We face a housing crisis. Those occur when supply doesn’t map particularly well to the demand for housing at various income levels.
Fairness argues those who work in a community ought to have a reasonable chance of living in or near it. If all the jobs are low wage, inexpensive housing (which, when land is expensive, often means higher density, since that lets you spread the cost of land over more homes) is the goal. Conversely, if all the jobs are high wage it’s OK to have policies that support building expensive homes.
Neither extreme typically occurs in practice. Instead, communities have a mix of jobs. Which means you need a mix of housing types. Sounds simple!
But now let’s add several political factors.
Single family homeowners are more likely to vote in local elections than their higher density housing counterparts. In addition, for various reasons, many single-family homeowners oppose adding higher density housing to their communities. Commuters — who often play a significant role in a community’s economy — have no say in how housing policies are developed, because they can’t vote in local elections. As a result, local politics are generally skewed against increasing housing densities, even in the midst of a crisis.
Proposition 13 keeps a lid on property taxes but makes residential property expensive for a community. Why? Because residents want good local services — police, fire, schools, parks, etc. — whose cost tends to increase much faster than residential property taxes do. It’s also cheaper to protect non-residential areas. Consequently, prioritizing non-residential development reduces costs, and can generate more tax revenue, too (e.g., through hotel and sales taxes).
This simple balance of forces explains why many California communities haven’t met their state housing “mandates” for many years, despite experiencing enormous economic growth requiring a lot of new employees. Since those “mandates” weren’t enforced, there was little downside when local leaders dodged them. Why risk annoying voters if you don’t have to?
Why didn’t the housing crisis erupt earlier? The explosive growth of personal transportation since the mid-20th century created a safety valve which helped delay the inevitable. Not enough affordable housing near where you work? No problem! Live someplace you can afford and commute to and from work in your car. The community you work in benefits from this, too: More commuters foster more economic growth without the need to create more housing locally. That fills community coffers, helping make them more attractive, driving up home values.
The safety valve worked … until the roads got clogged up and there wasn’t any affordable land to build more, or build mass transit systems, to house the new employees needed to maintain economic growth.
The state’s drive for more appropriate housing policies resulted from all of this. Sacramento’s concern is understandable. Many Californians have terrible commutes. Plus, all that commuting is a significant factor behind climate change. But the biggest fear — pocketbook issues generally trumping everything else — is that businesses will move away or not start here because they don’t want, or can’t afford, to pay the necessary salaries. That would kill the goose that laid the golden egg.
Not recognizing why the state is being more aggressive makes Sacramento look like a bully. This missing perspective is surprisingly common among local officials. It’s why councils write letters criticizing state efforts to get more housing built. Those missives commonly exhort Sacramento to “leave it up to us as you always have.”
Much of the responsibility for the housing crisis lies with local officials. After all, they’re the ones who have been crafting land use policies. Had councils done a better job educating their constituents about the changing landscape — so better policies could be supported locally — the state would not have had to act. Unfortunately, kicking the can down the road was, and still generally is, the order of the day.
It took me years to appreciate the magnitude of this crisis while serving on our city council. I regret not having found a way to energize the council and our community to engage on the issue.
The conservative political philosopher Edmund Burke said, “Your representative owes you, not his industry only, but his judgement; and he betrays you instead of serving you if he sacrifices it to your opinion.”
Let’s hope we see less catering to opinion and criticism of the state, and more education and leadership, on the housing front.
Mark is a former mayor of San Carlos. He and his former school board colleague Seth Rosenblatt host The Boiling Frog podcast, which you can find at https://www.TheBoilingFrog.net.
(9) comments
Mr. Olbert, thanks for your letter. Last week, a letter was published with ideas regarding housing and as with this letter, there’s no mention of the increasing costs to build housing. In many cases, exorbitant development fees are tacked onto these costs. How will “affordable” housing be built when costs to build “affordable” housing result in mortgages/rent higher than what low income folks can afford? Or is “affordable” considered those who make up to $200,000/year? Everyone can continue complaining about affordable housing but the bottom line is that builders aren’t going to build if they can’t make a profit.
For housing-related information, especially the costs to build, I’d highly recommend taking a gander at the Terner Center’s website and their research and policy publications (https://ternercenter.berkeley.edu/research-and-policy/). Every time government wants another piece of the pie via higher and higher development costs and fees, the further out of range “affordable” becomes. Costs are one of, if not the biggest reason affordable housing can’t be built – it’s not affordable to build… Sure, you’ll get a few developments that will offer a token numbers of “affordable” units but if the costs/profit margins don’t pencil out, developers are better off developing commercial buildings (commercial buildings may have lower fees per square foot). Remember, developers aren’t in the business of losing money and investors wouldn’t want them to.
You've identified one way that communities prevent more affordable housing from being built: restrictive building code requirements. To be fair, most such requirements aren't intended to discourage more housing. That's more traditionally done through restrictive land use regulations.
That's why Atherton is up in arms about the state's recent moves on the housing policy front -- many in Atherton don't want their zoning regulations changed to allow higher density housing, because they set those regulations up in the first place, in part, to discourage higher density housing.
FWIW, I'm pretty confident high density housing would get built in what you describe as over-regulated areas if the land use regulations were changed to allow it.
I once asked a commercial/residential developer if he regularly chose to not build multi-family residential housing because he made more money with commercial/retail projects.
He looked at me as if I'd just asked him the dumbest question of all time and said, "You're joking, right? I'd love to build multi-family residential because I make a TON more money on it. But I can't find land to do it!" Meaning, he couldn't find land zoned for it.
markolbert – thanks for your response. Although you’ve attempted to reframe the conversation, you, as well as others pushing “affordable” housing, continue to ignore the fees and costs associated with building… they’re not cheap and not getting any cheaper.
If more land suddenly becomes magically available, does it matter? If anything, in addition to existing development fees, costs may increase, especially if cleanup costs are involved. “Affordable” housing now becomes even less affordable. In regards to magically available land, guess who has plenty of land? Emily Hoeven’s recent article (https://www.sfchronicle.com/opinion/article/california-nimby-state-housing-17915441.php) gives us an idea. Why should (the collective) we destroy the look and feel our neighborhoods when there is plenty of land available? I’d say more power to folks in Atherton or any other cities that don’t want to cede local control. I’m not surprised if cities do anything and everything to delay as long as possible until the winds change.
Mark - thank you for your comprehensive review of our housing crisis. I agree with most of your assertions but question your opinion on the effects of Prop 13. Based on what I see around here, all cities seem flush with funding, schools continue to badger us with bond issues and even Belmont has found new ways to add assistants to assistant directors to its payroll. Priorities have been reshuffled and housing needs forgotten. However if you need any new superfluous regulations, the city councils are on top of them. Those are easy diversions from our real needs.
Hi Dirk! I think you may have misunderstood my point. Prop 13 enables cities to be flush with cash...provided they adopt policies restricting residential construction and enabling/prioritizing non-residential construction. The fact that you see lots of local communities flush with cash is consistent with discouraging housing construction.
The reason we don’t have more close in housing is the high cost of land, construction and infrastructure needed to for it on the Peninsula. The history of housing in the urban areas of our country shows that the solution for affordable housing is to build transit to areas where land and building cost are lower. It also enables companies to build satilite office to those areas. The key to enabling this is fast transit like buses and trains. The HSR should be building out from city centers instead of laying track in the empty farmlands of the Central Valley. More fast lanes could be added to existing highways to accompanied higher speed buses. California isn’t thinking out of the box.
Hi Ed! I agree there are still things that could be done, mass-transit-wise. My point was that doing them, today, is increasingly expensive, in many senses of the word.
HSR running into all the obstacles it has is a reflection of this. The first track got laid in where it did in large part because land is cheap there. Not to mention lower population density made it easier to secure the land (which is a local public action/decision).
Track didn't get laid up in the Bay Area for the opposite reasons. Land is incredibly expensive, relatively, on the peninsula, even adjacent to the existing right of way. And the population density is so high that there were, and are, an awful lot of voters who oppose adding HSR in their communities. Which illustrates, I think, the point I was making about what happens when you kick the can down the road on housing.
Adding lanes to the existing freeway system is possible (it's been done :)). But it's essentially one of the last stopgap measures, and not a very good one. When I was on the council and the project came up for review and approval I asked the consultants how much commute time would improve by spending all that money. The answer was shockingly low, something on the order of a few percent improvement...for a relatively short while.
Hats off to Mr. Olbert for his thorough and comprehensive account of why we are still struggling for courageous local leadership in our housing crisis. Asking the State to step aside and just send more and more money without true accountability is no answer. The proof is in the pudding.
Thanx! And shame on me for forgetting to include the phrase "the proof is in the pudding" :)
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