“Eye on the State: Housing Crisis Tied to Income Inequality”

SF Examiner, February 3, 2017

Here on our San Francisco island, struggles over affordable housing and land-use policy have for decades absorbed much collective energy. Now, beyond our shores, there is a statewide “housing crisis,” and ideas about how to “solve” it are flying around the Capitol. Eye on the State will examine the local implications of proposals brewing in the Capitol from the perspective of community, housing, labor and environmental advocates representing everyday people.

To start, let’s get some clarity on the problem: California’s “housing crisis” is, at heart, an affordable housing crisis. Yes, housing production plummeted statewide after the 2008 financial crisis and has yet to recover. But the core question about the need for increased housing supply is: “supply for whom?”

Let’s also be clear that this affordability problem is as much related to income inequality as simply affordable housing “production.” While the dramatic rise of the tech sector with its high paying jobs is widely reported, less talked about is the up to six lower paying support and service jobs created for every tech job, driving up the need for low- and moderate-priced housing. Yet the reality is that the real estate market tends to only cater to the top-end earners.

In areas of the state where housing production has increased over recent years, it’s predominantly on the upper end of market-rate, creating an ever-widening gap for housing affordable to Californians earning less than the state median income. We know this all too well in San Francisco, where new market-rate housing is at nearly untouchable prices for even well-paid, white-collar workers, let alone The City’s majority of everyday low- and moderate-income people in need of housing.

What this top-end focus of new development has resulted in is a tremendous imbalance in the affordability of housing supply. Some California cities are “performing” quite strongly on the housing goals the state sets for them for market-rate housing, but falling far short when it comes to housing affordable to low- and moderate-income people. For example, the regional Association of Bay Area Governments reported that 99 percent of the projected market rate/above-moderate-income housing need was accomplished across the region’s 101 cities in recent years, while only 28 percent of all other needs for very-low, low- and middle-income housing were achieved.

While some cities like San Francisco are working hard to address affordable housing, many others are failing to build their “fair share,” exacerbating the load put on the Bay Area’s “Big Three” — San Jose, Oakland and San Francisco — which have absorbed more than a third of the entire region’s development in recent years (and are expected by regional planners to take on up to 45 percent of Bay Area development between now and 2030!). We must seek “regional equality” in meeting our future housing needs with policies that even out development across the region.

It is important to remember the housing market is different here than in Fairfield, Vacaville or Palo Alto, or farther afield in cities like Costa Mesa or Bakersfield. If there is such a thing as “naturally affordable” housing for the middle class, it might happen in some places with the right market conditions, but not others with hot real estate markets. As former State Sen. Mark Leno poignantly said in response to last year’s sweeping “by-right development” proposal from Gov. Jerry Brown, “one size does not fit all.” New, innovative policies must be devised at the state level, focused on higher density development in mature suburbs close to suburban employment centers. Evening out development patterns is a challenge, but with smart policies targeting the right places it can be done.

Solving the housing affordability crisis is not simple or easy. The California legislature has tried a variety of bills over the last three years, from protecting tenants, to strengthening “inclusionary” housing law and securing permanent state funding for affordable housing. But heavyweight interests, namely the realtors, the apartment association and the building industry, have fought these solutions tooth and nail.

Instead, the real estate industry is pushing the concept of development approvals “by right” — the idea that if local review processes are eliminated or “streamlined” then market-rate development will happen faster, more bountifully and with lower costs, all of which might result in more affordability for everyday Californians, everywhere. For a city like San Francisco where development is blazing and approvals are flipped out like pancakes at the Planning Commission, stripping away local public review for market-rate development is a power grab putting developers’ “right” to expect development approvals over the city and community’s “right” to push for more affordability or better environmental or labor standards in new development. Last summer Governor Brown ran a by-right development proposal up the flagpole, and it was blasted by a statewide array of community, housing, labor and environmental organizations. And this year new by-right bills are already being introduced again in the legislature.

Eye on The State is a monthly report from San Franciscans for Community Planning and will follow this new round of by-right bills and other proposed housing bills over the next six months making their way through the 2017 state legislative session.