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The Defeat of California Senate Bill 827 and the Future of the Struggle to Curb Zoning

A California bill that would have greatly liberalized zoning rules failed in the state legislature. The defeat has implications for the broader struggle to expand housing and job opportunities for the poor.

San Francisco.San Francisco.

Last week, California Senate Bill 827 was defeated in a committee vote. Its failure was a painful setback for advocates of liberalizing restrictive zoning laws. The bill would have enabled the construction of many thousands of new homes throughout California by loosening zoning restrictions that block new construction. Zoning restrictions are among the main obstacles to expanding both housing and job opportunities for the poor and lower middle class in the United States. Many parts of California, including San Francisco and Los Angeles, have some of the most severe zoning restrictions in the nation, thereby cutting off millions of people from the opportunity to live in areas with greater job opportunities. Restrictive zoning is also major affront to property rights, since it severely limits owners' ability to use their land as they see fit.

The case against zoning restrictions is so strong, that it unites economists and housing policy experts across the political spectrum. That includes prominent left-liberals such as Nobel Prize-winning economist Paul Krugman, Matthew Yglesias of Vox, Yale Law School Prof. David Schleicher, and Jason Furman, Chair of President Obama's Council of Economic Advisers. Bill 827 was sponsored by liberal Democratic state Senators Scott Wiener (San Francisco) and Nancy Skinner (East Bay).

Nonetheless, liberal cities - including those in California - have some of the most onerous zoning policies in the nation. Such policies not only go against a near-consensus among experts. They are also an affront to values the left claims to hold dear. Shane Phillips, director of of Policy for the Central City Association, notes the "disconnect between liberal aspirations and liberal housing policy":

The people who live in coastal urban cities tend to be a pretty liberal bunch….

We care deeply about equality of opportunity,... I'm proud to count myself among their number….

And then we turn to housing….

The outcomes of our housing policies fly in the face of our ideology. For those in need, we support providing supplementary income, health insurance, educational support, and other social welfare programs—and then we erase their value by making our cities too expensive for those most in need of these benefits. Either low income residents can't afford to live in the city at all, or the cost of housing is so high that the value of the benefits is exceeded by the added cost of rent....

Sadly, the defeat of Bill 827 shows that most left of center political activists and voters are not on the same page as policy experts. Libertarian-leaning columnist Megan McArdle and prominent liberal commentator Matthew Yglesias have insightful pieces on the dangers of this disconnect. NYU law Professor Rick Hills, a leading academic expert on housing and zoning, notes that Bill 827 failed in large part because it was opposed by a broad coalition of left-wing activists and interest groups, including even some who claim to be advocates of affordable housing. He points out that some of them endorse utterly implausible theories claiming that loosening restrictions in order to build more housing would actually increase rent rather than decrease it, a position at odds with both basic economics and extensive empirical evidence. Hills compares left-wing denialism on zoning to widespread right-wing denial of the scientific evidence on global warming. As he points out, both represent triumphs of ideological bias over expertise. "In the end," he fears, "the feedback mechanism between data and policy becomes so attenuated, Florida sinks into the sea, and San Francisco sinks into a housing crisis."

This state of affairs is indeed lamentable. But the situation may not be quite as dire as Hills fears. Unlike climate change, zoning has only recently become a significant political issue, after a long period during which few nonexperts paid much attention to it. Even now, the amount of attention it gets is still only a small fraction of what it merits.

While some left-wing activists clearly do have strong biases against zoning deregulation, many on the left (and on the right, as well) just simply haven't thought about the issue much, or had a chance to develop opinions on it. Moreover, to their credit, a good many left-wing policy elites have made a strong push to move their rank and file on the issue. The very fact that a proposal as far-reaching as Bill 827 got introduced and had a real chance of success, is evidence that these efforts have had some effect.

Widespread public ignorance is difficult to overcome, including on zoning. Most voters are "rationally ignorant" about most policy issues, for the perfectly understandable reason that there is little payoff to spending much time studying them when the chance of a single vote having an effect on electoral outcomes is infinitesimally small. It will not be easy to get them to understand the counterintuitive idea that zoning restrictions are a major reason why millions of people are cut off from better jobs and housing.

Nonetheless, broad expert agreement on zoning creates potential opportunities for cross-ideological alliances on the issue. In the short run, the main initiative in places like California must be taken by left of center reform advocates. But conservatives and libertarians can help by giving this issue a much higher priority than most have done so far. When the left is divided on an issue (as it currently is in California and elsewhere), they can potentially help tip the political balance even in places where they are heavily outnumbered. And restrictive zoning is at least as much an affront to free-market advocates' values as to left-wing ones. There are few, if any, more significant issues for anyone who cares about property rights, economic liberty, or increasing growth.

Reform advocates should also look for ways to help jump-start the issue outside the regular legislative process. One potentially promising strategy is to use strategic litigation to challenge especially egregious zoning restrictions on constitutional property rights grounds. Combining political action with litigation has been an effective strategy for many reform efforts, including the Civil Rights Movement, feminists, gay rights advocates, and - most relevant - property rights advocates seeking to curtail the use of eminent domain to benefit private interests.

The failure of Bill 827 is a painful setback in the struggle against restrictive zoning. That fight was never going to be an easy one. But it is much too early to conclude that it is doomed to failure.

UPDATE: Shane Phillips contacted me to make clear that wrote the post of his that I quoted above before he director of the Central City Association, and that the views expressed there do not necessarily reflect those of the CCA. I am happy to convey this information to our readers.

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  • Eidde||

    "Bill 827 was sponsored by liberal Democratic Sstate Senators Scott Wiener (San Francisco) and Nancy Skinner (East Bay)."

    Perhaps the bill failed because...

    (trigger warning)

    ...they didn't want to vote for something called the Wiener-Skinner bill.

  • Don Nico||

    Clever observation.

  • Don Nico||

    More seriously, it is pretty easy for someone from the East Bay to support such a measure. Oakland has large areas that need development and that could provide housing for the the poor and homeless. In contrast SF is already pretty tightly packed with considerable overcrowding that leads to poor availability of parking and other essentials.
    (The way Muni drags a few people to their death every year, don't say public transport is the answer.)

  • Scarecrow Repair & Chippering||

    San Francisco has tons of room, if they would just allow it. There was a fascinating article a few months ago about some poor schmuck who's been trying for years to turn a small triangular dirt lot into a house. He wants four stories to make up for the small size and wide setbacks, and the three story neighbors are screaming bloody murder about being overshadowed, while others are screaming about the loss of a dirt lot.

    That kind of attitude is the NIMBYism at issue. You could probably double the housing density with one or two double-height apartments per block, but the single-family zoning and heightism makes it impossible.

  • PoxOnBothYourHouses||

    I take it you're not referring to the case of the San Francisco man who has spent four years trying to turn own laundromat into an apartment building? Even with the zoning department on his side he can't get it done.

    It was covered here at Reason.com.

    There actually is a crisis. California has is home to the six most expensive housing markets in the nation, based on median price of a home, and eight of the ten judged "Least affordable."

    That goes a good distance toward explaining why it has a quarter of all homeless people in the United States and nearly half of all "unsheltered" people (though this is partly explained by the mild climate).

    And why there California continues to experience net out-migration from the state, especially by people of more modest incomes. This is made up largely -- but not entirely -- via immigration and natural increase.

  • shawn_dude||

    I'm not sure I agree with the fact that expensive housing causes the homeless problem in these cities. I've lived in two of them (currently in SF) and my personal observations are that people who want a home get one. The people we see living on the streets have made a choice not to have solid roof over their head. Either they are mentally ill, which describes the vast majority I see in SF, or they're addicts (which is just one of many paths to mental illness here), or they have made a conscious choice to live out of a backpack (what we call "street kids" here.) The city spends over $250M a year on various forms of housing for the homeless. People who get priced out of the city and aren't mentally ill tend to leave and find a life somewhere less expensive or enter into a housing program and take advantage of services. Our climate makes it very easy to do this and our generosity in services makes it possible to survive like this for years. If we really wanted to do something about it, we'd have to start committing them to public hospitals for treatment. But rather than do that, we wait for them to get arrested over and over until their crimes build up to the point where we can jail them (without access to adequate mental health, either.)

    Expensive houses don't give us our permanently homeless; they force poor families to cheaper cities.

  • PoxOnBothYourHouses||

    Eidde: "...they didn't want to vote for something called the Wiener-Skinner bill."

    !!!!!!!!!

    (Must remember not to sip coffee while reading this!)

  • FlameCCT||

    AKA the Lorena Bobbitt bill?

  • Devastator||

    Californians want their nachos with everything on it, when all you have are nachos and cheese. They will have to lighten regulations and allow homeowners and landowners to do what they want with their property, or at the very least increase the amount of options and stop the NIMBYism, otherwise normal people will give up and move elsewhere, it's a house of cards in SF, SD and other cities. If you are in California, you should be renting to limit your exposure until this house of cards falls in on itself.

  • regexp||

    California (Bay Area especially) has been generally immune to major housing busts and booms (not that smaller cities haven't been hurt). This is largely due to growth of the tech sectors in many parts of the state including LA, San Diego, and Bay Area. That being said when I relocated to San Francisco I chose not to buy property not over concern it wouldn't maintain its value but that I didn't want to owe a bank a $1million for a mortgage. So I'll continue to enjoy a Bay Area salary and California weather while investing my money out of state. Which is what California doesn't want in the long term.

  • shawn_dude||

    The NIMBYism maintains high values. I'm not sure how this make it a "house of cards." The demand for affordable housing is so high that a mass construction effort over a decade might not be enough to bring prices down. At this point, an earthquake might not even do that.

  • Don Nico||

    Be honest. People in SF want more low-income housing, but somewhere else that won't lower their property values.

  • shawn_dude||

    OK, honestly, as an SF resident, no, you're wrong. The largest complaint about the bill in SF has been that it would let developers build more for-profit housing and not enough below-market-value housing. People stop construction here because 80% BMV housing has too many market value units. Seriously. The NIMBYs have joined with the homeless advocates to stop this law. It's a loony partnership where no one gets new housing and the current homeowners watch their equity climb rapidly.

  • Rev. Arthur L. Kirkland||

    The key to zoning and planning, as with most regulation, is deftness.

    Ham-handed, overly restrictive zoning and planning can create problems (unfairness, diminution of rights); inadequate zoning and planning can create problems of at least equal magnitude (flooding, diminution of breathing).

    I do not pay much attention to those who criticize all zoning, just as I would not find persuasive those who never criticize zoning.

  • Scarecrow Repair & Chippering||

    In other words, you are defending the rule of (benevolent, all-knowing, objective) men over the rule of law.

    If only we had the right leaders!

    As some founder said, "If we were governed by angels, we wouldn't need laws. If men were angels, we wouldn't need government." You combine the two, acting as if we are sooooo. close to finding angels among men to govern us, so why bother with laws which would cripple those (as yet unfound) angels among us?

  • Rev. Arthur L. Kirkland||

    How are sensible zoning and planning laws inconsistent with the rule of law?

  • Scarecrow Repair & Chippering||

    Because "sensible" means at the discretion of men interpreting vague laws. That means the rule of men.

  • shawn_dude||

    "That means the rule of [straw]men." FTFY

  • NToJ||

    Don't leave us hanging, what are "sensible zoning and planning laws"?

  • Rev. Arthur L. Kirkland||

    Sensible zoning and planning laws are zoning and planning laws that are sensible.

    That is a fitting response, in the sense that it fits within the space provided here.

  • Ghost of Patrick Henry||

    You are assuming a fact not in evidence - that the left truly wants to help the poor. There is NO evidence of this. Instead they preach socialistic policies which increase poverty and tribalistic race baiting that divides us. They also support illegal immigration which lowers wages for poor Americans, all for votes for politicians who become wealthy through government programs.

  • Sarcastr0||

    Which his the mirror of what people say about the right and their love of deregulation and low taxes - all prosperity eyewash to deceive the poor while self-dealing and pleasing their donors.

    In reality, though, if you talk to both sides you'll see neither side has a monopoly on evil - there is the usual mix of cynical players and sincere idealists.

  • Sarcastr0||

    If you like, I'd be happy to give an explanation for each of your arguments that liberalism is a cynical plot to get votes by destroying America.

  • FlameCCT||

    IMHO the left is controlled by Progressivism not Liberalism. And to be fair, the right is not quite as far down the same path to being controlled by Progressivism not Conservatism. Hence why their appears to be little difference between the two parties.

  • GailStorm||

    Odd that someone who writes a book about smaller government being smarter advocates taking away local government oversight and handing it to a larger body.

  • Scarecrow Repair & Chippering||

    No. They propose taking away local government oversight, period.

    Would you allow local governments to have more oversight in the form of, say, slavery, or eminent domain abuse, or general searches at police whim?

  • NToJ||

    If zoning laws have gravitated to the seriousness of "too important for local communities" what hasn't? Education? Let's just centralize everything, then.

  • shawn_dude||

    The zoning issue is just a symptom of a really terrible set of rent control laws combined with Prop 13 tax restrictions and a long history of tarring politicians as being the sycophants of developers.

    Rather than try and untangle that whole mess, Weiner figured he'd pass a zoning law that would remove some of the anti-developer's favorite weapons.

    Jane Kim is running for mayor to replace Ed Lee. She's one of the current frontrunners, if not the likely next Mayor. Unlike Lee, who was in favor of development, Kim panders ceaselessly to force developers to build more below-market-homes as a condition of getting approval. The city will likely vote for her and we'll have more of this mess going forward.

    25% of new development must be below market

  • Robert||

    Am I too cynical if I think that many advocates of redistrib'n in the cities are bluffing—that they're glad to have policies in place to keep the poor out?

  • SimonP||

    "Liberals" have painted themselves into a corner, when it comes to development.

    The law that Ilya is describing here is specifically about "transit-oriented development," which is to say that it lifts caps and restrictions on development occurring within walking distance of major mass transit corridors. This is smart policy, insofar as it helps serve demand precisely where it exists. Here in NYC, in corridors where we have implemented policies that mimic TOD polices, we've seen tremendous building booms, with tons of new units going onto the market.

    The reason that "liberals" dislike this is that TOD often "gentrifies" neighborhoods, bringing in more wealthy residents who "push out" long-time neighborhood residents, who can't afford luxury apartment rents or whose businesses don't suit the tastes of these new interlopers. So you see a consistent pattern where apartment towers go up, wealthy white people move in, and brown people get pushed further out of the city, into poorer neighborhoods more distant from transit.

    So "liberals" see this superficially inequitable outcome - minorities shoved out of their historical neighborhoods - and oppose policies that actually serve the city as the whole. It's unfortunate.

  • Sarcastr0||

    Do love the scare quotes.

    But in the end, it's not the gentrification concern that's the issue, it's the one issue left and right agree on - NIMBY.

  • Stephen Lathrop||

    I think the use of NIMBY as a rebuke is usually morally reprehensible. Make it a point to notice. In public debate, when NIMBY comes up, it will almost always be in some contest where the person using the term seeks to force uncompensated loss on someone else—often enough, as an alternative to the risk of experiencing that same loss himself. Or sometimes to experience without paying for it a share of the gain the uncompensated loss is supposed to secure.

    Not infrequently in those debates, the NIMBY target is already materially disadvantaged economically—sometimes even by previous NIMBY-invoking happenstance—while the NIMBY accuser does so from a secure position of economic privilege which all but assures he will never fall victim to a NIMBY targeting, even in the unlikely event one is directed his way.

    You ought to bite your tongue and think carefully before you say "NIMBY." If you don't conclude you are ready to take the loss yourself, and aren't ready to advocate toward that result, deny yourself the luxury of making NIMBY accusations.

  • shawn_dude||

    For those not familiar with SF:

    Roughly 90% of San Francisco falls into the transit category, btw. It does basically mean the vast majority of the city will be open for easy development.

    Roughly 60% of SF residents rent.

    The average monthly rent for a one bedroom apartment with no parking is around $3400/mo.

  • sscrane||

    Unfortunately, Bill 827 was rather extreme. It was clearly a step in the right direction, but it aggressively revoked zoning control from local governments in a way that would have had numerous negative side-effects (for example, many cities would cling to their existing zoning simply by reducing the frequency of bus stops along major streets, thus eliminating any "major transit thoroughfares" as designated by the law).

    This makes sense, as it seems that it was more of a public statement than an actual policy proposal. Hopefully it'll be more successful in encouraging reform than it was in actually getting passed. It's been very clear for a while now that local governments will not see sense on their own. The state needs to intervene in land use and zoning policy, to restrict the ability of local governments to limit construction. Unfortunately, that seems unlikely, since the opposition to development and housing construction is near universal, not restricted to to either left or right. The obvious solution to high housing prices—build more of it—somehow doesn't connect with people. Or, more depressingly, they understand that's the solution but everyone just thinks, "Sure, building more housing sounds great, just not where I live."

  • Michael Ejercito||

    Members of racial minorities are as free as anyone to lobby for preferential treatment. They just can't lobby for it on the basis of their race, sex, etc. Nor can they be disadvantaged on those bases.


    Neither can members of racial majorities.

  • Sanctimonica||

    Help dispel my 'rational ignorance'. What kind of zoning are we taking about here?

    There are no 'high rent' zoning districts, afaik. Perhaps zoning that allows greater density might lead to decreased rents, but some of the highest rents exist in some of the most densely populated parts of the coastal cities, so that's probably not it either. Then again, I suppose rents might decrease if you razed Woodside and Redwood City and covered them with highrise apartment buildings, but is that what's at issue here? Are we talking about forcing property owners to accept low rent for certain units as part of a zoning scheme?

    What we see appears to be the market at work: there is great demand to live in certain areas, and with high demand comes high cost. People want to live wherever they think the best opportunities exist for themselves and their families. Is there any reason to believe people will behave differently even if the zoning is changed.

  • NToJ||

    "...but some of the highest rents exist in some of the most densely populated parts of the coastal cities, so that's probably not it either"

    I think you're confusing cause and effect.

    "Is there any reason to believe people will behave differently even if the zoning is changed."

    Yes, there is overwhelming empirical evidence that zoning regimes increase the cost of housing. That's not seriously disputed even by people who support zoning regimes.

  • Stephen Lathrop||

    NToJ, ever looked at real estate comparables? Have you noticed how exquisitely every amenity or detriment is adjusted into the price? When you write, "Yes, there is overwhelming empirical evidence that zoning regimes increase the cost of housing," you are reasoning on a mistaken presumption that a house adjacent to a rendering plant ought to be priced alike with one next to an ice cream parlor. The empirical evidence that your presumption is mistaken shows up in the price variations among the comparables.

  • NToJ||

    "...you are reasoning on a mistaken presumption that a house adjacent to a rendering plant ought to be priced alike with one next to an ice cream parlor."

    No, I am reasoning on the opposite: that a house adjacent to a rendering plant is not going to be priced the same as one next to an ice cream parlor. That's precisely the sort of mechanism driving the price up! If your bundle of sticks includes a right to foreclose rendering plants from moving in, you're going to have to pay more because that bundle of sticks is more valuable than the one in which a rendering plant could move in next door. That's why zoning laws increase the cost of housing.

  • Stephen Lathrop||

    NToJ, I'm at a loss for what you are getting at. Is yours an argument that zoning is good, because it increases value, and value is good? Or is it an argument that zoning is bad, because it increases value, thereby making housing for poor people less available? Or is it an argument that amenities are bad, and detriments are good, because that way there is more housing for poor people? Or something else?

  • Sanctimonica||

    Me too. NToJ is all over the place.

  • shawn_dude||

    The zoning law effectively fast-tracks all building permits for buildings that meet all existing zoning and code restrictions for a given parcel. If no variances are required, cities have less authority to stall the process in order to wring concessions out of developers or for residents to stop construction they aren't happy with.

    In SF, there is a high demand for housing anywhere in the city limits. Demand is so high that even Oakland, a couple BART stops away, is unaffordable. There is a lot of areas in the city where single family homes dominate. My neighborhood was zoned single family with no in-law quarters. The city recently struck the "no in-laws" from the code so suddenly two of my neighbors are digging down their first floor (a "basement" here) to meet ceiling codes so they can turn their garages into apartments. Neighborhoods like mine are famous in the city for fighting any buildings over 3 stories. Various neighborhood groups are poised and ready to kill any pending construction project with a raft of unreasonable demands up to an including the developer taking no profit on 25% of the units in the project. The laundromat example above is still delayed after 4 years because neighbors are now claiming it is "historic." (it isn't.)

    I agree that this is the market at work, where the market as learned that control of City Hall is how you ensure your property values remain high.

  • Sanctimonica||

    The "zoning keeps my property value high" argument works when applied to others: i.e., your property keeps its value when the law prevents your neighbor from opening an auto salvage yard next door. And grouping consistent uses while separating inconsistent ones is kind of the whole point of zoning.

    The flaw in the way you use the "zoning keeps my property value high" argument is that your basement-digging neighbors' property increased in value now that the 1st floor can be rented. X1000 if the city let them build a 25-story apartment building on their lot. I don't think the population density of San Francisco can be increased enough to make living in San Francisco affordable. There is an apparently unlimited population of potential residents willing to pay an unreasonable premium to live there, although increased density in SF might decrease the cost of living in surrounding areas as those who are able to pay the premium move into the city.

    Perhaps it's an issue of people who bought property with the expectation that it will continue to be suitable for which they purchased it trying to hang on to that use. Bottom line is I don't think that

  • Stephen Lathrop||

    Hills compares left-wing denialism on zoning to widespread right-wing denial of the scientific evidence on global warming. As he points out, both represent triumphs of ideological bias over expertise.

    Wow. Expertise? Not evidence? Not experience?

    Granting that climate models probably deserve the "expertise" label, how is that different than the theoretical ruminations of economists with predictions that don't improve on chance? Climate models and economic models ought to be tested on the basis of accurate predictions, but treated with near-blanket skepticism until experiments deliver powerful evidence to prove theory, or falsify theory. Which hasn't come even close to happening in either case.

    Which doesn't mean at all that climate change concerns are bunk, or that free-market theories about zoning are wrong. Climate change is copiously supported by hard evidence that shows a warming trend of concerning magnitude. Causality is rightly in question.

    Just so with housing prices and zoning. You can see the high prices. You can account for them with any number of arguments. But you can't even suggest causality in a laboratory test, as you can do fairly convincingly for climate change.

    Both kinds of advocates should make arguments founded in empirical evidence, tested by experiments, and justified by results—not on the basis of models which no one can yet validate.

  • NToJ||

    "But you can't even suggest causality in a laboratory test, as you can do fairly convincingly for climate change."

    I don't know what you mean by "laboratory test" (surely you do not have a climate laboratory big enough to test the earth), but climate scientists are engaged in studies of empirical data to support a hypothesis about climate change. So, too, are economists with respect to the relationship between housing prices and zoning regulations. See here and here.

  • NToJ||

    And here and here.

  • NToJ||

    More here. President Obama's administration agreed. And they were right.

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