From Housing Crisis to Energy Revolution: The Rebuild Conversation with Tom Steyer

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California’s affordability crisis isn’t slowing down — so we brought on Tom Steyer to talk about what it would actually take to fix it. In this episode, we dig into his plan to build a million homes in four years, why your electricity bill is so high and who profits from it, and whether California can lead a clean energy revolution that’s already underway around the world. Housing, energy, food costs — it’s all on the table. These are the questions Californians are asking every month when the bills come due. Introduction Tahra Hoops: Welcome to the Rebuild. I’m one of your hosts, Tahra Hoops, joined with Gary Winslett, and today we have an incredible guest. We are joined by Tom Steyer [https://tomsteyer.com], investor, climate activist, and candidate for Governor of California. Tom is the founder of Farallon Capital [https://www.faralloncapital.com] and the progressive nonprofit NextGen America [https://nextgenamerica.org]. He’s spent the last 15 years putting his own resources towards California ballot fights on climate, taxes, and economic fairness. Now he’s running on the most urgent issue facing the state: the cost of living. We’re thrilled to have him here to talk housing, energy costs, and what it would take to actually make California affordable. Tom, welcome to the show. Tom Steyer: Thank you very much for having me. Housing Crisis & Building 1 Million Homes Tahra Hoops: One of the reasons I was so interested to have you on is that I attended one of your housing talks a couple weeks ago in Los Angeles, where housing activists and yourself discussed ways to actually make housing affordable. It’s now one of the major promises of your campaign, to build one million homes in four years. That’s a huge promise. So what does the Governor’s office actually control that could help make those numbers achievable? Tom Steyer: There are a number of issues that have to be dealt with urgently, permitting, zoning, cost per square foot, and relationships with local cities and counties. In every one of these areas, we have to move with urgency. And let me say, this is an urgent issue because Californians cannot afford to live here anymore. The number one bill they have every month is housing. Getting this right is not a nice to have, it’s a have to have. We are in a crisis. There was CEQA reform [https://en.wikipedia.org/wiki/California_Environmental_Quality_Act] last year — the California Environmental Quality Act [https://en.wikipedia.org/wiki/California_Environmental_Quality_Act] — to try and improve permitting. I supported that publicly. There was a lot of opposition, but it got passed in the legislature. There was zoning reform last year too, which also faced opposition but got done. But there’s a lot more to go in terms of making the timing and regulation of house building as fast and cheap as possible. In some places in California, the fee to build a house is 20% of the cost of the house. That means the price goes up by 25% just because of fees. We also need to dramatically drop the cost per square foot of building. There are tens of thousands of permitted, zoned units in California that aren’t being built because they can’t get built to a price people can afford. There are technologies to build offsite and assemble onsite that are about a third cheaper right now, and people think the price could drop by half. Just to give everyone a sense of how harsh this is: the average first-time home buyer has gone from 28 years old to 42 years old. There are many people in California who think they’ll never be able to buy a house. And a house is not just some asset, it’s the place where you live, where you build a family, where you build your life. The last issue on the table is opposition from cities and counties. To a large extent, they feel that building houses is an unfunded mandate. When they permit units, they expect people to live there, and those people require education and health services that cities don’t have money for. So they push back hard. On that score, I think I’m the only person running for governor talking about this: I will call a special election right away to close a corporate real estate tax loophole that brings in $22 billion a year to localities for education and health. That should dramatically reduce their reluctance. There’s a carrot and stick here, if we’re providing this for you, we’re going to ask something in return. Modular & Offsite Construction Gary Winslett: Can I follow up on the modular points? We’re huge fans of that here at the Rebuild, we love technological solutions to the challenges we face. I had a whole piece last week on the American Housing Corporation [https://americanhousingcorporation.com] doing offsite building and assembling on site. As you say, it saves a ton on development cost per foot. How exactly would the state help with that as governor? Is that procurement standards? Tom Steyer: I think it’s procurement standards, permitting standards, and regulations. But it’s also that people are reluctant to try new things, and this is something whose time has come. When you talk about modularization, I think we’re actually at a stage beyond that. When I think about modular technology, I think about building rooms offsite, putting them on trucks, and taking a wide load down the highway. That’s not what I’m talking about. I’m talking about technologies that can easily build nine to twelve stories, the ability to build apartments much cheaper, as well as houses. Gary Winslett: So you’re talking mass timber [https://www.woodworks.org/mass-timber/], that kind of thing? Tom Steyer: Yes, we’ve looked at that for a long time. But a lot of this is about building walls and floors offsite and assembling them on site. It’s been done very successfully with some of the biggest builders and homeowners in the world. The technology is here. The question is how we get it moving, and making sure the jobs that come out of this are good-paying, organized jobs. Tahra Hoops: This all sounds like a no-brainer to me. I’m originally from New York City, which did a lot of building in the past. I grew up in a row home, everything was quite vertical. I’ve been in Los Angeles for two years now, and the first thing I noticed was just how flat everything is. I’d go on walks with my dog and think, we could be doing so much more here. Why do you think Los Angeles and California as a whole have been so slow to build? Tom Steyer: I think there are a couple of reasons. One is cultural. When people are used to low-rise, they can’t imagine high-rise. They find it unpleasant to think about. But if you build it, that was true in New York. Before they built apartment buildings, everyone said, “I’ve never lived in an apartment.” Then they built some really nice ones and people said, “It’s great living in an apartment.” The other thing is there are reasons in terms of liability for developers as to why we never build condos in California. We only build rental apartments and houses, and it has to do with differential liability laws. There are a bunch of things we need to change. But the biggest issue is there has been no sense of urgency. I went down to LA to look at a low-income housing site with the person who developed it, and they said it took three to four months after the building was fully built to get hooked up to the grid. No one can move into a building with no electricity. So that’s three to four months where you’re paying interest on your loan, paying all your costs, with absolutely no revenue. That’s outrageous. We need to stop saying “let’s have the meeting in three months” and start saying “we’re having the meeting this afternoon.” There has to be a sense of urgency. Including ADUs [https://hcd.ca.gov/building-standards/adu], let’s get going, get units built, and make them at a price point people can actually afford. Tahra Hoops: The process isn’t working. Tom Steyer: We have decades of knowing the process is not working. So let’s stop that attitude. Affordability is at the center of our campaign. The ability to pay your bills at the end of the month is the biggest issue in California, and this government in DC is crushing us. I know it’s just one station, but $8 gas, what does that do to your monthly budget? Energy Costs & Electricity Reform Gary Winslett: California has some of the highest electricity bills in the country, and you’ve made bringing those costs down a centerpiece of your campaign. Your pledge is to lower energy costs by 25%. How are you going to get that done? Tom Steyer: I know everybody feels like that’s impossible. Let’s be clear: California pays twice the average cost of electricity in the United States. If we drop rates by 25%, we’ll still be 50% over the national average. So when people say that’s a big cut, yes, it’s a big drop to a still-terrible place. The three big utilities in this state are legal monopolies. You’re not allowed to compete with them. And monopolies always overcharge and always produce terrible service. They always explain that nothing else is possible, that without them, we go back to burning trees. Here’s how utility economics actually work. Most people think electricity companies charge you for electricity, have costs, and the difference is profits. That’s not true. What they do is get a capital expenditure accepted by the Public Utilities Commission [https://www.cpuc.ca.gov] into what’s called the rate base, and they get a guaranteed return on that rate base. So their incentive is to get capital expenditures into the rate base. If you and I are running an electric utility, we could put $200 million into the rate base and make $20 million, or do the same project for $100 million and make $10 million. It’s very much in our interest to choose $200 million. There’s no incentive, in fact, there’s a huge negative incentive, to do things cheaply. That’s a perverse incentive. I’m not angry at these people; that is what the state set up. And meanwhile, there is a gigantic electricity revolution going on in the world. The cost of clean energy is incredibly cheap and getting much cheaper. The cost of batteries is incredibly cheap and getting much cheaper. It is much, much cheaper than fossil fuels. Several countries last year increased their electricity supply by 50% in one year. We’re talking about increasing ours by 2%. A ton of this technology is coming out of California. We need to be adopting it, not avoiding it. No one’s walking into a utility and saying, “There’s this great new technology that’s going to reduce our earnings, we should adopt it immediately.” We need a different system. Part of it is changing how we oversee the PUC. We also need to introduce competition. To put some numbers on it: solar and wind cost one to two cents per kilowatt hour. Batteries are a couple cents per kilowatt hour and dropped 80% last decade, with similar drops expected this decade. At PG&E [https://www.pge.com], we pay 48 cents per kilowatt hour at retail. Think about that. We’re moving to a world where local renewable energy generation with batteries is overtaking everything. But we have a monopoly here, it’s illegal to compete. We need to introduce microgrids, local competition. I’m not trying to destroy these companies. I’m saying you’re going to have to adopt the new technology. We’ll give you different incentives and pay you to do the right thing. But 48 cents versus four cents, that’s too big a gap. Natural Gas & the Clean Energy Revolution Tom Steyer: Everybody can see the cost of oil because you go fill up your car and get a different cost per gallon. It’s in your face daily. But nobody understands the economics of natural gas. Traditionally, natural gas is a local market because it’s hard to ship, you can’t send it overseas easily. Oil is a completely global market. Even though nothing changed in the United States, we’re paying dramatically more at the pump because something happened in the Middle East. We’re a net exporter of oil, but the global market immediately changes everything at the pump. Natural gas has been different. In the United States, we pay approximately three dollars per thousand cubic feet. In Europe, they pay $19 to $21 for the exact same amount. Why is that relevant? In Louisiana and Texas, they’re building multiple LNG terminals [https://www.eia.gov/energyexplained/natural-gas/liquefied-natural-gas.php] to export our cheap natural gas to Europe. And they’ve told us it won’t change domestic prices. Really? You more than double the demand and it doesn’t change the price? In what fantasy world does that happen? Renewables are already way cheaper than natural gas for everything. Once we have a global market, which the United States is determined to create, to fatten the coffers of fossil fuel companies, everything that happens around the world affects us. What we’re looking at with fossil fuels is a world that is already more expensive, already much dirtier, and already subject to supply shocks. And we’re saying, “That’s our future”? It’s incredibly dumb. Tahra Hoops: It reminds me of that joke tweet, typically the average person is wrong to say the president has a lever to make gas prices go up or down. But right now is the only time where that’s actually true, because he did pull that lever. California as a National Model Tahra Hoops: How can we actually ensure California is a model for a national cost-of-living agenda? We started the Rebuild because we thought Democrats weren’t doing enough. What’s your vision as governor to make that possible? Tom Steyer: Affordability is at the center of our campaign because it’s at the center of the mind of every Californian, all the time. If we solve affordability and also deliver the services people need, education, healthcare, home care, we actually become the model for the world. This is what the 21st century is supposed to look like: entrepreneurial, innovative, growth-oriented, and bringing everyone along. Working people have been getting the shaft for 45 years, and that’s why the affordability crisis is exploding. We absolutely have the ability to create the best society in the history of the planet. Literally. We are rich enough and smart enough to deliver everything we’re talking about. We just need to drive down costs and be smart. If we do that, we restore the California dream, and we show what a society is supposed to look like: inclusive, dynamic, entrepreneurial, and forward-thinking. California invents the future. This is our chance to invent a really bright one. Tahra Hoops: From the top of our coast to the bottom, we have been lead innovators. There’s been a lot of talk about people leaving California, saying it’s not the place to build and imagine anymore. I reject that. Tom Steyer: The thing a lot of people don’t seem aware of is that young people are enduring, not living. They feel like their chances don’t look bright. Many think they’ll never buy a home. Many think great public schools are beyond them. That is not okay. Restoring that dream in a new time, with a new vision, that’s honestly what this campaign is about. Tahra Hoops: As someone who is 27, I don’t think I’m buying a house next year— don’t have that in my plans anytime soon. Rapid Fire Questions Gary Winslett: Other than housing, what is something that you think is too expensive? Tom Steyer: Food. Electricity’s too expensive, housing’s too expensive, and food’s too expensive. We need to deliver delicious, healthy food to our citizens, and we can do that. We grow the greatest food in the world in this state. Gary Winslett: Food at the grocery store is right in your face, like gas prices. And people don’t feel like they can substitute down. You can try to do without something else, but you can’t not go to the grocery store. Tom Steyer: What people do is substitute unhealthy food for healthy food. That’s the real issue. People can buy food, but the food that’s affordable has been designed to addict them to it, and it’s terrible from a health standpoint. Gary Winslett: Last question, what is a policy or innovation that you think is underrated? Tom Steyer: Batteries. Batteries are going to change the world. The ability to have a long-duration, cheap battery solves all the problems, because the only issue with wind and solar is when the sun doesn’t shine and the wind doesn’t blow. With the right batteries, they’re not intermittent fuels anymore. They’re baseload. That’s where we’re going. But the second issue is cars. What is an electric vehicle? It’s a battery with a car built around it. This week, BYD [https://en.wikipedia.org/wiki/BYD_Auto], the biggest EV maker in the world, announced a $26,000 car that goes 440 miles on a charge, with one in development that goes 600 miles. Game over. The technology is here for an electricity revolution. When you burn fossil fuels, you lose about a third of the energy, and for a whole bunch of reasons, you really end up with only about a third. We’re going to electricity on a massive level. I wrote a book called Cheaper, Faster, Better: How We Win the Climate War [https://en.wikipedia.org/wiki/Cheaper,_Faster,_Better]. We’re not saying to people, “Buy a crummy, expensive car because it’s good for everyone else.” We’re saying, “Buy the cheapest car on the planet, and it’s amazing. And by the way, the pickup is fantastic.” Tahra Hoops: From a competitive standpoint, we are dragging behind. China has understood the power of batteries for a long time and has built a monopoly around them. We’re slowly catching up, and we’re shooting ourselves in the foot if we don’t get to a united front. Tom Steyer: The tech is coming out of California. But look, China doesn’t have any oil and gas. They have absolutely no political reason to prolong fossil fuel energy. And if you look at the history of the world, the country that dominates in energy runs the world. England dominated in coal. We dominated in oil. It’s over. The costs have crossed forever. Battery costs are going to go down 80% this decade. Fossil fuels aren’t going down. They’re subject to interruption. They’re dirty. And they aren’t even paying their actual costs, they’re turning those costs into the bill paid by the people in Altadena and Pacific Palisades [https://en.wikipedia.org/wiki/January_2025_Southern_California_wildfires], saying: you want to know the tax on our emissions? Your house. Tahra Hoops: I want to end on a positive note. Tom Steyer: If I sounded negative about energy, I’m actually sensing something completely different. We are absolutely going to win this. We are at the point where there’s no doubt who the winner is. The faster we get on that train as a state, the faster everybody benefits. Cheaper, faster, better. Why don’t we lead the world and produce the technology, much of which is unique to California, that we can use to create huge companies and world markets? Tahra Hoops: I love hearing that. Again, thank you so much for being on here. We wish you luck and can’t wait to see how far you’ll go. Tom Steyer: Thank you very much. I appreciate it. This is a public episode. 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From the Inheritance Economy to the Homeownership Ladder

This week Gary and I sat down with two amazing housing wonks: Muhammad Alameldin, Senior Policy Advisor at California YIMBY, and Eduardo Mendoza, Policy Director at the Livable Communities Initiative. I rent a condo in LA, and if I opened Zillow tomorrow I could not find anything close to my square footage at my price. There’s a reason for that. California builds about 3,000 condos a year, out of roughly 100,000 multifamily units. As Muhammad put it, more babies are born in two days than we build condos in a year. Zoning is usually where the housing conversation starts and stops. This episode is about everything after that: why American elevators cost two to four times what the rest of the world pays (Muhammad sits on the board of a senior housing nonprofit that got quoted $380,000 to fix one). Why the windowless bedroom became a standard American housing product. Why a modular home that installs in a day still waits 18 months for permits in San Diego, while Texas approves plans in 24 hours. It’s a wonky one in the best way. Listen, read, and send it to the person in your life who still blames BlackRock for their rent. Tahra Hoops: Hi everyone. My name is Tahra Hoops and I am here with my co-host Gary Winslett. Today we have two very special guests with us, both from the great California YIMBY [https://cayimby.org/]. We have Eduardo Mendoza. Eduardo is the policy director at the Livable Communities Initiative [https://www.livablecommunitiesinitiative.com/] and a Los Angeles-based urban planner. He sits on the board of Abundant Housing LA [https://abundanthousingla.org/], previously chaired Inclusive Santa Monica, and has worked with Santa Monica Forward, the Parking Reform Network, and the Palms Neighborhood Council. He has a master’s in planning from USC, and he is also a demographer whose work has appeared in Cityscape and Slate. Joining us as well, we have Muhammad Alameldin, who is a senior advisor at California YIMBY, where he leads research and shapes the organization’s five-year legislative agenda, focused on the barriers, the how of production, that go way beyond zoning. He was previously a policy associate at UC Berkeley’s Terner Center for Housing Innovation [https://ternercenter.berkeley.edu/], has advised BuildCasa, and worked at the Greenlining Institute, and his work has been cited everywhere from the Atlantic to the White House. Thank you both for being here with us. Eduardo Mendoza: Thank you. Muhammad Alameldin: Thank you for having us. Previous White House, not this one. Tahra Hoops: Back to the good old days. Why We Don’t Build Condos Anymore Tahra Hoops: So today I would love for us to start off talking about a very real problem that we have in California that also gets pretty localized in Los Angeles. It’s the fact that we don’t build condos anymore. I rent out of a condo, and if I opened up Zillow for my local area, I would not be able to find anything of this square footage for a similar price at all. So I am stuck with golden handcuffs, and there’s a very real policy reason why we do not build condos here. I know there are a couple bills that you guys have championed, so I would love to start off with an overview, for whoever would like to take that, and some of the bills you guys have championed to combat this issue. Muhammad Alameldin: So California YIMBY’s legislative agenda this year is, wow, it’s a lot. We’re tackling a few key issues. Number one, we’re gonna make it easier for people to pre-buy units. AB 1406 [https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB1406] is a presales bill. Basically, everywhere else in the world, if you have 12 people bidding on a home and the home price goes from $1.1 million to $1.7 million, a developer would find those other 11 people and be like, hey, gimme your down deposit, I’ll build you 11 new units and you guys could live in those in two years. We basically made that impossible in California. The reason why is because developers used to run off with the money, right? Then we invented this thing called computers, and we have this thing called bonding and insurance, and anywhere from Egypt to Guatemala to Germany to Singapore, they all presale units. We don’t have that in California. We’re trying to fix that with 1406. Oh yeah, my bad. The other issue for condos is construction defect liability, sometimes wrongly called condo defect liability, but it’s construction defect. So what happens is that if there might be defects in your building, a lawyer comes to your HOA, and your HOA has to sue the developer, and then the insurance and the HOA fight it out for five years, and then there’s a big settlement. It’s this long litigious process, and no developer wants to sit in a courtroom for three to five years. And let’s say you did have a leaky window, and then you gotta wait three to five years to get money to fix it. Okay, you fix the window, but now everything around the window is moldy. And it increases the costs, and condos always have to compete with rental housing units. Like, what am I going to build? I wanna build one with less headache, and it’s rentals, because they have a four-year liability instead of a 10-year liability. What we’re trying to do with AB 1903 [https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB1903] is just take the lawyers a little bit out of the process. It’s like a car: if I have an issue with my new car, I take it to the dealership and they fix it. If I have an issue with my condo, I could go to the builder and they fix it. That’s our first step in actually making condos a little bit more popular in California. Gary Winslett: So that makes a lot of sense, ‘cause it got me thinking about a few years ago, I visited some friends of mine in Minneapolis, and they own a condo, and it was nice. We were pretty close to downtown. We could be in the urban center, but they didn’t want to have their own house in the suburbs. They wanted to live in the city, and so a condo was just a way to do that. So I’m always a little stunned that California doesn’t do that, because as great as Minneapolis is, with all of its bike trails and light rail and urbanism, you could do that in California. And I like winter, but most people would prefer the California weather to the Minneapolis weather. So I’m always just surprised. To me it feels very self-sabotaging that California doesn’t do more to just make condos the real starter home. Muhammad Alameldin: Yeah, everywhere else it’s the real starter home. What we did is that we passed a bunch of random laws in the 1970s and early 2000s that weren’t well thought out, and now we’re dealing with the consequences. Condominium construction, we only build 3,000 condos in California per year. So out of a hundred thousand multifamily units, all of them are apartments except for 3,000 of them. And it’s like, we make more babies in two days than we build condos in a year. It’s not working. Gary Winslett: Yeah. Well, it also creates this weird two-tier market. You have really wealthy people who can own a whole house, and then you got renters who can’t own, and they’re in apartments. For a place that is fairly left-leaning and rhetorically cares about equality, it’s got this very odd sort of, you know, the aristocrats and the sans-culottes down below. It’s just not a great social setup. Muhammad Alameldin: Oh dude, yeah. We destroyed the homeownership ladder, right? We’re creating a more economically segregated society, ‘cause we’ve outlawed condos a hundred percent. And you are more likely to own a home because your parent died than you are to buy a condo in California right now. Like, it’s messed up. Tahra Hoops: It’s an inheritance economy. If you are a boomer, or you know that you’re going to inherit something later in life, you are set. But for everyone else, the economy used to feel like a waiting room. I just need to get a little older, I just need to get a good job, and then the market will have also caught up to me and my financial needs. And that’s just not the case anymore. We’ve kind of lost the plot on what people can agree to be a starter home and what people feel like they should be, to the point where everyone is only ever going to be a renter forever. Which is fine if you are going to be in that financial stability ladder, but we’re forgetting a large bottom rung of people due to that. Eduardo Mendoza: Absolutely, especially in really high-market areas. For a really long time we kind of stretched the starter homeownership ladder to include townhomes. Townhomes are really valuable in a lot of areas, but in places like San Diego or Los Angeles or San Francisco, they just won’t cut it. You need the density of a condo in order to make a building pencil out for ownership. And just creating those opportunities is very valuable. Starter Homes on Small Lots: SB 1123 Tahra Hoops: I wanted to ask about one of your more recent bills, I guess this has been just over a year now: SB 1123 [https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB1123], which unlocks a lot of the small-lot starter homes. Tell me the mechanics behind that, how it was getting that passed, and what we have seen now a year later. Muhammad Alameldin: Yeah, definitely. So SB 1123 is an expansion of SB 684. This year we have SB 1116 [https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB1116]. So each year we’re trying to make the bill better. But SB 1123, we were like, okay, on any multifamily lot, you could split it up to 10 times, or build up to 10 units of condos or apartments on the lot, basically. So what we’re doing is we’re saying, okay, existing land, you could build more housing here. SB 1123 also allows that in single-family zones. We already allow ADUs in single-family zones, but the benefit of SB 1123 is that if you allow for lot splits, these are units that are going to be for sale. So more homeownership opportunity. The average size of those 10 units has to be, like, 1,750 square feet. So you’ll have a lot smaller units, a lot larger units, or somewhere in the middle, but it’s a lot smaller than the 2,500-square-foot single-family home we see everywhere. And, you know, each year we’re trying to make it better. This year we’re trying to make it so HOAs and CC&Rs don’t restrict it as much. Right now, CC&Rs could say, like, no Black people and no lot splits, from, like, 1930. And the city will say, oh, we’re not gonna enforce that. But then any private citizen could sue. And the thing about lawsuits is that even if there’s no grounds, you’re delaying construction by a few months. We’re just trying to tighten that up a little bit. Gary Winslett: No, I think that’s great, because no one with a straight face will defend some of that nastiness anymore. You just can’t. Nobody’s on board with that staying on the books, but the fact that there’s this potential risk is what’s doing the thing. So I love hearing that that’s gonna get cleaned up. I did wanna ask, within that, are there minimum lot sizes in that bill? Because those are more prevalent in the Northeast than on the West Coast, but they can sneakily kill projects if you have to put a starter home on a lot that’s too big for it, where land’s expensive. Muhammad Alameldin: Yeah, so the minimum lot sizes are, for multifamily, I think it’s 600 square feet. For single-family, it’s about 1,200 square feet. So a lot smaller than usual. And we’re seeing a boom similar to what we saw in ADUs. I think Riverside is gonna have like 400 projects come online. I think South San Jose is like another hundred. One is completing tomorrow in San Diego, I’m gonna go check it out. We’re seeing a boom similar to ADUs in 2019. But these are homeownership opportunities, which is awesome. Beyond Zoning: Elevators and the Building Code Gary Winslett: No, that’s great. We’re so used to talking about zoning when it comes to housing, for obvious reasons, but I so love the fact that we’re starting to think about other stuff besides just the zoning. I know we’re gonna get to single stair later, so I kind of wanna bracket that off. And we just talked about condos. Are there other non-zoning reforms that you think are potentially super helpful? Muhammad Alameldin: Well, where do I start? Ed, do you want to take it first and I’ll add some more? Eduardo Mendoza: Non-zoning reforms. So things within the codes, you might be referring to. Yes. Tahra Hoops: Or anywhere, wherever your mind goes. Get creative here. Eduardo Mendoza: Okay, so right now we’re trying to dismantle the myth that a lot of people say, that we’re stuck at building costs, or hard costs and soft costs. We are challenging that notion. One way that we’re doing that is by looking into elevator reform. We overpay in the United States for our elevators, I believe two to four times compared to the rest of the world. And a lot of that is tied to, I would say, bureaucratic and policy inefficiencies that are not directly related to fire and life safety, which is a central theme in a lot of topics covering the building code. We’re also looking into expanding what the residential code can be. So for context, there are two major codes that govern how we build housing in the United States. One’s the residential code, which typically will cover one to two homes, and then there’s the commercial code, which will do three to as many as you can fit. And there not being a middle ground, or an expanded middle ground, is a problem. So right now what we’re doing is we’re attempting to tackle this on both sides. We’re saying for commercial buildings, you know, what are ways to make our buildings still conform to life safety thresholds while also adopting better electrical code practices, so we don’t overkill the amount of electricity that goes into a building, or elevators, or plumbing. And then on the residential side, we say, how can we upgrade or make our residential code a little bit more resilient in order for it to accommodate a triplex or a fourplex, buildings that would more naturally fall under the residential category? Gary Winslett: I wanna ask you about the elevator thing, because every time I’ve been part of a conversation in DC about elevator reform, it runs into a brick wall of, the unions don’t want it. Or before they even take it to the unions, it’s just fear of the unions that shuts it down. California is a fairly high union density state, and they’re politically quite strong. Have you figured out a way to get the unions to be on board with elevator reform? Eduardo Mendoza: I mean, we’re always happy to reach out and get them to understand where we’re coming from. I think a big lesson that we should learn from this type of reform is the people that are impacted by the reform. For example, in the United States, we trail far behind most other countries in the amount of elevators that we see in new buildings. It’s very common in other countries to see an elevator in a two-story or three-story building. You almost never see it here. It’s very common to see elevators in a 10-unit building anywhere else. You don’t see it here. And that has real-life consequences, right? It’s accessibility. It’s the pool of people that you could sell a building to. It’s senior living. It’s people with disabilities, it’s people with children. Let’s say you live on the third floor of a building and you get injured one day. Are you out of luck, ‘cause you can’t get up to the third story of a building? So what we’re trying to do is create a voice for these people to say, we understand that you have a sweetheart deal with the elevator monopoly, right? Because there are only three major companies in the US. We understand that you’re getting paid really, really well. All that we’re trying to do is expand the amount of elevator installations that we want to get across the country. Maybe it’ll be a little bit less money per elevator, but in large, there’s a lot of opportunity to do either new elevators, new buildings, extra elevators in new buildings, or retrofits of older buildings with elevators. I think it’s a deep win-win situation for all stakeholders. It’s just a matter of challenging the status quo. Gary Winslett: No, I think the retrofits is an especially good place to start, because you’re comparing the building to, it has an elevator if you can retrofit it in; right now, it doesn’t have an elevator at all. To me, that feels like the first place to go. That would be really helpful. Eduardo Mendoza: The way I usually describe it to people, and my bad, let me just finish this one and then I’ll let you. Muhammad Alameldin: Go off, Ed. Go off, Ed. Eduardo Mendoza: This is usually how people understand the problem, when I frame it like this. You guys know about the McDonald’s ice cream machine problem? When you’re at the drive-through and, Tahra Hoops: It’s broken. Eduardo Mendoza: It’s always broken, and you never know why. You guys wanna know why? I mean, it’s not true anymore, because they recently changed the policy, but for the longest time it was true because there’s only one company that could service your machine. And it was up to that one company, exactly, to send their service tech. You couldn’t be an owner of a McDonald’s franchise and say, hey look, the dispenser handle broke, let me order something off of a catalog and hire a guy who has a license to install it. That’d be illegal. You can’t do it. You have to wait for the guy from the company to come. If you want him to come faster, you know, gotta put money on the side. Gary Winslett: Yeah, and McDonald’s ice cream doesn’t have nearly the margin to justify that. I’m just saying, it’s the McDonald’s ice cream machine. It’s not some high-margin business activity that justifies paying money on the side to get the guy to come. Tahra Hoops: This is like many home renovations, though. I had a friend in DC who is, by his career, a regulatory lawyer, wanting to remodel his bathroom. It wasn’t intense, wasn’t going into the plumbing at all, just a basic remodel. And the amount of people he had to call to go through to pass all the permits, to get the correct people over there. People were telling him the wrong thing, and this is from the DC government, telling him the wrong thing so many times, where it ended up being such a costly project that he’s just like, I’m never doing this again. How does the average person go through this? It’s maddening. Muhammad Alameldin: I know a planning director that has unpermitted work ‘cause he couldn’t deal with the process in a different city that he lives in. And if I could add to the elevators, I’m on the board of this church that owns affordable senior housing. We had to fix one of the elevators, and fixing an elevator, and then having a warranty on it so they could come in to fix it anytime for the next two years, was like $380,000. And these are seniors, right? And then I sent that to Ed, and Ed was like, wow, you got a good deal. They could charge a lot more. Gary Winslett: Oh my God. Eduardo Mendoza: It’s literally the same elevator that was built in the same factory in East Asia, run by the same company based in Europe. The same elevator in Switzerland, which isn’t even part of the EU, which has their own structures or whatever, they’ll get it at a fifth of the cost. Tahra Hoops: That’s crazy. Gary Winslett: So this is actually one of the wildest examples. I did my doctoral dissertation on regulatory trade barriers, so I can nerd out on these international differences. And even in the universe of cases I know of, this one’s extra clear and extra mind-blowing how nonsensical it is. The Top Non-Zoning Reforms: Codes, Finance, Permits Muhammad Alameldin: Oh yes. And if we could talk about beyond zoning, to get back... Tahra Hoops: I was gonna say, I wanna circle back, because I wanna hear your top three outside-zoning reforms. Muhammad Alameldin: Oh yeah. So this is mostly my job, like, okay, why are things not getting built? So number one, if I could add to Ed’s thing about the residential code, from three to 10 units, it would save 20% on hard costs, and that’s conservative, if we allow triplexes to 10-plexes to build under it. And it would save over a year of delay, because you work with one inspector instead of working with four different inspectors with different timelines. And we could even say, hey, as long as these 10 units are smaller than the biggest single-family home in California, you just use one inspector. Because the biggest single-family home in California is like 48,000 square feet, but they have the most lenient codes. Versus if 10 middle-class people wanna live in homes, they have this regulatory framework they gotta deal with. Ed, you wanna hop in? Eduardo Mendoza: And we’re already seeing holes in this, or what you always see, the market trying to fix itself when faced with these barriers. For example, in Los Angeles, there’s something called the double duplex. From the outside, it looks like an 8,000-square-foot, four-story apartment. But when you look closely, you’re like, wait a second. This is a duplex with 24 bedrooms and 24 bathrooms in it that is being leased by the bedroom. Tahra Hoops: Crazy. Muhammad Alameldin: We wrote a whole paper about this for Mercatus [https://www.mercatus.org/research/policy-briefs/double-duplex-one-response-los-angeless-overcrowding-crisis]. I forgot about that, Ed. That was like two years of work there. Yeah, it was the double duplex paper, we wrote it for Mercatus. And Mormons are buying these too, because you have nine bedrooms, nine bathrooms, and Mormon households love it, dude. But three regulatory reforms, let me hit that real quick. So number one, we need to catalyze finance. People think just because we legalize something, the housing finance industry is gonna come in. Nah. Capital’s slow. They’re a little scared. They don’t wanna be the first mover. Tahra Hoops: Especially in this environment. Muhammad Alameldin: Yeah. And like, I could double my money with a random coin, or I could follow Trump and how he advocates for war and pulls back, and I could double my money, right? Why would I invest in housing? So I think there just needs to be, like, some revolving loans or these credit enhancements, from the state or from another structure, just to make people more comfortable in investing in housing. Number two, what Ed was saying: building codes. It’s like a dark box. Anyone could put anything in it. It makes buildings really hard to build and also really ugly. Buildings are so ugly because we have so many codes we have to follow. Tahra Hoops: That’s a number one critique where many people don’t like YIMBYs. They’re like, we don’t want a bunch of ugly-looking upzoned buildings going up in our neighborhood. And I do understand some of their concerns. You buy a very lovely home, you put your heart and soul into it, and then you just have 20 of the same go up nearby. I can understand the aesthetics issue that people have. Gary Winslett: But it’s the regulation. Tahra Hoops: Yeah, I know. I agree. Gary Winslett: They have to follow these totally asinine rules. I’ve been to a bunch of development review board meetings where I live in Vermont, and it’s unbelievable how much people wanna micromanage the look of buildings, but they don’t know what they’re doing. And so you get micromanaging by people who are not trained to. The craziest example of this was, I was at a DRB for a project that was gonna be a bank and 30 units of housing. And this one guy on the development review board was like, I don’t like this. That corner of that building doesn’t have any windows. And the developer had to be like, sir, it’s a bank. That’s where the vault is going. We don’t have windows into the bank vault. And he just couldn’t. It’s just like, come on, man. You are not qualified to be micromanaging. But that’s what’s going on: you’ve got regulators at the super-local level micromanaging the look of buildings, and then when they look like crap, people are like, oh, capitalism. Tahra Hoops: You need bigger problems in life if you care about a window on a freaking pink building. Get bigger problems in life. I’m sorry. Eduardo Mendoza: And there’s a lot of truth behind that. A very big reason of why we have the buildings that look a certain way, or are shaped a certain way, or have massing a certain way, is because of our building codes. And so if we want to work towards nicer buildings, say with courtyards, or more windows, or buildings that look more quaint and, you know, modest, then you do have to understand the big technical book of codes and really point down and reform the code in a way that you will get those beautiful buildings. Muhammad Alameldin: Yeah, if I could add, the codes make it ugly. So it’s like, oh, NEC standards, right? Says that a kitchen island cannot have outlets anymore ‘cause it’s dangerous. It has to be a little popup outlet. And I’m sure it’s because one company is like, hey, we sell popup outlets, and we’re gonna say it’s a fire hazard, let’s put this in building codes. And now we have these little stupid popup outlets in islands, so people don’t wanna do it. So they just build a kitchen island without an outlet, and then people are gonna go and install extension cords from near their stove over, right? So the inside’s ugly. And on the outside, on top of building codes, we have objective design standards, which are great in concept. Ministerial review: you’re reviewed quickly, your building gets approved, but the city sets what it’s gonna look like. And a lot of them are like, we must have 11 different materials, we must have these setbacks. It’s like if you have 10 people writing an essay: there’s no voice, and it’s really weird. That’s kind of what’s happening. And then you have 11 different materials and whatever, okay, defects are gonna happen, because you didn’t have a general contractor on that objective design board. So now you’re gonna have a bunch of lawsuits in the building. Everybody just keeps getting into other people’s stuff. Just let it go. Let’s just approve housing, right? So, the permit timelines, right? SB 1123 is awesome. Still takes like a year to get through permits and everything. After the fire rebuild in Altadena, they were saying, oh, it takes two weeks for us to approve plans. That’s a miracle. I go to Texas, it takes 24 hours. Tahra Hoops: Ugh. Muhammad Alameldin: This SB 1123 project we got in San Diego that I’m seeing right now, it took them like 18 months to go through the government process, and San Diego’s really fast by California standards. But they’re installing the units in a day. Then they’re putting in everything within a month. They’re doing modular, but you can actually build the units and have everything installed and be done in a month and a half. But our permitting delays are a year and a half, because people just want random little things, because planners don’t have anything to do. And it’s a huge problem. Modular Housing Tahra Hoops: So you actually brought up something that I think our audience would be interested in: modular building. That’s on the newer innovation front when it comes to housing. And you mentioned how it is faster because of it. I would love an overview there. Muhammad Alameldin: Oh yeah. So modular, I’ll go over some, and I know Ed has some thoughts on this too. If you ask people in the housing industry, they’re like, oh, modular’s not gonna be the solution. And I was kind of in that camp, but then I realized, no one actually did a concentrated push in legalizing modular and streamlining it at a state level before. There are some reforms proposed in California this year. There are gonna be better reforms proposed in the next two years, I promise you that, and we’ll work on that. But basically it’s saying, hey, instead of building everything on site, we could build some, if not all, of the unit offsite and make the installation in someone’s backyard or on a vacant lot a lot faster. So it’s prefabricated. But you’re building in a factory, so you don’t have to deal with, oh no, it’s really windy, or, oh no, it’s raining. You could actually just build it there. It’s inspected there, through state standards, not local standards. And then it goes onto the site. Yeah, we need to standardize stuff. Why do we have jurisdictions doing their own thing? That’s wild. What system does that work in? Especially during a crisis. So, yeah, but there’s some issues, right? If you’re transporting stuff from the factory, let’s say from Burbank to San Diego, every different city and county has different rules on, like, how much CHP has to be around that car to drive it over, what hours you could go. You have to have a permit for each stretch of the way, and you can’t do it for a whole year, it’s for every trip that you do with a modular home. And it’s like, oh yeah, you literally can’t transport these buildings. Tahra Hoops: How do we get anything done? Gary Winslett: It’s like a case study of something that should absolutely be at the state level, not at the local level. If something’s safe to put on the I-5 or whatever, it should be safe for the whole I-5, not this town versus that town. That’s crazy. Muhammad Alameldin: Yeah. It makes sense if it’s like the Grapevine. Yeah, okay, maybe we should have different times and standards for the Grapevine. But if you’re driving from Glendale to Pasadena, there shouldn’t be different standards there. And the Terner Center has a whole paper [https://ternercenter.berkeley.edu/blog/potential-pathways-to-scale-innovative-construction-methods-in-california/] about 40 different reforms that you could do to help with innovation when it comes to modular housing. Tahra Hoops: Eduardo, I did want to see if you had anything to add there as well. Eduardo Mendoza: You really covered it. I think the big takeaway from this is: we could solve this through policy. This is not a technological constraint. This is something that we could address head-on and significantly lower the cost of housing. Tahra Hoops: I often joke that the internet thinks everything’s a conspiracy theory these days. I look around and I think everything is a policy issue these days. Every time you see something that is a small nuisance in your life, I’m Googling immediately: what policy constraints have led us here to annoy me on this specific Tuesday afternoon? That is the dark pill I am on, all of us. Gary Winslett: You know what’s funny, though, is some of the things you bring up actually travel really well outside of California. So like the modular stuff, we’re really starting to lean into it in Vermont more, because our margins are just a lot thinner. California’s got money, and we just don’t. And so anything we can do to cut cost, we’re trying to do, and modular’s a thing people are really leaning in on. Catalyzing Finance: Skyscrapers and Presales Gary Winslett: I also wanted to ask about the catalyzing finance point, because there’s a lot of areas, you know, it might be a low-income urban area or it might be a super rural area, where the financing is a really important deal, in being a little short of making a project pencil versus actually getting it to where someone will build it. So could you say a little more about how you actually do the finance catalyzation? Muhammad Alameldin: Yeah, so the first one we’re tackling, the biggest one, is AB 2074 [https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB2074], which is this bill by Assemblymember Haney that we’re working on with the trades, with the unions, that says the biggest cities, the seven biggest cities, could draw little maps of where they wanna see skyscrapers. It has to be union labor, and of course you’re gonna use union labor when you build a skyscraper anyway, like naturally that’s what’s gonna happen, right? And what we’re doing is, skyscrapers have such a bad rap in California. Millennium Tower, graffiti tower. So capital doesn’t wanna invest in skyscrapers. So it proposes a revolving loan fund of $500 million from the state that goes in to replace the most expensive part of the debt, with like 12 to 15% interest, with like 5 to 6% interest. And when the building is done, that money goes back to the state, and then it revolves again to another skyscraper. And what it does is, it’s very Keynesian. We kind of create this catalyst where people are like, oh, these skyscrapers are being built, people are renting them, they’re mixed-use or they’re residential, and they’re in downtowns or wherever the city wants more development. Okay, private capital feels more comfortable, right? Because if you have a Millennium Tower that fails, capital’s not gonna invest in another skyscraper in that area in San Francisco for the next 30 years or more. Or graffiti tower. And that’s the issue of all housing in California, is that financial capital, if you tell them, hey, are you gonna invest in California real estate? No. These big institutional investors that people are complaining about, they’re like, oh, BlackRock’s buying homes and flipping it. They’re not doing that in California. It’s too expensive for even them to do that. So it’s like, there’s not this big corporate scheme in California with money. Not really, because it’s so expensive. You’re telling me you’re gonna hold onto a million-dollar home and wait five years to get $80,000 in equity? No, I could buy fartcoin and make double my money tomorrow. So we’re trying to get capital more comfortable in investing in California. When it comes to lower-resource areas, when it comes to other types of housing, a credit enhancement, which says, hey, for 10% of this loan, the state will back you on this. We do this with small businesses, and we do this with other stuff that we wanna promote already at the state level. So it would be like, hey, I know this is like a rougher neighborhood, but we want more investment here. And it’s not like opportunity zones, even. And that’s a very controversial thing, opportunity zones. I’m not gonna touch that. What this is, is like: hey, you’re a developer, and 75% of your debt is from a bank, 25% is from private equity. Private equity debt’s really expensive, and that’s actually how they invest in the housing market. Bank, can you put another 10% down for construction? So this project could pencil. And they’ll be like, okay, as long as the state covers that 10%, we’ll do it. Tahra Hoops: That’s something that, to me, makes a lot of sense. And I love how you brought up that even for these larger institutional investors, they’re making like no money doing so. Which is why I find it to be so funny with specific areas like California especially, people are like, well, corporations are just buying up all the homes, that’s why we don’t have any homes here. I’m like, there are just no homes, period. The undersupply crisis we have here is so deeply severe. I would welcome anyone to come here and start building homes, and if they make a smidgen of a profit, to me that’s better, because at least people are getting into shelter, they’re getting into homes, and they’re fixing a problem that should have been dealt with decades ago. But because of many years of well-meaning policies, we’ve kind of just dug our grave so deeply. I also wanted to, oh, go ahead. Muhammad Alameldin: Oh dude, I dealt with that specifically, ‘cause I tried to buy a home and I lost out to an all-cash offer a few years ago. I was like, oh man, must have been a corporation. You know, this is evil. I talked to a homie who’s really good at housing finance. He was like, nah, this guy most likely already owns a home. He got a hard money loan against his existing home, bought that house all cash, and then he’s gonna refinance in two months to get a better interest rate. And he beat you with an all-cash offer. Everyone does this. Gary Winslett: Right. Yeah, that’s how it works. I was talking to my real estate agent here, and he was basically saying the same thing. And it’s always so funny to me too when people say that here, ‘cause I’m like, I promise you no one at Goldman Sachs is like, you know what we’re gonna do? Corner the market in housing in Vermont. That is like our next play. Tahra Hoops: That’s the moneymaker. Gary Winslett: That is not what’s going on at all. Muhammad Alameldin: And the way to break people completely free from private equity in the housing space is allowing for more presales. If a developer could use bank debt and a bond, a bond which is made up of deposits, which is protected and goes back to the buyer if the developer goes under, then we don’t need private equity in the housing market. The United States is the only place that has private equity when it comes to new housing supply investments. For everyone else, it’s like, for small things, some skyscrapers and stuff. You go to Mexico, go to Brazil, go to Singapore, you go anywhere, with social housing or market rate, they all use presales and initial capital to make it, because that’s the only way it pencils. We just don’t do that here. Single Stair, Finally Gary Winslett: Eduardo, I wanted to move over to, we’ve delayed single stair long enough in this conversation. I think within this conversation we all know what single stair is, but just for our listeners, walk me through why we even have the two-stairway requirement to begin with. What’s the point, and why is it that other countries don’t have that? Eduardo Mendoza: Why do we have it? We have it because it was safe, or it made buildings safer, at the time that it was adopted. Two stairs is safer than one in an unprotected building. There were terrible catastrophes where, you know, you would have a fire coming in from a unit or a room that would get into the staircase and spread out through the entire building, and you would have mass-casualty events that were truly tragic. And so in the US, we typically addressed a second means of egress either through a second internal stair or through a fire escape. That’s why a lot of older buildings will have, you know, iron fire escapes right on the facade. In the mid-20th century, I believe, we got rid of fire escapes and ended up just mandating two internal ways of exiting a building. As the building code has evolved, as fire code has evolved, as all the codes have evolved, they’ve evolved with redundancy in mind. And there have been a lot of advances in how we build homes, how we even build our furniture, right? We have fire-resistant furniture, we have fire-resistant walls, we have compartmentalization. We have certain lengths of how much you could travel inside of a building before needing a mode of egress. All those things combined have kind of diminished the need for a second means of egress in our contemporary setting. And other countries outside of the US, they’ve acknowledged this. And they typically will build their buildings and systems that still maintain very, very high levels of fire and life safety, but also allow for a single means of egress within the building. So it’s a little bit of a broad answer to your question. But at one point it was completely legitimate to address fires with a second means of egress. Today, I believe it’s over 90% of all fires are stopped with a sprinkler system. Gary Winslett: So we’re talking one-hour firewalls, basically it takes a whole hour to burn through the wall, so it’s not just some old pine box that goes up in a few minutes. We’re talking sprinkler systems, rules about how far away from the door to the stairs. What else goes into fire safety, or are those the main ones? Eduardo Mendoza: Oh yeah, way more things. There are limits to how large a floor plate can be, it’s typically 4,000 square feet net. There’s travel distances, the farthest you could be away from the exit stair, 20 feet. There are horizontal travel distances as well, I think it’s 125 feet. In some cases there’s pressurization of the interior stairwell itself. There are rules that do not allow stairs to open directly onto your unit, again, to stop smoke spread. There are higher fire ratings for the stairwell itself. It’s not a one-hour, it’s typically two-hour fire ratings for the stairwell, I believe. In some cases other walls are also two hours or one and a half hours. The way to think about building code is through redundancy. You know, if a system fails, there will be 10 other systems that will take its place. And any jurisdiction that adopts single stair, or a single-stair framework for their smaller, modestly sized buildings, takes that into account. It’s never, you know, we’re just getting rid of a stair and calling it a day. Tahra Hoops: I love that you raised your hand. Muhammad Alameldin: I had to raise my hand. I wanted to add something cool. And I hope you guys don’t hear the plane. So another thing is that, we do this two-stair requirement, so the only apartments we could build are on, like, this massive lot. And then, you know, the distance from any unit in this giant building to the stairs is much farther than if we had five different buildings with a single stair. So it’s more unsafe than if we were to adopt single stair. And Alfred Twu [https://www.sfchronicle.com/opinion/openforum/article/housing-architecture-california-single-stair-17774317.php] did this whole thing in the San Francisco Chronicle that you should look up that really illustrates this. We are trying to be so safe against fires that Pew even says [https://www.pew.org/en/research-and-analysis/issue-briefs/2025/09/modern-multifamily-buildings-provide-the-most-fire-protection] you’re more likely to die in a single-family home fire than you are in a multifamily home fire. We try to make it so safe that in the long scheme of things, it’s actually kind of less safe. Tahra Hoops: That’s insane. Gary Winslett: And it’s not just a safety thing. The double-loaded corridor, you know, is why every apartment building in America feels like a hotel. Whereas if you go to Italy, I lived in Italy for a year, and people are in these lovely family-style garden apartments that have lots of windows and different-size bedrooms, and it’s just wonderful. And you’re like, wow. Eduardo Mendoza: And that’s why architects really love this reform. It really allows them to have the creativity to build out the type of building that you want. And it also benefits developers as well. You have a type of building that is able to adapt to different market conditions, to different tenants or buyers. And right now there is that limiting factor, and it’s sadly tied to what seems to be a non-important piece of code. An arbitrary one, right? One thing that I see a lot today in a lot of new rentals, in 5-over-1s, is the concept of the windowless bedroom, a.k.a. the den. And it’s almost become standardized. You ask anybody from any other country, or even people from here who have no idea of this unit typology, and they say, that’s not good, or, we could do better. Right? And half the time I say, you know, this is something that we have to work with, because this is what the building codes grant us. We can’t deviate. We have to do it, ‘cause that’s the only way we could get the building built in the first place. Whereas that doesn’t have to be a real constraint. You can have units with windows in all bedrooms, right? You can have buildings that have courtyard space and cross-ventilation and all the nice things that improve, you know, your quality of life. Muhammad Alameldin: One window per housing unit, that was the standard for prisoners for a long time. Like, that is what you have to do for prisons. But now the building codes have gotten so hard that if you want two windows in one space, you gotta have a corner unit, and everyone else has to live, like a prisoner has to, with one window. And I want to go back to the market conditions. Because we’ve pretty much outlawed single stair, our building codes are difficult. Other countries, when there’s a housing crisis — ‘cause housing crises aren’t new, like humans have had cities for 3,000, 5,000 — I’m Egyptian — thousands of years, right? There have been other housing crises. Greece had a major one in the 1920s. They were short 4 million homes, just like California. What they did is that they had this thing called, I cannot speak Greek for the life of me, antiparochi [https://en.wikipedia.org/wiki/Polykatoikia]. Where basically the single-family homeowner would exchange their land to a developer for free, on the condition that they get to own two to three floors of the building. And the developer would build a six-story building with one stair. And then you get to build your generational wealth, and then the developer could sell the other units, and then boom. And that’s how they solved their housing crisis in 20 years. I mean, their GDP growth was like 7.7% for a long time, because they’re building so much housing. It was a major contributing factor. So it was good economically, it was good to solve the housing shortage, and then, like, families got to stay together. And we just cannot do that. The main advantage of single stair is that these lots for single-family homes, we could actually build more units on there. And Ed did a beautiful design competition, a national design competition, recently, and he should share the photos. But we could bring back beauty, and we’re just not doing it. Tahra Hoops: It also goes to show, like, when people actually treat this as a crisis, instead of what we have now, as in, we have a large group of people who are struggling under this, but we’re still dragging our feet across. And even if we pass great bills on the state level, we’ll have a lot of local counties and cities do everything they can to water down these bills. It’s like, okay, do you wanna treat this as a crisis or not? We need to have someone just, like, have a firm no, really focus on state preemption, and just get it all standardized, so that we can get more people into homes and stop dragging our feet. Lessons for Other States Tahra Hoops: But in the essence of time, I did wanna open up the last question to the both of you, just for any advocates in other states who are watching California, obviously. You guys at California YIMBY have passed so many great bills. Still, it’s not solved here, obviously. What should advocates be copying here, and what should they just be learning from, as a case study of what not to do? Eduardo Mendoza: Well, so one of my hats is working for California YIMBY. My other hat is working for an organization called the Metropolitan Abundance Project [https://www.metroabundance.org/]. And there we work with different organizations that are truly, truly focused on their core policy issue, and we help them develop model legislation to then introduce to legislatures. So right now we’re working on elevator reform model legislation, single stair, a number of other building codes. On model legislation, we’re doing lot splits, we’re doing one off of 1123 that will be accessible to the country. So we’re proactively working on this, and I invite electeds’ staff and advocates to take a look. Muhammad Alameldin: What I would say is that, number one, keep the laws easy. Our more complicated laws, no one’s building them. So ADUs, small-lot subdivisions, these are working. Sometimes laws in California are complicated because we have to negotiate with so many people. Other states have it a lot easier to pass laws. And number two, we have this great thing in California called the Housing Accountability Unit and the Attorney General’s office. So when cities break the laws, there’s actually an enforcement mechanism to make them do something, that other states do not have. And I applaud the vision of Governor Newsom on this one, actually. Because it’s like, oh, what city was trying to do a whole mountain lion habitat to get around state law? Altadena. No, not Altadena, I’m sorry, wait, scratch that, that sounds so bad. It’s Los Altos. Los Altos tried to be a wildlife habitat for mountain lions to get around state law. Any other state, that tomfoolery would’ve worked. But here, everybody got involved, and I have developers with, like, 400-plus-unit projects working with the AG’s office against the city, because they’re doing illegal stuff. You don’t have that anywhere else. So make the laws simple, and enforce them. That is the most important stuff. One Last Thing: The Ballot Measure PSA Tahra Hoops: This has been great, and I really appreciate both of your time here. I know I learned a lot, and I’m sure our audience will as well. Do you have anything you guys are working on that you would like to plug? Now is the chance. Muhammad Alameldin: Oh yes. So the state of California is at a crossroads. The Howard Jarvis group is pushing something to the ballot [https://ballotpedia.org/California_Two-Thirds_Vote_Requirement_for_Special_Taxes_and_Charter_City_Real_Estate_Transfer_Tax_Prohibition_Initiative_(2026]) that would limit transfer taxes to 0.11% and reverse the Upland decision. Upland is this decision where, if there’s a citizens’ initiative, with 50-plus-1 percent you could fund parks and transit and other things that we like, we don’t need a 66% vote. There’s this ballot initiative that’s going in that’s gonna say, oh, we’re gonna limit transfer taxes, because of a lot of the mistakes that LA has done that have killed their housing supply. And the other thing is reversing the Upland decision. Both of those things are terrible for cities, because then you’re gonna cut fire services, you’re gonna cut affordable housing, you’re gonna cut homelessness services, etc. Both groups, for some reason, think they’re gonna win this ballot initiative, the left and the right. Peter Thiel put $5 million behind it. Tahra Hoops: Crazy. Muhammad Alameldin: California, let us not do a proposition here. Talk to your state senators, talk to your assembly people. Be loud about this. We need to cut a deal at the state level, because high transfer taxes kill housing supply, we’ve seen it. But also, cutting transfer taxes creates a worse Prop 13 environment where we don’t have any services, and no one’s gonna wanna buy a house where they don’t have, like, firefighters around, right? Tahra Hoops: Especially not in California. Muhammad Alameldin: Yeah, especially in California. So let’s talk to your legislators. Talk to your people. Say, cut a deal. The state needs to cut a deal to prevent this proposition, and they have less than a month to do so. This is not a drill. We’re working on this right now, California YIMBY is helping lead these negotiations, and hopefully by the time this is published, we solve the problem. Tahra Hoops: Thank you. Muhammad Alameldin: Thank you for having us. Eduardo Mendoza: bye! This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.therebuild.pub [https://www.therebuild.pub?utm_medium=podcast&utm_campaign=CTA_1]

Yesterday54 min

From Pro-Business to Pro-Market: The Rebuild Conversation with Rep. Sean Casten

The biggest barrier to cheap energy in America isn’t technology, cost, or even politics in the abstract, it’s that utilities get to decide who competes with them. That’s the throughline of this week’s conversation with Rep. Sean Casten (D-IL-06), a clean-energy engineer turned Financial Services Democrat who has spent four years co-authoring the Energy Bills Relief Act with Rep. Mike Levin. The numbers Casten lays out are startling. There are 2,000 gigawatts of new generation waiting to connect to the U.S. grid. Only 85 of them are fossil fuel. The market has already chosen clean energy; the regulatory system keeps blocking it. Meanwhile, electricity bills are up 13% in Trump’s first year, and utilities just asked for $31 billion in new rate hikes. From there the conversation widens: what the One Big Beautiful Bill’s rollback of IRA tax credits actually does to coal communities, why one Category 5 hurricane could push Florida into bankruptcy, and Casten’s central argument, that the Republican Party of his youth was pro-market, the Republican Party of today is pro-business, and Democrats have an opening to claim the difference. Tahra Hoops: Hi everyone. My name is Tahra Hoops. You are joined here at The Rebuild with my co-host Gary Winslett. Today we have a very special guest: Congressman Sean Casten, who represents Illinois’ Sixth Congressional District. It includes a lot of Chicago’s western suburbs. He was first elected in 2018, actually flipping a Republican-held seat at that time. Casten serves on the House Financial Services Committee [https://financialservices.house.gov/] and the Joint Economic Committee [https://www.jec.senate.gov/]. Before joining Congress, he spent two decades in the clean energy sector, including as CEO of Turbosteam and co-founder of Recycled Energy Development. In Congress, he’s focused on energy policy, climate change, grid modernization, and helping to lower utility costs for constituents across the nation. We are very excited to have you. Representative Casten, how are you doing today? Rep. Sean Casten: Good. Thank you for having me. Tahra Hoops: I wanted to jump into the recently introduced Energy Bills Relief Act [https://www.congress.gov/bill/119th-congress/house-bill/7977/text], which is the most ambitious affordability-focused energy legislation House Democrats have put forward this Congress. It comes at a moment when electricity bills are up 13% in Trump’s first year, and utilities just requested $31 billion in rate hikes. Tell us what is in this bill and why this is the moment for it. Rep. Sean Casten: It’s funny. Sometimes moments just come to you. Mike Levin [https://levin.house.gov/] and I, who came in together in 2018, have literally been working on this bill for four years, and we’ve been half joking that we were just waiting for Trump to totally botch our energy policy and invade Iran to really make it resonant, so we could run between the shackles. Somewhat more seriously: when Mike and I both got elected, the Speaker picked us to serve on the climate committee. We wrote a set of 700 recommendations, about 300 of which became law in the Inflation Reduction Act [https://www.congress.gov/bill/117th-congress/house-bill/5376]. But when we got our report done, we had a bunch of outside experts vet it, and we said: what is the biggest thing we’re missing that’s going to delay our ability to achieve these goals? And they said, without exception, that the United States has never built transmission fast enough to deploy clean energy. We’re very good at building gas pipelines, which means we build gas plants where we can run the gas to it at the load. But we try not to build transmission. And so we said, we’ve got to have a package, and we have to have a package that when the window opens, it gets there. I say this in a climate perspective, but I could just as easily say it in an affordability perspective, because if you can keep your lights on and keep your house warm and get back and forth to work every day without buying fossil fuel, that also means you can do all those things without paying for fossil fuel. Clean energy and affordable energy are completely synonymous. And candidly, that’s always been the biggest political barrier, because truly prioritizing the interests of consumers to have affordable energy is an existential threat to the fossil fuel sector. Gary Winslett: It’s funny you mention transmission. Where you are, we make tons of wind in Iowa, and Chicago’s where it needs it. You’re sitting across exactly one of those transmission corridors. Rep. Sean Casten: Yeah, and there are multiple projects that would bring that wind, that cheap power, into the area, and they’ve been consistently bedeviled by grid interconnection. Grid interconnection is one of these things. The old joke is that asking a utility to connect to their grid is like asking a man for permission to date his wife. Whether or not that’s the best outcome for all involved doesn’t really factor into the conversation. When you’re sitting there as a utility and power prices are running 90, 100, $110 a megawatt-hour, and somebody wants to build a line that would bring $20 or $30 power in, that’s a competitive threat. You don’t need to be cynical about it. That’s just a practical reality. No business wants to compete with lower-cost supply if it doesn’t have to. And so we’ve seen time and time again utilities and regulators doing a really good job of building transmission lines to bolster reliability and an objectively terrible job of building transmission lines for affordability. Gary Winslett: Has your region, PJM, been particularly tough on this? Rep. Sean Casten: Everybody’s tough in their own special way. I criticize ERCOT [https://www.ercot.com/] all the time because ERCOT has remained un-interconnected. That’s the Texas grid. On the bright side, I think PJM [https://www.pjm.com/] has done a much better job than MISO [https://www.misoenergy.org/] of really embracing markets as tools to solve problems. But all of the regional transmission organizations are really bedeviled by governance problems. Their governance is set by their members, and their members, because they have so much capital invested in the system, are innately lowercase-c conservative. And a lot of what Mike and I have done tries to fix those things: let’s reform the governance process, let’s compel all the RTOs to be evaluated on a consistent set of metrics over the same geography and on the same timeline, let’s give FERC [https://www.ferc.gov/] the authority to permit transmission lines, which it already has for gas lines. We know that system works. We have the ability to do it. But let’s get rid of these abilities for local actors to gum this up, while still making sure that we protect consumers and the environment. Gary Winslett: Of course. That would just put green energy on the same level playing field as natural gas. What we’ve done with natural gas has been great, but green and clean electricity should be on the same playing field. Rep. Sean Casten: Look, you can see it in the numbers. We currently have about 1,300 gigawatts of generation in this country. There are 2,000 gigawatts waiting to be interconnected. Of those 2,000 gigawatts, 85 are fossil fuel-fired. Everything else is wind, solar, batteries. That’s what markets want to build. Wouldn’t you prefer to build an asset with no operating costs so you can make more margin? That’s what they want to build. But that stuff is also the competitive threat. Gary Winslett: Could I also ask you about the tax credits in this bill? What do they do and why do they help? Rep. Sean Casten: The simplest way to answer is: we simply restore all of the IRA tax credits that were taken away in the One Big Beautiful Bill that Republicans passed. The reason is a little more important from a policy perspective than just “let’s get back at those bad guys.” If we were to fully embrace affordable energy, it would be a massive wealth transfer from energy producers to energy consumers. Every single American is an energy consumer. A small number of Americans are energy producers. Do the math. All is more than some. However, for certain communities, that wealth transfer is really, really economically painful. Look at what’s happened to the West Virginia economy as markets have turned away from coal. If you’re living in a town where the mine shut down, then the power plant shut down, then the Walmart shut down, and now the school can’t afford an improvement to the football field, you might understandably not see affordable energy as your friend. And part of the reason why we wanted to bring those tax credits back in is that when we crafted them, and when I say “we,” I’m talking Mike Levin and the other members of the climate committee, we were really intentional about saying we have to put incentives in place that prioritize investments in those communities that have historically stapled their economy to yesterday’s technology. Because they’re all Americans, and we want everybody to see this as a win, not just the people who don’t depend on the oil derrick in their back 40. And so those IRA credits with those incentives were really important to put back in. Tahra Hoops: It is great to see you champion that, because there was so much progress in the prior years and it seemed like we were just starting to see results. But then we have people across the aisle who seem stuck in the past. There was a recent quote from Energy Secretary Chris Wright who said, “I am pretty confident coal will lead the world in global electricity production”. I find that mind-boggling, because if you look across the globe, coal seems like something of the past. Right now we are in an all-of-the-above energy approach, and renewables are a part of that. You’ve directly criticized the Trump administration’s energy policies. What would you say to Republicans who argue that coal or fossil fuels are still the cheapest and most reliable option? Rep. Sean Casten: Look, it’s not freaking complicated. I could tell you academically all the reasons why, if you don’t have to pay for inputs, you’re going to have a lower operating cost and therefore compete in a market. That makes me sound like a college professor. If you don’t want to treat it that way, just look at the freaking scoreboard. Coal consumption in the United States has declined over 50% in the last 15 years. That’s not because of wokeism. It’s because a coal plant is a really lousy investment. The private sector is not building coal because you can’t make any money running a coal plant. Coal plants don’t run that often because they get outcompeted by everything else on the grid. Oil consumption in the United States is exactly the same as it was 15 years ago, not because of wokeism, but because given the choice between a car that gets 10 miles to the gallon and a car that gets 30, or better yet an EV that doesn’t take any fuel, people like not paying for energy. It’s pretty awesome not to have that bill. So as I tell my Republican colleagues: shut up with your wokeism. You are just afraid of capitalism, because you are a mediocre individual who cannot compete, because you are part of that half of the population that is well below average. That is the Chris Wright story. Tahra Hoops: I cannot agree with you more. I saw that and I’m like, these are the people who lead and govern us. Rep. Sean Casten: Chris Wright testified before a science committee hearing that I was on, before he came to Trump’s office. I told him that he was a disposable human being who would be an embarrassment to his grandchildren. I stand by my words. Nobody in the energy industry took Chris Wright as a serious player. He was a guy who could say things and go on Fox TV, and he is as qualified to be Secretary of Energy as Pete Hegseth is qualified to be Secretary of Defense. These are not people who were recognized as understanding the nuance in their industry. Before they got there, they did a good TV hit, and that’s what Trump wanted, and that’s what Trump got. We have to engage with them because of their power and because they’re tied with the White House. But when you look at what markets were building, markets wanted cheap. When you look at what the rest of the world is building, those not bedeviled by this political concern, they’re making those transitions to more affordable energy. I’ll give you a statistic. If you divide US GDP by total energy use, we generate about $200 of GDP for every million BTUs of energy. The Danes generate over $500. The Swiss generate over $600. The Brits generate over $300. That means we could potentially double the size of our economy with the same amount of energy input, or cut our energy input by half and have the same standard of living. Why wouldn’t you want to do that? We invest in labor productivity all the time. We want to get the maximum return on capital. If you’re a steel manufacturer, you don’t want to throw iron away. You want to turn as much of it into steel as possible. Energy is the only place where the United States does such a terrible job relative to other first-world economies at turning inputs into useful output. We can either be depressed about that, or say: what an amazing opportunity to grow our economy. Gary Winslett: That’s exactly right. The United States has both solar and wind potential, different places, to be sure. Denmark has great wind, not ideal for solar. We actually have both. So we’re kind of just leaving a lot on the table. Rep. Sean Casten: And candidly, our challenge is that we also have a lot of coal and a lot of gas, and you’ve got a lot of communities that have built their economies on that in ways you don’t see in other countries that embraced efficiency sooner. Denmark is a little bit weird because Denmark made the commitment to efficiency before the North Sea oil discoveries, and by then it was habit. The US, I think, is still deciding whether we want to be full-on adults or whether we still like having the lack of responsibility that you have when you’re a teenager. Tahra Hoops: It seems to me, just from hearing this, that Democrats are the people who would like to succeed in a capitalistic market, and it’s the Republicans who are holding us back by trying to own the libs and arguing about culture wars from ten years ago. That’s not the narrative you see online. When you think about Democrats and how they move when it comes to innovation, somehow you’d think they’re going to be the party trapped by woke culture stories that you’ll see in the New York Post, stories that are going to harm innovation for all, and that Republicans are trying to be the serious adults. But as you can see from the work you’re doing, it is just the opposite. Rep. Sean Casten: There’s ample data, and I hate that we have to say this. The Joint Economic Committee, bipartisan and bicameral, has done research showing that going back six presidents, the economy always performs better under Democratic leadership. Not just a little better. A lot better. Eighty to ninety percent of all the jobs created under those six presidents were created under Democratic presidents. The GDP always grows more, the dollar’s always stronger. I will say there’s nothing innately Democratic or Republican about supporting competitive markets. Ronald Reagan deregulated the airlines and telecoms and led antitrust enforcement. That’s an ideology that works. I think what’s hard, and this is arguably just as hard for Democrats as Republicans, is that any business that has achieved a certain scale has a lobbying shop. Any entrepreneur with a great idea who can compete against that incumbent doesn’t spend their time on lobbying. So you hear very few voices on either side of the aisle in Washington saying, “What we need is more competition.” Competition has never really had an advocate in Washington. Gary Winslett: It’s funny you mention how bipartisan some of this is. A lot of that deregulation actually starts under Carter. Carter just doesn’t get as much credit for it as he probably should. But that goes to your point. There’s not a Democrat or Republican way to ensure competition. Rep. Sean Casten: Maybe this is just my anchor point. I was born in ‘71, I don’t remember Nixon at all, I have vague memories of Carter, but Reagan was the first president I really remember. But I do think the Republican Party of my youth was a pro-market party. The Republican Party of today is a pro-business party, and those are not synonymous terms. There’s a real opportunity for Democrats to step into that void and say: let’s be the pro-market party. Gary Winslett: I did want to ask you a little more about the Energy Bills Relief Act. If we could get it, it’d be great. How would you assess success in the first few years, if it passes? Rep. Sean Casten: Let’s make no small plans. I think the last real meaningful energy bill Congress passed was the Energy Policy Act of 1992 [https://www.congress.gov/bill/102nd-congress/house-bill/776] (EPAct 1992). That sounds crazy given how long ago that was. We do energy policy roughly every 15 years. We had the Public Utility Regulatory Policies Act of 1978 [https://www.ferc.gov/media/public-utility-regulatory-policies-act-1978] (PURPA), which was transformative. We had EPAct 1992. We did one in 2005, but it was kind of small. So that’s really the last big one. When EPAct was passed, within 10 years we built 200 gigawatts of natural gas combined-cycle generation, because suddenly there was an incentive for people to build the lowest-cost source, which at the time was natural gas. Within 10 years, the nuclear fleet went from running at 60% capacity to 90%, because utilities had an incentive to dispatch their lowest-cost assets. So I think we should hold that as a minimum measure of success: within a decade, a complete transformation of the US grid. Right now you have in the queue all the generation you need to fully decarbonize. If we don’t deploy that quickly, we didn’t get the rules right. Some of what we’ve done is top-down and mandatory, but a lot of it is just changing the incentives. For example, we have provisions that say: if a utility is investing to decongest the part of the grid you’re on and bring prices down, why don’t we let them make a little more money? Instead of seeing that as a zero-sum fight. If a utility deploys what are known as grid-enhancing technologies, tools that lower line losses on their grid, why don’t they get to keep some of those savings and give some back to the ratepayers? Right now, all of those things are zero-sum fights. So a lot of what Congressman Levin and I have done is to make utilities partners in this, the way EPAct ‘92 gave utilities a pathway to preferentially build the lowest-cost assets. It’s time to update that bill. The measure of success: let’s be ambitious. Once we’re having a conversation about how zero-marginal-cost supply competes in a market awash in zero-marginal-cost supply and still gets paid to generate, that’s when I know we’ve succeeded. Tahra Hoops: That all sounds great, and I hope we can get past the gridlocked Congress. Midterms matter so much. But I want to look beyond this bill. You spent four years working on this, and it’s incredibly politically salient right now. What are the top issues you’re focused on, and where do you think you could make the biggest impact this Congress, outside of this bill? Rep. Sean Casten: The stuff we’re really focused on, and you mentioned that my committees are mostly financial regulation, I’m really increasingly concerned that our next financial crisis is either going to come from crypto or from climate change. Both are creating massive systemic risks. We spend a lot of time trying to identify where those risks are pooling in our financial connective tissue. On the climate side, here’s a little example: six of the top seven most uninsured housing markets in the country are in Florida counties. Miami-Dade is number one. Broward County is number two. I think Harris County, Texas, is number three. And then it’s a bunch more Florida counties. Twenty percent of all Florida homeowners are in the state insurer of last resort. If that insurer goes away, they have no coverage. The total value of Florida real estate is about three times total Florida GDP, which means it would only take one Category 5 hurricane to essentially force the state of Florida into bankruptcy. I’m not being hyperbolic. Just run the math on how much of a hit you’d need. The part of this I think is bipartisan: we’ve never really done a good job of monitoring systemic risks in our financial system beyond a handful of systemically important banks. As we saw with the 2008 financial crisis, if the risk goes off the bank balance sheet and onto an insurance company’s balance sheet, our regulators stop watching it. We made some changes after the financial crisis, but now you’ve got a scenario where the risk goes straight through the insurer onto the property owner, who just says, “I’m not going to get insurance because I can’t afford it.” Where does that risk start to pool? And our financial regulators, particularly in this Trumpian moment, are politically scorned if they even ask the question about climate financial risk. And yet we know those risks are there. But really the government should be, in the words of Jack Handy, I’d rather be rich than stupid. Gary Winslett: Fair enough. Tahra Hoops: I live in Los Angeles now, and for the first time in over a year, we drove down to Pacific Palisades and part of Malibu, which over a year ago was completely burnt down. To see all the structures that were so iconic, and now it’s just complete rubble with not much work having been done. A lot of it is due to the insurance problem we’ve been facing here. It was something they were trying to ignore, and then the wildfires blew it up in everyone’s faces. To see it for the first time in over a year with my own eyes was a very shocking and eerie experience. Rep. Sean Casten: This is heavy. If you haven’t read the work of Spencer Glendon [https://probablefutures.org/about/team/spencer-glendon/], I would highly recommend it. He runs Probable Futures [https://probablefutures.org/], a former managing director at a wealth management firm who has gotten really into climate. One of the points he’s been making for a while is that our species 10,000 years ago survived in a climate very similar to the one we have now, except we were migratory. We need to start thinking about what it looks like to survive in a climate as volatile as the one we have now, because when confronted with this before, our species thought it wasn’t a good idea to tie all your wealth up into a single fixed asset in a fixed geographical location. We didn’t build cities on rivers or along coastlines because we couldn’t count on them staying stable. That’s a really scary prospect. But read the news. There seem to be a lot more migratory people now, aren’t there? Gary Winslett: It’s funny, in a couple of different ways over the last few minutes you’ve brought up housing, and that was something I wanted to ask you about. A lot of our first pillar at The Rebuild, and all the stuff we do on the cost-of-living blueprint, is about increasing the supply of housing. From your seat on Financial Services, what do you think is the single biggest federal lever that would actually move the needle on housing supply? Is it land use? Is it something to do with Fannie and Freddie? Is it something else? Rep. Sean Casten: Historically the stuff that has worked best and been most politically durable is lowering costs for first-time homeowners. I say “politically durable” because if you’ve never owned a house, the price of housing is daunting, and we’re seeing the average age of first home purchase going up. On the other hand, 60% of American households own their own home, and the majority of people’s wealth is tied up in their home. And if you want to lose your next election, bring down the cost of 60% of Americans’ primary source of wealth. If you don’t have housing, housing is a cost. If you have a house, housing is an asset. We want assets to inflate. We want costs to go down. So where Congress has been most effective is helping that first-time buyer get into a home, whether through tax credits or through programs like what we did after World War II, where at least if you were a white American you got a lot of opportunities for discounted mortgages. The things we call “the projects” were initially built as places for people to get stable housing, and generally that was very racially mixed housing. I’m oversimplifying, but not by much. But then the incentives to lower the cost of first home ownership were applied in very racially disparate ways. And so the projects became a racial thing. That wasn’t how they were first defined, and they worked. We saw home ownership spike with those programs. I think we’re close on doing a housing bill that would have some good stuff in it. We’ve still got to work out some kinks with the Senate, particularly on what a “financial buyer” of a home looks like and how to prevent financial buyers from coming in. That sounds easy if you just say “private equity is bad.” But then you ask: does anyone have a friend with some investment properties? Would they be covered by the ban? What about a firm that owns housing to provide temporary accommodation for people relocating for a job? I think there are some structural issues that don’t work in what’s come through the Senate, but I’m hopeful we’ll have really hefty credits for first-time buyers in a lot of different structures, because it’s worked in the past, and it stays away from that politically toxic third rail of lowering the price of everybody’s assets. I represent wealthy people in the suburbs. I would absolutely lose my election if I said, “You know what we need to do is multifamily zoning on your property.” Tahra Hoops: I appreciate your candor. Trump has even said himself: the thing about building more housing is it will lower housing prices. I understand that point of view, but I’m glad you brought up making it easier for people to own homes. I critique a lot that we are very much in a boomer economy, and it’s very difficult for younger generations to feel like they can get ahead. The economy used to feel like a waiting room. Now people feel like they can’t even get into the waiting room. I would love to pick your brain more, but we’re coming short on time. Let’s do some rapid-fire questions. Low effort, nothing crazy, just the first thing that comes to mind. What is something you think is too expensive, and you can’t say housing or electricity prices? Rep. Sean Casten: Junk fees. How much stuff do you get charged for where you’re like, “I don’t even know what value I got”? Every one of those junk fees is too expensive. Gary Winslett: When I bought a house I remember title insurance. I started looking into it and I’m like, there was no reason this should be this much. Rep. Sean Casten: Like every time you fly on an airplane. What am I paying for now that I didn’t use to have to pay for? Tahra Hoops: And what is a policy or innovation that you believe is underrated? Rep. Sean Casten: The Office of Technology Assessment [https://en.wikipedia.org/wiki/Office_of_Technology_Assessment]. It was this amazing office that provided technology assessments for every member of Congress, so robust that in my early years as an engineer and consultant, I’d read OTA reports to get smarter. I’d go in and say, “Let me tell you how paper manufacturing works. Let me tell you how steel manufacturing works. I’m investigating next-generation battery technology. How does that work?” Gingrich and the Republican Congress killed it in [ed. ‘95]. It has never been brought back. Rather than criticize Congress for not being up to speed on new technologies, I don’t think we talk enough about the fact that Congress created an agency specifically to keep us up to speed, and it was a choice of Newt Gingrich’s Republican Party to make Congress dumber. It hardly cost anything. A budget of about $10 million a year. Gary Winslett: Really Pennywise pound foolish. Rep. Sean Casten: Again, I’d rather be rich than stupid. That is a politically controversial statement. Gary Winslett: What’s something people don’t really know about your district that you find fascinating? Rep. Sean Casten: My district was the last home of Muddy Waters [https://en.wikipedia.org/wiki/Muddy_Waters]. Coolest guy who ever came from my district. You’d never know it. If you drive through Westmont, Illinois, right now, you wouldn’t think this is where you get the blues. But if you got the blues, got on the train, made it part of the Great Migration, came up north, inspired all these people, and finally had enough to put down a down payment and live in a little house in your final years, Westmont was the place to go. It’s a cool piece of history that runs counter to people’s stereotypes. This does not look like the heart of blues in America. Gary Winslett: That’s fascinating. I didn’t know that. I’m glad I asked. Tahra Hoops: And what is something that you think your district does really well? Rep. Sean Casten: We have really smart and thoughtful people. I’m a nerd at heart. I’m an engineer. Every time I do a town hall, or when we do polls, you realize there are soundbites that infect our public discourse that you can put on a sign. And then you go and talk to people, and they’re just very nuanced and very thoughtful and appreciate the complexities of issues. I don’t know if that’s true everywhere in the country, but I joke all the time that the smartest, most athletic, most charismatic, most talented people in America are all in Illinois’ Sixth District. Not just the 55% who vote for me, to be clear. Tahra Hoops: All of them! Well, this has been a lovely conversation. Thank you for all the work that you do. We definitely appreciate it. Thank you for taking the time to be here. Gary Winslett: Thank you. Rep. Sean Casten: Thanks so much for having me. Appreciate you guys. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.therebuild.pub [https://www.therebuild.pub?utm_medium=podcast&utm_campaign=CTA_1]

6. maj 202634 min

From Housing Crisis to Energy Revolution: The Rebuild Conversation with Tom Steyer

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