‍California keeps discovering that subtraction can be surprisingly productive, right up until it starts subtracting the things we actually need. Cut unnecessary red tape and ADUs boom. Cut water reserves, refining capacity and employer confidence, and the experiment gets less charming. This week, the state tests its tolerance for absence. Case in point: the now-fizzled dream(?) of reintroducing grizzly bears to a state of 39 million.

THE LEAD: BEYOND THE BACKYARD

Imagine a world where doing less resulted in greater productivity. Where loosening your vice-like grip on the steering wheel magically got you where you wanted to go. If you want to see a real-life picture of what that looks like, take a peek at the latest report from USC’s Lusk Center, which contains some eye-popping stats about housing production in Los Angeles County. The most astonishing: The county completed 10,230 Accessory Dwelling Units in 2025, more than six times the 1,624 built in 2018. In fact, ADUs accounted for 37% of all new housing units certified for occupancy last year. No bond passed. No new agency in Sacramento. The state just legalized a building type, axed discretionary review that had previously prevented it, and homeowners did the rest, one granny flat and garage conversion at a time. 

This being a newsletter about California, we can’t enjoy an uncomplicated celebration of the achievement. A new CalMatters examination of housing production in the state shows that less than a third of cities and counties are on track to permit enough units to meet their “above moderate” income housing goals. The picture gets progressively bleaker as you move down the income ladder. Only five jurisdictions in the entire state are permitting at a pace to hit all four income targets.

Which brings us back to the ADU stats.

“It's an encouraging policy story,” USC public policy instructor Jared Schachner told the L.A. Daily News. (Try to contain your excitement Dr. Schachner.) Then again, maybe that’s the level of enthusiasm the stats deserve when viewed in the context of the broader crisis. Ten thousand units barely scratches the surface of what SoCal needs. It turns out, a granny unit behind a single-family house is not a substitute for the apartment buildings the region has spent 40 years refusing to permit.

The ADU boom is no fluke; it’s a controlled experiment that continues to return positive results over time. It’s time now to apply those lessons broadly, aggressively, and immediately throughout the state.

<GO DEEPER>

🤫 Everything you should know

💧 - THIS BATHTUB RING SHOULD TERRIFY YOU — Eons ago, back when America routinely completed large public works projects that benefitted her people and caused other countries to marvel at our ingenuity and resolve, workers put the finishing touches on the Hoover Dam and tamed the mighty Colorado River. The basins and canyons that filled behind the concrete behemoth became Lake Mead, the largest reservoir in the United States and the primary source of drinking water for roughly 30 million people across three western states. And if you take a look at the bathtub ring around the lake today, you’ll be seeing soil that hasn’t been above water since the lake first filled 90 years ago. “It’s extremely significant and extremely concerning,” said J.B. Hamby, chairman of the Colorado River Board of California and a board member of the Imperial Irrigation District, the largest user of the river’s water. “We need to have long-term solutions that are going to get us away from the precipice.” Meanwhile, the picture is no rosier in the north state. New research found that the Sacramento valley sank roughly a foot per year during the 2020–2022 drought, driven by intense groundwater pumping. The worst part? It’s irreversible. To recap, the reservoir is shrinking above and the aquifer is collapsing below. Our traditional water-management strategy of gazing hopefully at storm clouds over the Sierra seems dangerously naive. — Associated Press | SF Chronicle

⛽ - I DRINK. YOUR. MILKSHAKE! — Daniel Plainview must’ve been onto something. Reeling from the loss of two refineries over the past year, California is now deploying a very long straw to slake its thirst for fuel with premium-grade Texas tea. One of the refiners, Phillips 66, is counting on a $5 billion, 900-mile pipeline to carry fuel from Texas through Arizona into an existing line that reaches San Bernardino County. One analyst figures it will shave about a nickel off of a gallon in SoCal. The underlying arithmetic is brutal: California has retired close to a fifth of its refining capacity in a year, on top of the roughly 20% it lost after 2020, and the state's own regulators concede the replacement barrels have to come from somewhere. Now we know where. Texas, by pipe, arriving in 2029 if the permits hold. Meanwhile, the state issued an investigative subpoena to the German energy company that accepted a $1.2 billion check from the Trump administration in exchange for abandoning its California offshore wind projects. Both stories share a takeaway: As energy demands continue to climb, any capacity taken offline must be replaced — and then some — just to keep pace. Sometimes, more is more. — Wall Street Journal

📉 - ASK THE PEOPLE WHO DO THE HIRING — Two jobs reports landed this week from opposite ends of the state. The news is…complicated. The Greater San Fernando Valley Chamber of Commerce surveyed 165 business leaders, of which 54% said L.A. is headed in the wrong direction. A heroic — or possibly confused? — 6% said things were trending positively. Chamber CEO Nancy Hoffman Vanyek, speaking before Thursday's State of the Valley panel, put encampments outside storefronts at the top of the grievance list and the price of staying open right behind it. “The cost of doing business is getting greater and greater, and that's why people talk about moving out,” she said. Up north, the picture is characteristically weird. Joint Venture Silicon Valley counted 7,295 tech layoffs in the first six months of 2026, within 9% of the entire 2025 total. At the same time, regional unemployment is sitting at 3.9% and the dark clouds of recession haven’t yet darkened the horizon. Joint Venture chief Russell Hancock calls it a paradox. “We have a very hot innovation engine, but it's not translating into job growth,” he said. “We are not in a recession. We're in a boom.” Two regions, one unresolved problem. The state is still producing extraordinary wealth and has stopped reliably converting it into jobs people can work, or storefronts people can afford to keep. Closing out the Valley luncheon, LA Councilmember Bob Blumenfield said his goal for next year was to get that 6% up to 60%. He was joking. Somebody should hold him to it. — San Jose Spotlight | LA Daily News

‍🎙️ 💬 🎧 - ON THE POD: THE BUSINESS

Hollywood runs on BS and Kim Masters isn't buying any of it. The veteran Hollywood Reporter journalist dissects the deals, feuds, and power plays behind your streaming queue — who's getting fired, who's getting rich, and which studio is circling the drain. No fawning celebrity interviews. Just the money and the knives. — The Business

‍🛸 🧘 👂 - ONLY IN CALIFORNIA: THE INTEGRATRON

Welcome to the Integratron, a domed wooden structure in the Mojave, built by an aeronautics engineer who said the design instructions came from Venus and that the finished building would reverse aging. It does not appear to have reversed anything, but the acoustics are extraordinary and people now drive three hours from Los Angeles to lie on the floor while someone plays quartz bowls at them.— Integratron

‍🏃‍♂️ 💨 ✋ FAST FIVE

1. 🏗️ Governor Newsom fast-tracks 1,700 affordable homes. A $239 million package accelerates 20 shovel-ready rental developments. — Governor's Newsroom
2. 💸 Maybe we shouldn’t kill the golden geese? New polling shows California voters increasingly split on so-called “billionaire tax.” — LA Times
3. ⚖️ SoMa gets sued back into state law. Housing advocates allege San Francisco illegally carved the neighborhood out of state density rules, which is how cities beat laws they lack the votes to repeal. — Planetizen
4. 🚄 It can't even give a permit away. After nearly 30 years and $16 billion, the high-speed rail authority cannot issue an encroachment permit. A farmer who wants to drain rainwater across the right-of-way has nobody to ask. — Sacramento Bee
5. 🐻 No grizzlies for you. Lawmakers killed the bill to study reintroducing grizzly bears to California, leaving the species where it has been comfortable since 1953: on the flag. (Also, this newsletter!)— CalMatters

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