Builders Shower Cash on Davis, Recall Candidates
Builders and developers, perennially among the state’s largest campaign contributors, have once again emerged as a force in the race to recall Gov. Gray Davis, showering the governor and his would-be successors with hundreds of thousands of dollars.
The building industry has lined up on both sides of the recall question, with most developers and real estate companies supporting either the Democratic governor or the leading Republican seeking to replace him, actor Arnold Schwarzenegger. Some developers also contributed to the committees that set the recall in motion.
Overall, developers and real estate brokers have given roughly $1 million to the recall, with Davis receiving about $350,000, Schwarzenegger $400,000 and the largest remaining portion going to pro-recall committees. Lt. Gov. Cruz Bustamante and state Sen. Tom McClintock, two other leading candidates to replace Davis, got about $30,000 and $40,000 respectively from developers and contractors.
Those supporting Davis said they were motivated more by a shared political philosophy than by business interests. But they dismissed criticism by Republicans that their profession was languishing as a consequence of a hostile business climate in Sacramento.
“My feelings about the recall have nothing to do with what I do for a living,” said Los Angeles-based developer Doug Ring, a longtime Davis supporter. “Real estate development is not a state issue; it is largely a local issue. I am involved in the recall because I am a liberal Democrat.”
California developers who take a different view have registered a litany of complaints with state politicians in recent years over what they say is a plethora of unreasonable rules and regulations that hamper their industry.
Builders have been particularly unhappy with rules allowing homeowners to pursue lawsuits alleging defective construction. They contend that excessive litigation has all but stopped townhouse and condominium development because builders can no longer obtain insurance.
In response to the criticism, Davis and lawmakers crafted an overhaul of the state’s construction defect laws last year. But some builders say the compromise deal between trial lawyers and developers has not brought much relief.
Many builders have long thought California was a hostile place to do business because of the state’s strong environmental protections and labor rules, as well as its development fees.
“They are wholly dissatisfied and frustrated with their ability to pursue development in this state,” said Stuart Gabriel, director of the Lusk Center for Real Estate at USC. “There is a lot of frustration, a lot of real estate firms that are thinking of moving out of state.”
Some builders, particularly those supporting Schwarzenegger, said they were reacting to what they saw as a failure by Davis to foster a healthy business climate in California.
They cited higher electricity costs resulting from the energy crisis, as well as increased fees and expenses from new laws conceived by liberal Sacramento legislators that Davis chose to sign rather than veto. One commonly cited example is a law he signed last year requiring employers to provide paid family leave for workers whose children, parents, spouses or relatives fall ill.
They also blamed Davis for failing to control spending, leading to this year’s record $38-billion state budget deficit.
“I have frankly been depressed by what I have seen happening to the state of California,” said developer Gerald Katell, president of Los Angeles-based Katell Properties, who donated the maximum $21,200 to Schwarzenegger’s official campaign committee.
“Now do I lay all of this at the feet of Gray Davis? No. I lay much of it at the feet of the Legislature. But he has not stood up to them nearly as much as he could have,” Katell added. “Look at that $38-billion deficit. Anybody in business with that kind of record would be thrown out.”
Keith Christopherson, president of Christopherson Homes, attended a recent wine country fund-raiser in Santa Rosa for Schwarzenegger with his wife, Brenda, and both came away impressed with the former bodybuilder.
Christopherson recounted how he had a hard time luring a new employee to California from Arizona recently due to the state’s high cost of living -- “He had a nice house in Phoenix, and he’s living in an apartment here” -- and he holds Davis partially responsible.
“The problems we’ve got can’t be blamed on Gray Davis alone. But I think he is part of the problem, not part of the solution,” Christopherson said. “I do know people -- friends of mine -- who are moving out of state. I don’t see anybody grabbing the bull by the horns and trying to get this thing back in shape.”
California’s economic troubles come at a time when the costs of owning a home in the state have reached record highs and the supply of new housing is lagging years behind demand.
Housing starts this year are on pace to reach their highest levels since 1989. But for more than a decade, California failed to build enough new housing to keep up with population increases, contributing to the state’s skyrocketing housing costs.
William Fulton, an urban planning author and editor of a newsletter on California development trends, said there is a widespread perception that Davis never truly focused on what some say is a housing crisis.
Part of the reason, Fulton suggested, is that Davis would have had to take sides in political battles between the building industry and environmentalists over such issues as urban sprawl.
“On the development issues, there has been a stalemate in Sacramento as long as I can remember,” Fulton said. “Even though everyone agrees that housing is one of the biggest issues facing the state, nothing has really been done.”
But Davis supporters say it is unfair to criticize his housing record, arguing that the problem was decades in the making. Julie Bornstein, who served as state housing director under Davis for four years before joining the Lusk Center at USC, said he did more to promote new housing -- particularly affordable housing -- than any governor in years.
In all the years prior to Davis’ tenure as governor, the state had helped finance just 35,000 units of affordable housing. Under Davis, it financed 39,000 units, and a recently approved housing bond issue that was supported by the governor will provide money for at least 120,000 more, Bornstein said.
“We were pretty aggressive in that area,” Bornstein said.
Real estate executives supporting Davis ridiculed the notion that California has become an inhospitable place for their industry. They said many of the same people complaining about state policies under Davis are making mountains of money in the current market.
“A lot of these regulations and requirements predated Gray Davis, obviously,” said Richard Ziman, chief executive of the Los Angeles-based commercial real estate firm Arden Realty, who recently held an anti-recall fund-raiser at his home that was attended by Davis and his wife, Sharon.
