California Regulatory Burden

I often tell folks that while the taxes in California are irritating, what has really killed my interest in expanding in California is the regulatory burden.  It took 3 years to get through Ventura County planning department to get permission to put a modular ticket booth in a corner of an existing parking lot -- only to be denied.  I have faced potential prosecution because we demolished an unsafe deck without state permission.  I now have to fire people who try to work through lunch or else face employees suing  me (successfully!) later for their voluntarily working through lunch.

I think that is why I enjoyed this blog, SLO Leaks, so much.  It is a 3-1/2 year story of an obviously wealthy gentleman trying to get the local planning board and later the California Coastal Commission to allow him to build a house on his residential-zoned land.  I sat up for hours last night reading through it.  42 months and $3 million later, he still is not even close to having his approvals.  It is interesting to see his respectful-of-authority tone shifting over time, until at the end he is writing about how he has shifted his company's new office and expansion from California to Texas.

Here are a few nuggets.   Here is what he is up against:

Once a year the Public Works Dept gives a report on what has happened in the previous year in the Avila Beach area. One part of their report is on how many building permits were issued. In order to get a building permit you first have to get a minor use permit through the Planning Dept, so this is a good gauge of how much work the Planning Dept does. So for the period from July 1, 2010 to June 30, 2011, in the Avila area, which has Ryan Hostetter as a full time planner, the entire list of building permit issued is here:

One single family residential permit was issued during the entire year.

That’s it. No commercial buildings, no office building, no barns, just one single family house permit. And it wasn’t my permit, that’s for sure – because I am now going through the potentially years long Coastal Commission permit appeal process before I can even apply for a building permit.

And this:

So after waiting nearly a year, Daniel Robinson, who is a low level bureaucrat with the California Coastal Commission, and who had never even been to the house site, and who had never even met me or my wife, has told me that he doesn’t like my front yard, he thinks the retaining walls are too big, he thinks my house is too big, and that he doesn’t like the overall design of my house. Daniel thinks that my house should look more like a farm house, and also that people walking around in the city of Pismo Beach will be offended by the mere sight of my house (so called “visual impact”). And if my house design doesn’t please him then he will recommend to the full Coastal Commission that they deny my permits. Since I will only get 3 minutes to defend my house in front of the Coastal Commission I would then probably lose that permit appeal vote and I will be unable to build my house at all, and I will lose about $3 million, and will have wasted years of my life.

The California Coastal Commission is perhaps the most capricious and authoritarian government entity in the country, for example:

But then there was the minor issue of a permit for Daly City, a suburb of San Francisco, to rebuild a rock retaining wall that had been damaged during the last winter storms. It was such a minor issue that Daley City didn’t even send a representative to the CCC meeting. What could possibly go wrong?

The rock retaining wall was to protect a dirt and gravel road that follows along the coastline. On the other side of the dirt road is an abandoned landfill that Daley City capped over in the 1970′s. And I watched the Coastal Commission, apparently on a whim, decide to overrule their staff and instead of issuing a permit they decided to require Daily City to dig up the entire landfill and relocate it inland somewhere. Where it got relocated to the Coastal Commission didn’t care – since that isn’t their problem. And the estimate to do this landfill relocation is $125,000,000.00!

$125,000,000.00 works out to $1250.00 for every man, woman, and child in Daly City. And the Coastal Commission decided that this must happen with about 10 minutes of discussion amongst themselves and without a single fact to cloud their minds! It was both unbelievable and terrifying.

From all the facts, it looks to me like he is never going to get approved.  But you can get quick approval from the  CCC -- if you are rich and have political juice

Like me, [Steve Blank] is in the high tech industry. Like me, he has started several high tech companies....

After Steve sold his last startup company he applied for a permit to build a house in the California Coastal Zone in 2000. And, just like me, Steve’s land use permit was appealed to the California Coastal Commission. The reason for the appeal was “sensitive habitat” issues. (I don’t have any sensitive habitat issues because my proposed house is in the middle of a field of non-native weeds.)

Unlike me, Steve’s appeal to the Coastal Commission went pretty smoothly. He had his hearing in only 8 months – start to finish. It has taken me a year and a half, after waiting a year and a half for SLO County to issue the permit in the first place. And there were no onerous “Special Conditions” imposed on Steve by either San Mateo County or the Coastal Commission.

Here is the list of “Special Conditions” that the Coastal staff wants to impose on me.

Superficially Steve’s house and my house are similar. I have a main house and a barn on 37 acres, Steve has a main house, two barns, and a farm labor house. But Steve’s house is 15,780 sq. ft., with a swimming pool, and a 2,500 sq. ft. barn, and another 3,040 sq. ft. barn 31 ft. high, and a 1240 sq. ft. farm labor house all on 261 acres. So Steve’s house is around 3 times larger than my proposed house (and much taller). Steve also got to have a fence and there was no requirement for public access. And Steve was able to build his house to look anyway he wanted. No “rural agricultural theme” architecture for Steve, that’s for sure. Steve can also plant in his yard pretty much any damn thing he wants.

Steve is pretty proud of his house. A picture of his house is the banner to his web page, which ishere. You can see the front gate of his house here. And this is an overhead view.

Steve Blank is one of the current California Coastal Commissioners.

  • bigmaq1980

    Your sense of timing is impeccable!

    Reading with empathy it was frustrating to hear the example after example of bureaucratic piffle. Then you hit us between the eyes with the infuriating conclusion!

    Puts the 2 hour line-up at the DMV for license renewal to shame.

    Goes to show: 1) Being a so called 1%er gets you diddly squat...it is political influence that counts more and more in this increasingly government run world; 2) the fundamental truth of government is that, invariably, as it expands, it invites / incents those involved in the political process (politicians, bureaucrats, lobbyists/special interest groups) to abuse its power.

    George Orwell, Animal Farm:

    "All animals are equal, but some animals are more equal than others"

    "In a way, the world-view of the party imposed itself most successfully on people incapable of understanding it. They could be made to accept the most flagrant violation, because they never fully grasped the enormity of what was demanded of them, and were not sufficiently interested in public events to notice what was happening. By lack of understanding they remained sane. They simply swallowed everything and what they swallowed did them no harm because it left no residue behind, just as a grain of corn will pass undigested through the body of a bird."

  • http://twitter.com/ElamBend Elam Bend

    Wow, I have a lot of respect for Steve Blank, but this has diminished it significantly. shame

  • sean2829

    We have our little bits of non-sense like this in Maryland too. Liquor licenses are hard to obtain in our state for restaurants. There was a story of a restaurant owner who meticulously followed the procedures, got denied, fixed the deficiencies in the original application, got denied again, tried a couple more times but to no avail. An approval was not to be had by following the published procedures. The owner then learned there was one specific legal firm in Baltimore that had a very good luck with obtaining liquor licenses. After hiring them and paying $10K in fees, he had his license in 6 weeks. There is a happy ending to this story though, the legal firm that was so successful at obtaining licenses was brought up on charges that they were bribing city officials and was ultimately convicted.

    There is a part of me that wonders if the process this gentleman has gone through is the result of not working with the "right architectural firm or hiring the "right" legal firms. After all, how many large solar projects in the state have been held up on environmental grounds because the developer didn't contract with the right union shop to do the construction? And that kind of nonsense, in a state where anyone has legal standing in an environmental suite, is perfectly legal.

  • http://twitter.com/worstall Tim Worstall

    I used to live in SLO. None of this surprises me at all. One of the most pleasant places on Earth until you actually try to do something.

    And I think I can work out who the complainant is too.

  • http://www.booksbyoliver.com/ MountainHome

    The more "authoritarian government" that more restrictions we have on our freedoms.

  • bigmaq1980

    Folks, if you think this is bad, wait until Obamacare becomes a single payer system! The management panels will be just as plodding and corrupt, only it will be people's lives we are talking about.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    Exactly, people have no idea how bad that will get, and quickly.

    Plus, the US Treasury cash burn rate will explode, well above where it is now.

    We are on a very dangerous path which leads to violent uprising.

  • obloodyhell

    }}}} at the end he is writing about how he has shifted his company's new office and expansion from California to Texas.

    Now clearly, this is a man with MORE than half a brain...

  • obloodyhell

    }}} Puts the 2 hour line-up at the DMV for license renewal to shame.

    LOL, If you have a 2-hour lineup at the FL DMV (most of the time you have no need to be there at all, most stuff can be done on-line or via e-mail), just come back later, the only reason for it is that the computers are down (does happen more than it should, but once they are back up it's a lot better. And locally, at least, the DMV is polite and well-staffed with people who know their stuff). That's for standard operator licenses, also -- can't comment on any issues regarding commercial licensure.

  • bigmaq1980

    "...Violent uprising..."

    Too strong a possibility for my comfort. The political volatility means unpredictable results. I fear more that people get desperate and start listening to the even more extreme demagogues out there. The divide and conquer "warfare/envy" rhetoric we hear is already pushing in this direction. Then we could be heading to 1930s Germany, or similar - much worse than an uprising.

  • bigmaq1980

    He was also vocal and not demur - a no no in any bureaucrat's mind.

  • http://profiles.google.com/maruadventurer john mcginnis

    Same here in Texas. About the only time its a hassle is maybe lunch time, a little longer wait. Usually tho, its 15min or less to get an answer to your problem.

  • SamWah

    Steve's a member in really good standing of the "In" club. Do make all the difference.

    'Splain to me why anyone would want to go a few rounds with these sharks and wolves and pour bucketfuls of money down these rats' holes.

  • Eris Guy

    I see California has a need for tough gun control laws.

  • a_random_guy

    Reminds me of a story of a friend of mine, who was building a multi-million dollar commercial building. Everything was finished, but they couldn't open until some final inspection was done. I don't remember what it was called exactly; building safety, or somesuch. The inspector kept finding little things to fuss about, they'd get fixed, he'd come back and find the next thing.

    This went on and on, until the inspector finally gave up and clued them in. There would always be the next "little thing" until such time as someone accidentally left an envelope with $5000 lying about. They did, the envelope disappeared, and the building was able to open.

    My friend was practical enough to do this. I wouldn't have been able to take it: I'd have planted a camera and had the guy prosecuted. Of course, my building would then never have been allowed to open, because I'm sure his buddies would have avenged themselves.

  • marque2

    But less than a full one - after all he threw 3 million dollar away to figure out CA is not the best place to live.

  • perlhaqr

    The answer would seem to be to join the CCC if you want to build something. It's probably cheaper in the long run.

  • Dave Boz

    Here is Scottsdale AZ I have learned that I can't update my 1950s house unless I put in a 21st century overhead sprinkler system. My nice little house, the one that I have been happily and safely inhabiting, won't be habitable without the sprinklers. That is to say, I won't get the city certificate that says I can inhabit it. And why is it, in this metropolis of many cities and millions of homes, the ones in Scottsdale are unsafe without sprinklers but the ones two blocks away in Phoenix seem to be doing fine? Well, maybe it has to do with the juice of the architects (you don't get your sprinkler permit unless you submit an architectural drawing), the plumbers (your plumber has to be specifically certified in sprinklers), and the permit office (you need a separate permit for this, surprise!) Yep, this is how political pull translates to a nice living for some folks: make it illegal to live without their services.
    I'm pushing for a law that requires computer systems to be certified, by a certified computer system certifier. I happen to have lots of certificates. I'm going after the computers of the plumbers and architects first.

  • Ron H.

    Tougher gun control laws are promoted extensively by members of the California Coastal Commission for some reason.i

  • FelineCannonball

    The summary above concerning the Daly City landfill is a little inaccurate.

    In the July 13th CCC meeting, the decision for the Daly City landfill was for a one month continuance so that a schedule for future planning could be added to the permit.

    The landfill is on a steep slope on an active landslide directly above the San Andreas Fault and a small subsidiary fault, with the lower edge actively eroded by open ocean surf. On the escarpment above something like 15 homes were red-tagged and removed the last major El Niño. Over the last 100 years, previous El Niño's and landsliding has destroyed a railroad and a highway along this section of the coast and caused at least a 100 foot retreat of the sea cliffs. The landfill costs the city a ton of money every year no matter what -- actively maintaining drainage, terracing, revetment, etc. It's slowly moving into the ocean even under active management.

    In the August 8th CCC meeting, the permit for the revetment was approved and it is being put in place. A report looking at the feasibility of alternatives is required under the permit and due in three years.

  • Ron H.

    "My friend was practical enough to do this. I wouldn't have been able to
    take it: I'd have planted a camera and had the guy prosecuted.
    "

    Do you mean by his golf buddy the DA?

  • http://devilish-details.blogspot.com/ mesaeconoguy

    Absolutely, but the forces are already unleashed, and we are already headed for economic disaster.

    Further governmental abuse, in numerous directions (additional restriction of rights, removal of benefits, etc. etc.) could have very, very bad outcomes.

    I am not at all optimistic about the future of this country.

  • http://twitter.com/xbradtc xbradtc

    I hate to admit it, but CA DMV is very user friendly. Yes, there IS a two hour line at the DMV. But that's only if you didn't do your business online, or, if you must show in person, make an appointment. The CA DMV appointment system runs very well. And while the staff may not be perfect examples of people striving to make you happy, I've never had any problems with petty tyrants there, either.

  • KJB

    My father and his business partner bought a piece of property near the coast in California with the intention of building a spec home. They had an architect draw up the plans and then went to the local authorities to get a building permit. They were told that because a road (that did not exist and was not going to be built) was shown on that piece of property that they had to redesign the house so that it was a certain number of feet from this non-existent road. My father passed away before he could get approval to build. My sibling and I, along with his business partner, eventually had to sell the property to the town b/c it was a lot that was basically unbuildable with such restrictions. California is ridiculous.

  • bigmaq1980

    Thanks. Clearly it is a YMMV on DMV, same with navigating the various regulatory bodies for granting permits/approvals/zoning changes/etc in different jurisdictions. DMV is only one experience...we could pick another...TSA, Customs? Government is target rich for queuing problems.

    The point is not the length of lines at DMV/TSA/etc for sardonic effect though. There is a whole new level of experience when the decision makers have to use more "judgement" than they do processing plates or licenses. Certainly more potential for abuse and petty tyrannical behavior. Even being a "1%er" doesn't seem to help.

    We hardly ever re-evaluate the "rules" nor the "institutions" we let our "leaders" put in place to see if they deliver what was intended and remain within that scope, all using meaningful metrics. Instead, we allow them to keep piling on, with the tired refrain "the ought to be a law..." bleating from some sympathetic citizen or group.

    Pretty soon, the government is not serving us at all, but itself and the insiders, as illustrated by Warren's post....hence, the Orwell quotes.

  • random

    I wonder that people don't just shoot them.