Rethinking the Suburbs Is Integral to California’s Housing Solution

12 10 2017

This is the second essay in a two-part series on the role of the suburbs in California’s housing crisis (read the original posting on Medium here). Read Part One here

A new model of the Bay Area that we can – and should – be moving towards.

An important and often overlooked factor in the state’s affordability crisis is the dramatic drop in single-family housing production in California over the past 10 years. We break this down in the first part of this series. Despite the rhetoric repeated by real estate boosters, the media, and some politicians that California historically under-produced housing for decades, developers were actually producing roughly enough homes until recently, through the ups and downs of economic cycles, to maintain pace with the state’s growing population at a rate of about one unit per average 2.5 person household.[1]But the Wall Street financial crash of 2008 brought with it a huge decline in investment in single-family and townhouse construction that the state has not recovered from, eliminating a source of homes that were once “naturally” affordable to middle-income Californians. Single-family production is down to about 40% of the statewide total, compared to 70%-80% of all homes built through the decades until the crash.

The result has been 1) a decline in single-family construction which has left overall state and regional housing production far below historic levels, and 2) changing geographic patterns where development is now concentrated as multi-family units (ie, apartments and condos) comprise the bulk of housing construction.

Clearly, jobs will continue to expand and the population will continue to grow, from in-migration, from births, and from a growing population of seniors on fixed incomes. Statewide, and in the Bay Area, home building needs to get back to the kind of pre-meltdown balance before single-family production dropped off, when new housing more closely matched population growth (in this we are in agreement with the supply-sider critics).

But we need to come to terms with the new reality we are living in — that a once inexpensive source of homes is no longer viable at significant levels (and is no longer desirable, environmentally-responsible, or even marketable to new generations of Californians).

So how do we deal with this new decline in single-family homes, and the accompanying desire to live in more “urban” places? And how do we make this new reality affordable to the vast majority of Californians, given the increasing income inequality of the state’s urban regions?

Cities Struggling to Make Up for the Suburbs

As single-family development in suburban cities dramatically slows, attention has increasingly fallen on a few major cities to take up the slack. For example, the Metropolitan Transportation Commission crafted the recent “Plan Bay Area” that places almost half of the entire burden for future residential growth on just three of the region’s 101 cities: San Francisco, San Jose, and Oakland.[2] But is it realistic for most of California’s new homes to now be built in just a handful of core cities, with many of their low-income and working class neighborhoods already struggling with a crisis of urban gentrification and displacement? And with a greater share of units in those core cities now being built in luxury high-rises, is that any solution to our overall statewide and regional housing crisis?

The answer is no, for two reasons:

1) The gentrification and displacement impacts of this approach are very real — and they are increasingly immoral and untenable. As California development is becoming increasingly concentrated in a handful of core cities and urban neighborhoods, we are seeing a new re-segregation of metropolitan regions, with working class people being pushed out to the suburban periphery, the inner city transformed into exclusive areas for the wealthy, and nowhere for the middle-class to go. An approach to “build, build, build” that leans on core cities alone and just heightens the risk of displacing poor and low-income folks to older suburbs, forced to commute long distances to jobs in the urban core, doesn’t address either the environmental or affordability imperative of this new era.

2) Even if we wanted to put nearly all the region’s new housing in three core cities, we (city governments, legislators, planners, policy makers, activists) can’t make that happen — short of controlling either the land or the financing. San Francisco, for example, approves (the official way of saying, “yes, go ahead and build this!”) a lot more housing than is currently being actually built. 2016 was a record year with over 5,000 new homes built, yet there are still 38,000 more units already approved but not the financing or construction cranes to build those thousands of units. Why not? We can speculate, but the main thing to know is that just approving a ton of market-rate housing in “the big three” and expecting it to quickly materialize is more urban fantasy than practical market reality, not to mention the attendant gentrification and displacement impacts noted above.

Getting into why there would be financing limitations is beyond the scope of this essay, but looking back at the Chronicle’s graph, even with today’s housing boom in the core cities, developers built only 49,000 multi-family units across the entire state in 2014, compared to 155,000 single-family houses constructed at the height of suburban construction in 2005 before the Wall Street crash. Clearly, any aspirational goal that attempts to squeeze most new construction into California’s core cities won’t meet the demand at the scale needed to address the state’s overall shortfall.

Middle-class Californians increasingly want more urban living, but it can’t all be done in a handful of high-density cities or concentrated into existing working-class, inner city neighborhoods. It is time to re-think suburbia. From a public policy standpoint, we can’t afford to write off the suburbs — which have already paved over millions of acres of the California landscape in the last 50 years — as private investors have largely done since 2008. We need to reevaluate the potential of the suburbs for more multi-family development, especially suburban cities accessible to regional transit, for enabling the denser, more interconnected, more affordable, and more sustainable living that people are looking for.

A More Urban Suburbia

Bringing a degree of urbanity to the suburbs is not the same as transforming suburbs into big cities. A suburban “urbanism” is what in the 1920s and 30s would have been called “streetcar suburbs,” the kind of human-scaled, walkable, and transit-accessible communities that many middle-class people are rediscovering today. This means increasing the density of suburbs by degrees, moving from the single-story tract house landscapes of the 1960s-1990s to duplexes, three-unit walkups, small apartment buildings, and condominium clusters. This increased density can be concentrated near town centers and within primary corridors connected to commercial areas and parks. This is really just about going back to a California of pre-sprawl suburbs, what “smart growth” advocates have been pushing for twenty years (to give credit where it’s due).

With the crash of single-family construction, now is the time for the smart densification of suburbs to be part of the big-picture statewide housing solution. In our own Bay Area region we need a new vision of a multi-nodal metropolis, with denser, human-scaled, small-city suburbs around the Bay augmenting the ‘Big Three’ core cities, with both residential and employment opportunities, linked by efficient regional transportation systems. That is, if developers will reverse the trend of abandoning the suburbs in favor of high-end development in core cities, and step up again to “build, build, build” middle-class homes for a re-envisioned California suburbia.

How to Get There — and How Not to

One approach currently being pushed by some development boosters essentially draws its cues from Reagan-era neoliberalism: removing what are seen as regulatory “barriers” to residential approvals, including removal of public input and planning commission approvals, inclusionary housing requirements, or environmental review that has the potential to empower NIMBY opponents to development. As part of a wider deregulation agenda that helped to produce the very financial crisis that nearly brought production to a halt in the first place, it’s hard to accept this as a primary path forward.

However, the data detailed in the Chronicle’s graph, showing residential production since the 1990s, clearly points to something other than regulations or NIMBYs as the cause of the crisis in California’s housing supply. It’s not as if regulations or fees suddenly changed in 2006, or NIMBYs suddenly found themselves empowered to stop construction when statewide production dropped by over 70% between 2005 and 2008. Moreover, it’s important to remember that while these deregulatory approaches may facilitate “approvals,” they cannot force financial decisions that lead to whether and where homes actually get built. Hence San Francisco’s backlog of 38,000 approved units, with little control over the fickle private investment to ensure that those units are built in the foreseeable future.

To acknowledge this is not to say that the planning bureaucracy cannot be improved — there is always room for improvement. But a deregulation approach on its own will not only fail to actually produce the scale of housing the state’s growing population needs, but more importantly will fail to produce homes where they are really needed — in the suburban cities of California where construction has dramatically fallen off over the last ten years. By contrast, a universal deregulation approach that cuts local public oversight will have the potential to exacerbate gentrification and displacement in urban “hot” neighborhoods already struggling to shoulder the bulk of the state’s development, silencing the voices of those fighting to get more affordable homes in those impacted neighborhoods, and pushing existing communities to the urban periphery.

So how to get there? The exact opposite of a deregulatory approach may be required — smartly using regulation to incentivize suburban areas to build and stabilize housing at the needed affordability levels. A good start would be regional measures that make local cities’ transportation funding dependent on the adoption of new production, affordability, and anti-displacement measures. A regulatory approach could also counteract the Prop 13-induced emphasis on retail and commercial development (Emeryville, anyone?) by linking the ability of cities to approve commercial development with approvals for residential construction that meets the housing needs of new workers brought by the commercial development — what is called a Jobs-Housing-“Fit”.

Lessons from Cities

The experience of San Francisco from the last two decades serves as a partial example of how the state could begin to go about this reimagining of California suburbs. As San Francisco finally rebounded from the suburban outmigration that had depleted its population from the 1950s to the 1990s,[3] planners and community activists began a long and imperfect process of rezoning its former industrial districts and creating redevelopment plans (bringing public investment) on former military bases, train yards, abandoned freeways, and downtown parking lots. This is the approach that our organization, the Council of Community Housing Organizations, took to development in San Francisco, an approach that sought to balance jobs, housing, and affordability: in the 80s we advocated to meter new commercial offices so that housing and infrastructure could keep up (jobs-housing balance), and successfully passed jobs-housing linkage fees (funding mechanism) so office builders would contribute to homes affordable for their workers; in the 90s we advocated for residential development in areas like Mission Bay (rezoning for residential development) when the landowners and pro-growth boosters still believed the future of the city was as the region’s officehub; in the early 2000s we worked with neighbors (yes, neighbors!) to plan for their own communities to support housing with 50% affordability in the former Central Freeway parcels of Hayes Valley (rezoning, with public investment in affordable housing); and in the late 2000s we pressed for public benefits and inclusionary fees built into rezonings (“public benefits zoning”) for Rincon Hill, Market/Octavia and Eastern Neighborhoods.

All of these were hard-fought campaigns that resulted in real homes. They depended not on deregulation, but on the opposite: an understanding of what the development market will and will not provide on its own, good participatory planning, a commitment of public resources needed to attract and direct private investment, and regulations that provide certainty for development outcomes. Key to some of these successes was the use of redevelopment funding, bonding against future tax growth, to build the infrastructure and affordable housing that would kick-start private development, then demanding that the private development also include a mix of affordability (ie, “inclusionary” housing). Redevelopment was dissolved in 2011 in California, and years of talk of a replacement “Redevelopment 2.0” have come up empty. Creative local financing sources will be needed to facilitate this kind of holistic planning and investment, whether at an urban or suburban scale.

Rethinking and densifying the suburbs, as well as the old “Main Streets” of the less dense areas of core cities and towns, is not the same as building out industrial lands and former military bases — these are existing communities. So, planning will be key, as was done in San Francisco’s Market/Octavia and Central Freeway parcels where intact and vibrant communities were already in place. State bills just passed in the legislature such as AB73 and SB540 this summer may provide incentives for this kind of carefully planned growth and development supported by infrastructure and mandated minimum levels of affordability.

But to make this happen there will have to be a firm commitment to change in these suburban communities, which requires organizing and political leadership — creating an understanding and acceptance that there will berezonings, there will be increased heights and density of people, there will be a lot more activity, and things will change for the better as the old single-family suburbia model morphs into a 21st century regional urbanism. That commitment needs to come with careful understanding of potential displacement of any existing residents, and the impacts on existing small businesses those communities depend on. And any rezonings should be predicated on well-analyzed requirements to capture a portion of the added profits to landowners and developers in order to mitigate the infrastructure and affordable housing needs that planned growth will bring. Change in suburbs can happen, it’s not rocket science, but it does mean being intentional. Which is to say, we need more planning, not less regulation.

Conclusion

The changing trends in statewide residential production over the past decade are drastic. In a new era where single-family construction no longer provides the bulk of middle-class homes to support a growing population, with a generational shift to more dense urban living, and with growing income inequality, it’s time to rethink the role of the suburbs. This isn’t a question of either/or: both core cities and suburban areas will need to do their share. California’s core cities are clearly going to continue to shoulder a large responsibility for accommodating population growth, and in so doing those of us in the affordable housing and community development movement will continue to grapple with countering the pressures of gentrification and displacement while figuring out how to plan for growth.

With the shift to “infill” multi-family housing patterns, California’s policymakers, planners, and developers will have to start envisioning a smaller overall development footprint in our metropolitan regions. But this is not the end of history for the vast built landscape of California’s suburbs and small towns. The state is 770 miles long stretching from Oregon to Mexico and 220 miles wide, with 482 local cities in total and millions of acres of suburbanization over the past six decades. Suburbs will have to evolve to play a new role, if we are to have any hope of solving California’s housing affordability crisis.

[1] Comparison of census population for California to housing starts tracked by the Construction Industry Research Board.

[2] Metropolitan Transportation Commission, Plan Bay Area 2040, Final Preferred Scenario: regional growth pattern & investment strategy. November 2016.

[3] Like many core cities across the US, San Francisco lost population every decade of the 1950s, 60s, and 70s, while the surrounding suburbs mushroomed in size. SF did not bounce back to its previous peak 1950 population until the year 2000.


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