Jan052017

Are bad housing solutions better than no solution at all?

Any legislation or policy that promotes housing production is better than producing no housing at all.

In the post, Will building more roads and houses merely increase demand?, I lamented that nimbys managed to turn the solution into part of the problem. They embrace the idea of “induced demand,” a belief that providing more roads or housing fails to alleviate supply shortages because it stimulates demand. It’s the ultimate weapon against new development because we’re damned if we don’t build, but we’re doubly damned if we do build.

The real solution to the housing affordability problem is to provide sufficient supply to meet the needs of the growing economy and population. As long as California creates many jobs but builds few houses, there will be a shortage of housing. And as long as a shortage persists, prices will remain high relative to incomes, and many people will flee the state looking for less expensive housing.

Most solutions offered to solve the housing affordability problem attempt to regulate the problem out of existence by mandating what private owners can charge to rent their properties. Perhaps the progressives who embrace this failed idea believe it’s hopeless to provide enough market-rate housing to solve the problem. However, I suspect many of them know the policy is doomed, but they embrace it because it soothes their guilty conscience while inflating the value of their own homes. The ones who are merely mistaken are fools, but the ones who cynically embrace a failed policy are greedy assholes who don’t love their children.

The dilemma I address today is what should be done with the people and policies that are foolishly misguided but at least attempt to address the problem. Is it better to embrace bad policy that moves toward a positive end state, or is it better to oppose bad policy because it fails to solve the problem?

Senator Wiener Introduces Housing Affordability and Accountability Bill

Senate Bill 35 will streamline production of affordable housing and create more accountability to meet regional housing needs goals
December 9, 2016

On Tuesday, December 5th, Senator Wiener introduced Senate Bill 35, the Housing Affordability and Accountability bill, which will streamline the production of affordable housing and spur the construction of housing throughout California. Senate Bill 35 will remove local barriers to creating affordable housing, as well as barriers in jurisdictions failing to build housing needed to meet Regional Housing Needs Allocation (RHNA) goals.

The intent is good, but that is where the good ends.

SB 35 includes a provision that all these requirements are subject to the payment of prevailing wages to workers building the housing.

Governor Brown’s housing affordability proposal could have succeeded, but the labor unions killed the bill because it took away their collective bargaining hammer they use to extort money out of real estate developers. The Senator put this provision in the bill specifically to avoid opposition from labor unions. The odorous corruption is pungent and repulsive.

Senator Wiener introduced the intent bill as his first piece of legislation after being sworn-in in Sacramento as the new State Senator for District 11, representing San Francisco and northern San Mateo County. Senator Wiener will work with affordable housing organizations, housing advocates, building trade groups, environmental advocates, and others to formulate the bill in the coming months.

California residents are suffering from high costs of housing, and we need to do more to build homes at all affordability levels,” said Senator Wiener. “We need to make it easier to deliver the critical affordable housing projects our low-income residents need, and we need to ensure that every city across our state is taking its role seriously in addressing this housing crisis. The Affordable Housing and Accountability Act will put us on the path to achieving both of these goals, while ensuring that we are creating jobs that pay a living wage as we build this housing.”

The living wage wouldn’t need to be quite so high if we provided enough housing so that low wage earners could afford roofs over their heads.

Last year, Senator Wiener, while serving as a member of the San Francisco Board of Supervisors, passed legislation to streamline the production of 100% affordable housing in San Francisco by exempting these projects from burdensome approval processes. Wiener’s San Francisco Affordable Housing Streamlining Law exempted all 100% affordable housing projects from conditional use authorizations, which can add months on to the entitlement process and increase costs for projects, even if the project has no opposition. The legislation passed with unanimous support from the Board of Supervisors, and with support of affordable housing developers, housing activists, and public policy organizations.

Affordable housing mandates are exactly the wrong solution.

First, the people who obtain housing in this manner are lottery winners. Since supply is short, and since the price is below market rate, the demand always greatly exceeds the supply. Therefore, a few win and the rest lose.

Second, after the lottery winners settle in, they realize they’re trapped. They can’t move or they lose their subsidy, and they can’t afford the area without it. Perhaps it’s a comfortable prison, but it’s a prison all the same.

In order for California to grow and thrive, we must implement policies that will deliver more housing for everyone who lives and works here,” said Gabriel Metcalf, President and CEO of SPUR, a San Francisco Bay Area urban planning and good government organization. “We can no longer afford to ignore our needs for producing new housing at all affordability levels, and we look forward to working with Senator Wiener on legislation that will achieve these goals across all of California.”

Yes, simply providing a few token units and mandating them as affordable doesn’t solve the problem.

The Regional Housing Needs Allocation (RHNA) is the state-mandated process that sets the number of housing units that must be included, at all affordability levels, in each local jurisdiction’s housing element. Senator Wiener intends to set a timeframe by which jurisdictions must meet RHNA requirements, and if after that timeframe, the needs aren’t met, then barriers to housing production would be lifted by the state. This would preserve local control options for building housing, provided that jurisdictions work to meet their RHNA goals. If those goals aren’t met in a provided timeframe, then local barriers to construction would be lifted, potentially including allowing as-of-right construction, as proposed by Governor Jerry Brown earlier this year.

The Regional Housing Needs Allocation (RHNA) process is similar to the idea I floated in A possible solution to California’s housing crisis. Unfortunately, local governments at the bequest of nimbys long ago learned to manipulate the data and render the process impotent. What could have and should have been a mechanism to ensure we provided sufficient housing to meet our needs became a toothless tiger.

So is embracing a bad policy that moves in the right direction the proper response?

In the short-term, yes. Any policy that promotes construction of new housing is superior to embracing nimbyism. However, over the long term, treating the symptoms rather than the disease still results in the patient’s death. Treating the symptoms often disguises the deeper damage done by the disease. It’s easy for people to ignore the real problem because they feel they are doing something about it.

Affordable housing mandates and building a few more token affordable projects is merely minor symptom relief. Removing more barriers to construction and providing many, many more housing units is the real solution. Unfortunately, it’s a bitter medicine nobody is ready to swallow.