This would address an important element of high Bay Area housing costs: the discretionary project veto by local authorities. This is the main reason why only super-high end luxury stuff gets built in San Francisco.
In most parts of the US, there are certain local zoning laws. You apply to the local government for review of your project. This is expensive, as you must prepare detailed professional studies for the proposal.
If the project conforms to all of the zoning laws, it must receive a permit. They can only deny you a permit if your project does not comply with some specific zoning law.
In San Francisco and several other nearby cities, the local government can arbitrarily withhold a permit even when a project conforms to all local zoning laws in every respect, usually under the vague and arbitrary guise of "not fitting in with the neighborhood's character."
Since applying for a permit is an expensive and time consuming process, most developers simply don't bother to even try in San Francisco. They just go elsewhere, where their project can't be arbitrarily vetoed by local authorities despite conforming to all applicable zoning laws.
The main exception is luxury developments: since the profit margin on luxury construction is so high, it's worth the extra cost and risk associated with navigating San Francisco's permit process.
If this law passes, then municipalities will not wield the power of arbitrary veto anymore. There will still be extensive zoning regulations, of course; the difference is that development restrictions will have to be spelled out in the law, in advance, rather than made up on an ad hoc, per-project basis by local officials. This greatly reduces the risk involved in starting a development project, and makes non-luxury developments much more likely to be profitable and thus undertaken by developers.
Economics are the reason high end housing gets built. The fixed costs of development are similar regardless of affordability. Assuming uniform margins gross profits are higher at the high end as are internal rates of return [due to constant fixed costs].
Going further, there's more money to be made on larger loans and hence incentives for any developer financing purchases. Easier to sell on mortgages backed by higher quality assets.
Affordable housing development is a specialty. It requires relationships with politicians willing to forgo maximizing the property tax base, specialized lenders, and a unique deal flow pipeline. E.g. think about the attractiveness of the 30 year affordability requirements in the legislation to the commercial market.
Anyway, the effects of legislative changes will be felt ten to twenty years out...many of the shovel ready projects funded by the stimulus are still under construction.
This is the correct answer. Labor and materials costs, nationwide, exceed $300 per square foot (and often much higher) for a high-rise project [1]. Once you factor in efficiency, land, insurance, financing, sales and marketing, and all of the other costs of a project, it's difficult to make a profit until costs start pushing the $1000/sq.ft. range. That's luxury housing.
However broken SF's development process may be, it isn't the limiting factor to new development. SPUR estimates the regulatory costs for a San Francisco project at about 20% of the total costs [2], and most of that is the low-income housing set-aside (which is ~10-15%, varying by project). The majority of the costs of any new project are land, labor and materials. And San Francisco truly is an exception, in that it's one of the few cities in the world where there's no more undeveloped land.
People love to make generalizations based on community meetings (which are always a circus, in any city) and the cost to do a bathroom renovation or alter a garage door, but to a large construction project, these kinds of bureaucratic costs are a fixed expense. Land, labor and materials drive everything.
Edit: I'm stating facts here, and citing sources for those facts, directly from developers. I have no idea how you can downvote factual information. If you want to have a reasonable conversation about housing in SF, you have to take these basic economic questions into account. They matter.
"The majority of the costs of any new project are land, labor and materials."
That's highly misleading, because if development gets easier then rents go down, and if rents go down then land prices go down. The paper at http://faculty.washington.edu/te/papers/Housing051608.pdf estimates that excessive regulations are responsible for half of San Francisco's housing costs. That was in 2006, so it's almost certainly more now.
"The data shows, clear as daylight, that prices are only ever this high in cities which refuse to build any new housing"
That graph shows only that housing is more expensive in cities that haven't built a lot (it's actually not clear, since there's no R^2, so you can't interpret it). It doesn't tell you anything about why those cities haven't built.
"In Houston, which famously has no zoning, you can buy a condo in a downtown luxury high-rise for $200 per square foot"
Houston is over 600 square miles, with few geographic impediments to construction. San Francisco is 50 square miles, surrounded on three sides by water. There's a latent variable you're ignoring.
"That's highly misleading, because if development gets easier then rents go down, and if rents go down then land prices go down."
Development doesn't "get easier" as rents go down. It gets harder, because it's harder to justify the costs of a project to investors.
The $300/sq.ft. estimate is a nationwide baseline estimates for high-rise construction. They're labor and materials costs, and are unrelated to land, rents, local policy, etc. High-rise construction becomes especially difficult as rents drop, which is why you don't see it outside of the most expensive markets in the world.
"Downtown San Francisco is full of undeveloped surface parking lots. Here are some maps I made..."
Highlighting every parking lot you see in SF (which is what you've done here) isn't a counter-argument. They're land that is being used for a current economic purpose (unlike, say, most of the land surrounding Houston, which is being used primarily for jackrabbits and snakes).
In fact, you've highlighted a number of lots in my own neighborhood that are currently in the process of being developed. Why weren't they being developed before? It wasn't worth it until residential demand in the neighborhood went up. You're assuming that these lots weren't developed "because regulation", when the answer is "because nobody wanted to build there".
"The paper at...estimates that excessive regulations are responsible for half of San Francisco's housing costs."
As far as I can tell, it's not a reliable source. It's a paper about Seattle, which runs a regression based on a small sample of land-use restrictions from a Wharton database, and claims (without proof) that regulations added $409,000 to housing costs in SF from 1989-2006. Aside from not passing the data analysis smell test, that number includes all regulations -- including state and zoning restrictions, many of which are perfectly reasonable.
The numbers I'm citing are directly from SF developers, via SPUR. It's possible that "unreasonable restrictions" drive up land prices more generally in SF, but you'd need a better analysis than this to prove it.
I don't necessarily dispute this, but your putative arguments could be applied to lots of industries, and seem inconsistent with the wide range of quality / price points for most products.
Real property is, in some meaningful ways, different from goods and chattels. It can be improved but not manufactured and of course cannot be relocated. It doesn't matter how much demand there is, some new real-estate entrepreneur isn't going to disrupt Palo Alto with $150,000 detached single family homes.
In so far as real-estate is a product, differentiation between quality and price points is primarily a function of location...as Peter Thiel might put it [but probably doesn't], each lot is a monopoly. There is cheaper housing in Detroit and solely based on the opportunities afforded by location and not necessarily the nature of improvements one might deem it of lesser quality than a similar structure in San Francisco.
Anyway, I've been involved in a bit of housing development over the years. The few developers I know who do affordable housing specialize in it [as the many upmarket developers do in the upmarket]. Developers who don't specialize in affordable housing typically don't do it. The market analysis and proper institutional investors are not orbiting the market rate housing and general commercial development herd...and most developers stick to their track record.
Yes, real property is different from goods and chattels in meaningful ways. But I don't think your initial arguments for a dearth of affordable property exploit on any of them.
In California newspeak, "affordable" housing means government-subsidized housing, while "luxury" housing means any housing built for profit (even if it's tiny studio apartments).
> In California newspeak, "affordable" housing means government-subsidized housing, while "luxury" housing means any housing built for profit (even if it's tiny studio apartments).
This is false. Direct subsidies are one of many means used in California to achieve targets for affordable housing, but affordable housing does not mean subsidized housing. That's particularly important in the context of this proposal, a key part of is proposing additional non-subsidy mechanisms to encourage affordable housing (by reducing the local-review barriers to new developments which include it, and reducing regulatory barriers to new units on existing lots.)
IME, that's how the word affordable is always used; do you know of any counterexamples? SPUR had to come up with a new term, "affordable by design", to distinguish housing that was built to minimize construction costs from housing that was government subsidized (http://www.spur.org/publications/spur-report/2007-11-20/affo...).
When bills like this talk about "affordable" housing in new developments, they don't just mean "the rent in this unit has to be kept below $X per month" (as in rent control). The "affordable" units are turned over to a government agency, such as the Mayor's Office of Housing in San Francisco (http://sfmohcd.org/), which administers them and decides who gets to live in them. For example, last year, the city of San Francisco decided that people who lived in the same neighborhood as a building would be first in line for that building's affordable units (http://www.sfexaminer.com/affordable-housing-lottery-being-t...). The building owners' approval was not required, because the program is run by the city.
> IME, that's how the word affordable is always used; do you know of any counterexamples?
Well, the most relevant counterexample here would be the California Health and Safety Code Sec. 50052.5 [0], which provides the cost-based definitions of "affordable housing" which apply to various income tiers (which are also those relevant to the present proposal from Gov. Brown.)
(These definitions are often prerequisites to certain subsidies, but it is meeting the definition, not the subsidy, that makes it "affordable housing".)
> The "affordable" units are turned over to a government agency
Proposals (including the present one from Gov. Brown [1]) conditioned on a certain share of affordable housing usually require that the developer make a commitment that they will meet the applicable cost-based definition of "affordable" for a period of time, and that that commitment will be enforceable by a public agency (the present proposal requires that this be done by the developer recording a land-use restriction enforceable by the public agency.)
This does not require that the property be turned over to (or even managed by) a public agency, though certainly there are affordable housing developments that have occurred where there was either direct ownership or management of the units by a public agency, nor does it require that the housing be subsidized in any way (though at the "lower income" tier, the population for whom they are targeted to be "affordable" to is also the population eligible for Section 8 housing subsidies, I believe.)
You point to two cases where the legal definition of "affordable" doesn't refer to subsidies, but don't the large majority of those units, in point of fact, enjoy subsidies? Your precision is helpful, but apsec112 could still be basically right. ("California newspeak" clearing referring to the way words are typically used, not legal definitions.)
FWIW, I have never understood "affordable" housing to have that connotation.
In my experience, as appears to be the case here, local governments often "encourage" developers to offer below-market-rate housing as part of the residential zoning rules. Here's an example: http://gothamist.com/2015/12/18/de_blasio_zoning_affordable....
I would add a little to this: It only holds true if there's nearly endless demand for high end units relative to supply. In SF, Manhattan, London, and other major cities this is true. There will always be a bunch of rich people willing to move in and pay high rents.
Otherwise, your logic implies developers in a place like Houston should only build high end units. That obviously doesn't make sense.
What would stop a municipality from making zoning laws that are impossible to meet, and then just issuing waivers to those that play the political game well enough?
Hopefully the local interests who also know how to play the political game well enough but recognize the "indications that businesses and residents are fleeing the state in part because of high housing costs and the state's Legislative Analyst Office blaming excessive restrictions on development for the affordability crisis".
Profiting from pulling out the rug to newcomers only works if there are enough newcomers still willing to pay the exorbitant rents for the artificially suppressed supply. If enough people start saying "eh, the bay area is nice and all but not worth it", the NIMBYism starts to get less profitable. Sort of a pendulum-swinging-the-other-way dynamic-equilibrium type of thing.
I don't know about that. Ignoring the rest of the world for a moment and concentrating on industrialized nations, we seem to be the worst at providing socialized services.
I've been out of the states for 10 years now and have noticed the motto being applied in states as altruistic as Switzerland, and it definitely rules in here China, much more than in the US.
China is a third-world country not comparable to western Europe. It's industrializing rapidly, but no one would ever be so naïve to think it has social services even approaching those in western nations.
China is comparable, but further down the development chain. Social safety nets and good governance tempers selfishness a bit, but can't eliminate it (e.g. Switzerland). America has less of a net and equality than much of Europe, which is why selfishness seems to be more apparent there than in Europe.
No, China isn't even remotely comparable. Just a few decades ago, it was a mostly agrarian economy. They've had massive industrialization in a very short time, but they don't the much longer-term culture of industrialization and social programs and worker protections etc. that western nations have.
And how exactly is Switzerland "selfish"? They may not be part of the EU, but they appear to have just as many social safety nets as any other western European nation. This seems like a rather silly charge to me.
My guess is that that would be a tougher law to pass. The real estate developers and construction trade unions would pretty much swear to block something that extreme.
It could also wreak havoc with small-time landlords who want to improve their properties, so that's another interest group that would militantly oppose it.
This has already happened in SF. You need a permit to install a new garage door on your house, including a review of how well it fits the neighborhood character (in the subjective opinion of the reviewer).
Yes, the real estate developers and construction unions have screamed, for decades. It passed anyway.
In the 1960s and early 1970s, the San Francisco city government was run by pro-development Republicans who built some admittedly rather monstrous looking concrete slab modernist skyscrapers downtown.
(Contrary to popular belief, it was then a rather conservative city, not some sort of mythical artsy bohemian paradise. The "freaks," as they were then known, were a small minority of the population.)
This led to an anti-development backlash against the so called "Manhattanization" of San Francscio, which synergized with general anti-capitalist sentiment brought by the large number of leftist newcomers who arrived in the 1970s. The pro-development Republicans were routed entirely out of city politics by 1980, and rent control as well as a number of highly restrictive zoning laws were passed, aimed at preserving the picturesque postcard hillsides and views of the bay and halting all forms of physical and social change in the city.
The result is that most of the city has a "frozen in amber" feel to it. Making any substantial changes to the way anything physically looked circa 1950 is simply forbidden.
If you have to do repairs, you must demonstrate how it will not alter the appearance of the building. You must preserve the facade identically to the way it has been. You can often see gut renovations where the original facade is propped up on wooden stilts facing the street, and the entire rest of the house has been torn down to be rebuilt.
A current case in the local news revolves around the city granting landmark status to a 60 year old pine tree (not even a rare species) in some guy's backyard, so that he is legally unable to remove it: http://www.latimes.com/local/california/la-me-san-francisco-...
Right. Another aspect of this is that SF is one of the few cities where minority groups have been able to use housing laws effectively to try and prevent them being kicked out of the city as prices rise (in most other American cities, these actions have failed). Look at the Tenderloin or Chinatown. This creates a pretty difficult where mostly poor minority groups feel like they have to be anti-development, because otherwise they won't be able to live in the city anymore. In theory given enough building and enough time, prices will go down and SF could be diverse again, but most people think that would be along time. It's a compounding situation of bad choices.
I also think you're giving short shrift to the effect that Milk's and Moscone's assassination had on city politics. It heightened everything that was going on elsewhere in the late '70s - the rise of the environmentalist movement, urbanism, increasing power to minority groups.
I would also say that a lot of the blame belongs to the cities outside of SF: SF only has 11% of the total population of the Bay Area and most of it's suburbs are even more anti growth then the city itself, they just hide it better by being zoned for single residency housing.
Very true about this being a regional problem. San Francisco is doing a poor job building more housing but the suburbs are actually far worse, such as mountain view allowing more office space to be built but no new housing.
Landmark status for a tree is rather unusual even in San Francisco. I don't know what would happen if this specific tree were damaged by a storm. My guess is they'd allow its removal and require that it be replaced by another one, but who knows.
Storms are not common in San Francisco, but they do happen occasionally. We usually get at least one or two good thunderstorms with high wind every winter.
Hah, I know that tree. The picture they used does not do it any justice. Its a beautiful tree. The lot is at end of the dead end street off Geary. Interesting one - double or triple size with main house and old carriage house on it, both set way back, unusual for that area and pretty. My guess is, it was bought to be torn down and build a couple multi-million townhomes side-by-side. Suppose it was easier for those guys to protect the tree than the home, carriage house or parcel itself. Is it that big of a loss of very unaffordable housing in grand scheme of things? The developer would not do affordable apartment building, even if it was zoned, the profit is just not there. I'd take that tree anyday over new small home. Looked at it every time I walked by it.
By the way, one fact thats rarely mentioned, that makes it far more profitable for developers to build small structures in sf is the earthquake code. Once you get over three stories, its totally different and far, far more expensive from time, engineering and materials standpoint. Dont get me wrong I'd love to see the city grow in height over some areas such as along Lincoln dr, its just not as simple as only zoning or nymbd blocking everything.
Harder to build -> harder to densify -> homeowners reap appreciation.
If you don't need work done, this is a great way to sit back and let your property values skyrocket (as long as you can pay property taxes, but I hear that's kinda sorta not a problem in California).
Existing homeowners don't usually oppose new development in order to maximize their property values. They are usually more motivated by quality of life issues. Some people specifically chose to live in low-density suburbs in order to have a little space, privacy, and quiet. It's hard to convince them to put up with more noise and traffic congestion just so that newcomers can have cheaper housing.
What percentage of home owners are people who have owned their house for a long time (to benefit from prop 13), need zero work done (unlikely if you've owned your house for a long time), and whose behavior can be reduced to a financial equation?
My guess is that a lot of people do interior work without permits. If you're tearing down an interior wall and re-building a bathroom, there's no evidence of that from outside, so no simple way for the city to stop you.
There is tons of this in SF, notably the huge number of illegally built "in-law apartments," where someone converts their garage or basement into a seperate dwelling unit without permits.
This is essentially what San Francisco does now: "fitting in with the neighborhood's character" is impossible to meet, unless you play the political game well enough.
Local real estate interests and the lack of political will. Sweeping zoning changes are hard work over many years. Those that widely devalue property? Few local politicians have the charisma to ride out multiple elections with that sort of agenda.
Philadelphia allows any individual member of city council to veto any construction project for any reason[1]; it's called "councilmanic prerogative", and it is unsurprisingly linked to a number of corruption cases as well as some very murky cases of political retribution[2].
I think Municipalities should have the power of arbitrary veto. As a resident of Sunnyvale I do not want more housing projects to come in Sunnyvale, this helps me keep my property prices higher, have less traffic, less people and less crime. Also high income people tend to also improve the quality of public schools.
I do not want state government to arbitrary force their views on our cities. Let the cities decide for themselves.
> The main exception is luxury developments: since the profit margin on luxury construction is so high, it's worth the extra cost and risk associated with navigating San Francisco's permit process.
And by navigating arbitrary decisions, I assume we're talking about bribery at some level of the process?
It is a step in the right direction, but this is still just more of the same policies that screw over the middle 40% of population. This still doesn't fix the problem with housing. As someone who makes exactly the median income but likes to save it, I am legally forbidden from living in "affordable housing".
If you are poor, here is your free house. If you make the median income, you are forced to spend money exactly like everyone else. Lawmakers only care about affordable housing for the poor, no one cares about providing modest housing for the modest earner.
I think it's more that there is an imminently obvious solution (housing subsidy based off of income, on a sliding scale. And letting that reach 100% for poorer people if needed), but instead we've opted for setting aside stock, which causes a whole range of problems in itself.
So the whole "affordable housing" thing becomes a sort of fiscal cliff: you make a dollar over this amount, and suddenly you lose all the benefits.
Of course it makes sense to help out the less fortunate more than someone who makes more, but maybe there are easier ways.
An example of what some other places do: France offers housing subsidies where the only restrictions are that you're "for real" renting the place (not living at a relative's house). Then it's only a function of your income and age (and capped at something like 80% of your total rent)
I believe I'm entitled to the same benefits we give to the bottom 40% of the population and I believe I'm entitled to think this based on my reading of the equal protection clause of the constitution.
Creating housing where only the poor can live is not equal protection under the law.
Given there exist software engineers at Google who sleep in their vans ... maybe yes if the OP's employer doesn't have free food? At least in tech, we don't have student loans. I've heard of Doctors leaving the Bay area because they were fed up of housing + commute. Have you seen the prices in MV downtown? Apartments seem to have doubled in prices. In my opinion, what happened is low interest rates allowed some big hedge funds/property management companies to buy all the properties in the prime spots ... they did a bit of renovation, tagged the places as luxury apartments and here we are. My last place, the apartment manager mentioned that some 2 bedroom apartment had 4 roommates .. that's how people afford this crap.
I like the idea of vouchers, a basic income, and slow slope / no income guidelines.
On the topic of food, I can legally shop for food where the poor shop. Around here it is Aldi. If Aldi ever said, "due to federal subsidies and local laws we can't allow you to shop here because of your income" then I would have a problem.
My county social services are the best I've seen so far. I can get some types of medical care for free and have access to the food pantry. They do ask for income, but don't deny free access based on your answers. It is the closest social programs I've seen that align with my ideology of equal access for all.
I'm not the person you're asking, but I don't think it's "entitled" to expect that government policy should at least try to address the needs of the average citizen.
> When Brown was mayor of Oakland, "every Oakland project I proposed was opposed at City Council by one group of neighbors or activists," he said last October.
If anyone wants to see evidence of this just sign up at nextdoor. There exist a group of dedicated people in every neighborhood whose sole purpose it is to stop any new development.
THIS. OMG, the anti-development mob on Nextdoor is horrifying. I live in southern Marin and you would not believe the hysterical and shameless level of NIMBYism. People in my area use the platform to try to block new single family residences from being built even on privately-owned parcels, and post to Nextdoor urging everyone to come to the planning meetings to try to block the permits. After all, the person who wanted to build the house was a developer who lived in Sacramento, not a local person, and everybody freaked. Why, there was even a possibility that he might build five or ten houses in that area further down the line (the horror, the horror).
When I posted comments objecting to the attitude, one of the local anti-development residents apparently ran a deep background check on me and posted to Nextdoor that I surely must be opposed because my family must be real estate developers and have some kind of vested interest. Actually, my grandfather started a commercial real estate company on the other side of the country, not residential real estate nor any kind of new development. But the implication was clear: try to block NIMBYism and people will actually dox you (albeit poorly), to the point they will seek out your deceased maternal grandfather's name and business.
At last he frees us from the shackles local governments have had on reasonable development. I do hope this passes. This, in my mind, would vindicate his governorship, in my eyes. Glad pragmatism shows through from time to time.
Having recently moved to the Bay Area in the last year from Texas, I've been observing the NIMBYs and I've determined that it's very nuanced issue.
I live in Dublin, CA, one of the far East Bay suburbs that is actually constructing tons of highly dense, brand new housing. And I've closely observed long time residents and neighbors debate and challenge the developers putting in this housing.
There are the obviously impractical folks, complaining about the aesthetics of highly dense townhomes/apartments and how they "ruin the hillside" with their "cookie-cutter" looks. But this is a relatively small group making a fuss. They're an easy target for the media.
But there are those with practical concerns. Increases in burglaries and auto theft because thieves target newly constructed communities first due to easy pickings [1]. Schools that become so overcrowded that kids are being taught in mobiles because the schools can't build fast enough to accommodate the growth [2]. Traffic that comes to a standstill because the two lane roads can't be expanded fast enough and toll roads become the only rapidly deployable option [3]. Mass Transit that becomes standing room only due to the influx of new residents [4].
There are solutions to these problems (more police, more schools, more road construction), but these services are often not financed by the housing development authorities. Recent attempts to get the developers to shoulder more of this cost is often the next fight these communities face. Some of these things take a decade or more to resolve.
Given all of this, it's understandable why some just go the easiest route possible and decide to block all new development. I'm not saying it's right, but hopefully this gives you a bit more context. It's not just long time residents fighting change for no reason.
The structure of cities in the US needs to change some so that you can be close to more things: food, cafes, bars, barber/hairdresser... all that kind of stuff that's common on a regular basis. That way you don't have to clog up the roads for even the most minor of needs.
Agreed. At the same time, companies should invest more in distributed work places. Most of the congestion in the Bay Area and surrounding areas, extending through the Tri-Valley and into the Central Valley, is caused by commuter traffic.
Of course, the main reason house prices are so high in this area in the first place is because the tech industry is so heavily reliant on geographically centralized offices in the same area. Fix that and there's no reason for prices to keep shooting up in the first place.
It's true that dealing with a ton of new residents requires a lot of infrastructural work on the part of local governments. I don't think anyone denies that. The issue is that it's not a choice between getting a lot of new residents or not getting a lot of new residents.
Empirically, tons of people are moving to the Bay Area every year, whether local governments like it or not, whether they make provision for that or not. It's happening, and there's no legal way to stop it.
Resisting new development doesn't stop people from moving here, nor does it remove the need to build out new infrastructure. It simply makes property values become that much higher, because there's a fixed supply and a growing demand.
This is, I think the main factor in why NIMBYs resist development: their own property is worth much more every year. Building new residences would only slow the rate of appreciation of their property.
> Resisting new development doesn't stop people from moving here, nor does it remove the need to build out new infrastructure.
Sure it does. People aren't living in tents (generally speaking). Population can't grow unless the housing supply does.
There might still be a growing demand for Bay Area housing, but without supply growth, the effect of that demand is to push prices up until current residents are forced to leave. NIMBY housing policy has a lot of shitty side effects, but it does succeed at the basic goal of maintaining low population density.
San Francisco itself is a counterpoint. It's still the densest area of the US outside of Manhattan, despite decades of anti-development NIMBY housing policy. Both the population and the average rent are rising every year.
The old Victorians you see on postcards were built as single-family houses. Most of them are now subdivided into multiple apartments. Many houses in the city have illegally built inlaw apartments in the basement. People live with multiple roommates into their 40s and 50s.
It is true that eventually housing prices become so high they outstrip the ability of the local economy to provide salaries. In the meantime, it massively increases the costs of doing business, the capital requirements necessary to operate any business in the city. So far, venture capitalists have been willing to provide that capital, but that can't last forever. Last time (1999), it ended in a big economic crash.
Further complicating the analysis is rent control: most existing residents aren't forced to leave, because they are legally shielded from rising property values and rents. They are given the reverse, an incentive to stay in place no matter what, because they enjoy an artificially low rent that they cannot possibly replicate in any comparable dwelling. This causes market rents to skyrocket as maintenance costs and profit are shifted by landlords to the few open units they have, subsidizing the long term residents. It's a wealth transfer from "people who have moved recently" to "people who have not moved recently."
Finally, there are tons of people living in tents in San Francisco, which has become a major political issue lately. This is arguably partly due to homeless people from outside the city moving in to take advantage of its extremely generous social welfare programs for the homeless, but it is at least in part due to high housing costs.
> It's still the densest area of the US outside of Manhattan
Do you have a source for that? Wikipedia (https://en.m.wikipedia.org/wiki/List_of_United_States_cities...) seems to suggest the incorporated city is the second densest major city after New York, but not that San Francisco is the most sense place in the us after Manhattan. It's often cited that Brooklyn is twice as dense as SF for instance. Cambridge Massachusetts is more dense than San Francisco.
This. My apartment in the south bay is a perfect microcosm of this phenomenon: it is obviously a former single-family home, which has been subdivided and built upon, so that it now houses about 4 two-bedroom apartments. Although I live alone, I had to compete for it with two couples, who wanted to share it. So, you could have what was once a one-family home easily housing eight families.
> Sure it does. People aren't living in tents (generally speaking). Population can't grow unless the housing supply does.
Population can grow even if the housing supply does not, if the existing population becomes concentrated into fewer dwellings.
Bay Area residents who used to have their own apartments or houses are now renting rooms and sharing apartments or houses with others.
The people moving here are generally wealthier or higher paid than the existing residents, and will not be deterred from moving here until the number of high-paying job openings decreases.
Regarding living in tents, there has been a noticeable increase in the homeless population in recent years. It's not clear if they were displaced from housing or came here from somewhere else, but there is no denying the increase.
Please bear in mind that the wording on the question means that someone in a homeless shelter or city-funded SRO for a month "used to live in a home in SF". Which is to say that the number is meaningful, but needs to be taken with a substantial grain of salt.
@pjlegato I think it's a fair point, but as a local resident I don't see the "attack on our property values" argument come up much with blocking new development. Again, it's something only a very small minority are concerned about because it's not an immediate problem that everyone feels right away compared to all the others.
I agree that most people don't conceptualize it in quite those terms, but the choice really is:
* Allow new higher density development, accept that your neighborhood will be under construction for years and then will look vastly different forever; and besides that, the city has to divert budget from other things to pay for building expanded infrastructure now (because California property taxes are mostly fixed by Prop 13);
* Fight development, the city spends that money on your pet project instead, the neighborhood looks the same as it always has, and then there's the bonus that your house will be worth a whole lot more in 5 or 10 years.
This is why you have unremarkable 1950s-era 3 bedroom ranch houses that would go for 75k in most US suburbs selling for $2m in Silicon Valley. It's why you can pay $5000 a month for an apartment in San Francisco that would be $700 a month in most US cities.
I'm pretty surprised anyone thinks Dublin, California is "highly dense". It has half the population density of Oakland, and only double the overall population density of Alameda County, which is huge and empty. The only even remotely dense housing I can think of in Dublin are the apartments near the BART station, but even those are utterly car-dependent because there's nothing to which to walk. I challenge you to name even a single commercial establishment that fronts a walkable street instead of being totally surrounded by parking lots.
I don't think it's that Dublin is highly dense, it's that the new housing developments are (in comparison to the more spacious, less-planned communities). One of my good friends grew up there, and they lived in a regular neighborhood with normal sized houses and big yards.
The new developments have units stacked high and smashed together. It may not be absolutely dense, but it is certainly more dense than necessary or desired by residents.
Population density isn't a great measure here either, because Dublin has a ton of open/protected/unbuildable space, and even the planned communities have a certain target ratio of public/garden/playground use space.
I think it's more a case of it's the 'burbs, and they'd like it to stay that way.
> The new developments have units stacked high and smashed together. It may not be absolutely dense, but it is certainly more dense than necessary or desired by residents.
Not desired by the people living there? Or not desired by other people in Dublin? These are two very different things.
> even the planned communities have a certain target ratio of public/garden/playground use space.
Maintaining a certain amount of public space in the form of parks/playgrounds/plazas makes sense, but that shouldn't translate into shooting down high-density housing developments.
> I think it's more a case of it's the 'burbs, and they'd like it to stay that way.
This kind of attitude -- the "let's keep it this way, forever" attitude -- is exactly why the bay area is now largely unaffordable. Sure, we'd all love it if we could maintain a certain neighborhood style AND have affordable housing. But we can't.
So, it comes down to what you value more: a style of neighborhood with more space between residents, or people being able to afford their rent without hour+ long commutes.
That's something to be careful with too. I certainly desire a couple of acres of rolling woodland in Palo Alto, but... yeah, that's probably not in the cards. Some people may not desire dense housing, but given the alternatives like moving back to Cyanide Springs, Oklahoma, they might find it's still ok.
The OP never claimed that Dublin is highly dense but that it's one of the few places in the Bay Area building "highly dense" projects, which makes sense given the situation they describe of a local population complaining about increasing density.
> Recent attempts to get the developers to shoulder more of this cost is often the next fight these communities face.
Why would the people building the housing be responsible for these costs? If new people are moving to a community and consuming services, can't they pay for those services through taxes like everyone else?
The cost to deploy most services does not increase linearly with the tax base. Usually it's capital expenditure.
Maybe (but not necessarily!) the number of police can grow linearly with the growth in taxable property. But police cars and police stations must be acquired from scratch. Same with sanitation workers vs an expanded water treatment plant, bus drivers and buses.
Some of those costs can maybe be amortized via debt issue (bonds), but the cost of servicing those would still be borne by the community overall and not necessarily the newcomers' taxes alone.
When a new development is proposed, it's the developer who's there in the moment, hoping to make business and a profit. The prospective-and-still-hypothetical newcomers are not yet there to make a case that housing be built for them. So it's not insane that the developer be put in a position to minimize negative effects of new building.
This isn't a perfect system, and it's certainly one that can be abused by nimbys as everyone now knows. In particular things get unintuitive for (usually older) folks who are house-rich but cash-poor ... accommodations might leave them with a house worth more, even as a fixed income prevents them from absorbing, say, increased taxes. But, since Proposition 13 passed in 1978, California has been pretty clearly biased towards disproportionately helping out those sorts of people though. Can't say we weren't warned.
> Some of those costs can maybe be amortized via debt issue (bonds), but the cost of servicing those would still be borne by the community overall and not necessarily the newcomers' taxes alone.
This seems like another way of saying money is fungible. Suppose there is School A used by current residents and School B we propose to build for new residents. The annualized cost (labor+amortized capital) of a School is $X/year, which registers as a tax burden on current residents. Building School B doubles the total tax burden, but in response to a doubling in population, so per-person taxes are unchanged. (assuming that new residents pay taxes at or above the average rate, which is certainly true in the Bay Area).
It's meaningless in this case to distinguish who is paying for which schools - you could say "newcomers are paying the entire cost for School B" since the marginal revenue increase equals the marginal cost, or you could say that the costs of servicing both schools are "borne by the community overall". But in the latter case, in order to claim that current residents are contributing to new infrastructure, you have to acknowledge the reciprocal contribution of new residents to existing infrastructure: increased tax revenue helps to pay off the bonds that built the current schools, and that will eventually be sold to renovate and rebuild them. Either way it balances out.
The annualized cost of a school isn't fixed though. Firstly, the capital cost of the older schools may well have been paid off. Secondly, the cost of building one is going to be pushed up by the fact they're competing with expensive premium housing for land, builders, etc. Thirdly, they're also going to be competing with existing schools for teachers and it's not like teachers from outside the area are going to be able to afford to move there unless they're paid an awful lot.
> Firstly, the capital cost of the older schools may well have been paid off.
In the long term nothing is "paid off"; you have to keep up a regular schedule of renovations and renewal projects, or things fall apart. Which is what's currently happening to a bunch of US infrastructure. :-(
As for cost differences, property tax revenue scales with rising land values, so land costs should be a wash (ignoring prop 13 insanity, which from other replies seems like it might be the real issue here). And expensive housing / high cost of living for new teachers is caused by high demand for housing without a corresponding increase in supply. So existing schools would already face that problem, but increasing supply by developing new housing should help to mitigate it.
> The cost to deploy most services does not increase linearly with the tax base.
In the long run, infrastructure for dense housing developments is cheaper per resident than infrastructure for sprawly housing developments.
An apartment complex of 100 units requires far fewer miles of road, water pipes, electrical wiring, sewer pipes, etc. per $ of local tax revenue generated than a development composed of 100 detached SFHs.
But, you're right about the immediate impact vs tax revenue that comes in slowly.
> Why would the people building the housing be responsible for these costs? If new people are moving to a community and consuming city services, can't they pay for those services through taxes like everyone else?
Prop 13's property tax rate limitations made developer fees more important as a source of revenue to support city services (raising up-front property prices.)
Under Prop 13 -- both the rate limitations and the assessment increase limitations -- "everybody else" isn't paying for the (full, prorated costs of) services through taxes, new homeowners are paying full-freight from full-value assessment and direct taxes, and by paying (or, for new purchasers of existing houses, in effect reimbursing the prior owner) for the development fees. Homeowners that have held their property longer still paid (or reimbursed) the development fees when they bought the house, but pay reduced share through direct property taxes.
You don't even need to bring Prop 13 into the discussion. Depending upon both existing demographics of a town and the expected demographics of a new project, the development can lead to tax increases. Because, in many cases (especially outside of cities) most property taxes go to the schools, a development catering to young families is going to put a lot of pressure on an existing tax base in a community tending toward singles and couples with their kids off to college and beyond.
Community could always implement Mello-Roos tax which can be used to fund new infrastructure. Its how a lot of new communities pay for their schools and roads.
This is a great point that a lot of people miss. Yes, Prop 13 limits the increase in property taxes, but there are other ways to raise taxes collected on homeowners.
When I was looking to buy a house in SF, I dug up a lot of the tax information and the Mello-Roos tax seemed pretty common.
A new 100 unit building opens in April of year 1. 25 new students move in. This means overall the school district now needs one extra classroom. Usually the schools are at capacity already, so they need to roll in a portable and hire a teacher.
The problem lies in the fact that these kids are going to be in school in September of Year 1. Assuming it took a year to build the building, that means the district had to start spending money for the construction in year 0, and the teacher in year 1.
But the building won't get their first post-construction tax payment until Year 2. And that won't hit the school budget until Year 3.
So for 3 to 4 years, the school has had to front the costs of supporting those new students. By year 4 they'll have the revenue to support those new students, but they had to eat those first few years. And they won't hit efficiency until a few years down the line still.
If the developer has to make a direct payment to the school, it helps the absorb that cost.
As it turns out, in Cupertino at least, the developer has to pay $100 per new unit when they open the building, which at least helps offset the costs, but the school still comes out behind.
It turns out that there's a long-established financial mechanism for paying upfront for something when you'll get the income to pay for it later--bonds. Major capital projects (such as building new schools) are usually financed via bonds, so timelines aren't that much of an issue.
Except practicality gets in the way. "Dear voters, please approve a bond that will increase your taxes to help pay for all the new people who are moving in, who will increase your traffic and suck away resources from your children."
Why would you need to raise taxes to pay off bonds? Why isn't the increased revenue from the new residents' taxes sufficient?
If your population doubles, sure you need to sell enough bonds to double your infrastructure, so the annualized cost (labor + amortized capital) of providing Government Services will double. But your tax base also doubles, so as long as the new residents pay at least the average tax rate (and wealthy gentrifiers usually pay higher rates), you'll collect double the revenue and everything balances out.
> Why would you need to raise taxes to pay off bonds?
To make the interest payments? A bond is a loan and it has to be paid off. The taxes from the future residents will only cover the current costs, not the interest.
Again that's a wash, though, as long as interest rates on new bonds are not significantly higher than those the city is already paying on its existing infrastructure bonds (or on future bonds that will be sold when necessary to repair/replace the current infrastructure as it falls apart). Sure, high interest rates would provide an incentive against new infrastructure investments, but rates over the past few years have been historically low.
(Also, the effect of interest rates is at most a small single digit percentage, so even if it's not exactly a wash, those costs could be cancelled out by other effects, e.g., the returns to scale on denser infrastructure - you can generally serve 2x the population at less than 2x the cost, but you still get to collect 2x taxes).
>but these services are often not financed by the housing development authorities
Train companies in Japan build train stations, but also malls, supermarkets, and real estate.
I think it would be interesting to see more development that relies on this mixed-zone development. Sure, more people means more traffic, but being closer to things like shops could also reduce traffic. Perhaps no-parking stores to force people to walk, things like that.
I would rate the probability that this actually passes as somewhat less likely than an asteroid wiping out all life on Earth in the next year. That said, it sounds like a major step in the right direction toward actually addressing the root of the housing crisis.
I'm not sure that real estate developers are super-excited to build projects with 20% on-site affordable units, though maybe! I think it's clear that their preferred model would be to allow them to off-site their affordable housing requirements, but maybe this is a compromise they could live with.
They turn around and donate some cash to an "affordability" fund to get out of building any affordable units in their new developments. I'm somewhat torn about this: something has to be done to insure that a variety of economic classes live and mix in proximity in our cities ,but it seems like affordability programs don't do much to help the working poor but offer plenty of assistance to folks who are on disability and other assistance programs perpetually.
Despite my radical leftist beliefs, I feel like the family that works in the downtown should be able to live "close" to their work if they want to, with an available pool of affordable housing in the market.
Interesting but Sec 3 (c) does have an out with regards to planned existing zoning or general plan, then of course design reviews are another ninety days.
I am quite sure that if the groups have been so successful they will simply be able to delay the process regardless. There will certainly be cities who will sue the state to throw the law out.
Finally, never discount political retribution towards developers who do go this route. While protected in developments that follow this proposed law all their other developments directly and indirectly related will face more scrutiny
Still got to celebrate a Governor whose solution doesn't involve taking away property rights but attempts to allow those with them to use them as they want.
This will have some effect in San Francisco (some neighborhood development plans and zoning regs are so low density all projects require approval). But a lot of projects (like "the monster in the mission" to replace an old Burger King and empty warehouse with housing) would not be able to be blocked under this law. They follow the existing development plan so they require no exceptions.
Even out here in Sunset, all the land is zoned 40ft or 60ft. If you include a basement, thats 4-6 stories when most structures are 2. If you weren't subject to massive delays and reviews, it would certainly be profitable to tear down some of these single-family homes and build 4-6 story apartment buildings.
In most parts of the US, there are certain local zoning laws. You apply to the local government for review of your project. This is expensive, as you must prepare detailed professional studies for the proposal.
If the project conforms to all of the zoning laws, it must receive a permit. They can only deny you a permit if your project does not comply with some specific zoning law.
In San Francisco and several other nearby cities, the local government can arbitrarily withhold a permit even when a project conforms to all local zoning laws in every respect, usually under the vague and arbitrary guise of "not fitting in with the neighborhood's character."
Since applying for a permit is an expensive and time consuming process, most developers simply don't bother to even try in San Francisco. They just go elsewhere, where their project can't be arbitrarily vetoed by local authorities despite conforming to all applicable zoning laws.
The main exception is luxury developments: since the profit margin on luxury construction is so high, it's worth the extra cost and risk associated with navigating San Francisco's permit process.
If this law passes, then municipalities will not wield the power of arbitrary veto anymore. There will still be extensive zoning regulations, of course; the difference is that development restrictions will have to be spelled out in the law, in advance, rather than made up on an ad hoc, per-project basis by local officials. This greatly reduces the risk involved in starting a development project, and makes non-luxury developments much more likely to be profitable and thus undertaken by developers.