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Solimar Research

Insight: The Market Versus NIMBYS And Renters

William Fulton on
Mar 25, 2018

Give Scott Wiener credit: Everybody in California is talking about housing and SB 827, and – truth be told – nobody’s talking about much of anything else.

SB 827 is, of course, the now-famous bill that would pre-empt local control over certain residential projects located close to transit stops. It’s the most high-profile piece of legislation – other than the sanctuary state bill – to be proposed in California in a long time. Everybody’s talking about it.

California’s burgeoning YIMBY groups are enthusiastically supporting it. A distinguished group of 22 urban planning and policy professors has taken the unusual step of endorsing it.

Meanwhile, a curious alliance of renter activists and NIMBY groups are opposing it, often using harsh terms in the process – apparently because they share a common view that change will be bad for their very different constituencies: affluent homeowners and at-risk renters. (Indeed, the old rent control crowd has become very vocal against SB 827, fearing that low-cost old rent controlled buildings will be replaced by luxury high-rises.) These activists range from a candidate for Cupertino City Council, who argued in measured terms that there’s little evidence market-rate housing becomes affordable over time (probably true in Cupertino), all the way over to the Crenshaw Subway Coalition, which said that SB 827 is a “declaration of war on South L.A.” and said that Wiener is to gentrification what Donald Trump is to racism.

Meanwhile, Los Angeles City Council President Herb Wesson, a former speaker of the California Assembly, is leading the charge for L.A. to oppose SB 827. His recent committee hearing on the topic yielded a bemused piece in Streetsblog wondering why NIMBYs in peaceful Beachwood Canyon, far from any transit, would froth at the mouth about SB 827. Even Joel Kotkin has weighed in, somewhat cryptically, apparently siding with the NIMBYs over the market advocates by saying: "If you live within a half mile of transit lines, developers can come in and reshape your areas with little public input."

And yes, this debate has even spilled over onto the pages (both real and virtual) of California Planning & Development Report, where our Josh Stephens – admittedly an unabashed supporter of the YIMBY group Abundant Los Angeles – mixed it up with longtime Sierra Club leader (and former Berkeley planning commissioner) Eric Parfrey about whether the Club is being hypocritical in supporting infill development while opposing SB 827. Even Joel Kotkin has weighed in, somewhat cryptically siding with the NIMBYs over market advocates, “If you live within a half mile of transit lines,” he wrote recently, “developers can come in and reshape your areas with little public input.”

The big question, of course, is where is all this going to go this year. One thing is clear: Unlike past efforts, it’s not going to go nowhere. Despite the significant resistance among NIMBYs and renters rights advocates, something along the lines of SB 827 is going to get passed. After all, last year, 15 housing bills were signed into law, including Wiener’s SB 35, a distant cousin of SB 827.

Furthermore, housing has taken center stage in the gubernatorial race, even if the don’t always address SB 827 head on. On the one hand are Gavin Newsom and Antonio Villaraigosa, former big-city mayors who have endorsed the audacious goal of building a half-milion units per year. Then there’s John Chiang, who says that there’s no way that much housing will ever be built but we should throw tons of money at affordable housing. And finally there’s the leading Republican candidate, John Cox, who quite predictably is advocating an extreme streamlining of the California Environmental Quality Act to solve all housing problems.

So what’s going to happen? Most likely it will come down to the question of affordable housing versus market-rate housing. In other words, will local overrides such as SB 827 apply to all housing projects? Or will they apply mostly to affordable housing projects?

This is where we are beginning to see a shift in political alliances and possible political outcomes compared to past years. Up to now, the most influential lobbyists favoring infill development in Sacramento have been the affordable housing developers, both non-profit and for-profit, and their allies in the advocacy world, especially from the Bay Area.

There is considerable pressure in that world to focus public policy exclusively on affordable housing. Think back to the Strategic Growth Council’s Affordable Housing and Sustainable Communities program, funded by the cap-and-trade money. As the program guidelines were being developed, Bay Area affordable housing advocates were all over the process and the result is a major emphasis on affordable housing in a program that is, by statute, focused on greenhouse gas emissions reduction.

And in political terms, focusing on affordable housing – by which I mean housing built with government subsidies and reserved for households with specific incomes – is a perfect way out of the political box, at least for in dealing with the renter advocates. If you run the risk of displacing tenants from low-cost but unsubsidized housing, what better outcome could there be than creating guaranteed affordable housing that those tenants – and others – can move back into.

Yet there’s a growing belief on the part of housing advocates such as Wiener that affordable housing won’t solve the problem. No matter how much money is thrown at that particular problem – and Chiang, for one, is proposing another $9 billion bond on top of the $4 billion bond that will be on the ballot this fall – it’s not enough to make up the 2.5-million-unit gap that McKinsey Global Institute identified and that Newsom and Villaraigosa have promised to erase.

In the view of all of those folks, the private market has to step up and build a lot of market-rate housing as well in order to solve the problem. But NIMBYs and affordable housing advocates simply don’t believe that’s going to happen – they think all the new development is going to be luxury and there isn’t going to be any filter-down of older housing to the middle classes. Some SB 827 opponents even seem to view Wiener as a kind of a shill for the private real estate development industry.

The question, then, is whether the infill market advocates can overcome the NIMBY/renter opposition in Sacramento. Wiener definitely represents something new in California politics – a liberal democrat from San Francisco who is fighting folks on his side of the political spectrum over the role of the market in increasing housing supply and affordability. In the end, he may have to fold this year on the question of affordable housing with SB 827 – he’s already amending the bill to provide renter protections. But it’s clear that this new kind of Democratic housing advocate isn’t going to go away in California anytime soon.

2 Comments Posted Leave a comment

Howard Ahmanson (Irvine)
Howard Ahmanson (Irvine)
 

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