Back to Basics
Happy Tuesday, and welcome to another edition of Rent Free. This week's newsletter takes a look at a few major housing developments in state legislatures. Stories include:
How a California transit-oriented development bill survived a crucial committee hearing, while a missing middle bill wasn't so lucky
Montana lawmakers continue to perform more miracles on zoning reform.
Washington legislators pass statewide rent control.
As the newsletter covered last week, two significant California housing bills, Senate Bill 79 and Senate Bill 677—which would respectively upzone land near transit and liberalize regulations on duplexes and starter homes—faced a make-or-break hearing before the Senate Housing Committee.
One made it, the other broke.
The committee rejected S.B. 677 and approved S.B. 79. The latter bill now heads to the state Senate's Local Government Committee.
The immediate practical implication is that any serious reforms to the state's signature missing middle housing regulations are a dead letter this year, while debates about whether or not to enable more transit-oriented development will continue.
The housing committee hearing itself included some tense, if exceedingly inside-baseball, drama.
S.B. 79 passed over the objection of Senate Housing Committee Chair Aisha Wahab (D–Hayward), who has repeatedly expressed skepticism about the ability of market-rate (i.e. unsubsidized) housing to ease California's housing shortage.
"Rolling the chair," as that is colloquially called, is considered an unusual and confrontational move.
When testifying in favor of S.B. 79, Sen. Scott Wiener (D–San Francisco), the author of that bill and S.B. 677, also spent a considerable amount of time criticizing the unusually negative committee report on S.B. 79.
This was a not-so-veiled swipe at Wahab, whose committee consultants prepared a report that included no recommendations for how to amend or improve S.B. 79, and instead just urged a simple "no" vote.
Wiener compared the report to a line from Marge Simpson's aunt (he meant mother), who says in one episode, "It hurts to talk, so I'll just say one thing: you never do anything right."
Wahab, during her own remarks at the housing committee hearing, spared no criticism of S.B. 79, which she said was unacceptable so long as it didn't include affordable housing mandates.
"Bypassing affordable units perpetuates socioeconomic segregation, which is de facto racial segregation," she said at the hearing.
While California's supply-side housing reformers can be happy that S.B. 79 did survive a hostile committee hearing, the nature of the debate is nevertheless a depressing reminder of just how little progress has been made conceptually on this issue.
In the state with one of the worst housing crises in the country, lawmakers are still having this very rudimentary discussion about whether enabling more housing production generally will lower housing costs.
This should be a no-brainer. Economic theory and real-world results from other, less regulated states make it abundantly clear that when more new housing is built, even when it's expensive "luxury" housing, average prices fall. The people who can't afford the newest, most expensive housing still benefit from falling rents on older, existing units.
The alternative idea that new housing has to be built as money-losing, below-market-rate housing in order for it to improve affordability is not just false, but gallingly so.
It's easy to see the absurdity of that position when it applies to any other good. Imagine a lawmaker arguing in the middle of a famine that new land can't be opened up for farming unless farmers are required to sell their crops at a loss.
That California legislators, let alone the chair of the state Senate's Housing Committee, still don't grok that very obviously true idea is equal parts alarming and sad.
On one of the most important issues facing California, legislators are still fighting over the basics.
The good news is that lawmakers in other states have in fact grokked the basics on housing.
In Montana, lawmakers have built on last session's housing reforms (the so-called "Montana Miracle") with the passage of a slew of bills that pare back local parking minimums and height limits, while capping impact fees charged on new housing developments.
The parking reform bill, House Bill 492 authored by Rep. Katie Zolnikov (R–Billings), prevents city zoning codes from requiring parking for child care facilities, assisted living facilities, affordable housing, and residential units under 1,200 square feet.
A second bill, S.B. 243 authored by Sen. Ellie Boldman (D–Missoula), would prevent local governments from setting height limits of fewer than sixty feet in downtown areas, industrial areas, and commercial clusters.
Those two bills pair well with a law enacted in 2023 that allows mixed-use and multifamily residential buildings in commercial zones.
While that bill ended explicit zoning bans on building apartments in downtown commercial areas, minimum parking requirements and height limits still made residential development practically infeasible.
With S.B. 243, a developer would have every right to convert a centrally located commercial lot into a six-story apartment building. Provided the units are all under 1,200 square feet, H.B. 492 would free them from any obligation to add parking—which is often a development killer on smaller lots.
"It's going to be a big deal. There are a lot of cities in Montana that maintain some pretty severe height limits. We should be building up," says Kendall Cotton, the president of the Frontier Institute, a Montana-based think tank.
Another notable bill, S.B. 133, eliminates local governments' ability to charge impact fees for landscaping and caps increases on impact fees to the producer price index's increase in commodity prices.
Montana's zoning reforms are notable both for their sweep and their simplicity. Contra the typical California zoning reform, Montana's bills are all a few pages long, and refreshingly free from endless carve-outs and caveats about labor standards and affordability mandates.
That leaves less room for local governments to exploit loopholes and makes the bills more intelligible and usable for developers.
State-level zoning preemptions are a pretty recent phenomenon in the Montana Legislature.
When Danny Tenenbaum, a former Democratic legislator from Missoula, introduced a fourplex bill in the 2021 session, it didn't make it out of committee.
But that defeat was followed by Gov. Greg Gianforte assembling a bipartisan task force in 2022 to look at ways to increase housing supply in the state.
A number of recommendations from that task force, including preemption of local restrictions on duplexes and accessory dwelling units, managed to pass with the governor's backing in 2023.
Now that lawmakers are more used to the idea of state-level preemption, it's easier to build support for subsequent bills, says Tenenbaum.
"Once we passed a few bills and got people used to voting yes to putting some sideboards on what regulations local governments can impose, that made it a lot easier to bring other bills that set further limits on what red tape cities can use to slow down and block housing development," he tells Reason.
Having passed the Legislature, Montana's housing reforms go to the governor for a signature. Once transmitted to his desk, Gianforte will have 10 days to sign them.
Tenenbaum wrote a comprehensive rundown of all the bills that have passed the Montana Legislature this session for the Sightline Institute. Read Reason's interview with Gianforte about housing reform here.
The slow, steady rehabilitation of rent control continued this past week, with the Washington Legislature giving final approval to a bill that caps annual rent increases to the lesser of 7 percent plus inflation or 10 percent.
As Oregon Public Broadcasting reports, the bill faced opposition from both the legislature's Republican minority and some moderate Democrats who expressed credible fears that capping rents would reduce home construction.
Those moderates briefly succeeded in raising the rent increase cap to 10 percent plus inflation. But this was then cut back down to 7 percent. The bill passed on the last day of the state's legislative session.
Washington follows the example of its southern neighbor, Oregon, which in 2019 passed the country's first state-level rent control law. California followed suit later that year.
Washington's bill includes a number of moderating provisions, including an exemption for buildings that were built in the last 12 years and two-, three-, and four-unit buildings when the owner lives on site. The bill also allows vacancy decontrol, meaning landlords can raise rents an unlimited amount on vacant units.
This makes Washington's bill relatively more modest than some legacy local rent control policies as exist in San Francisco, Los Angeles, and New York, where rent increases are typically capped at one or two percent a year.
That's not to say that it's costless. Economic theory and academic research are clear that to the degree that rent control suppresses rents, it will also suppress housing construction and/or housing quality.
Today's moderate rent control policy can also become tomorrow's strict rent control policy.
In 2019, New York drastically tightened longstanding rent stabilization policies covering New York City. The policy has certainly helped to suppress rents.
New data from the New York Apartment Association, an advocacy group for property owners, show continually falling rental incomes, falling maintenance spending, and a sharp increase in financially distressed properties following the 2019 reforms.
California is currently considering a bill to slash its own state-wide rent cap from 5 percent plus inflation to 2 percent plus inflation, and expand controls to many single-family homes and condominiums.
Like dozens of states around the country, Washington had sworn off rent control. There were no state-level controls, and state law prohibited localities from adopting their own policy—always a sore spot for Seattle socialists.
Washington's rent control bill leaves the prohibition on local rent control laws in place. Provided Gov. Bob Ferguson signs it, it'll join the movement to rehabilitate a once radioactive policy.
Over at Commentary, Seth Mandel covers a contentious zoning fight in Linden, New Jersey, where the town's Orthodox Jewish community is objecting to new rules limiting the size of homes on smaller lots.
The town's Jewish residents argue that limiting the size of homes is a ban on the kinds of large family-sized homes that Orthodox Jews with large families require.
Mandel's article details additional zoning restrictions seemingly aimed at the Jewish community, including Linden continually expanding minimum lot sizes for houses of worship until none could be built in the town.
That latter restriction would seem to be an easy target for a lawsuit under the Religious Land Use and Institutionalized Persons Act (RLUIPA), a federal law that protects religious land uses from local and state land use regulations.
Other Orthodox communities in New Jersey, with the aid of the U.S. Justice Department, have filed successful RLUIPA lawsuits against their towns' zoning restrictions.
What stands out in the Linden case is that the zoning restrictions being deployed to allegedly exclude the Jewish community are hardly unique. Towns and cities across the country maintain egregious minimum lot size requirements, excessive regulations on small lot development, and more.
Historically, zoning laws were used to exclude certain types of people. Today, their aim is a more general exclusion of people and businesses. That's a little less noxious than outright racial or religious discrimination. It's hardly inclusive.
Read Reason's voluminous past coverage of zoning laws tripping up religious land uses.
The U.S. Supreme Court mulls taking up a challenge to Los Angeles' COVID-era eviction restrictions.
Over at City Journal, the Cicero Institute's Devon Kurtz argues that the Trump administration was right to shutter the U.S. Interagency Council on Homelessness.
New York's mayoral candidates are warming to freezing rents at rent-stabilized buildings, reports Politico.
Bay Area homeowners sue the city of Belvedere, saying the city has fined them $250,000 over permitting violations they claim were in fact the city bureaucracy's fault, reports the San Francisco Chronicle.
Ned Resnikoff in The Nation on how YIMBYs are the real class warriors
The post Back to Basics appeared first on Reason.com.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles

USA Today
an hour ago
- USA Today
Major student loan changes just came one step closer to becoming law
Major student loan changes just came one step closer to becoming law A 71-page bill released by Senate Republicans would cut down on repayment plans and deem certain college programs ineligible for federal financial aid. Show Caption Hide Caption Senators grill Education Secretary Linda McMahon over proposed cuts Education Secretary Linda McMahon testified to Congress over proposed budget cuts. WASHINGTON – Congress is closer than it's been in a long time to massively reforming college financial aid. On June 10, GOP lawmakers in the U.S. Senate proposed their version of the higher education section of President Trump's tax and spending megabill. The 71-page portion of the so-called "One Big Beautiful Bill Act" would set new caps on student loan borrowing while drastically cutting the number of repayment plans. Read more: Republicans propose massive overhaul of student loans, Pell Grants The Senate's version of the legislation is less aggressive than the bill that Republicans in the U.S. House of Representatives introduced in late April. While it will likely be further watered down due to congressional budget rules, the scope of the legislation indicates big changes will be enacted soon to how Americans pay for college. Student loan caps proposed When President Donald Trump asked Republicans to find billions of dollars in federal spending cuts, GOP lawmakers in the House drew up measures to eliminate or dramatically curb many student loan programs. In April, they proposed cutting subsidized loans altogether for undergraduates. When students take out a federal direct subsidized loan, the government pays the interest while they're in school (and for a short grace period after the students complete their studies). That idea didn't survive in the Senate version of the bill, which was expected to be slightly more moderate than the House proposal. Read more: Could Trump fail on tax bill? Why going 'big' doesn't always work out as planned Other elements of the House version remain, however. Like the House bill, the Senate measure proposes cutting the number of student loan repayment plans to just two. That change would kill President Joe Biden's Saving on a Valuable Education, or SAVE, program, which former Education Secretary Miguel Cardona repeatedly called the "most affordable repayment plan ever." SAVE has been stalled in court for months, placing roughly 8 million people in forbearance. The Senate bill would also dramatically curb lending for graduate students and parents (though at lower caps than House Republicans wanted). Ben Cecil, a senior education policy advisor at Third Way, a center-left think tank, said he was pleased to see the bill appeared to make compromises. "These loan limits are much more reasonable," he said. Melanie Storey, president of the National Association of Student Financial Aid Administrators, said she was "relieved" some of the "most harmful" provisions of the House bill had been nixed. "Still, there are several concerning aspects of this bill that would ultimately make college less affordable for students," she said, including changes that "may drive borrowers to riskier private loans, which are not available to all borrowers." Less concern over Pell Grants One of college access groups' biggest criticisms of the initial bill was a significant change to Pell Grants, federal subsidies that help lower-income students pay for college. House Republicans wanted to increase the number of credits students would need to take each semester to be eligible for Pell Grants. The Center for American Progress, a progressive think tank, estimated that two out of three Pell recipients could've lost their grants or received smaller ones if that requirement were enacted. The Senate version takes a softer approach, codifying a provision to more fully exclude higher-income students qualify for Pell funds. At the same time, the bill expands Pell Grants in ways that could waste money, according to critics such as Sameer Gadkaree, president of The Institute for College Access & Success, a college affordability group. 'While the Senate nixed most of the House's proposed cuts to the Pell Grant program and averts a looming funding shortfall, it regrettably threatens the program's long-term stability by extending Pell eligibility to unaccredited programs that are unlikely to pay off for students," Gadkaree said in a statement. New accountability rules One of the biggest distinctions between the House and Senate versions of the bill is that they lay out two entirely different sets of new accountability rules for colleges. The House proposal would fine colleges for leaving students on the hook for unpaid student loan debt. The Senate's framework suggests taking federal financial aid away from college programs if they can't prove that students who graduate are earning more than they would have without a degree. Mike Itzkowitz, who served in the Education Department under President Barack Obama, said that concept has bipartisan support. "I don't know anyone who would be willing to fork over their time to take on loans to earn less than a high school graduate," he said. But it's possible that particular provision won't survive special Senate rules. To avoid needing the support of Democrats, Republicans are trying to pass Trump's "Big, Beautiful Bill" using the budget process. That strategy comes with challenges. However, the bill must only make changes that spend money or save money. Significant reforms to college oversight might go too far, said Jon Fansmith, the senior vice president of government relations at the American Council on Education, the main association for colleges and universities. "This process isn't designed to do complicated policymaking," he said. "I really do worry about rushing something through without understanding what we're doing." Zachary Schermele is an education reporter for USA TODAY. You can reach him by email at zschermele@ Follow him on X at @ZachSchermele and Bluesky at @


The Hill
an hour ago
- The Hill
House GOP approves ‘technical changes' to Trump agenda bill
House Republicans on Wednesday greenlit a series of 'technical changes' to the party's tax cut and spending package, removing language that would have thrown their effort off course in the Senate. The chamber approved the tweaks — which were tucked inside a procedural rule for a separate measure — in a 213-207 vote, weeks after Republicans passed the sprawling package full of President Trump's legislative priorities. The adopted rule also tees up a final vote on the White House's bill to claw back $9.4 billion in federal spending. House GOP leaders moved to make the changes after the Senate parliamentarian scrubbed through the legislation — a procedure known as the 'Byrd bath' — and identified provisions and language that do not comply with the strict rules for the budget reconciliation process, which the GOP trifecta is using to circumvent a Democratic filibuster in the Senate and approve the bill by a simple majority. Leaving the legislation as it was risked the parliamentarian ruling that it was not compliant, which would have resulted in the threshold for passage in the Senate increasing from a simple majority to 60 votes — allowing Democratic opposition to block it. The changes to the Trump agenda bill — officially titled the 'One Big Beautiful Bill Act — pertain to defense funding, energy policy and changes to Medicaid. For defense, Republicans nixed $2 billion for the enhancement of military intelligence programs; $500 million for the development, procurement and integration of maritime mines; and $62 million to convert Ohio-class submarine tubes to accept additional missiles. On the energy front, meanwhile, the changes removed a provision that would have reinstated leases for a proposed copper and nickel mine that had been renewed under the first Trump administration but revoked under Biden. The mine would have been located near an area known as the Boundary Waters Canoe Area Wilderness, a nature preserve that contains canoe routes and species including black bears, moose and foxes. While leaders moved to strike some portions of the bill, they still plan to fight for those provisions when the package hits the Senate floor. 'We disagree; ultimately we're going to try it again on the Senate floor,' House Majority Leadere Steve Scalise (R-La.) said Tuesday. ' We disagree with the parliamentarian. … But you can't take the risk on any of them. You cannot take the risk because if any one of them is ruled on the Senate floor to be fatal, it's a 60-vote bill. The whole bill is a 60-vote bill — you can't take that risk.' With the changes made, the House is now expected to formally send the package to the Senate, where Republicans are mapping out their own changes to the behemoth bill. Some GOP senators want to decrease the state and local tax (SALT) deduction cap, others are pushing to increase the spending cuts in the bill, and a subset are pressing for a smaller rollback of the green energy tax credits that Democrats approved in 2022. Any changes to the House bill in the Senate, however, risks party leadership losing support in the lower chamber, which will have to approve the Senate's tweaks before the bill can head to Trump's desk for signature. Party leaders are still hoping to enact the package by July 4, but that timeline is coming into serious question as Republicans remain at odds over a series of high-stakes issues. Rachel Frazin contributed.


The Hill
an hour ago
- The Hill
Hegseth takes fire from Republicans at heated Senate hearing
Republican senators came out firing during Defense Secretary Pete Hegseth's hearing on Wednesday before the Senate Appropriations subcommittee on armed forces. Sen. Mitch McConnell (R-Ky.) immediately pressed Hegseth over the Russia-Ukraine war, with Sen. Lindsey Graham (R-S.C.) driving home the point later in the hearing; Sen. Susan Collins (R-Maine), the top Senate appropriator, scolded the Pentagon's delays with budget information; and Sen. Lisa Murkowski closed out the hearing by questioning the administration's focus on Greenland in its Arctic strategy. McConnell, one of three Republicans who opposed Hegseth's confirmation, gaveled in the hearing by calling out the Trump administration for what he views as a flat base-line defense budget. He then launched into strong warnings against the U.S. cozying up to Russia in its bid to end its war in Ukraine. McConnell said Washington's allies are 'wondering whether we're in the middle of brokering what appears to be allowing the Russians to define victory. I think victory is defined by the people who have to live there — the Ukrainians.' The former Senate majority leader who now chairs the subcommittee, McConnell asked Hegseth which side he wanted to win the war. The Defense chief said the Trump administration wanted the killing to end but would not choose a side. 'America's reputation is on the line,' McConnell said. 'Will we defend Democratic allies against authoritarian aggressors?' Later in the hearing, Sen. Lindsey Graham (R-S.C.) asked Hegseth and Joint Chiefs of Staff Chair Gen. Dan 'Razin' Caine Caine if Russian President Vladimir Putin is going to stop at Ukraine. 'I don't believe he is,' Caine replied. Hegseth, meanwhile, said it 'remains to be seen. Graham fired back, referring to his previous allusion to appeasement of Adolph Hitler: 'Well, he says he's not. This is the '30s all over. It doesn't remain to be seen.' The line of questioning laid bare the ideological divide within the GOP as to how the U.S. should confront Russia, seen by defense hawks as a global threat that must be countered with military assistance to prop up Ukraine and assert U.S. force in the European theater. But many in the Trump administration, including Hegseth, have taken a more ambivalent tone, arguing for an America First approach that could see American troops rotated out of bases in Europe and an end to the flow of military aid from Washington to Kyiv. 'We don't want a headline at the end of this conflict that says Russia wins and America loses,' McConnell told Hegseth. The hearing had a far more adversarial tone compared to Hegseth's appearance before the House Appropriations defense subcommittee a day prior, in which the Pentagon chief emerged largely unscathed, particularly at the hands of GOP members. Democratic and Republican senators grilled Hegseth over a sparsely outlined defense budget for next fiscal year, echoing rare bipartisan criticism during the House hearing. Collins reprimanded the Pentagon for being 'unacceptably slow' in submitting a detailed Pentagon spending request for the fiscal year 2026. Congress is waiting on the information as the GOP struggles to agree on Trump's reconciliation package. She also told Hegseth that Trump's budget request represented a reduction in buying power compared to the 2025 military budget, when inflation is taken into account, but suggested the Senate might correct that. McConnell earlier was also critical of the administration's defense spending plan, pushing back at Hegseth's argument that the U.S. would be making the largest investment in the military in 20 years via Trump's reconciliation package. McConnell said putting funneling defense dollars into that package while declining to increase military spending in the regular budget 'may well end up functioning as a shell game to avoid making the most significant annual investments that we spent years urging the Biden administration to make.' There was also no shortage of criticism from the panel's Democrats. Sen. Dick Durbin (D-Ill.), bashed the Pentagon for cutting military medical research while spending $45 million for a grand military parade marking the Army's 250th birthday, set for Saturday 'This is not consistent with what the men and women in uniform deserve,' Durbin said. Others, including Sen. Patty Murray (D-Wash.) berated Hegseth for the Trump administration's decision to send National Guard troops and active-duty Marines into Los Angeles this week, calling the actions a wildly out-of-proportion response to sometimes violent protests against Trump's escalating immigration crackdowns. 'Threatening to use our own troops on our own citizens at such scale is unprecedented, it is unconstitutional, and it is downright un-American,' Murray said, noting that the actions were undermining the readiness of the U.S. military. Sen. Jack Reed (D-R.I.) pressed Hegseth to reveal the cost or timeline of refurbishing Trump's luxury jet from the Qatari government, meant to become Air Force One. 'You have signed a contract with a company to reconfigure the Qatari aircraft. What is the price of that contract?' Reed asked. Hegseth replied that the information 'cannot be revealed in this setting,' prompting Reed to fire back. 'Why can't it be revealed? This is the appropriation committee of the United States Senate. We appropriate the money that you will spend,' Reed said.