Monday, May 14, 2018

Is There No End To California's Housing Crisis?; May 4, 2018

Hello Everyone:

It is a sparkling Monday to start a fresh week on the blog.  Today, Yours Truly wants to talk about an issue that will play a large role in the California state election, housing.  The cost of housing--staying housed--has reached crisis levels.  Joe Cortright reports in his CityLab article "There Will Be No Exit From California's Housing Hell," "The recent defeat of SB 827--California State Senator Scott Wiener's bill that would have legalized apartment construction in area's well served by transit--was the subject of a thoughtful post-mortem in the Los Angeles Times:"

A major California housing bill failed after opposition from the low-income residents it aimed to help.  Here's how it went wrong... (; May 2, 2018; date accessed May 14, 2018)

Times writer Liam Dillon observed that although SB 827 had the strong support of YIMBY (Yes In My Backyard) housing advocates, it flamed out because of the combined opposition of municipal governments, homeowners and, strangely the very people it was intended to help: low-income renters.  Let us take a look.

Mr. Dillon focused on the divide between the economic and political arguments for the legislation.  Mr. Cortright writes, "SB 827 may have been great economics, but it was poor politics."  YIMBYs and broad coalition of urban and housing scholars threw their support behind the bill, making the case "that more housing, especially in transit-serving locations, would lower rents and reduce displacement."  The bill's sponsor State Sen. Wiener said,

The reality is that the heart of displacement is a lack of housing, which pour lighter fluid on housing costs, puts huge pressure pushes people out,.... [Mr. Dillon writes] Research from the state's nonpartisan Legislative Analyst's Office and UC Berkeley has found that building any new housing, especially homes subsidized for low-income residents, prevents displacement at a regional level.

While this argument makes intellectual sense, low-income renters and their advocates pushed back.  Liam Dillon wrote, 

...there is a fundamental disconnect between the approach of the senator and his supporters on one side and influential anti-poverty organizations on the other.

Their concern was "that new apartment construction would happen disproportionately or exclusively in lower income communities.  In a tweet, the Brookings Institution's Jenny Schuetz (; @jenny_schuetz; May 2, 2018; date accessed May 14, 2018) distills the matter to its essence,

Tricky politics. Past experiences shows that wealthy white communities have been more successful blocking development in their neighborhoods, so not unreasonable that lower-income POC worried they'll bear the brunt.  But building more housing is only long-term.

Joe Cortright criticizes Ms. Schuetz's tweet as flying "in the face of the logic or real estate development: Given the choice to build apartments in a high-income community or a low-income community, developers will inevitably tend to gravitate toward the places where rents are higher so that they can earn a greater profit."  Since higher-income communities have been so facile (; Mar. 28, 2018; date accessed May 14, 2018) at zoning land for single-family housing and quite resistant to new development is the principal reason that "demand has been divert to lower-income neighborhoods in the first place."  Only a sweeping preemption of local control, by the state, can provide opportunity to develop in higher-income communities.

In essence, this demonstrates just how thoroughly ingrained the idea of "weaponizing development approval is in the land-use process."  The argument appears to be "that unless low-income communities have the same power to exclude new development that wealthier communities routinely exercise, that this is inequitable."  Low-income advocates counter by "withholding development permission and regulating density to extract concessions from developers in the form of community benefit agreements or construction of or financial contributions for affordable housing."  This tactic follows the path that higher-income communities travel in order to extract concessions in the form of land dedications, parks, contributions to schools and local governments.

Joe Cortright points out, "As long as we view planning and development approvals as devices for extracting concessions from developers on a case-by-case basis, will inevitably circle back to a low-build, NIMBY-dominated world."

This is the persistent problem in New York's Mandatory Inclusion Housing program (; Jan. 25, 2018; date accessed May 14, 2018).  Theoretically, "the city's program requires developers to dedicate a portion of units in new apartments buildings for affordable housing, which should ease the city's supply crunch and help reduce everyone's rent."  However in practice, "the individual neighborhoods in which the upzoned apartment building would be constructed oppose the additional density."  This citywide policy earned the majority support of the City Council, "the individual upzoning approvals that would activate the 'mandatory' portions of the law have run into difficulties."  The first two projects under the new law--in Manhattan (; Aug. 16, 2016; date accessed May 14, 2018) and in Queens (; Sept. 19, 2016; date accessed May 14, 2018)--faced serious opposition from the community spurred the local city councilor to remove support for the necessary zone change--"effectively torpedoing the projects."

Joe Cortright opines, "In many respects, this is a reprise of the drama that doomed California Governor Jerry Brown's 2016 proposal (; May 26, 2016; date accessed May 14, 2018) to exempt affordable housing construction from the state's CEQA environmental impact review process." The positive aspect of Governor Brown's proposal was it encouraged development.  However, it would have removed an important bargaining chip that municipalities (labor unions and environmental groups) have used to leverage concessions from developers.  Mr. Cortright adds, "As long as development permission is organized around this highly transactional, brokered process, it's unlikely that any group is going cede its points of leverage."  In short, housing equality will be achieved when all neighborhoods, regardless of income level, will be enabled to say not in my backyard--NIMBY.

When it comes to loosening up land-use laws, Mr. Cortright sums the situation as a "particularly nasty version of the prisoner's dilemma (Ibid; Sept. 21, 2016)" in operation.  While "Individual communities and groups would better off if everyone were allowing more housing everywhere.  But they don't trust that other won't renege, and their community (or group) will be saddled with all the burden and impacts."  In essence, while individual stakeholders look out for their own self-interest, the result makes it collectively worse for everyone--the "prisoner's dilemma."  

Mr. Cortright speculates, "If there's going to be a way to break this logjam, it's probably going to have to look a lot like Senate Bill 827--a relatively simple, clear and unavoidable state preemption that applies with equal force to all communities,..."  The mission impossible will be to get everyone to set aside their self-interst and work for the common good.

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