California's Housing Reform Bill Is a Hot Mess. It Would Be Great If It Passed.
SB 827 is a progressive-backed mix of climate change goals and tenant protections. It is also a major free market reform.
A climate change bill sponsored by a California Democrat with unimpeachable progressive bona fides and endorsed by the Natural Resources Defense Council does not sound like the recipe for sweeping market reforms.
Yet that is exactly what SB 827 is.
Introduced in January by state Sen. Scott Weiner (D–San Francisco), the bill would override local zoning restrictions on residential plots near transit stops, allowing developers to build up to eight-story apartment buildings where currently only single-family homes are permitted.
Weiner says his bill is essential to meeting California's ambitious carbon reduction goals.
"Because of low-density zoning around transit, you just push people into longer and longer commutes, so carbon emissions go up," says Weiner. He tells Reason that more people living next to and thus using public transit will "cause less congestion and create fewer carbon emissions. So that is the goal."
Fighting climate change and spurring transit ridership are standard progressive fare. The means Weiner is pushing for achieving those goals, however, are strikingly deregulatory.
If it passes, SB 827 could unleash a housing construction boom in swaths of what are now low-density, high-priced urban neighborhoods entangled in layers of red tape.
"This bill should make it easier for developers to build where they've wanted to build for a long time, where we use land really inefficiently," says Michael Manville, an assistant professor of urban planning at UCLA. "It's crazy that in so much of west L.A. We have nothing but single-family homes."
Manville isn't wrong. According to one estimate, some 80 to 85 percent of Los Angeles is zoned for single-family homes. In 38 percent of the city, homes can be no more than 33 feet tall, and have to come with two on-site parking spaces.
Making things worse are residential design guidelines that allow many cities' bureaucrats to shrink otherwise zoning-compliant developments that might clash with "neighborhood character."
All this limits how much housing can be built on the same amount of land.
Between 2005 and 2014, California added 308 units of housing for every 1,000 new residents. New York State, by comparison, added 549 units per 1,000 new residents in that same period. Among the states, California ranks 49th in housing units per capita.*
The predictable result of fewer homes being built: rising prices for existing units.
54.2 percent of the state's renters pay more than 30 percent of their income in rent, and 28.8 percent pay more than 50 percent. Of the 10 most expensive cities to be a renter, seven are in California, according to a January 2018 report from apartmentlist.com.
"The price of housing for everybody has gone up," says Manville. "We have not built housing to match the increase in demand."
SB 827 would address this by overriding the local ordinances that are depressing construction and inflating prices.
Under the bill, development projects that are within a half-mile of a "major transit stop" could be built without regard for local height requirements. Instead, a state maximum height restriction of 85 feet would be imposed (or 55 feet on narrower streets).
The bill would further exempt these "transit rich" developments from local density limitations, minimum parking requirements, and open space and setback rules. Local design and zoning laws that restrict the number of units one can add to an existing structure would also be overridden.
A detailed state-level analysis of the bill is still forthcoming. But a report for the San Francisco Planning Commission estimates that 96 percent of the city would fall within half a mile of a major transit stop. Maps prepared by Los Angeles city staff show that the bill would upzone major swaths of the city.
Unsurprisingly, the bill has sparked stiff resistance from the very local officials who will see their power over the development process curtailed, and who insist that they are already doing everything they can to respond to California's housing woes.
Last week, the Los Angeles City Council unanimously passed a resolution opposing SB 827 and declaring the city "must make every effort to expand affordable and middle-income housing, but not at the expense of local control over land use and community-driven planning."
San Francisco City Supervisor Aaron Peskin has threatened to sue the state if SB 827 passes, while San Francisco Planning Commissioner Dennis Richards has called the notion that the bill would create more affordable housing "B.S."
Other voices argue that allowing more housing construction will gentrify neighborhoods and displace current tenants. Berkeley Mayor Jesse Arreguín called the legislation "a declaration of war against our neighborhoods." An activist group in Los Angeles has accused Weiner of trying to "enact a 21st century Trail of Tears."
Weiner—himself a former neighborhood activist and San Francisco city supervisor—says he is sensitive to concerns over local control. But he thinks there needs to be a balance between community- and state-level decision-making.
"For many years we have operated under a system where local communities have almost total power to decide whether to build any housing," Weiner says. "They can opt out of housing entirely, or [allow] just a little housing, and there are really no repercussions."
In February, Weiner addressed concerns about gentrification by amending SB 827 to include strict anti-displacement regulations. The bill would forbid developers who use SB 827's density bonus from demolishing renter-occupied buildings that they purchase, unless the developer pays the tenants' moving expenses and provides a rental subsidy for their new homes for as much as 42 months.
The bill would also defer to local demolition controls, and to local inclusionary zoning mandates that require developers to offer a certain percentage of units at below market rates. These provisions make the bill more politically palatable. They also risk blunting its effectiveness by watering down its free market approach.
Manville doesn't think these compromises will smother SB 827. Requiring developers to pay affected tenants rental assistance and move-out expenses "would be a damper if it wasn't the case that the bill also would open up so many areas that are owner-occupied homes to redevelop," he tells Reason.
Even with those compromises, the fact that such a bill is being seriously considered—attracting the endorsement of urban planning academics and more than 100 tech CEOs, including those of Lyft, Yelp, and Mozilla—is a sign that California's housing politics may be experiencing a sea change.
"Ten years ago, it was really hard politically to be strongly in favor of housing and of delivering housing faster and removing some of the obstructions," Weiner says. "Now the politics have flipped." He hopes his bill will capitalize on this wave of pro-housing sentiment.
"For 50 years we've made it progressively harder and harder and harder to create housing," he says. "We're now in the process of removing some of those hurdles."
CORRECTION: The intial version of this article said California ranked 49th in number of people per housing unit. Instead, California ranks 49th in housing units per person.