The Housing Affordability Puzzle Looms Large in the Face of Contending Interests

Downturn, Lessons, Hemming Morse, San Francisco, Bay Area,

By Jacob Bourne

The Bay Area’s economic mega-engine pumps steadily despite the stubborn reality of crisis and insecurity in the realm of housing for the region’s inhabitants. Now that San Francisco has a solid lead in median rent prices over the nation’s major cities and the continued effects ripple into housing affordability struggles across the region, the topic of reaching solutions has been particularly heightened this summer. However, understanding that today’s housing issues have been largely created by a long history of policy and decision-making, is essential to making choices at the present juncture that could lead to more housing equity and stable communities.

“We’ve had a housing deficit since the early 1970s and haven’t built nearly enough housing since then,” stated Matt Regan, senior vice president, public policy, Bay Area Council. “At that time, the Bay Area and coastal cities were five to 10 percent more expensive than the rest of the country. Now it’s 2.5 times more than the average home price nationwide. This has mostly been due to regulations around building housing and job growth.”

An August 25 article in The New Yorker offers a perspective suggesting that the root of the issues go back to 1949 when Paul Oppermann became San Francisco’s planning director and initiated the slowing of housing growth by prioritizing free parking and implementing outdated rules around building lot sizes. Apparently urban planners such as Oppermann failed to foresee the rise in population and economic allure of the country’s major cities such as New York, San Francisco and Washington, D.C.

In 1970, the state passed the California Environmental Quality Act, which requires local municipalities to follow an extensive protocol to identify potential environmental impacts of development projects, disclose them to the public and take steps to mitigate the impacts.

“CEQA is the granddaddy of a patchwork of regulations that make it difficult to build,” Regan commented. “The governor’s proposal with by-right was to get around the CEQA problem. It would have made it so that you don’t have to go through extra hurdles by taking one or two bites at the CEQA apple. It would have allowed projects to skip the additional CEQA review for little details. These things can grind projects to a halt.”

Governor Jerry Brown had proposed a bill this summer to address the housing affordability crisis for middle to low-income households by attempting to speed up the development of residential projects, ensure high-density affordable units and work to lower development costs at the local level. The bill would have allowed projects with affordable units to be built “by-right” side-stepping some local review requirements, but failed to pass as a variety of groups were opposed, including building-trades unions wanting prevailing wage agreements for construction workers as part of the initiative.

“I don’t think it’s politically feasible to make major changes to CEQA,” added Regan. “The path the Governor took was a politically feasible way to go, though it didn’t work this time. I think we can reach the necessary agreements with the construction trades with the right package of affordable housing and project types to make it more feasible.”

Though the spirit of CEQA is to protect against environmental degradation potentially caused by development, current land use policies are at odds with the other environmental goal of reducing carbon emissions. Patrick Kallerman and Micah Weinberg authored Another Inconvenient Truth: To Achieve Climate Change Goals, California Must Remove Barriers to Sustainable Land Use, which argued that sprawl instead of infill development results in a dramatic increase in vehicle miles traveled, making California one of the world’s biggest carbon emissions polluters.

According to the report, “The high cost of housing in coastal communities has pushed many residents to look farther inland for more affordable housing. Comparable housing in the San Joaquin Valley can be had for one third of the price in the Bay Area. As a result, the number of commuters crossing regional boundaries within the Northern California megaregion on a daily basis has grown by 78 percent since 1990, with most of those trips being by car.”

Though the Bay Area continues to see monumental labor growth especially for tech workers, corporate managers and engineers, earnings in many employment sectors have not kept same pace. Public and service sector workers such as teachers, nurses and city employees have to make long commutes from more affordable homes in places like Los Banos to fill necessary positions in cities such as Palo Alto. The burden then rests on these workers to pay for their carbon footprints while municipalities, which require the laborers, continue to fall short of building adequate housing across the income spectrum, often due to local regulations and sentiments aimed at preserving lower-density suburban communities for those at the top of income ladder.

“We need to incentivize and reward the cities that meet housing needs and punish the ones that don’t,” Regan advised. “Cities like Milpitas should get rewarded and be recognized as housing heroes. They’ve built more than was required.”

Though the Bay Area is seen as a beacon of thriving economic growth by many across the nation, the Mayor of Palo Alto, Patrick Burt, recently commented that curbing job growth is part of the solution to the region’s housing problems. His comments came in the wake of the departure of the City’s planning commissioner, Kate Vershov Downing, who said that she and her family could no longer afford housing in Palo Alto.

“It’s a sad situation when you advocate to start sending jobs to other parts of the country and overseas,” reflected Regan. “It’s the middle-income jobs that go first and the service sector is struggling — 170,000 people drive into the Bay Area everyday.”

In a decision that could support the creation of thousands of affordable housing units across the state, the Bay Area Council and others celebrated the passing of SB 1069, which makes it easier for property-owners to build accessory dwelling units. The Council estimates that the legislation could bring as many as 150,000 new units of affordable housing to the region in the coming years.

Though skeptics argue that there’s no guarantee that building more housing will create more blanket affordability for the region, and that the amount of housing needed to meet the demand is not feasible to build, today’s housing issues were created incrementally by cumulative decisions made over the course of many decades. Moving forward, the individual steps ahead don’t necessarily result in all-or-nothing scenarios, but will either continue the status quo, make things worse, or gradually ameliorate the crisis through a region-wide, comprehensive approach that anticipates continued high demand for housing across the income spectrum.

West Coast Commercial Real Estate News