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Power Problems In California Could Mean Homebuilding Cutbacks

May 14, 2001

With electric power short on supply, California homebuilders could be forced to postpone -- or kill -- some new housing projects. Since the state already is woefully short of places for its burgeoning population to live, this is a problem.

"The ability of a builder or developer to supply electricity to a new subdivision . . . is becoming as important an issue as providing roads, water, schools, and other infrastructure. The availability of electricity could be a deal-breaker in some projects," said Stan Ross, chairman of the board of the Lusk Center for Real Estate at the University of Southern California. He's a former vice chair of a real estate unit of Ernst and Young.

At a conference on this subject recently sponsored by Lusk, it was noted that real estate investors in the state are basing some decisions on where to invest based on power supply. "It was noted," a Lusk report says, "that some investors are interested in acquiring multifamily properties in Los Angeles partly because the city has its own utility, the Department of Water & Power, which has a surplus of power."