Change the Zoning, Change the Housing Crisis

As the housing crisis continues, with no end in sight, it is time to look at why it is so difficult to build new housing and what can be done to change that situation.  There are many reasons proffered on why new housing is being built in the North Bay (and much of California) such as the abuse of the California Environmental Quality Act (CEQA); lack of construction workers; increase in building materials; neighborhood opposition  — the list goes on.  But one thing that has been getting more attention is the fact that current zoning makes building the housing we need illegal.

Let’s look at the arguments that if you change the zoning to allow for higher densities, taller buildings and reduced parking, you will be on the right path to build the much needed housing needed to end this crisis.

Some housing advocates are calling for an end to single-family zoning, meaning allowing only apartments and townhouses to be built, and no detached, single-family houses.  This push to “upzone” is a response to years of communities “downzoning” the land in their jurisdiction, reducing the development potential and “converting land that allowed courtyard apartments to just fourplexes, fourplexes to duplexes, large-lot single-family homes to even larger-lot single family homes,” said Emily Badger (The Upshot) Link.

“It was death by a thousand cuts,” said Greg Morrow, executive director of the Real Estate Development and Design program at Berkeley. “You’re just taking a little bit out each time. If you look back at early attempts to downzone, they really were almost driven by this naïve belief that if you just downzoned, you could stop population growth.”

But downzoning didn’t stop population growth.  The population kept growing while new housing did not keep up with that increase.  At the same time, the cost of housing, due to the scarcity, also skyrocketed.  Rents increased forcing many renters to pay well beyond the one third of their income for their monthly rent.  The UCLA – Lewis Center for Regional Policy Studies (Link)  found that zoning restrictions triggered these increases.  The Lewis Center also found that conversely low-density zoning “excludes multi-family housing with due to higher rents so low and middle-income families are not able to live in neighborhoods with quality public services, particularly high-performing schools, as well as amenities such as parks.  Barring families from high-opportunity neighborhoods entrenches inequality and reduces social mobility in the long run.”

The Center’s research showed that “low density zoning also hurts the regional economy.  Less housing makes it harder for workers to find a place to live.  The city, unable to house workers, becomes less appealing to firms that rely on a local labor pool.  Pushing people elsewhere incentivizes firms to locate elsewhere.  A city that can’t house workers stunts its own potential for economic growth and dynamism.”

So who benefits from keeping the zoning low-density?  Existing property owners, who are able to reap the returns on their properties’ increasing value.  Another researcher, urban economist William Fischel (Link) has studied the homeowner voter or home voters and developed the home-voter hypothesis.

Fischel predicted that California homeowners’ opposition to new housing is consistent with their desire to “prevent any development that might devalue their homes, which are usually a household’s primary source of wealth. For example, if a multifamily building is proposed in a municipality otherwise characterized by single-family housing, we may expect a homeowner to resist the development on the premise that an influx of new families could overburden public schools or worsen traffic congestion, or express fears that the new rental housing might threaten “community character” – thereby lowering home values.

Which brings us to the reaction to upzoning.  Sen. Scott Weiner’s SB 50– Homes for All bill – was killed in committee by suburban homeowners pressuring their representatives to not not allow change to their neighborhoods that they feared would threaten their property values.  Local governments also opposed the bill fearing that it would diminish their “local control.”  Weiner’s bill would have upzoned land near public transit and in job-rich areas to allow high density, taller buildings with less parking. Polling indicated that the public supported key provisions of the bill.

In looking to gain support for upzoning, there is recognition that there is a lack of political will at the local level to take on these development fights.  Some people like Christopher Elmendorf (Link) have proposed a “compact between state and local governments in which the state would set quotas for housing growth, but the municipalities would choose their own zoning reforms to meet them.  Once a municipal plan gets certified by the state, it would supersede the adoption or enforcement of any contrary zoning provisions.  Any municipality that fails to comply with its own plan would face financial penalties.

Other proposals also look at shifting land use decisions away from the local agencies to the regional or state governments. The Lewis Center found that decisions made at the regional or state level were “less exclusionary and reduce socioeconomic segregation. Housing markets, like labor markets, operate at the regional level, yet land use decisions are made at the city level.  As a result, each municipality is incentivized to limit its housing supply to exclude new residents of the region even as that municipality reaps the collective benefits created by the region’s dynamism. “

The proposed Housing Alliance of the Bay Area that would be formed if AB 1487 (Chiu) is passed, is an example of housing advocates trying to jumpstart that process in the Bay Area.  This new housing authority would be authorized to raise money to build new housing, provide rental subsidies and finance planning by local jurisdictions for new housing development

Fuller and Gray say, “in the end, SB 50 is no more dead than its predecessor bill, SB 827, which similarly sought to permit multifamily housing near transit lines.  Neither the coalition built by Senator Weiner, nor the crisis that it aims to address are going away. But if housing reformers are serious about addressing the root causes of the home-voter impulse, they’ll need to plan for contingencies.  SB 50’s foes are already rallying to introduce a ballot initiative aimed at entrenching local control of land use in the state constitution – an amendment that would all-but ensure that California’s housing crisis becomes permanent.”  After decades of failing to build housing to keep up with the growing jobs and population in California, one wonders if the crisis isn’t already permanent.

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