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‘By-right’ deregulation is not a real solution

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Regulatory interventions, other than by-right development, would address the question of housing production if the state’s political leadership were really serious about seeking solutions to our housing crisis. (Mike Koozmin/2015 S.F. Examiner file photo)
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A few weeks ago we wrote about the “by-right” development law, which Gov. Jerry Brown is pushing for approval this year, as a speedy trailer bill to the state budget with no public hearings. The narrative behind the governor’s bill is that it would help increase the supply of housing being built — both market-rate and affordable — and therefore ease the demand on housing that today is at crisis levels. But this deregulation-based approach, like many before it, is a false solution to the housing crisis. Instead, we point to other ways that state and regional government can increase housing with more helpful policies and real interventions.

Gov. Brown’s bill would, by state law “pre-emption,” deregulate housing development approvals, supposedly in the name of affordable housing: taking away public review hearings, trumping local conditions of approval and overriding Planning Commission discretion for development proposals that simply comply with a local inclusionary housing requirement (the minimum amount of affordable housing developers are required to include in projects). For cities that don’t have a local inclusionary requirement, the state law standard would be as low as five percent affordable units in a project to be “eligible” for by-right approval. In San Francisco, this deregulation would basically apply to all residential development projects.

As we reported earlier, in San Francisco, where we have a pipeline of 19,000 more approved units than have actually been built (not even counting those approved in The City’s big redevelopment areas), a backlog growing by approximately 700 more units each year, it isn’t the approvals process that slows down development, but something much more fundamental: financing for actual construction of approved projects. And deregulation — the favored approach of some politicians and developer front groups — isn’t going to affect that fundamental fact.

In actuality, increased deregulation has the potential for terrible consequences. As the head of the State Buildings Trades Council pointed out last week in the Los Angeles Times, both the state’s energy crisis and the national financial meltdown in the last decade were preceded by similar deregulatory approaches, with disastrous results as everyday people have experienced. The Building Trades leader was quoted as poignantly saying: “We have found the history of mass deregulation in America doesn’t work well for working people.”

Instead of focusing on the overblown boogeyman of regulation, if the political leadership were really serious about seeking solutions to the state’s housing crisis, there are other regulatory interventions that would actually address the question of housing production.

1) Give teeth to existing housing development requirements: There are always examples to be found of “Not In My Back Yard” groups or entrenched political elites in small cities that want no development or demographic changes, and that refuse to accept their “fair share” of housing development to relieve regional population pressures. Each city is required to have a Housing Element certified by the state, and they are assigned “quantified housing goals” to achieve. Some cities do quite well, some do OK, and some do poorly. But there are no real consequences for NIMBYism. Perhaps putting some “teeth” into the state Housing Element law accountability would help to push those jurisdictions that don’t work to provide their fair share of basic housing needs or a minimum level of housing affordability.

2) Reform property tax law to promote residential development: A fundamental reason why cities see little incentive to build housing is Proposition 13, which capped property taxes and then limited increases, both for single family homeowners as well as for institutional landlords and commercial building owners. Until Prop. 13 is reformed to differentiate between protecting single-family homeowners and taxing big landowners, commercial landlords and developers, cities will continue to seek out retail and commercial development, which provides them with sales and business taxes, and to reject residential development.

3) Pair housing policy with the necessary state-level investment: An example is how in 2011, when the state government began a process of “realignment” to reduce overcrowded state prisons, shifting many in the prison population to county facilities. Along with giving that responsibility to counties, the state provided funding to pay the bill, directly investing in local government to fulfill the mandate. The state could do a similar thing today, investing at the local level to increase affordable housing.

4) Link state and regional investments to local government action: This week, the Metropolitan Transportation Commission, which allocates regional transportation funding to Bay Area cities, faces a quandary. It can choose to link the allocation of its “One Bay Area” transportation grants to jurisdictions that support affordable housing and enact anti-displacement measures, or it can continue to give grants to exclusionary cities and those that do little or nothing to meet their fair share of either market-rate or affordable housing. A broad coalition of real housing advocates, led by the “Six Wins Network,” a coalition of more than 20 social justice, faith, public health and environmental organizations across the Bay Area, is pushing to ensure the MTC does the right thing and actually puts Californians’ housing needs first. MTC has the power to combat displacement and promote housing by leveraging the $300 million in One Bay Area grants that it controls to encourage cities to adopt meaningful anti-displacement and affordable housing policies. If the governor, local politicians and developer advocates wanted to leverage real solutions, that’s one place to start, but so far they have been silent.

These are real ways we can begin to encourage good housing development across the state. But as long as developer front groups masquerading as “housing advocates” and some politicians continue to chase after false solutions based on 1980s-era deregulation policies, they will fail to meet the increasingly dire housing needs of Californians.

Peter Cohen and Fernando Marti are co-directors of San Francisco’s Council of Community Housing Organizations.

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