetings throughout the state, and responses and revisions based on more than 40,000 public comments, concluding that WaterFix is the only viable plan to protect the state’s water supply and the environment.
As WaterFix moves toward implementation, rigorous and continuing assessments of habitat and wildlife standards are expected.
Two-thirds of California homes, farms, and businesses depend on water that flows through an aging distribution system to regions across the state.
The California WaterFix will address the severe vulnerability in the state’s water infrastructure and secure local water supplies. Outdated, dirt levees would be replaced with a modern water pipeline built to withstand earthquakes and other natural disasters. Natural water flows would be restored to support the surrounding environments. The plan is critical for many California communities and the state’s economy.
The CalChamber supports the WaterFix as part of the Californians for Water Security coalition of more than 12,000 California citizens and more than 180 organizations representing business leaders, labor, family farmers, local governments, water experts, environmentalists, public safety officials, infrastructure groups, taxpayer associations and others.
For more information on the California Water Fix and coalition, visit www.watersecurityca.com
One of the things keeping state legislators busy in Sacramento right now is a shortsighted attempt to impose on California small businesses a new, one-size-fits-all mandated leave program that threatens their ability to stay in business.
SB 63 would impose a new unmanageable mandate on small business. The bill would dictate another leave program over and above the existing pregnancy disability leave for new parents.
Small business owners want to be sensitive to the needs of new parents. But with limited resources and limited flexibility in managing their workforce, the best way for employers to meet the needs of new parents beyond what is already required in statute for pregnancy disability leave is to work out a mutually agreeable solution. This proposal is unworkable because there is no flexibility.
The cookie-cutter approach required under SB 63 would not adequately take into account the fact that in order to be profitable, a business must be responsive to its clients. The situation SB 63 would create could make this impossible.
Very troubling is the fact that the proposal would allow employees to sue their boss if the employer could not grant leave on the employee’s terms. SB 63 would put the employer in an untenable position of choosing between the threat of litigation by trial lawyers or meeting its customers’ needs.
Veto of Similar Bill
Last year, Governor Edmund G. Brown Jr. vetoed a measure that was nearly identical to SB 63, saying, “I am concerned, however, about the impact of this leave particularly on small businesses and the potential liability that could result.”
Yet the bill was reintroduced again this year without any sensitivity to either the governor’s or small businesses’ concerns. The threat of litigation under this proposal is significant. Any claim that the employer denied, interfered with, discouraged, retaliated or attempted to do any of these actions with regard to the employee’s 12-week leave could expose the employer to compensatory damages, injunctive relief, declaratory relief, punitive damages and attorney’s fees.
A 2015 study by insurance provider Hiscox regarding the cost of comparative employee lawsuits estimated that the cost for a small employer to defend and settle a single plaintiff claim was approximately $125,000. This amount is without regard to the merit of the claim and could easily put a small employer completely out of business.
The size of the employer to whom SB 63’s mandate would apply also contributes to the bill’s overreach. The practical reality of how the policy would need to be implemented makes the measure particularly onerous. While the bill purports to apply only to businesses with 20-50 employees within a 75-mile radius, it does not take into account the impact on individual locations.
Consider a scenario where a business’s individual location employs five people and three are out on mandated protected leave programs. The inflexibility of the bill means there is no opportunity to work out a mutually agreeable arrangement for the leave to make sure both the needs of the employee and employer are met.
Currently, small employers have the ability to balance the parental needs of their employees and customers, without the interference of state law. Employers can work with their employees to determine the amount of leave needed in consideration with other employees who may be out on leave as well, and how that leave can be provided while still making sure the business’s needs are addressed.
After determining an appropriate leave schedule, employees also can access and obtain wage replacement while on leave through California’s Paid Family Leave program. SB 63 eliminates this flexibility as it mandates the leave instead of allowing the employer and employee to determine a mutually agreeable arrangement.
Most small businesses do not have a dedicated human resource officer who can monitor and juggle all the various leave programs available to employees nor can small businesses absorb workload with numerous employees in one location out on simultaneous leaves. This proposal ignores the limited resources of a small business.
Proponents often emphasize the idea that SB 63 wouldn’t “cost” employers anything because it deals with “unpaid leave.” What they forget to mention is that small businesses or companies who deal with very specialized products or services cannot simply hire a temp to do the job necessary to stay profitable.
Also, under the proposal, employers are required to continue to maintain and pay for the absent employee’s health coverage during his or her leave. Additionally, the employer must either pay other employees overtime to cover the duties of the individual on leave or hire a temp, if possible, at a premium price to cover during the absence.
California is already recognized by the National Conference of State Legislatures as one of the most family-friendly states given its list of programs and protected leaves of absence, including paid sick days, school activities leave, kin care, paid family leave program and pregnancy disability leave—all of which apply to small business. This list is in addition to the leaves of absence required at the federal level.
Leave policies like the one proposed in SB 63 can overtake and strain small business employers who, ironically, are needed by families to provide the jobs, paychecks and benefits that will allow them to support their families in the future.
With strong support from the California Chamber of Commerce and the business community, the Legislature yesterday approved AB 398 (E. Garcia; D-Coachella), which will extend the cap-and-trade program, which provides the least costly path to achieving the state’s ambitious climate goals.
“The Legislature achieved a bipartisan solution that will reduce the cost of compliance with the state’s ambitious greenhouse gas reductions,” said Allan Zaremberg, president and CEO of CalChamber.
The Senate approved AB 398, 28-12, followed by Assembly approval by a 55-21 margin. The bill required a two-thirds supermajority because the cap-and-trade auction is a tax.
“Republicans and Democrats set aside their differences, came together and took courageous action,” Governor Brown said following the passage of the cap-and-trade legislation. “That’s what good government looks like.”
Last year California passed SB 32 (Pavley; D-Agoura Hills; Chapter 249), which adopted the most ambitious greenhouse gas (GHG) reduction goal in this or any other country.
CalChamber and the business community supported AB 398 because it will make cap-and-trade the primary tool to meet the state’s goal of reducing carbon emissions by 40% below 1990 levels by 2030. AB 398 also includes cost containment measures that will help mitigate some of the impacts on consumers and the economy, including a price ceiling, audited offsets that reduce costs and spur innovation, industry assistance to mitigate loss of jobs and emissions to other states, and reduced direct command-and-control measures by state and local regulators.
CalChamber Announces Support for Accountability Measure, ACA 1
Yesterday, CalChamber also announced support for ACA 1 (Mayes; R-Yucca Valley), an important element of the overall cap-and-trade package to ensure accountability over the spending of revenues from the cap-and-trade auction. The measure also passed the Legislature with bipartisan support on July 17.
The recently passed cap-and-trade extension measure, AB 398, will authorize the collection of billions of dollars in new revenues for the state’s climate change and other programs.
ACA 1, a constitutional amendment, will establish a legislative “check-up” in 2024, providing an opportunity to review (1) expenditures from the fund since 2020; (2) the commitment to regulatory and tax reforms enacted in AB 398; and (3) the effectiveness of the overall state program in reducing GHGs and minimizing the effect on the California economy.
The Legislature will enforce this check-up by requiring that any appropriations in 2024 be approved by a two-thirds supermajority of the Legislature.
Recent legislation to mandate economy-wide GHG reductions will have profound effects on the California economy and on individual businesses. ACA 1 will provide the Legislature with a mid-term opportunity to gauge the overall effectiveness of this ambitious program.
ACA 1 passed the Senate by a 27-13 margin, followed by Assembly approval by a 59-11 margin. This measure also required a two-thirds legislative supermajority because it proposes a constitutional amendment, which will be voted on by the people in June of 2018.