I hope all these developers are able to find enough skilled labor to build tons of new high quality buildings. Since demand for building trades has been artificially constrained by dumb zoning and supply of skilled labor in the trades has been artificially constrained by a culture idolizing 4 year degrees, it looks like we're in for a perfect storm of skilled worker shortages. I hope this doesn't lead to cutting corners, might then cause a backlash against new buildings.
This policy change on its own is great, but a holistic housing policy suite would include revamping the education system to make sure the state has enough people with the right training by the time these proposals are ready to break ground.
Great summary. Do you (or any commenters here) have good references for this statement?
> Research has long supported that private developers are most interested in building in affluent neighborhoods over poorer ones because its more profitable.
For context, we're working on convincing some local communities in CO that when broad-based (rather than targeted) upzoning that includes wealthier neighborhoods is implemented, developers are more likely to target wealthier neighborhoods for new development than lower-income neighborhoods. They are concerned that broad-based upzoning will lead to higher rates of construction in lower-income neighborhoods "because the land is cheaper"
I personally understand the theory of why this wouldn't come to pass: developers are chasing the highest margins, not lowest input costs - and these figures don't always correlate. Even if base land cost is higher in wealthier neighborhoods, that margins on this construction are likely to be higher due to higher sales prices.
But wondering if we have empirics on this.
- We have a suggestion it would be the case from Houston's 1998 small lot zoning reforms, where most development occurred in middle-income neighborhoods, rather than low-income neighborhood (high-income neighborhoods we largely excluded from the reform). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3659870
Also and i shouldve mentioned this, 20% IZ is going to pencil in wealthy areas mostly where the market rates are high enough to compensate the subsidized units.
Can anyone break this first line down for me: "anywhere in a city, so long as at least 20% of the homes are below market-rates a.k.a. low income residents."
How is the 20% calculated? Is it within any defined city limit - so for LA it would consider the entire city limit? And how they define what below market rate is?
No its a not a city composition percentage, its a building percentage. An individual housing project a developer proposes must be 20% affordable or greater so below 80% Area Median Income. Alternatively it can be 100% moderate income between 80% and 120% AMI.
This is pretty amazing if I'm understanding it right. I wish I was a little more certain of my understanding, though.
Maybe I'm not the target audience here, because I'm not deeply informed on YIMBY issues or California laws. I have a lot more than zero knowledge, having lived in CA for 15 years and being a long-time reader of Yglesias, but still - a lot of the details here are a bit over my head.
I guess I got the upshot, though, which I'd tl;dr like this: A statewide YIMBY law was put into place in the Reagan years but not enforced with any teeth until much recently. It gets rid of nearly all residential zoning requirements. For some reason, it got implemented in Santa Monica months before anywhere else, but will now apply in some % (what %?) of California cities.
Hope I'm not misunderstanding. Maybe I missed it but are there estimates on how many more units are expected to be built or what % of California this might apply to? It would be interesting to speculate on how much CA population growth this could lead to.
Longstanding state law in California requires that every eight years, every jurisdiction in California—every city, town, and the unincorporated area of every county—has to file a housing plan with the state, and it has to be approved by the state. The state assigns to each region, and the region assigns to each jurisdiction, a number of homes to plan for in each income category (low, moderate, above moderate). The jurisdiction has to say where they can be built.
This cycle, YIMBYs in the state legislature made the process much more strict. The number of homes to plan for is much bigger, the other requirements for the housing plan are more strict, and the scrutiny is much more severe. The state's Department of Housing and Community Development is rejecting plans right and left.
Regions have different deadlines. The Los Angeles area's deadline was October of 2021, which is why cities like Santa Monica have been vulnerable to the builder's remedy already. The deadline for the San Francisco Bay Area is today.
By state law, if a jurisdiction does not have a compliant housing plan, then any multifamily housing project that has 20% low income units in it has to be approved by the jurisdiction, unless it is demonstrably unsafe. Tomorrow begins the new cycle for the Bay Area. Jurisdictions that do not have a compliant housing plan for this new cycle, which is most of the jurisdictions, will be vulnerable to the builder's remedy.
This is by no means a surefire way to build houses. Any builder's remedy project will end up in court. Jurisdictions will say they have compliant housing plans, deny the project, and dare the applicant to sue. CEQA suits are almost a certainty for builder's remedy projects. Still, it's entertaining.
The housing plans are called Housing Elements, and they are an element of each city's General Plan. So an adopted housing element is part of the city's laws. Once adopted, it's not something the city can ignore.
Each city has to plan for a certain number of units, or lose its ability to enforce residential zoning laws. "Plan for" here means zone for, in places where the zoning is going to result in building.
The political backlash will be fierce. These wealthy communities will not go down without a fight. This will be a huge issue in the upcoming governors race as well as many communities around the state.
@Darrell - In the sentence below, did you mean Emeryville? I thought they were the ones who got pro housing status. If I'm misremembering, my bad.
"In December, HCD bestowed Oakland and only 6 other cities (none in the Bay Area) the state designation of “pro-housing,” which comes with a pot of affordable housing funds due to Oakland resident’s supportive attitudes towards housing approvals."
Can anyone take a guess on how much more population this will allow in California over the next decade? Could it add more than 1 million before the next census compared to if it didn't happen?
This did happened, just google Builders Remedy Santa Monica. And the frantic rezoning process is happening today, just listen quietly to planning depts trying to whip maps up as the state sends out some final grades.
I hope all these developers are able to find enough skilled labor to build tons of new high quality buildings. Since demand for building trades has been artificially constrained by dumb zoning and supply of skilled labor in the trades has been artificially constrained by a culture idolizing 4 year degrees, it looks like we're in for a perfect storm of skilled worker shortages. I hope this doesn't lead to cutting corners, might then cause a backlash against new buildings.
This policy change on its own is great, but a holistic housing policy suite would include revamping the education system to make sure the state has enough people with the right training by the time these proposals are ready to break ground.
Great summary. Do you (or any commenters here) have good references for this statement?
> Research has long supported that private developers are most interested in building in affluent neighborhoods over poorer ones because its more profitable.
For context, we're working on convincing some local communities in CO that when broad-based (rather than targeted) upzoning that includes wealthier neighborhoods is implemented, developers are more likely to target wealthier neighborhoods for new development than lower-income neighborhoods. They are concerned that broad-based upzoning will lead to higher rates of construction in lower-income neighborhoods "because the land is cheaper"
I personally understand the theory of why this wouldn't come to pass: developers are chasing the highest margins, not lowest input costs - and these figures don't always correlate. Even if base land cost is higher in wealthier neighborhoods, that margins on this construction are likely to be higher due to higher sales prices.
But wondering if we have empirics on this.
- We have a suggestion it would be the case from Houston's 1998 small lot zoning reforms, where most development occurred in middle-income neighborhoods, rather than low-income neighborhood (high-income neighborhoods we largely excluded from the reform). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3659870
- And Portland /modeled/ likely outcomes when upzoning SFH areas, showing it would reduce displacement faster than the status quo in almost all cases. But this is a model, not empirics. https://www.portland.gov/sites/default/files/2019-12/vol_3_appendix_b_displacement_risk_and_mitigation.pdf
- Early explorations on Seattle reforms has shown most middle housing has been built in higher income neighborhoods. https://www.seattletimes.com/opinion/editorials/serve-the-people-not-developers-amend-middle-housing-bill/
That's all I have for now!
Just to add to the lit you researched, Urban Displacement Project reviewed pro-formas of a wealthy Bay Area suburb vs. Oakland and found the former was far more profitable for developers. https://escholarship.org/content/qt1rw1z3mx/qt1rw1z3mx_noSplash_406d3019d8e8a4835c56bc5ad1769cb9.pdf?t=qbmb56
Also and i shouldve mentioned this, 20% IZ is going to pencil in wealthy areas mostly where the market rates are high enough to compensate the subsidized units.
Great, detailed update. Do you (or readers) have any resources that gives community’s status in SoCal? Am particularly interested in LA county cities
Here's where you can find out whether your California city is in compliance or out of compliance:
https://www.hcd.ca.gov/planning-and-community-development/housing-open-data-tools/housing-element-review-and-compliance-report
Yeah I'm curious about LA in particular.
Can anyone break this first line down for me: "anywhere in a city, so long as at least 20% of the homes are below market-rates a.k.a. low income residents."
How is the 20% calculated? Is it within any defined city limit - so for LA it would consider the entire city limit? And how they define what below market rate is?
LA's housing element was approved: https://la.urbanize.city/post/state-officials-bless-las-updated-housing-element
No its a not a city composition percentage, its a building percentage. An individual housing project a developer proposes must be 20% affordable or greater so below 80% Area Median Income. Alternatively it can be 100% moderate income between 80% and 120% AMI.
Ohhh OK, I was way off. Thank you, it makes more sense now.
https://www.hcd.ca.gov/planning-and-community-development/housing-open-data-tools/housing-element-review-and-compliance-report
Thank you! Its linked above
This is pretty amazing if I'm understanding it right. I wish I was a little more certain of my understanding, though.
Maybe I'm not the target audience here, because I'm not deeply informed on YIMBY issues or California laws. I have a lot more than zero knowledge, having lived in CA for 15 years and being a long-time reader of Yglesias, but still - a lot of the details here are a bit over my head.
I guess I got the upshot, though, which I'd tl;dr like this: A statewide YIMBY law was put into place in the Reagan years but not enforced with any teeth until much recently. It gets rid of nearly all residential zoning requirements. For some reason, it got implemented in Santa Monica months before anywhere else, but will now apply in some % (what %?) of California cities.
Hope I'm not misunderstanding. Maybe I missed it but are there estimates on how many more units are expected to be built or what % of California this might apply to? It would be interesting to speculate on how much CA population growth this could lead to.
Longstanding state law in California requires that every eight years, every jurisdiction in California—every city, town, and the unincorporated area of every county—has to file a housing plan with the state, and it has to be approved by the state. The state assigns to each region, and the region assigns to each jurisdiction, a number of homes to plan for in each income category (low, moderate, above moderate). The jurisdiction has to say where they can be built.
This cycle, YIMBYs in the state legislature made the process much more strict. The number of homes to plan for is much bigger, the other requirements for the housing plan are more strict, and the scrutiny is much more severe. The state's Department of Housing and Community Development is rejecting plans right and left.
Regions have different deadlines. The Los Angeles area's deadline was October of 2021, which is why cities like Santa Monica have been vulnerable to the builder's remedy already. The deadline for the San Francisco Bay Area is today.
By state law, if a jurisdiction does not have a compliant housing plan, then any multifamily housing project that has 20% low income units in it has to be approved by the jurisdiction, unless it is demonstrably unsafe. Tomorrow begins the new cycle for the Bay Area. Jurisdictions that do not have a compliant housing plan for this new cycle, which is most of the jurisdictions, will be vulnerable to the builder's remedy.
This is by no means a surefire way to build houses. Any builder's remedy project will end up in court. Jurisdictions will say they have compliant housing plans, deny the project, and dare the applicant to sue. CEQA suits are almost a certainty for builder's remedy projects. Still, it's entertaining.
The housing plans are called Housing Elements, and they are an element of each city's General Plan. So an adopted housing element is part of the city's laws. Once adopted, it's not something the city can ignore.
Thanks so much!
As an even more stripped-down summary (I want to text a friend about this) would this be right?
"Each city has to build a certain number of units or lose it's ability to enact residential zoning laws"
Each city has to plan for a certain number of units, or lose its ability to enforce residential zoning laws. "Plan for" here means zone for, in places where the zoning is going to result in building.
Awesome!
The political backlash will be fierce. These wealthy communities will not go down without a fight. This will be a huge issue in the upcoming governors race as well as many communities around the state.
@Darrell - In the sentence below, did you mean Emeryville? I thought they were the ones who got pro housing status. If I'm misremembering, my bad.
"In December, HCD bestowed Oakland and only 6 other cities (none in the Bay Area) the state designation of “pro-housing,” which comes with a pot of affordable housing funds due to Oakland resident’s supportive attitudes towards housing approvals."
No it was Oakland.
Do you happen to know where I would look to see about Santa Cruz?
Nevermind, I think I found it. This is stunning.
Can anyone take a guess on how much more population this will allow in California over the next decade? Could it add more than 1 million before the next census compared to if it didn't happen?
This did happened, just google Builders Remedy Santa Monica. And the frantic rezoning process is happening today, just listen quietly to planning depts trying to whip maps up as the state sends out some final grades.