I did a double-take when The Times in London recently reported that Prime Minister Boris Johnson intends to end local control of real estate development there. Reaction to the proposal was swift and mostly critical. “The antagonism of Johnson and his colleagues towards anything local … is clearly visceral,” wrote Simon Jenkins in The Guardian. “But his reform is of a new order. It cancels the democratic right of people to exercise some control over their immediate surroundings, over the character and appearance of their neighborhood. This is not mere nimbyism—any more than Johnson’s friends are mere profiteers. But it is a civil right that deserves better than to be smothered by commissars.”
What Johnson and his Steve Bannon–like lieutenant, Dominic Cummings, are proposing is a hodgepodge of Prince Charles–inflected New Urbanism with John Ruskin–inspired borrowings from Roger Scruton. But in proposing to control real estate development from the top and gut local control long enshrined in British planning law (not to mention the Magna Carta), it is echoed by proposed legislation now in play in California.
For readers outside the Golden State, let’s review the situation here and the debate it has engendered: A cohort of politicians—the Bay Area’s Scott Wiener, David Chiu, Nancy Skinner, and Buffy Wicks, and San Diego’s Toni Atkins—are pushing a legislative package that would put teeth in statewide housing production targets and dictate new housing types and densities in most California towns and cities, limiting local control. These bills find support from San Francisco’s SPUR, which argues in a recent report that housing should be considered as infrastructure:
State government has a very important role to play in addressing the housing crisis because it can create new rules around what gets built where. … State government can also create new sticks and carrots to discourage or encourage certain behaviors. It can diminish local control for jurisdictions that don’t help to address the housing crisis and offer new funding for jurisdictions that work to build the housing needed. It can also reform existing laws, like the California Environmental Quality Act, that make it harder to build housing in already-developed areas.
SPUR implies that housing is a “public good,” like others that underpin the public realm. In the report’s conclusion, it posits a cultural shift in the way housing is viewed, emphasizing the unmet needs of renters and the homeless. This echoes the Green New Deal’s sense of housing as a “right.” That initiative would fund the renovation of existing public housing, a measure that would benefit a metropolis like New York with a large, deteriorating stock of it. While stopping short of calling for renewed development of public housing, the Green New Deal at least acknowledges its importance.
In the wake of the 2008 Recession, as Palo Alto’s Embarcadero Institute points out, California eliminated redevelopment agencies and cut its funding for below-market housing.
Over the last few years, rather than restoring funding, some state legislators have blamed local zoning and tried to use state-mandated density bonuses to spur affordable housing development. Both adopted bills and recent amendments to the Housing Density Bonus Law were designed to stimulate affordable housing production through the streamlining of approval processes, the provision of additional density bonuses as incentives, the creation of a CEQA exemption, and the supply of a new funding mechanism for sustainable affordable transit-oriented development (TOD).
Analyzing actual housing production in different categories against California’s Regional Housing Need Assessments (RHNA) targets, the Embarcadero Institute asserts that while market-rate housing production in California substantially outstripped its RHNA target, production of below-market-rate housing lagged its targets, especially for the “low and very low income” category.
“Although it is still too soon to assess the impact of the two bills passed in 2019,” the institute adds, “it seems clear that prior incentive approaches are not working as the state is building less new affordable housing than it was in the 2000s.” For this reason, it questions the current legislation’s tilt toward encouraging market-rate housing production. SPUR takes the position that market-rate production is crucial to housing affordability:
Without a sufficient amount of market-rate housing, high-income workers will continue to outcompete everyone else and shift housing prices for the entire region. Building more housing for market-rate buyers can reduce their impact on the housing market as a whole and help limit rapid increases in price.
The group recommends “housing targets that are almost double the RHNA estimates and slightly more than double the region’s annual production from 2000 to 2018.” While its targets are regional, SPUR cites the McKinsey Global Institute’s projection of a shortfall of 3.5 million units, based on 2025 housing needs—a figure that the legislative package’s authors appear to rely on. Embarcadero Institute has challenged it, pegging the shortfall at 1.4 million units, a big difference. As it notes, the shortfall in production is only in the below-market categories; market-rate housing is doing fine, as per RHNA targets.
The Embarcadero Institute faults the current legislative package for failing to revive state funding of below-market housing development at its pre-Recession levels. Instead, the legislation’s authors blame local delays in approvals of higher-density development as the bottleneck and assume that by limiting local control and adding bonus incentives for higher densities, the market will make up all shortfalls:
Many of these bills offer additional developer incentives (e.g. increased density) while lowering affordability requirements (e.g. agreements to provide affordable housing) already in place in existing law. … As a result, this could lead to fewer affordable units being constructed as the statewide requirements to receive bonuses may require fewer affordable units.
The shared issue of overriding local control of real estate development makes the unfolding debate in the U.K. around Johnson’s proposal of particular interest to Californians. That debate is front-page news in the U.K., with a more even field between protagonists, pro and con. The proposal is rightly considered to be radical, even by those who favor it. Unwittingly, Johnson has triggered the debate we should be having here.
The proposed legislative package in California is largely a product of the Bay Area’s Progressive Left. It enjoys support from think tanks like SPUR and U.C. Berkeley’s Terner Center for Housing Innovation. In contrast to Johnson and Cummings’ more controversial proposal, it represents a consensus view here, and the opposition is loose and bootstrapped, except for the better-funded Embarcadero Institute.
Livable California is an example. Run on a shoestring, it nonetheless serves as a clearinghouse of information about pending legislation, the sheer complexity of which is an obstacle to the average citizen. It hosts weekly webinars featuring critics and opponents of the legislation. And it rallies its membership to weigh in with the State Legislature—also not a simple matter—when bills come up for vote. Its colorful chat feed during the webinars reveals the many side issues housing politics engenders.
A recent opinion piece on the Marin Post, derived from Livable California and the Embarcadero Institute, typifies two themes that unite the opposition: first, that overriding local control is unjustified because the housing crisis is overstated and the legislation is tipped toward developers and market-rate housing; and second, that the legislation’s authors are doing the bidding of their powerful backers and have a built-in conflict of interest.
A case-by-case process also encourages spot zoning that undermines existing zoning without updating it in a concerted way that would engage communities involved. If NIMBYism exists, its rise is directly attributable to abuse from above.
It’s true that local control of real estate development in California cities is problematic. Even for very small projects, entitlements and regulatory review can be glacially slow and expensive. The root of the problem, however, is the extent to which the process has become almost universally case-by-case, rendering meaningless the by-right assurances that underpin zoning and building regulation. A case-by-case process also encourages spot upzoning that undermines existing zoning without updating it in a concerted way that would engage the communities involved. If NIMBYism exists, its rise is directly attributable to abuse from above.
The current legislative package does nothing to tackle this problem, substituting a top-down directive to upzone that limits local checks on the scale and nature of building projects. It does this under the banner of “affordable housing,” emphasizing increased housing production as a cure-all. However, as its critics point out, market-rate developers are the main beneficiaries.
Embarcadero Institute data show clearly that California’s housing shortfalls are in the below-market categories. To accept that incentives for increased market-rate housing production will address this in the absence of state funding, you have to believe there’s an overall housing shortfall here of crisis proportions and take SPUR’s “domino effect” premise seriously:
As more higher-income households compete for a limited number of available homes on the market, they bid up rents and purchase prices across the board. This particularly affects new entrants into the housing market, making finding a first time home expensive—if not impossible— for everyone but the high earners.
Both in California and in the U.K., the top-down proposals on offer present a Hobson’s Choice between dysfunctional local control and top-down measures that resolve it by eliminating it. Missing is the political will, locally and centrally, to reform local and regional control of development by pressing communities to plan their futures seriously and establish zoning and building regulations that reflect them. Here in California, counties are the democratically elected bodies best suited to coordinate these plans, mediating thorny issues of where development should go.
Also missing, crucially, is the political will, both at the state and federal level, to invest public funds in below-market housing production. In California, this will require a tax regime that forces the industries that are the real sources of its wealth to pay their fair share of the public realm. The heated debates unfolding in the U.K. are a reminder that the issue of central versus local control is not trivial. The goals invoked here by progressive legislators are worthy, but they warrant much more scrutiny. SPUR and the Terner Center are too quick to accept their premises and dismiss their critics. Yet, as Boris Johnson demonstrates in real time, populists and others far less identified with progress can play this game, invoking the same crisis as an excuse to grab the wheel. California’s legislative package is a questionable fix, but organizations like SPUR and the Terner Center are all-in. My sense is that we have better options. Back to the drawing board!
Featured image via The Times of London.