California’s VMT restrictions have no effect on climate change, but make housing more expensive

Susan Shelley, The Orange County RegisterOrange County Register

Here’s a quiz about housing in California. Is it hard to buy a home because:

a) Jobs don’t pay enough to qualify for a mortgage

b) Current homeowners don’t want to sell

c) Caltrans has a chokehold on approving new housing construction

It’s a trick question. The correct answer is: d) All of the above.

Yes, all three things are true. The Legislative Analyst’s Office reported that in September 2024, the monthly payment for a newly purchased “mid-tier home” in California was $5,500, including taxes and insurance, up 75% since January 2020. The household income needed to qualify for a mortgage to buy that home was about $221,000, more than double the median California household income of $96,500 in 2023.

Higher interest rates are one reason that homes have become less affordable and why so many current homeowners won’t sell. A report in September from the U.S. Consumer Financial Protection Bureau estimated that almost 60% of existing mortgages have interest rates below 4%, while current rates are above 6% and projected to stay there through 2025.

Longtime homeowners in California have the additional disincentive of capital gains taxes. The sale of a mid-tier home today can create a momentary millionaire and trigger a state tax on capital gains of up to 13.3%.

Still, homeowners might sell if there were new home developments that they found appealing. Freed from a daily commute, either because of retirement or remote work, many people might like to live in a newly built home in a community far from the city center.

But that’s rarely possible for a reason so ridiculous that it couldn’t be true anywhere but California.

In 2013, then-Senate leader Darrell Steinberg pushed through a law to give a new arena for the Sacramento Kings a special exemption from the California Environmental Quality Act (CEQA). But Senate Bill 743 didn’t stop there. It authorized the governor’s Office of Planning and Research to update the standard for analyzing the impact on the environment caused by transportation.

Previously, an analysis of a project’s transportation impact was based on a standard called Level of Service (LOS), measuring the speed and safety of traffic. But as a Senate committee analysis of SB 743 explained, LOS “neglects transit, pedestrian crossings, and bicycles,” and “has traditionally led to widening intersections and roadways to move automobile traffic faster at the expense of other modes of transportation.”

SB 743 changed the standard from Level of Service to Vehicle Miles Traveled, or VMT. The state would calculate the “induced travel” created by a new project and disincentivize or kill projects that created more driving.

The Office of Planning and Research, now renamed “The California Governor’s Office of Land Use and Climate Innovation,” relies on Caltrans to figure out the VMT from proposed projects, including housing developments, in areas that are served by the state highway system. Caltrans also calculates the value of “mitigation” measures, such as paying to build bike lanes somewhere else.

It’s all arbitrary, a nauseating blend of made-up numbers and political favoritism that raises costs and blocks needed housing construction, unless it’s the high-density, urban in-fill rental housing preferred by the government. But why?

“To fight greenhouse gas emissions, Senate Bill 743 is working to reduce the amount of driving,” explains the Bay Area Metropolitan Transportation Commission.

Still, there’s always room for political favoritism. “Lead agencies such as Caltrans have substantial discretion to determine the extent to which various public policies may warrant the approval of a project, notwithstanding the potential that the project may cause significant adverse impacts,” the agency explains in a document titled, “When are VMT Impacts from a Project Acceptable?”

They’re acceptable whenever government officials say so.

The tragedy is that California’s VMT restrictions have no effect on global climate change, but by preventing single-family home construction in areas where land is more affordable, they’ve wrecked the dreams of a generation of young Californians.

Write [email protected] and follow her on X @Susan_Shelley