NEWPORT BEACH, CA—Those who build entry-level market-rate housing would be devastated by AB199, which would subject all residential projects built on private property to prevailing wage standards, Landmark Capital Advisors managing director Adam Deermount tells GlobeSt.com. Deermount has been watching this bill closely, so we spoke with him about what it would do and its implications for the affordable-housing sector.

GlobeSt.com: How did AB199 come about?

Deermount: Back in the summer of 2016, Governor Brown was pushing a housing proposal that would have allowed any residential project that complied with local zoning and set aside as little as 5% of its units as affordable to be built “as of right.” This measure would have taken more control away from municipalities and NIMBYs and put it in state hands. Construction labor unions demanded a significant modification to the proposal: apply prevailing wage standards to any project built under Governor Brown's proposal. The prevailing wage standards under this plan would have made the construction of housing economically impossible. Governor Brown refused to give in to union's demands. As a result, the proposal died. In late January 2017, Kansen Chu, an assemblyman from San Jose whose largest donors are unions, submitted bill AB199. The bill is an attempt to apply an even broader prevailing wage standard than the unions demanded in their response to Governor Brown's measure.