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State May Scale Down Its New Home Loan Program Designed to Assist First-Time Homebuyers

In this economy, who has enough money for a down payment on a house? Despite a projected $25 billion budget deficit, the state of California does. At least for now. The California Housing Finance Agency is poised to launch a scaled-down version of its new shared equity home loan program on March 27. With the Dream for All program, the state plans to provide $300 million worth of down payments for an estimated 2,300 first-time homebuyers.

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The complicated program involves the state paying some or all of the upfront costs for buying a home -- the down payment, for instance -- in exchange for a share in the home's value when it is sold, refinanced or transferred.
The complicated program involves the state paying some or all of the upfront costs for buying a home -- the down payment, for instance -- in exchange for a share in the home's value when it is sold, refinanced or transferred.

By Alejandro Lazo
CalMatters

In this economy, who has enough money for a down payment on a house?

Despite a projected $25 billion budget deficit, the state of California does. At least for now.

The California Housing Finance Agency is poised to launch a scaled-down version of its new shared equity home loan program on March 27. With the Dream for All program, the state plans to provide $300 million worth of down payments for an estimated 2,300 first-time homebuyers.

The complicated program involves the state paying some or all of the upfront costs for buying a home — the down payment, for instance — in exchange for a share in the home’s value when it is sold, refinanced or transferred.

If the home appreciates in value, those gains to the state would then be used to fund the next borrowers — a little for the seller; a little for the next aspiring buyer.

Everybody wins — as long as prices go up.

The trouble is that home prices have been declining in the state for months, even as higher mortgage interest rates have made monthly mortgage payments more expensive.

A potential economic downturn looms as well, as the Federal Reserve weighs raising borrowing costs even further as soon as today.

And California’s tech industry is taking a beating and laying off workers, contributing to a decline in personal incomes. Income taxes are the state’s biggest revenue source.

Given the uncertainty, Gov. Gavin Newsom in January proposed a significantly smaller version of the 10-year, $10 billion program originally envisioned by Senate President Pro Tem Toni Atkins, a Democrat from San Diego. In his January budget, Newsom proposed spending an initial $300 million on the program, a cut from the $500 million compromise signed last year.

Optimism and expectations

The size and scope of the Dream for All program will likely be a subject of negotiations between Newsom and the overwhelmingly Democratic Legislature this year. The governor is expected to offer a revised state spending plan and a new financial forecast in May. Lawmakers must pass a balanced budget by June 15 in order to get paid.

The proposed cut “will not impact the Administration’s commitment or timeline for implementing the program,” Newsom’s Department of Finance said in January.

In a Feb. 13 email to CalMatters, Christopher Woods, budget director for Atkins, said her office will seek more funding for the program.

“The Governor ‘proposing’ to pull back some funds has very little to do with what will actually happen,” Woods wrote to CalMatters, in response to earlier coverage of the program. “No one should expect the program to be cut, and we should all fully expect additional funds — perhaps as much as $1 billion — to be allocated in the 2023-24 Budget Act.”

“With interest rates rising, the program is needed more than ever … and there are several innovative ways to fund the program,” Woods wrote.

Woods declined to answer follow-up questions for this story.

Atkins, who championed the equity sharing program last year, has said the Dream for All program is a priority. She said in a recent statement she isn’t giving up on getting more money for it.

“Our state is about to launch a program that will help change people’s lives for the better, and make the dream of homeownership a reality,” she said. “While existing funding for the California Dream for All is a great first step, we are working to allocate additional funding in the upcoming state budget — with the ultimate goal of providing $1 billion per year — to help even more families set the foundation for building generational wealth.”

Falling equity

The uncertainty in the economy and housing market has been a subject of discussion at CalHFA for months, as officials and political appointees seek to launch a program meant to take advantage of rising home prices at the very moment home equity is falling.

State officials said buyers positioned to hold onto a property for the long-term are those best suited for the program when home prices are falling.

In a presentation to its board of directors in January, CalHFA officials also said the agency is planning for a program with a potentially “very short life cycle.”

“Having lived the dream of buying a house in Los Angeles in 1989, when the market peaked, and then selling it at a loss almost a decade later, I can appreciate that the market doesn’t always go up,” Jim Cervantes, CalHFA’s chair, said during that Jan. 19 meeting.

“Disclosures, whatever we can do to mitigate — or rather, have prospective buyers understand what they’re getting into — would be extremely valuable, because no one’s a good market timer.”

California home prices, already rising for years, saw big gains during the pandemic, as mortgage interest rates hit historic lows and families sought more space for their remote work set-ups to practice social distancing.

The median price of a previously-owned, single-family home in California, as tracked by the California Association of Realtors, increased 47% from March 2020 to May 2022, when it peaked at $900,170.

That same month the Federal Reserve, in order to tackle inflation, began its most aggressive interest rate hikes in years driving up mortgage costs for consumers.

Since May 2022, the state’s median home price has fallen 16.5% to hit $751,330 in January.

Market change

Despite the decline in home prices, monthly mortgage costs continue to make the state’s housing market more unaffordable than at nearly any point in the last 15 years, particularly for lower- and middle-class families. Only 17% of families in California could afford a median-priced single family home at the end of last year, according to the Realtors group.

Given the rapid market changes, Tiena Johnson Hall, CalHFA’s executive director, called the governor’s reductions in Dream for All funding prudent at CalHFA’s January meeting. “There’s still a lot of room for (home) values to continue to decrease, and that is what we expect to see,” she said.

In February, the state’s nonpartisan legislative analyst projected a revised $25 billion deficit in next year’s state budget. Since then, job growth nationally and in California has remained strong, except for layoffs in the tech sector.

The full details of the Dream for All program — for instance, which lenders will offer the shared equity loans to borrowers — are not yet available from CalHFA.

And loans will not be immediately available to consumers when the program launches this month. Lenders will need a month to six weeks to roll out the loans and begin marketing them to consumers, said Ellen Martin, a CalHFA official tasked with designing the program.

“We do know that there’s a lot of excitement out there,” Martin told CalMatters in a recent interview.

How it will work

Some details have been revealed in CalHFA board meetings, public hearings and a report to the state Legislature. Here are some of the program’s key components.

  • The loans will not be available for all Californians. Only those who earn 150% or less of the median income of others in their county qualify. Those income limits vary by county, with $300,000 being the cut-off in pricey Santa Clara and San Francisco counties, but $159,000 for many inland counties such as Fresno and Merced.
  • The loans will cover as much as 20% of a home purchase. Whenever a home is sold, transferred or refinanced, a borrower will owe the state the original amount the state invested, plus a percentage of the home’s increase in value. If the original loan was 20 percent of a home’s value, the seller would owe the state the original loan plus 20 percent of its increased value, though that amount would be capped at 250% of the original loan amount.
  • A social equity feature of the program will be included for those who earn as much as 80% of the area median income. They will get to keep more of their equity when they sell, refinance or transfer their properties than others with higher incomes. Also about 10% of the initial state funds, or $30 million, will be reserved for those lower-income borrowers.
  • The loans can be used to fund down payments and closing costs, including interest rate buydowns.
  • Given the complexity of the program, borrowers will be required to complete a homebuyer education course.

Advocates’ concerns

The complexity of the program has some consumer advocates worried.

Lisa Sitkin, a senior staff attorney with the National Housing Law Project, said it would be wise for the agency to ensure borrowers receive periodic notices about the loan’s atypical details.

“As time goes by, people tend to forget and treat it as a normal loan, and I think it is useful for people planning to be reminded,” said Sitkin, a member of a working group advising CalHFA on the program.

A proposal to sell the loans as mortgage-backed securities also has her worried. California officials are exploring the idea of pooling the shared equity loans into securities and selling them to investors, to help provide additional money for other borrowers.

Many Wall Street financial institutions bundled often poor-quality mortgage loans into securities during real estate’s boom years and sold them to major investors. But during the years of downturn, getting help to homeowners was complicated by the difficulties identifying who exactly owned these loans.

“If they are sold into private, securitized trusts there is a lack of transparency about who owns your debt, and a lack of information about options if there are problems,” Sitkins said. “I really want to be sure that there are guardrails and protections for the borrowers.”

Consumers are cautious

As CalHFA officials were designing the program last year, they held several listening sessions online, taking comments from the public. Jake Lawrence, a 41-year-old cannabis entrepreneur in Willits who also runs a nonprofit, said he liked what he heard.

“I’m very interested. The problem we face is that there’s such a flux in what’s going on,” Lawrence said. “We’re in the middle of a housing market bust, so we’re gonna watch prices tumble for a minute.”

What’s more, one of the county’s biggest industries, the marijuana trade, has been hit hard by declines in cannabis prices. “It’s beyond suffering,” Lawrence said.

Lawrence also wondered how the state will calculate equity if he makes improvements to a home.

Despite his questions, he is considering the idea.

“It doesn’t hurt my feelings to share equity with someone who invests in me,” he said of the state. “And anybody that understands any kind of financial literacy should understand an investor should be able to have their expected ROI (return on investment). For me, I have zero issue with the idea.”

Copyright © 2023 Bay City News, Inc.  All rights reserved.  Republication, rebroadcast or redistribution without the express written consent of Bay City News, Inc. is prohibited. Bay City News is a 24/7 news service covering the greater Bay Area.

Activism

Losing Income Chief Cause of Homelessness, UCSF Study Finds

Losing income is the No. 1 reason Californians end up homeless — and the vast majority of them say a subsidy of as little as $300 a month could have kept them off the streets. That’s according to a new study out of UC San Francisco that provides the most comprehensive look yet at California’s homeless crisis.

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The study's authors say the findings highlight the idea that money, more than addiction, mental health, poor decisions or other factors, is the main cause of -- and potential solution to -- homelessness.
The study's authors say the findings highlight the idea that money, more than addiction, mental health, poor decisions or other factors, is the main cause of -- and potential solution to -- homelessness.

By Marisa Kendall
CalMatters

Losing income is the No. 1 reason Californians end up homeless — and the vast majority of them say a subsidy of as little as $300 a month could have kept them off the streets.

That’s according to a new study out of UC San Francisco that provides the most comprehensive look yet at California’s homeless crisis.

In the six months prior to becoming homeless, the Californians surveyed were making a median income of just $960 a month. The median rent for a two-bedroom apartment in California is nearly three times that, according to Zillow. And though survey participants listed a myriad of reasons why they lost their homes, more people cited a loss of, or reduction in, income than anything else.

The study’s authors say the findings highlight the idea that money, more than addiction, mental health, poor decisions or other factors, is the main cause of — and potential solution to — homelessness.

“I think it’s really important to note how desperately poor people are, and how much it is their poverty and the high housing costs that are leading to this crisis,” said Margot Kushel, a physician who directs the UCSF Benioff Homelessness and Housing Initiative, which conducted the study.

Already the study — which the authors say is the most representative homelessness survey conducted in the U.S. since the mid-1990s — has drawn attention from high places.

The initial idea for the survey came from California Health and Human Services Secretary Mark Ghaly, Kushel said. Ghaly’s office has been involved along the way, though the state didn’t fund the research.

“As we drive toward addressing the health and housing needs of Californian’s experiencing homelessness, this study reinforces the importance of comprehensive and integrated supports,” Ghaly said in a news release. “California is taking bold steps to address unmet needs for physical and behavioral health services, to create a range of housing options that are safe and stable, and to meet people where they are at. We are grateful for the voices of those who participated in this study, as they will help guide our approach.”

The survey comes as local governments press Gov. Gavin Newsom to distribute ongoing funding to fight homelessness, arguing the one-time grants he has doled out so far don’t allow them to make lasting progress. Newsom has resisted that kind of multi-year commitment, although his administration has allocated nearly $21 billion toward homelessness and housing since he took office.

The UCSF team surveyed 3,198 unhoused adults throughout California between October 2021 and November 2022, and conducted in-depth interviews with 365 of those participants.

 

What drives California’s homeless crisis?

When asked why they left their last home, respondents cited conflict between roommates, not wanting to impose on the person or people they were living with, domestic violence, illness and breakups.

A loss of or reduction in income was the most common response, with 12% of people saying that’s what caused their homelessness. Just 4% blamed their own substance use or drinking.

All of those varied factors that led people to lose their homes often have underlying roots in economic instability, said Jennifer Wolch, a professor emerita at UC Berkeley specializing in homelessness.

“This lack of income and severe instability and housing precarity, it has spillover effects on people’s relationships, their use of alcohol and other kinds of problematic substances,” she said. “It impinges on their health status.”

The story told by one survey participant, identified as Carlos, shows how someone can gradually descend into homelessness. He had to stop working after falling off a ladder and injuring his spine, but wasn’t eligible for workers’ compensation because he had been paid in cash. Unable to afford his rent, he moved out of his apartment and rented a room in a new place. He soon left due to conflicts with his roommates. He then briefly lived with his sister’s family, until they faced COVID-related job loss and he moved out to avoid becoming a burden. He lived in his truck until it was towed due to unpaid parking tickets. Now, he lives in an encampment in a park.

Most of the homeless Californians surveyed said a relatively small amount of cash would have saved them from the street. Seventy percent said a monthly rental subsidy of $300-$500 would have kept them from becoming homeless, while 82% believed a one-time payment of between $5,000 and $10,000 would have worked.

Jennifer Loving, CEO of Santa Clara County nonprofit Destination: Home, hopes the study’s findings will help debunk what she says is a common myth that people are homeless because of their individual failings, rather than because rents are outpacing wages. She’d like to see California’s leaders take notice.

“Hopefully it will inform a statewide strategy,” she said, “because we need a statewide strategy to be able to manage how we are addressing homelessness.”

 

Another California homeless myth

Another myth the study attempts to dispel is that most homeless people flock to California cities because of warm weather, liberal policies and generous services. In reality, 90% of the people surveyed said they were last housed in California, and 75% live in the same county as where they lost their housing.

That’s important to remember, Wolch said, because it’s easy to disregard unhoused people who we think “aren’t from here” and haven’t paid taxes here.

“People who are homeless are your neighbors,” she said. “People who are homeless live in the same city that you do and they possibly have lived there longer than you have.”

The survey painted a bleak picture of the traumas and tragedies that made survey participants more vulnerable to ending up on the street. People reported growing up in depressed communities with few job opportunities, where they experienced exploitation and discrimination. Nearly three-quarters said they had experienced physical violence during their lives, and one-quarter had experienced sexual violence.

One in three people surveyed attempted suicide at some point.

Mental health and addiction also were a common undercurrent in the lives of many of the unhoused people surveyed, which is to be expected in a population that has suffered so much trauma, according to the researchers. Two-thirds of people reported experiencing mental health symptoms — including depression, anxiety or hallucinations — in the past 30 days. Homelessness and all it entails, including lack of sleep, violence and difficulty accessing medication, exacerbated their symptoms, many people said.

About one-third of people reported using drugs three or more times a week — mostly methamphetamines. And 1 in 5 people who reported regular drug or heavy alcohol use said they wanted addiction treatment but couldn’t get it.

 

Jail to homelessness pipeline

The study also emphasizes the relationship between incarceration and homelessness, said Alex Visotzky, senior California Policy Fellow for the National Alliance to End Homelessness.

More than three-quarters of people surveyed had been incarcerated at some point during their life. And in the six months before becoming homeless, 43% were in jail or prison, or were on probation or parole. The vast majority of those who had been incarcerated received no help signing up for housing, healthcare or benefits upon release.

“That drove home for me this point: Incarceration, homelessness and then subsequent criminalization are fueling a really vicious cycle for marginalized people, especially Black and Latino Californians, that’s both causing and prolonging homelessness,” Visotzky said.

 

‘We don’t have enough housing for poor folks’

To solve the homelessness crisis, the main problem California needs to address is the lack of housing that’s affordable for extremely low-income residents, according to the researchers. The state has just 24 affordable and available homes for every 100 extremely low-income households, according to the National Low Income Housing Coalition.

Among the solutions the researchers proposed: expanding vouchers that use federal, state and local dollars to subsidize people’s rent. They also suggested piloting shared housing programs where multiple households live together and split costs, while also providing funds to help people remain with or move in with family or friends.

Kushel hopes the study helps drive public support for these ideas, which in turn will spur politicians to act.

“I hope that it really focuses our efforts on housing, which is the only way out of homelessness,” Kushel said. “It’s almost so obvious it’s hard to speak about. We don’t have enough housing for poor folks.”

The study is available at https://homelessness.ucsf.edu/our-impact/our-studies/california-statewide-study-people-experiencing-homelessness.

Copyright © 2023 Bay City News, Inc.  All rights reserved.  Republication, rebroadcast or redistribution without the express written consent of Bay City News, Inc. is prohibited. Bay City News is a 24/7 news service covering the greater Bay Area.

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‘Godzilla Next Door’: How California Developers Gained New Leverage to Build More Homes

It’s hard to know just how many builder’s remedy projects have been filed across the state. YIMBY Law, a legal advocacy group that sues municipalities for failing to plan for or build enough housing, has a running count on its website of 46 projects, though its founder, Sonja Trauss, admits that it’s an imperfect tally.

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Over the last two years, local governments across California have had to cobble together new housing plans that meet a statewide goal of 2.5 million new units by 2030.
Over the last two years, local governments across California have had to cobble together new housing plans that meet a statewide goal of 2.5 million new units by 2030.

By Ben Christopher
CalMatters

Late last fall, a Southern California developer dropped more than a dozen mammoth building proposals on the city of Santa Monica that were all but designed to get attention.

The numbers behind WS Communities’s salvo of proposals were dizzying: 14 residential highrises with a combined 4,260 units dotting the beachside city, including three buildings reaching 18 stories. All of the towers were bigger, denser and higher than anything permitted under the city’s zoning code.

City Councilmember Phil Brock attended a town hall shortly after the announcement and got an earful. A few of the highlights: “Godzilla next door,” “a monster in our midst” and “we’re going to never see the sun again.”

“‘Concerned’ would be putting it mildly,” Brock said of the vibe among the attendees. “A lot of them were freaked.”

As it turns out, freaking locals out may have been the point.

WS Communities put forward its not-so-modest proposal at a moment when it had extreme leverage over the city thanks to a new interpretation of a 33-year-old housing law. Santa Monica’s state-required housing plan had expired and its new plan had yet to be approved. According to the law, in that non-compliance window, developers can exploit the so-called builder’s remedy, in which they can build as much as they want wherever they want so long as at least 20% of the proposed units are set aside for lower income residents.

Over the last two years, local governments across California have had to cobble together new housing plans that meet a statewide goal of 2.5 million new units by 2030. At last count, 227 jurisdictions — home to nearly 12 million Californians, or about a third of the state population — still haven’t had their plans certified by state housing regulators, potentially opening them up to builder’s remedy projects.

That gives developers a valuable new bargaining chip.

WS Communities used its advantage in Santa Monica to broker a deal in which it agreed to rescind all but one of its 14 builder’s remedy projects in exchange for fast-tracked approval of 10 scaled-down versions.

“The builder’s remedy — the loss of zoning control, the ability of a developer to propose anything, Houston-style, whatever they want, no zoning regulations — that gets people’s attention,” said Dave Rand, the land-use attorney representing the WS Communities. “The builder’s remedy can be a strategic ploy in order to potentially leverage a third way.”

For the developer, the settlement — which still needs a final vote to fully be implemented — is a major win. But this use of a long-dormant law also represents a shift in the politics of housing in California, reflecting a new era of developer empowerment bolstered by the growing caucus of pro-building lawmakers in the Legislature.

“The old games of begging municipalities for a project and reducing the density to get there and kissing the ass of every councilmember and planning official and neighbor — that’s the old way of doing things,” said Rand. “Our spines are stiffening.”

It’s hard to know just how many builder’s remedy projects have been filed across the state. YIMBY Law, a legal advocacy group that sues municipalities for failing to plan for or build enough housing, has a running count on its website of 46 projects, though its founder, Sonja Trauss, admits that it’s an imperfect tally.

Some of the projects, like those in Santa Monica, are towers with hundreds of units. Others are more modest apartment buildings. Whatever the total, Trauss said it represents a significant uptake for a novel legal strategy.

“There were a lot of naysayers who were like ‘it’s too risky,’ ‘nobody knows what’s gonna happen,’ ‘nobody’s gonna do it,’ blah, blah, blah,” she said. “I feel vindicated. You know, people are trying it.”

But counting just the units proposed under the law misses its broader impact, said UC Davis law professor Chris Elmendorf.

Multiple cities rushed forward their housing plans this year, with city attorneys, city planners and councilmembers warning that failure to do so before a state-imposed deadline could invite a building free-for-all.

“All the action is in negotiation in the shadow of the law,” said Elmendorf. The law “may result in a lot of other projects getting permitted that never would have been approved because the developer had this negotiating chip.”

Rediscovering the California builder’s remedy

If it’s possible for someone to unearth a forgotten law, Elmendorf can rightly claim to have excavated the builder’s remedy.

The Legislature added the provision to the government code in 1990, but no one used it for decades. In the one case Elmendorf found where someone tried — a homeowner in Albany, just north of Berkeley, who wanted to build a unit in his backyard in 1991 without adding a parking spot — local planners shot down the would-be builder.

Elmendorf stumbled upon the long-ignored policy 28 years later while researching East Coast laws that let developers circumvent zoning restrictions in cities short on affordable housing.

He started tweeting about it. He even dubbed the California law the “builder’s remedy,” borrowing the coinage from Massachusetts.

“I think it’s fair to say that people in California had forgotten about the builder’s remedy almost completely until I started asking about it on Twitter,” he said. ” I think those twitter threads led some people to say, ‘huh.'”

Among those who noticed: staff at the state Housing and Community Development department who began listing the “remedy” as a possible consequence of failing to plan for enough housing.

Why was the builder’s remedy largely forgotten? The text of the law is complicated and it’s only relevant once every eight years, when cities and counties are required to put together their housing plan. Plus, though it allows developers to ignore a city’s zoning code, it’s not clear that it exempts them from extensive environmental review, making the cost savings of using it uncertain.

But more importantly, up until recently, invoking the builder’s remedy — the regulatory equivalent of a declaration of war — was bad for business.

Historically, local governments have had sweeping discretion over what gets built within their borders, where and under what terms and conditions. Developers and their lawyers hoping to succeed in such a climate had to excel at what one land use attorney dubbed the art of “creative groveling.”

But in recent years, as the state’s housing shortage and resulting affordability crisis have grown more acute, lawmakers have passed a series of bills to take away some of that local control. In many cases, cities and counties are now required to approve certain types of housing, like duplexes, subsidized housing apartments and accessory dwelling units, as long as the developer checks the requisite boxes.

That’s all led some developers to rethink their approach to dealing with local governments — one that is less concerned with building bridges and isn’t so afraid to burn a few.

Santa Monica makes a deal

Santa Monica’s city council voted unanimously for the deal with WS Communities early last month — but grudgingly.

In exchange for the developer pulling its original proposals, the city agreed to a streamlined approval process for the new plans. The council also agreed to pass an ordinance to give the developer extra goodies on the 10 remaining projects.

If the city doesn’t pass the ordinance, according to the settlement, WS Communities has the right to revive the builder’s remedy for all 14 towers.

Councilmember Brock, elected in 2020 along with a slate of development-skeptics, was hardly a fan of the deal. But as he saw it, the prospect of a lengthy legal battle that the city’s attorney insisted Santa Monica would lose gave the council little choice. That didn’t make what Brock viewed as a hard-knuckle negotiating tactic any easier to swallow.

“I don’t believe for a minute that they ever planned to build all those projects,” he said.

Councilmember Caroline Torosis, who was elected last fall, laid the blame on the prior council for failing to pass a timely housing plan. Even so, she said the city had no choice but to reclaim control over its own land use from the developer.

“We were put in a difficult situation,” she said. “I think that this was absolutely the best negotiated settlement that we could have reached, but of course, they had leverage.”

Both Scott Walter, the president of WS, and Neil Shekhter, the founder of the parent company, NMS Properties, refused a request to be interviewed through their lawyer, Rand.

But in true property kingpin fashion, WS was able to flip these builder’s remedy proposals into things of even greater value: ironclad plans that it can build out quickly or sell to another developer.

“The builder’s remedy projects were anything but fast and certain,” said Rand. “This has been parlayed into something with absolute certainty and front-of-the-line treatment.”

Affluent California cities fight back

About an hour’s drive northeast of Santa Monica, the foothill suburb of La Canada Flintridge recently rejected a builder’s remedy application.

During a May 1 hearing, Mayor Keith Eich stressed the city was “not denying the project.” Instead, they were denying that the builder’s remedy itself even applied to the city.

The argument: The housing plan the council passed last October complies with state law. California’s Housing and Community Development department rejected that version of the plan and has yet to certify a new one. But La Canada’s city attorney, Adrian Guerra argued at the hearing that the agency’s required changes were minor enough to make the October plan “substantially” compliant.

That’s not how state regulators see it. In March, the housing department sent the city a letter of “technical assistance.”

“A local jurisdiction does not have the authority to determine that its adopted element is in substantial compliance,” the letter reads.

Not so, said Guerra: “The court would make that determination.”

A number of cities across the state have made that argument. Among them are Los Altos Hills and Sonoma. Beverly Hills is already fending off a lawsuit contending that the law applies to that city, though it recently rejected a builder’s remedy project on extensive technical grounds.

It’s a question that’s almost certain to end up in court. A recent California’s Fifth Circuit Court of Appeal ruling offers legal fodder to both sides.

The April opinion ruled against the state housing department’s certification of the City of Clovis’ housing plan. That’s a point for those arguing that the word of state regulators is not inviolate. But the ruling also noted that courts “generally” defer to the state agency unless its decision is “clearly erroneous or unauthorized.”

Down the coast, the City of Huntington Beach isn’t relying on such legal niceties. In March, the city council passed an ordinance banning all builder’s remedy projects under the argument that the law itself is invalid. Days later, the Newsom administration sued the city.

But in Santa Monica, city council members didn’t see much upside in pushing back.

“You can’t just fight a losing battle,” Brock said. “I think anybody who decides they’re gonna be an all star NIMBY is up for failure.”

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CalMatters

A California Law Forced Police to Release Shooting Footage; Now Videos Follow the Same Script

Ken Pritchett clicks his mouse and the logo of a Southern California police department pops up on a computer monitor the width of his shoulders. Another click and the image flips to a three-dimensional map. A glowing orange arrow indicates the direction a man ran as he tried to evade police. “Right here, this is the path he took in the alley,” Pritchett said, switching from the map to a still image highlighting an object in the man’s hand. “Then you can see him turn toward the officers. He wants to die. This is suicide.”

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The law has some exceptions, allowing departments to withhold video if it would endanger the investigation or put a witness at risk. Law enforcement departments often cite those reasons when regularly denying records requests by CalMatters and other news organizations. Of the 36 fatal police shooting cases since July 2021 being tracked by CalMatters, only three have responded with even partial records.
The law has some exceptions, allowing departments to withhold video if it would endanger the investigation or put a witness at risk. Law enforcement departments often cite those reasons when regularly denying records requests by CalMatters and other news organizations. Of the 36 fatal police shooting cases since July 2021 being tracked by CalMatters, only three have responded with even partial records.

By Nigel Duara
CalMatters

Ken Pritchett clicks his mouse and the logo of a Southern California police department pops up on a computer monitor the width of his shoulders. Another click and the image flips to a three-dimensional map. A glowing orange arrow indicates the direction a man ran as he tried to evade police.

“Right here, this is the path he took in the alley,” Pritchett said, switching from the map to a still image highlighting an object in the man’s hand. “Then you can see him turn toward the officers. He wants to die. This is suicide.”

This incident, like all the videos Pritchett produces in his home office, ended in a police shooting. Pritchett has made more than 170 of these for police departments and sheriff’s offices, mostly in California.

The video flips again, this time to the display of a shuddering body camera worn by an officer sprinting down an alley. Commands are yelled, the person being chased lifts an object with his right hand, police fire their weapons, the man falls down.

The video isn’t much different from hundreds of others produced since California passed a law in 2018 mandating police departments release body camera footage within 45 days of any incident when an officer fires a gun or uses force that leads to great bodily injury or death. Like most other critical incident videos released by law enforcement agencies after a shooting, this one is a heavily edited version of the original raw video, created by one of the private contractors that went into business editing police footage after the law went into effect.

Pritchett, who makes more of these videos than any other private contractor in California, asked CalMatters not to disclose the name of the police department in order to preserve their business relationship.

The law has some exceptions, allowing departments to withhold video if it would endanger the investigation or put a witness at risk. Law enforcement departments often cite those reasons when regularly denying records requests by CalMatters and other news organizations. Of the 36 fatal police shooting cases since July 2021 being tracked by CalMatters, only three have responded with even partial records.

Instead, the public and the media must rely on edited presentations that often include a highlighted or circled object in a person’s hand, slowed-down video to show the moments when the person may have pointed the object at police and transcriptions of the body camera’s audio.

They are also the only documentation of a fatal police encounter that the public will see for months, or years, or maybe ever.

Since the advent of cell phone cameras and, later, police-worn body cameras, the public has had detailed access to violent police encounters in a way it never had before. After incidents including the livestream of the aftermath of the Minnesota police shooting of Philando Castile in 2016 and the helicopter footage of the Sacramento police shooting of Stephon Clark in 2018, states including California passed a host of laws aimed at using that technology to better judge the actions of officers.

Critics allege that the problem with the condensed, heavily-edited version of the body camera footage released by law enforcement agencies is that they shape public opinion about a person’s death or injury at the hands of the police long before the department in question releases all the facts in the case or the full, raw video.

They also point to particular incidents in which a department erased or failed to transcribe audio critical to understanding the case, did not make clear which officers fired their gun or cut the video at a critical moment. In one case, Los Angeles journalist Sahra Sulaiman has taken apart multiple videos released by the Los Angeles Police Department and found irregularities that she asserts are deliberate manipulations meant to justify officers’ actions. In response, she said the LAPD ignores her or directs her back to the video.

“To only release an edited version is not what we think is called for from the defendant’s point of view,” said Stephen Munkelt, executive director of California Attorneys for Criminal Justice, a Sacramento-based association of criminal defense attorneys. “If they’re editing things out, it’s probably the stuff that’s beneficial to the defendant.”

He also worries about the impact of the release of the body camera footage on a potential jury pool. Still, Munkelt said, some video is better than none, if only because defense attorneys have more grounds to ask a judge for the full, unedited video.

Former journalist working with California police

In response to the 2018 body camera law, a cottage industry has emerged to produce these videos, though several larger law enforcement agencies produce theirs in-house. Pritchett works for Critical Incident Video, founded, not coincidentally, when the law went into effect in 2019. According to emails obtained by The Appeal and The Vallejo Sun, Critical Incident Video charges $5,000 per video.

Pritchett is a former journalist and insists that he applies the same scrutiny and objectivity to these videos, paid for by police departments, that he did in his former life as a television reporter and anchor in Fresno and Sacramento.

“Virtually every article we’ve seen about what we do, somebody accuses us of spinning for the police department, but I have yet to ever see an example put forward that shows that we’re spinning anything,” he said. “And if they did, tell me, for God’s sakes. My entire goal is to make these straight, spin-free.”

Not every department uses Critical Incident Video, but for the dozens that do, Pritchett’s style is unmistakable: first, the map, then usually a transcription of 911 calls, then the body camera video. Pritchett said that, if he’s done his job well, he can help head off conflict between a law enforcement agency and the public.

“I think the main issue now is people come jumping to conclusions about what happened before they’ve seen the video, which is why we recommend that (law enforcement) always get that video out there as quickly as possible,” Pritchett said. “We have done quite a few videos where there was a social media public narrative about something that happened, and the video clearly shows that that didn’t happen.”

Pritchett said that, before he made his first video, he learned by watching the videos that departments produced internally. He did not like what he saw.

“Basically, what we saw was the LAPD’s videos, and I didn’t like them … I probably shouldn’t have said that,” he said with a laugh. “But I remember seeing mugshots. I remember seeing information that was not really relevant (like) previous charges. I remember thinking the whole (video) that someone had a gun, until they told me at the end that it was actually not a gun.”

So, he has rules. He will not refer to the person who was shot as a “suspect.” He will not use mugshots of the person who was shot. He will not display previous charges or convictions of the person shot, even if the department asks him to — something that he said cost his company a client when the police department insisted on including it. If an object was later found to be anything other than a gun, he demands that the departments tell viewers that up front.

Critical Incident Video’s process usually begins hours after a shooting. The police department or sheriff’s office will call Pritchett and send the raw footage, along with any witness video the agency has obtained. He combs through it, picking out the parts he believes are important.

He reads the initial police press release — “which is often incorrect,” he said — then reads any related media reports. He transcribes the audio of the body camera, creates a 3D map showing where the encounter began and writes a prospective script if one is requested, then tells the police to put it in their own words.

Pritchett said he pushes back against departments. Sometimes in a press release, agencies will say they immediately rendered first aid to a person they shot, but the video shows a delay.

“Sometimes that becomes a point of contention,” Pritchett said. “I’m looking at the video and say, well, how do you define immediate? We’ll change that. Like I said, we have to fight.”

The California Police Chiefs Association and the California State Sheriffs’ Association did not return voicemails from CalMatters for this story.

Assemblymember Phil Ting, a San Francisco Democrat who wrote the 2018 body camera law, said he has no problem with the condensed videos provided by law enforcement agencies after a shooting, because they’re much better than what was made public before the law.

“After the legislation was passed into law, we’ve seen so much more released and so much more video,” Ting said. “If a department is articulating why they acted in a particular way, that’s a good thing. They work for the public and we want accountability.”

Michele Hanisee, president of the Los Angeles Association of Deputy District Attorneys, said the release of the videos is a balancing act, forcing prosecutors to weigh the benefit of transparency against the potential harm of prejudicing the jury pool.

“While transparency promotes public confidence in the conduct of law enforcement,” Hanisee wrote in an email to CalMatters, “the pre-trial release of evidence has the potential to influence the testimony of witnesses, create bias in potential jurors, or create an environment that could justify a change in venue.”

Replaying LAPD shooting videos

Three hundred and sixty miles south of Pritchett’s Sacramento home office, Sulaiman, a communities editor for StreetsBlog Los Angeles, is in front of her own monitor, squeezed into the two-foot patch of carpet between her couch and a knee-high table on which her laptop is perched.

Her eyes, reflected back in the dark blue of a police uniform on screen, dart back and forth between the video released by the LAPD and the time code. She rewinds, presses play, pauses the video, rewinds again.

“Did you hear it?” she asks, then presses play on the video from December 2021. “Listen again.”

On screen is Margarito Lopez, a developmentally disabled 22-year-old sitting on a set of short stairs, holding a meat cleaver, bathed in blue and red light. Several LAPD patrol cars are parked in front of him, the officers shouting at him to drop the cleaver, as they have for at least five minutes.

Lopez stands. The police continue to shout in English and in Spanish. He holds the cleaver over his head. The body camera video’s transcription matches the words of the officers: “Hey, drop it, drop it, stop right there!”

Seconds later, officers fire live rounds, killing Lopez. Sulaiman rewinds again and turns up the volume on her laptop.

This time, a piece of audio that wasn’t transcribed by the LAPD is clear: “Forty, stand by.”

Forty, in this case, is code for a less-lethal foam projectile, a warning to other officers that what they’re about to hear are not lethal rounds.

“The protocol demands that they give the warning and then everybody stand down, wait to see what effect it has,” she said. “So he gives the warning and if you don’t know what you’re listening for, you just hear shouting. But then I realized that that’s what the warning was, and immediately, as soon as the less lethal is fired, it’s contagious fire because they didn’t hear the warning.”

Without that piece of audio, Sulaiman said, the video makes it appear that Lopez was shot after failing to comply with commands and advancing toward the officers.

“And that’s where they play with these transcriptions a little bit,” she said. “So that’s the kind of thing where if you have this different piece of information, that completely changes what this incident is.”

Sulaiman doesn’t believe the LAPD transcription left out the less-lethal warning by accident. The LAPD did not respond to specific questions from CalMatters about this incident or the video transcription.

Since the murder of George Floyd by Minneapolis police in May 2020, Sulaiman has focused her work almost entirely on police violence.

Among her most thorough investigations was when she found the only evidence that an LAPD sergeant fired his weapon from his vehicle without stopping during a police chase on July 18, despite two other officers determining moments earlier that the man being chased didn’t have a gun.

The video never made clear which officer fired the shot that wounded 39-year-old Jermaine Petit, but in the reflection in the glass of the sergeant’s patrol car dashboard, she saw him holding up his gun and pointing it out the passenger side window. At the time of the shooting, the sergeant’s arm jerks backward. She said she had to watch the video several times, including at one-quarter speed, before she noticed the reflection.

She acknowledges that police have a difficult job in often-chaotic circumstances, trying to make life-or-death decisions. But that, she said, is their job.

“A lot of times they’ll say, oh, when we put civilians through these active shooter sort of scenarios, they just fire willy-nilly at people,” she said. “Well, yeah, ’cause I’m not f——- trained.

“And when you go second-by-second through these, it is certainly a lot easier to play Monday morning quarterback. But you also see that LAPD is doing the same thing when they’re constructing these narratives.”

Sulaiman said the videos themselves are a mixed bag of consequences. She’s glad that there is some video evidence of the shootings released, but said the format is ripe for manipulation by the police.

“What these videos have taught me is how really skilled LAPD is at deflecting attention at deeper structural reform,” she said. “That they are very good at pointing the finger, at localizing blame on the things that take the least amount of tweaking to fix and deflecting any kind of interest in questions of structural reform.”

Both Sulaiman and Pritchett, in their respective jobs, have had to watch hours and hours of people being shot. The images they see are not blurred. People lie dying in pools of blood, people ask why they were shot, people shout for their mothers.

“It’s tough,” Sulaiman said. “I don’t know what else to say about it.”

When asked how viewing those videos affects him, Pritchett paused for several seconds, started to speak, stopped himself, then started again.

“To be determined.”

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