Alleviating California’s Housing Crisis

Take Two

December 18, 2018

The political response to California’s worsening housing shortage stands as one of the highest-stakes debates in modern American policymaking. For many years now, California has suffered from underproduction of homes. Prices have risen, but new supply has not been allowed as municipal governments have stood in the path of new construction.  Long commutes for middle-class homeowners are common, while convenient apartments in San Francisco and Los Angeles can rent for more than their peers in other high-cost cities like Washington, DC and Chicago.

This problem has not gone unnoticed by California’s elected officials. In the 2018 legislative session, lawmakers debated a bill, SB 827, that would have legalized taller, denser buildings near transit stops. The bill failed to advance out of committee amid a flurry of NIMBY opposition as well as objections from a range of union and environmental interests. Though it did not pass, it provided a starting point for conversations on how to actually address the main factor driving of the state’s high cost of living.

A year later, the original bill’s sponsors, Bay Area senators Scott Weiner and Nancy Skinner have come back with a new bill, SB 50, that proactively heads off some of the main objections that sunk the original attempt. The bill would allow 4 to 5-floor buildings close to frequent transit stops like train stations and some major bus lines. This is less than the previous iteration but still would amount to one of the most substantial upzoning actions by a government in American history. Above and beyond the previous bill, this iteration would apply similar rules to “job-rich” areas as well, meaning more housing within walking distance of major employers.

But the new bill is not all roses compared to the previous attempt. Concessions, only added in committee negotiations in 2018,  that carve out many properties from new density rules are part of the bill from the outset. Property owners will need to wait 7 years after tenants leave to redevelop properties, which rises to 15 years if tenants left because of an eviction. Developers receiving concessions would need to use union labor, and reserve a to-be-determined amount of units for low-income households. All of this will add costs to using any density SB 50 legalizes, making redevelopment at higher densities much slower than the alternative.

The bill would allow many communities years to develop parallel plans. Those deemed “sensitive” by California’s Department of Housing, in consultation with local organizations, would have until 2025 to develop rules similar to those set out in this bill. This will further slow development in communities the state deems especially vulnerable to displacement, potentially exacerbating the same affordability problems it seems to remedy.

While misgivings and missed opportunities are a part of any housing reform, rules that codify a mandate to allow some minimum allowed density near the state’s highest-frequency transit stops are an important first step in any comprehensive housing reform. Places served-well by public transportation are a far less objectionable place to build than at the urban fringe where the vast majority of residents expect to drive for every trip. These places are already receiving public transportation subsidies, so there’s reason to believe they’re the ripest candidates for 4 to 5-floor buildings to replace smaller structures.

California’s housing crisis is a man-made catastrophe that has harmed the environment, fueled displacement, and meant a generation of Californians cannot afford the same amount and quality of housing their parents could. The only way out is to build. And SB 50, whatever its imperfections, would generate a whole lot of building.

Nick Zaiac is a Catalyst Policy Fellow and a Fellow in Commercial Freedom at the R Street Institute where his portfolio includes housing, postal and transportation issues. He holds a master's degree in economics from George Mason University. He lives in Washington, DC with his wife, Ali.
Catalyst articles by Nick Zaiac