What Prop 37 Would Mean for California Homebuyers | Robert Hertzberg

In California, renters outnumber homeowners until the age of 47. It's about a decade later than the rest of the country. There's a proposition on the ballot that's trying to change this. Basically, the simplest message is it's a 3% down program for middle class people. At the same time, this proposition is encouraging new home building and changing some of the construction defect laws. Why is it in California that almost nobody's building condos today? because developers are scared to get sued. So we've de-risked this, and we've talked to a lot of developers that are, oh my God, this is fantastic news. Today we sit down with Robert Hertzberg, who's a former Senate Majority Leader and the author of this measure. Keep in mind that California Insider is a nonpartisan show, and we don't endorse any specific propositions. We have guests with different opinions that are coming here to explain to us what they think about different propositions and what solutions they have for the state. I'm Siamak. Welcome to California Insider. Bob, it's great to have you on. Welcome. Thanks. Thanks for having me. I really appreciate it. We want to talk to you about Prop 37. This is something you have authored, you've worked a lot on. It's a complex proposition. I was trying to figure it out. It's really complex. And I know a lot about real estate in California. Can you tell us about it? Well, here's the thinking about it. The question is, how do you get folks in the middle class to be able to get a house? You work hard, you got a good job, paying for your kids to go to school. Who can come up with $200,000 for a house to buy a million-dollar condo as a starter home? You might as well make $200 billion. It's impossible. There are some small down payment programs, but what are the other issues that are impediments to people being able in the middle class to get a home? You can build a mansion all day long and pay a lot of money for it, but what are those impediments? And so it's something that's been really interesting to me. I tried when I was majority leader of the Senate to get it passed, and I couldn't do something just for the middle class. I wanted a positive, aspirational message to help the middle class. In the legislature, when you want to get votes, I used to be a speaker of the assembly as well. You got to go, I go to this member, and they go, well, I'll vote for it if you put this in. And somebody else says, well, I'll vote for it if you put this in. And what happens is it becomes so loaded down with so many things, I wanted a clear, clean message to help the middle class. And what were those elements? Something that was super consumer-friendly for folks, without significant restrictions, that understood their human condition and what it was like being in the middle class and how hard it was to get a place, and to persuade banks to loan and developers that wanted to develop. And I looked at each one of those problems. When you say it's complex, it's not complex and the idea is let's get middle class people brand new homes. It is more challenging because you got to solve all those independent problems to make it work. My experience in government for many, many years, I am sick and tired of the politicians who get out and call a press conference and say, I've solved this big problem and nothing happens. The people are angry because politicians promise and don't deliver. So this had to be something where we really sat down and thought it through and figured out how definition of success is not passing this initiative, Proposition 37. Definition of success is handing keys to a brand new house to a family that wants a new house and they can afford it. How does it work? Can you tell us about the deal? Here's the way it works. Basically, the simplest message is it's a 3% down program for middle class people. Now, adding the other dimensions to it. first. Where does the money come from and how does that work? You go to your bank, you get a conventional 80-20 loan, bank loans are 80, 80%. And because they're giving 80%, there's no mortgage insurance. For people that have gotten these 3% loans, mortgage insurance is very expensive. So it reduces the cost immediately by limiting mortgage insurance. Now, so you get an 80% loan from the bank. When you go to the bank, if you want to get an 80% loan and you want to buy a house normally, you got to be a first-time home buyer. Nope, nope. Don't want that restriction because what if someone got divorced? What if someone had a house and lost their house? What if someone sold their house but wanted to get a new house? I want middle-class housing to be built for people. So there's no restriction on that. There's no restriction for purposes of the person when they walk into the bank. We have often what's called shared appreciation on some of these programs that have this, where you've got to give part of your appreciation to somebody. Nope, you get all the money. Third, you have a credit score you've got to have. Well, what happens if you had a problem a few years ago on a credit card or something? Does that directly affect your ability to get the loan? No. We have what's called cash flow underwriting. I know it sounds a complicated term, but basically, do you pay rent every month? Can I look at your bank statement to show you pay the rent? Do you pay a light bill? When you look at your credit report, It's all about your credit cards and how fast you pay them and how much debt you got or don't have. If you have more credit cards, sometimes it's better to get a better credit score than less credit cards. It's crazy. It doesn't really get to the essence of the thing. So it makes it simple for a person. They don't have to pay mortgage insurance. And so you get your loan, you give 3% down. So let's assume, you know, you got a million dollar condominium just because things are so expensive. You would have to put $200,000 down in a conventional. Under our program, you've put $30,000 down, 3%, okay? Well, where does the other 170 come from? We're going out to the private markets. We're asking private investors to buy bonds so they create a pool of money and they will loan you the $170,000. And we're asking them to do it at 3%. Now, because we're saying, look, there's a war against the middle class. Help the middle class, private sector, invest. tech companies uh in labor unions foundations social impact funds buy our bonds for three percent so we can loan them to people so they have less money so when you get your monthly bill you got one bill when you buy your new house it's got you cost your first trustee to say the bank of america or your credit union and then a second trustee and you got to pay that money every month you got to pay the money back we're going out to the private sector and asking them to buy these because people in the middle class, they just want a fair playing field. They don't want to have to go to government and ask taxpayers to pay their thing. So when you read this on the ballot, when people see this in California, it says no state or local taxpayer costs, which is fantastic. Now, the next thing, we're giving the banks a little bit of a fee to be able, capping their fee, but giving them some money to basically incentivize them to make the loans. Then, developers. Why is it in California that almost nobody's building condos today? because developers are scared to get sued. They're only developing apartments, rental apartments, because they're scared if they get sued into what's called construction defects. So what we've done is on construction defects, we've changed the law. We call it right to repair. We've capped the legal fees for construction defects so as to incentivize developers that want to develop. So now you've got developers that want to develop, you've got banks that want to loan, you've got customers that don't have to deal with the government. In other words, when you go get a car from General Motors, for example, and they give you get $1,000 off, let's say, okay, you don't have to go to Detroit to get your $1,000. You just give it to the dealer and they write it off. Same thing here. We're having the banks deal with all the paperwork for the government that's giving you 17% loan. Because government, you have a PhD in bureaucracy sometimes to figure this stuff out. I want to make it simple. Super customer-friendly on the front end. and now for the developer, they'll want to develop. And here's the big thing, only for middle-class buyers and only for middle-class housing. Now, what does that mean? In all 58 counties, the amount of money for a middle-class person is different. It's different in San Francisco than it is in Fresno versus Orange County, right? It's about $200,000 for a family of four. So that's a much higher number to be able to afford a place because a lot of people that are paying high, high rents, we've done an analysis that shows in most instances, if you get one of these 3% down houses, now the interest rates may be going up, of course, but it's about the same as rents because rents are so high. People are paying $5,000 a month in rent. And then the house has to be a middle-class house. Middle-class is basically about anywhere from a million to a million five. So if you want to build a mansion, you don't get the benefits of it, but you get a nice place. And it can be any kind of house, a regular house, a single family house, townhouse condominium conversion of an office building conversion of a shopping center factory-built housing it doesn't matter if they are new and ownership and so that's the idea and it creates 190,000 new houses it creates uh the fund it's 25 billion dollar fund creates 190,000 new houses in California and it and it creates 150 billion dollars of new construction work in California puts a lot of people to work and people want homeowners in their neighborhoods rather than renters in their neighborhoods. So it's really an elegant solution to get people a piece of the American dream, get a house and make it work. My parents were young. They got a house. Their monthly payments was $155, right? Today, it's so expensive. We've got to bridge that gap for folks and get them into a house and give them an opportunity to create generational wealth. So you're doing this for new homes. Only new homes. And the reason, there's three reasons for new homes. One is on a 3% down when you're buying your new the old house It's easy to bid up an 800,000 house to 900,000 for $3,000 and so it bids up the price This only applies for new construction, which is really important Second the the financing people tell me when it's a new house They give you better terms because they know you're not going to be spending money immediately When you buy the place I talked to a reporter a couple weeks ago who told me she bought a 3% down but then she had a $25,000 bill to replace a new roof. So it's much easier, so you don't have that expense. And most importantly, it's a level of respect to the middle class. There's nothing like going in and getting a brand new house. It's like getting a brand new car, brand new refrigerator, brand new toilet seat. No one's sat on it before. You know, it's your place and it feels like a million bucks. And lastly, on the supply and demand. The big problem is if you don't have enough houses, prices go up. If you increase the supply, it helps reduce prices people will go from high expensive rentals buy the house and it'll bring down rental prices because the supply and demand it's pretty simple math so your goal is to encourage more development of new homes yes that's the goal 190,000 new homes in California and the program was called Evergreen meaning that when if you got one of these houses and you paid it off the money goes back in to finance somebody else that's 17 percent right because that 17 percent is the pool of the $25 billion. Correct. And what's the state involvement into this? This is a revenue bond, right? You're going to pay for it. There's no money to the taxpayers, right? Right. One of the challenges, I was just on the phone with the legislative analysts coming down here, but one of the challenges is you use the word bond, and when people hear that word, they think, oh, taxpayer, taxpayer, taxpayer. California, there's two kinds of bonds. One is called a general obligation bond, which means the full faith and credit of the taxpayers pay it off, and that means it comes out of the general fund and the taxpayers pay it. The second is called a revenue bond, where we use the authority of the state to act as a conduit, as a financial entity, to raise the money, but there's no taxpayer liability. So, for example, if a bunch of people defaulted on these loans, the investors lose the money, not the state. And what are your thoughts on getting the investment? Some people have argued that it might be hard to find the investors that are willing? I've talked to so many people, some here in Orange County, that really are interested in helping. I mean, I was on a radio show the other day, and somebody said, this is a 21st century GI Bill. People believe in the American dream. They believe in home ownership. They want to help. I was at the Realtors Convention, and they were saying, we want the realtors to buy bonds. I was talking to some union leaders. We want our union pension funds to buy bonds so we can get homes for our people. The carpenters will tell you, we want to be able to buy a house that we build. They can't, they make a lot of money and they can't buy a house that they built. There's all kinds of, I've talked to foundation people that want to buy the bonds. Think about this. You're a foundation and you give a million dollars to build a project in the community. A million dollars is gone. That's the project. And they're a lot more expensive because they're rental. Here, you take the million dollars, you buy the bonds. You still have the asset in your books. You're making 3% profit. And now you leverage that up dramatically to get a lot of people homes. And what about the construction defect sites? Some people have argued against that, that this law is good. Tell us about that. And how did you come up with the idea? Well, a dear friend of mine who was president of the Senate and mayor of Sacramento had written this law many years ago, thinking that, you know, we have this very big problem where in California, you have what's called latent defects, meaning that if there's a defect that's hidden, the statute of limitations mean the time you have to bring a lawsuit is 10 years. so what we were seeing in nine years 11 months and 29 days everybody was getting sued it was basically costing developers about 30 percent extra for insurance to deal with this issue because there were big lawsuits 30 percent extra on the cost right and so what we did was we we basically wrote the law that allows you to do a right to repair gives notice takes out the lawyers in all the process allows the customer to the homeowner to talk to the developer without having to talk to the lawyer can you please come and fix this and then we capped how much money lawyers can make on legal fees so basically you know if there's a real problem there should be a problem and they should be able to fix it but if but we're just avoiding the big expense which has the chilling effect it's the reason why now only three percent of the new housing in California's condominiums when it used to be something like 40 percent because no one wants everyone wants to take that risk so we've de-risked this and we've talked to a lot of developers that are oh my god this is fantastic news and is this the reason why we see all these rentals most of these buildings that are happening the developments that we see the five six story buildings that have apartment units that i haven't seen many for sale well you're seeing them for a couple of reasons one is because that's the only way to make money. No one wants to do an ownership condo or something like that because they're worried about the liability. So if I'm a developer, how do I make money? Over here, I've got the rental markets and I have these tax afforded deals. I've got local policies that say we want more housing. Governor says more housing, more housing. So I can't build these over here for condos. So I'll build these over here. And that's the reason you're getting more rentals. And you know, the thing that's really important for your listeners and viewers to understand here is that these are fixed rate mortgages. I get a lot of observations from folks that say, well, what happened in 2008 and all these people that lost their homes? They lost their homes for two reasons. One, they had variable rate mortgages. So when the market started going up, these payments went from $1,200 a month to $2,400 a month. Second, they had a lot of phony loan papers where people took out second trust deeds and loans against their houses on phony income statements and phony appraisals and they weren't really real because the market was going crazy on that stuff. How have I stopped that? I've done two things because those are legitimate interests. One, fixed rate mortgages. So let's assume you rent an apartment. In 10 years, what's going to happen? Your rent's going up. You have a fixed rate mortgage. In 10 years, guess what? You're paying the same amount of money. So I stopped that. Second thing that I did to stop that problem is if you want to refinance your house, you got to pay off the loan. I thought what happened in 2008 was a really big problem. I was involved in some of that stuff and I wanted to make sure that we designed a program that fixed that. And that's what we've done. So if you want to refinance, you have to pay the 17%. Pay it off, pay it off. We're not putting a risk pool on these things. I don't want that risk. You know, and probably, you know, if you get a 3% loan to the bondholder, we'll probably loan the money at 3.2%. Why? Because we said to the public, no taxpayer costs. So any administrative cost of the agency have to be paid for the proceeds. And secondly, we're going to create what's called a liquidity facility. What that means is you pay a reserve of a pot of money in case there's some defaults, and then you use that to pay off the defaults. You know, you have to be very smart about this. You couldn't do this in the legislature. Can you tell us about that? Why was it hard to do this? Because you had a big position there, right? I had a big position. The reason I couldn't get it done in the legislature is because, you know, we'd go through the housing committee and they took, of my $25 billion, they took $7 billion. They said, well, this has to be for affordable housing for this kind of stuff. And then somebody took for something else. And I could have got something through, no question, but I wanted it to be just for the middle class. Second, there's no way I could have ever made these reforms on construction defects and capping legal fees through the legislature. The consumer attorneys were a lot of my friends, but they're just too powerful to do that. I couldn't have done it. And the third thing is, while I have wage standards, very important wage standards to make sure we get rid of bad actors who are developers, I didn't put prevailing wage in. If you have a general obligation bond, you've got to pay prevailing wage, which is the union level for $80, $70, $80 an hour, whatever it is. I'm a big Democrat. I believe in that. But I had to be pragmatic. Pragmatic means, how do you allow a developer to make a profit for a middle-class person. How do you create a lower price? Well, if I increase labor costs dramatically, if I increase risks for lawsuits, I'm not going to get developers to build. Now, you have been working on this for a while, like for a few years now. Five years. And why did you focus on this issue? Well, because look, I am sick and tired of the bellyaching of politicians. It's like, we're out there and we're angry for this person or angry about that person. and it's so easy in politics to do all the negative campaigning and say this person's a bad person or this person did this. What did I do for you? That's the question. What did I do for you? And the middle class is out there, and they're sitting there thinking, you know, I'm working hard, I'm playing by the rules, and what are you doing for me? And you can't just sit back and get mad at the other guy. You've got to be for something. And it's hard to be for something. This was a very, very, very challenging thing to do, and I thought it was critically important in California. Look, there's a proposition in the ballot called Prop 1. One of my best friends in life is doing that. I love these guys to death, and it's all about affordable housing and stuff like that that's critical. Those are really, we go hand-in-hand together. But I wanted something just for the middle class, and I couldn't get it done in the legislature. So everybody be damned, I'm going to get the damn thing done, and I just work and work, and I have no pay. I'm doing this for free. I'm just using my skill and I think it's really really important to be for something and being for something is getting people a home and a way that they can afford it and that's a really big deal that to me is the big lesson in politics don't complain, deliver and that's what I'm going to do and that's why even when this campaign wins, when we win, I hope we win but I'm hoping we win and if we do I'm going to continue to work on it I want to come here and talk to developers I want to go to the philanthropic community, ask them to buy bonds I want to go to banks, get them to get involved in the program, I'm not going to stop. I'm going to keep working because, again, my definition of success is not a political definition which says, oh, I won because the people voted for it. That's BS. My definition of success is escrows close, people get keys in their hands, families get homes, and they have an opportunity to have a piece of the dream. Tell us about your thoughts of where California is going. We have discussed a lot of issues in this show with cost of living, the challenges the state is facing. We cover a lot of those. California still is an amazing place. A lot of people across the globe would love to be here, but we have a lot of challenges. How are you seeing where California is headed? I'm a historian. I studied California history. I started a PhD program in UCLA. I never finished in California history. I've been around this business for over 50 years. I know it looked a little old, but I've been around a long time. And I'm a real student of this stuff. And life, it goes in ebbs and flows. We have times in history where things are good times in history where things are bad And California, you know, I remember in November 1981 the headline in the Time magazine was how California's falling apart No businesses are coming here. It's all falling apart. Everybody likes to criticize us. Okay, but you know We are to some extent victims of our own success I was doing business in Arizona and it took me a day to get a permit on something here It takes you two months to get something why because so many things get added on and that everybody has an interest and we're so used to everybody wanting to come here. You know, when I was speaker, people from 78 countries come to visit me because they all want to come to California. I'm going this weekend to Dubai to talk about energy policy because they want to know what we're doing in California and some new legislation we passed. We still capture the imagination of the world, right? And part of the reason why we have so many people and so many issues and all these things is because people want to be here. It's somewhat a problem of our success. Now, what happens is we create this, what I call the Winchester Mystery House of Government. We have 5,226 subdivisions of government. In L.A. County alone, there's 88 cities. There's over 5,226 subdivisions of government. They all fight each other. They all got lawyers. They all got PR agents. They all got accountants. They all want to preserve themselves. And so you create this mess. But the mess was created as a result of our success. Other states, other countries, I've been and worked all over the world, don't generally have that because they're so competitive. that they they'll do anything to bring people we we don't feel that competition because we feel our success politicians run around and say we're the fourth largest economy with the fourth largest economy well go to la and look at the people on the street man that that's just fundamentally wrong right go look at how hard it is and what it costs to do what you do there's challenges but i would suggest that we're at a challenging time i would suggest that that we still have the fundamentals. And, you know, if you look throughout history, whether any time, you know, different parts of the world, right? We go through ebbs and flows and it's up to each generation to figure it out. And if they're going to make it work or if it's going to go bad, you know, you get good leaders out of bad times and you get bad leaders out of good times. And it's true. And so we're kind of in good times and we need to get the Abraham Lincolns who step up and realize they going to save the union or whatever the case may be and and i'm hoping that happens i don't know but we do have the fundamentals and we have a brand let me tell you there's a magic to california people love that that's the most important thing i'm going to china next month they're not asking people from Mississippi or or from Arkansas to come they want somebody from California right the former speaker and majority are from California they want they want those connections That's the material from which you build. Now, are we going to do a great job at fixing it? I don't know. We're in a tough spot. There's no question about it. There's partisanship's ridiculous. The bureaucracy's ridiculous. Can we get past it? There's a lot of people in goodwill that are trying to figure it out. And I'm generally optimistic. You mentioned about the conflicts between these agencies and challenges and the issues we have and partisanship. And you actually were the last speaker of the House that you were elected in a bipartisan unanimously. How do you see a resolution to all this? How do you think we can resolve these fights? What happened to me, you know, look, I couldn't get elected in Orange County. I'm a Jewish guy from LA, okay? But people in Orange County have a right to have a representative who they respect. I believe in the Constitution. Constitution says people have a voice. Am I supposed to be somebody that says, I'm going to tell you guys, you got to listen to me? So that's the reason why I worked hard. I listened to Kurt Pringle and to Scott Baugh and to other people in the community in Orange County and took care of them when I could. I gave them better offices. I work with them in a way because I respect the Constitution. The Constitution says everybody has a voice. It's not just I get a control because I'm in power. That was ridiculous. And as a consequence, Scott Baugh, who represents Orange County, represents Orange County, was the chair of the Republican Party here for 10 years, stood up on the floor and nominated me. The most conservative guy, Tom McClintock, who's in Congress now, stood up and seconded the thing. And the first thing I did, you know how you have like the right side of the aisle and the left side of the aisle, Democrats on one side, I mixed everybody up. Why? Because one of the reasons why we don't work together is we don't talk to each other. If I'm over here and I never have to talk to a Republican who's over here, I don't know who they are. But if I'm sitting right next to them, we're talking about our kids, they're talking about life or what did you do this weekend, and you build a relationship. And so I think that social media has created this odd situation where you get these weird outcomes because you've got somebody who's angry and upset about everything and just says horrible things. One of the reasons why homeownership is so valuable is that when people are happy and they're content in their life, they're not sitting on social media complaining, right? That's the fabric of making it happen. I work really hard to do that. Arnold Schwarzenegger offered me jobs in his administration. He's my buddy. And I'm a Democrat, you know. I didn't care. But I got beat up by some Democrats. Like, what are you talking to Arnold for? Who cares? We get fixed problems. Schwarzenegger. Let's see. I need you. Come here, Herzi. It's fun. But, you know, so I don't know. I try to do everything I can to help new members in the legislature, help electeds. I'm going to put a whole school together for people that want to run for office. I'm thinking through structurally what you've got to do. And, you know, all we can do is do the best we can in the few seconds we have on this planet. And hopefully the next generation does a better job. You mentioned your definition of success is to actually get out there and make sure things happen. How did you learn that? Is there somebody that actually showed you that? Well, a couple of things. Partly, I'm a lawyer for a long time. I'm a businessman. I've taken companies public before. I was a chairman of the board of companies, solar company. I've done all kinds of stuff. You know, I see the angst and frustration of the public when politicians get out there and call a press conference and say they've, you know, introduced a new bill to make you skinny and cure cancer act, and it doesn't do it. And it's like, it's the biggest frustration. Deliver for people. I don't have a problem. You know, we have people of all different political philosophies. Fine. Articulate your views. Go build support. But deliver. Don't tell me you're going to give me free rent. and don't do it. Don't tell me you're going to cut taxes and don't do it. Do what you say you're going to do. It may not be a direction I like, but deliver for people. And that to me is the biggest thing in government. And that's what informs my thinking and makes my head boil when I see people with all their fancy stuff. I used to, when I passed legislation, there's a woman, Jackie Goldberg, who's an assemblywoman who's going to Congress now. She had this big chart on her wall, but she would monitor all of her legislation and how's it working, how's it working. I put together oversight committees when I was speaker, following to make sure things work. I guess systemically, there's some problems about that, where we can celebrate our success, but don't make sure that the success is real. And do you think we go back to look at the laws? Because what I've noticed is that we pass thousands of laws, and every year we pass a thousand laws, but we don't really go back. Do we go back to look at which ones? Not really. First of all, we shouldn't be passing a thousand laws. We should be passing 50 laws, 100 laws. we should be having 10 hearings in each law based upon what the impacts are of having not just one law and it goes through committee to committee to committee you know i reduced dramatically the number of bills that required i made people meet together to organize around it there was 16 gun bills and i made all those members come together and organize and do something collectively rather than having 16 gun bills when i was there i remember and so no it's a management issue it's a management issue you really got to focus about how to do that no there's too many laws and also we have sunset provisions in the laws, but they're not really real. You need to, when you write a law, you need to really think through all the consequences from all the different interest groups. The people that present the bill should not be the lobbyists or the interest groups. They should be experts. Then you should have another expert. Well, these people say this. Well, what about this? And go back and forth and test it and hone it down and make sure it really works and then come back and make sure it works. The process is, it's like, you know, it's a whole political industrial complex out there who makes money on churning more laws. Now, is there a way out of this to change all of that? Sure, sure, sure, sure, of course there is. There's always a way. When I was Speaker, I felt like a million bucks. I was able to reduce the number of bills. I was able to change how we do stuff. We created a Speaker's Office of Oversight where we had a former U.S. attorney, district attorney, investigative reporter, and we went after folks on stuff to really drill in on the things. we prioritized you know three budget priorities for our democrats to talk to the governor we prioritize each committee we prioritized what are the top three things you think we got to fix in california so let's identify it in the beginning and then at the end say did we achieve the objective strategic strategic business management but i think that there's absolutely ways to do it and and uh you know i know there's some effort to put in that regard bob you have a long history in the public service here in California. Why did you get involved with public service? It's interesting. You know, my dad was a constitutional lawyer. And his five brothers in my family, as a kid, he always talked about the Constitution, about what was going on. I mean, in the 60s and 70s and stuff, you had all the civil rights stuff going on. The dinner table was always about the Constitution. And the Constitution was about government and about what the power of government was and what was right and what was wrong. And I became a young lawyer. And what happened was it kind of evolved because when you're a lawyer, you are arguing the law. Well, where does the law come from? It comes from court cases and it comes from the Constitution and it comes from the laws that are written. And I'd see how bad they were written. I'd go to court and I'd see I win a case for somebody. Then they'd come back and I'd make another mistake and I kind of evolved from there to being what's called preventative law. I would do a hotel and then I would say, look, I'm only going to do your hotel if you let me put a management notebook together so that you can show what your manager has to do. Otherwise, you're going to have defaults later on. And I started thinking more holistically. And I got involved in political campaigns early on, always trying to help members, legislators become better, going, I think, organizationally. How do you manage this? How do you achieve your objective? Every politician I talked to, I was asking two questions. I interviewed a lot of them. First question, okay, tell me what you want to run for office for. I want to fix education. I want to fix the tax structure. I want this. I want that. Okay. I passed the magic wand. Are you still going to do it? I want to test you as to whether you want to be the ego of being in the office or do you want to achieve your objective? Okay. Second question I ask everybody. It's 12 years. You finished your term. Write an exit memo. Tell me what you've accomplished. Because you get in these jobs and every day you wake up and there's a thousand things and you go to the same chamber of commerce event and the same ethnic community event and the same this event that the last people went to. What have achieved focus on deliverables management management management and i think like that and i've tried to apply that into a system that doesn't really have management systems in place now the speaker's now done some stuff Malik Lamont was excellent he's doing some of that stuff on oversight i just talked to her about it yesterday which is really important on that kind of stuff but i i try to talk to these folks and about that and to me those are the things that are important and and so it got me going to then going from a lawyer to fixing stuff to the writing the law writing constitutions to writing initiatives to fix the law now you mentioned when you're going internationally uh and and we have seen that too we have audience across the globe in europe people want to know what's going on in california what's california doing Why do you think that is? Why do you think people are looking up to California? Well, partly it's, it's just our physicality, I mean the beaches and the impact of Hollywood and tech industry and all those things that we've done but it's always been that when you look at what California was you know, the great story of California there was a book called The Exploits of Expolandia 1540 Spanish novel, it was a story of the Queen Califia and this island of Cal, mythic island of California Spanish novel, and the island had Amazon women who ruled the place and the woman who was Queen Califia was draped in gold, and so when the sailors who came here at that time, the Spaniards and they saw California, they named it California because of what was in their mind's eye of this great place of California because of its beauty and its nature. And I think that it's an informed part of its nature. I think that the Gold Rush in terms of what brought the statehood to California was extraordinary. And then I think that, you know, Hollywood and technology and the aerospace industry and how it all came together helped inform that level of thinking. But it is extraordinary to me. I've been all over the world. Everybody knows California. Everybody wants to see California. Everybody wants to come here to visit, whether it was the original Disneyland or Hollywood Boulevard or whatever else it may be, the beaches. But it's got a magic, and it still does. Bob Hertzberg, former Senate leader, it was great to have you on California Insider. Please come back and update us on this measure. Happy to. We've got to put it. You've got to build houses for folks. That's the game. Tell us what you think about this conversation on Prop 37. Have you or anyone you know have actually used any of these 3% down payment programs that the state has? Make sure to tell us in the comments or email us at [email protected]. We read all of your emails and comments. I'm Siamak Khurami. This is California Insider. We'll see you next time.