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California Housing Crisis: Part 2

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Editor’s Note: This is Part 2 of a three-part article. Part 1 appeared in the May Apartment Journal and Part 3 will appear in the July issue.

III. Attracting Big Business Without Accounting for Big Housing Demand Is a Big Problem.

For years, local governments have been luring big businesses to their cities and counties through tax breaks and incentives, without equally investing in housing to meet demand. In San Francisco, for example, city leaders have successfully lured big tech companies like Twitter, Dropbox, Salesforce, Zendesk, Airbnb, Lyft, Uber, Pinterest, Yelp, and even Google to set up shop right in the heart of the City through tax breaks and other development incentives.15 Before that, in the early 2000’s, it was biotech companies. But while politicians have been successful in luring well-paying jobs in droves, they have failed, and miserably at that, to account for population growth and in creating or facilitating the development of housing to accommodate the city’s housing needs. By the numbers, the Bay Area has added half a million more jobs than housing units since 2011.16

Statewide tax break incentives pose similar problems. The State recently approved $91 million in tax breaks as part of the California Competes initiative, which provides incentives for 114 companies to bring jobs to various parts of California.17 Sounds great until the statewide job growth exacerbates California’s housing problems.

Then there’s government’s incessant fawning over Amazon. Almost every major city in America is competing for Amazon’s new headquarters (including, of all places, the San Francisco Bay Area). The bids that are being discussed are jaw-dropping.

Chula Vista, California, for example, has offered $100 million worth of property and 30 years of property tax breaks, with no plan to develop more housing to accommodate the influx of 50,000 new jobs.18

Fresno, California, however, might be on to something with its controversial yet novel Amazon proposal. It proposed no tax breaks, but promised to funnel 85 percent of all taxes and fees generated by Amazon into a special fund for housing and other infrastructure.19 The catch was that Amazon got a say in how the taxes were to be spent.

Regardless, Fresno’s “build to play”20 proposal was a reasonable one because it required the development of housing to be more or less commensurate with job and population growth.

Although Fresno’s proposal was ultimately rejected, the approach was noteworthy because it approached job recruitment and growth with housing in mind.

IV. “Local Control” Is Why Sacramento Will Be the Location of the Next Big Housing Crisis.

Local governments argue that repealing Costa Hawkins will give them back “local control” to address their own housing needs. It is these same governments that blame rental housing owners for housing affordability problems, which they argue justifies why they should have the power to rent control all rental property. In fact, “local control” means local governments can choose to neglect their housing responsibilities while taking actions that create housing affordability problems, and then blame property owners when affordability problems and housing short ages actually occur.

Take what’s happening in Sacramento as an example. Sacramento is the fastest growing city in California.21 It also has one of the hottest housing markets not just in California, but also in the country.22 On top of that, rents are rising faster in Sacramento than any other part of California;23 some say it’s the fastest in the nation.24 Housing supply is low, while demand is high, and the population keeps growing.

But how did Sacramento go from “cow town” to “wow” town.25 More importantly, what are city leaders doing about meeting Sacramento’s housing demands?

It is no secret that a mass exodus from the Bay Area to Sacramento is in full throttle.26 But Sacramento leaders have also been working overtime to offer tax breaks and incentives to attract new businesses to the region. Just recently, Sacramento agreed to give Centene, a health insurance company, $13.5 million to establish headquarters in Sacramento. Ironically, the money they are offering to Centene to produce jobs in the area comes directly from old redevelopment funds—funds that used to be reserved for affordable housing production! 5,000 jobs are expected to be generated from the deal.

Sacramento was also one of several hundred cities to offer incentives to Amazon to build a new headquarters and bring in 50,000 new jobs. In fact, local governments in the Sacramento area offered Amazon more than $500 million in job grants, land donations, and infrastructure financing to lure the online behemoth to the region. None of the proposals were tied to the development of new housing.

Blaming property owners for high rents, therefore, is misguided and misplaced, when city leaders are making decisions every day that exacerbate the housing shortage problem, while neglecting to to offer incentives to Amazon to build a new headquarters and bring in 50,000 new jobs. In fact, local governments in the Sacramento area offered Amazon more than $500 million in job grants, land donations, and infrastructure financing to lure the online behemoth to the region. None of the proposals were tied to the development of new housing.

The city has made numerous other recent decisions to grow the area without considering its housing needs. The city just built a new NBA arena for the Sacramento Kings. “[I]n the 26 months the complex was under development, $530 million in real estate transactions took place in a 10-block radius around the arena, more than 80 new businesses moved downtown, and neighborhood employment jumped 40 percent.”27 A rail yards project is in development,28 as well as discussions about a riverfront district project on both sides of the Sacramento River.29

Sacramento is also hoping to be the home of a new Major League Soccer team. Subsidies for hotels, a science museum, an aquarium, and a new convention center are also either in the works or being discussed.30

Mayor Darryl Steinberg has vowed to make Sacramento a center for jobs, and is unabashed in his bid to attract high-tech startups.31 City leaders have even changed Sacramento policy to allow staff members to offer financial incentives to large companies interested in relocating to the Sacramento area.32

This kind of city growth should be commensurate with big investments in housing development. But Sacramento is barely lifting a finger to require new housing development.33 It’s making the same mistakes the Bay Area made.

Blaming property owners for high rents, therefore, is misguided and misplaced, when city leaders are making decisions every day that exacerbate the housing shortage problem, while neglecting to contribute toward the development of new or affordable housing.


V. Rent Control Removes Units from the Market and Drives Up Costs.

According to a recent Stanford University study on the effects of rent control, there are 30 percent fewer rent controlled units in San Francisco than there were when rent control went into effect in 1995.34 "Rent control exacerbates the housing shortage by pushing landlords to remove supply of rental housing," Rebecca Diamond, author of the Stanford study, stated recently.35 The study goes on to show that for every six percent decrease in housing supply, rent prices increased by seven percent.36 The study is in line with previous reports, including by the American Community Survey in 2012, showing that San Francisco has a staggering 30,000 vacant units at any given time.37 Some owners keep units off the market while others convert their properties to ownership housing.38

Rent control proponents argue that these studies show that owners should be prevented from converting their properties to ownership housing and should be heavily taxed for keeping units vacant.39 But more regulation and burdensome controls over rental housing will only serve to squeeze more rental units out of the market while chilling development. The Stanford economists suggest government subsidies, tax credits, and building more affordable housing as workable solutions.40

Editor’s Note: This is the end of Part 2 of 3. Part 3 will appear in the July issue of the Apartment Journal.

Ron Kingston can be contacted at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

No portion of this article may be reproduced or copied without the permission of the author (Copyright © 2018 CALPCG).

 



15 Marissa Lang. “Companies avoid $34M in city taxes thanks to ‘Twitter tax break.’” SFGate. Oct. 19, 2015. Web January 2018.
16 Liam Dillon. “California lawmakers have tried for 50 years to fix the state's housing crisis. Here's why they've failed.” Los Angeles Times. June 17, 2017. Web January 2018; see also Dillon. “What you want to know about California's failed housing affordability law.” LA Times. July 5, 2017. Web January 2018 (“Bay Area is adding hundreds of thousands more jobs than homes, which is driving up the demand for housing beyond what the targets had anticipated”).
17 Riley McDermid. “Here's what California paid to lure General Motors jobs to downtown San Francisco.” San Francisco Business Times. April 14, 2017. Web January
2018; see also Scott Olson. “Salesforce poised to receive city tax break on tower expansion.” Indianapolis Business Journal. August 2, 2016. Web January 2018.
18 Anna Hensel. “How 12 cities are trying to woo Amazon’s $5 billion.” Venture Beat. Heartland Tech Analysis. November 24, 2017. Web January 2018.
19 Id.
20 “Build to play” is hereby coined.
21 Randol White. “Sacramento Is Fastest-Growing Big City In California.” Capitol Public Radio. May 1, 2017. Web January 2018.
22 Linda Gonzalez. “Sacramento makes Zillow’s list of hottest housing markets for 2017.” The Sacramento Bee. Real Estate News. January 16, 2017. Web January 2018.
23 Angela Hart. “Rents are rising faster in Sacramento than any other part of California.” The Sac Bee. Capitol Alert. July 26, 2017. Web January 2018.
24 Josh Lyle. “Sacramento rents fastest rising in nation.” abc10. June 29, 2017. Web January 2018.
25 Patrick Sisson. “Sacramento, emerging from Bay Area’s shadow, becoming booming urban alternative.” Curbed. Property Lines, Real Estate. July 11, 2017. Web January 2018.
26 Erica D. Smith. “The Legislature did its part to fix Sacramento’s housing crisis. Now it’s your turn, Bay Area refugees.” The Sac Bee. September 19, 2017. Web January 2018; Katy Murphy. “Amid Bay Area exodus to Sacramento, low-income families at risk of being pushed out, study finds.” The Mercury News. November 22, 2017. Web January 2018.
27 Supra note 27.
28 Id.
29 Richard Chang. “Sacramento is either ‘unknown or misunderstood.’ Will that change in 2017?” The Sac Bee. Business & Real Estate. December 29, 2016. Web January 2018.
30 Ryan Lillis. “Big public subsidy coming for Sacramento riverfront museum.” The Sac Bee. City Beat. September 13, 2017. Web January 2018; Anita Chabria.
“Sacramento leaders OK convention center rehab – and want another tourist destination.” The Sac Bee. Local. May 30, 2017. Web January 2018; Foon Rhee. “Why Mayor Steinberg now owns Convention Center decision, for good or bad.” The Sac Bee. Opinion. January 30, 2017. Web January 2018.
31 Supra note 31.
32 Ryan Lillis. “Hey Amazon, Sacramento is ready to offer you financial incentives.” The Sac Bee. City Beat. October 24, 2017. Web January 2018.
33 Hudson Sangree. “Will Sacramento avoid another housing boom and bust?” The Sac Bee. Real Estate News. July 17, 2017. Web January 2018.
34 Katy Murphy. “Rent-control policy `likely fueled the gentrification of San Francisco,’ study finds.” The Mercury News. Business, Real Estate. November 2, 2017. Web January 2018.
35 Michelle Robertson. “Rent-control policies likely 'fueled' SF gentrification, Stanford economists say.” SFGate. November 3, 2017. Web January 2018.
36 Adam Brinklow. “Stanford paper says rent control is driving up cost of housing in San Francisco.” Curbed San Francisco. San Francisco Rent Control. November 3, 2017. Web January 2018.
37 Sarah Karlinsky and Kristy Wang. “Non-Primary Residences and San Francisco’s Housing Market.” SPUR. SPUR White Paper. October 21, 2014. Web January 2018.
38 Supra note 38.
39 Joshua Sabatini. “SF to explore taxing property owners who keep buildings, units vacant.” San Francisco Examiner. July 11, 2017. Web January 2018.
40 Supra Note 38.

 

 

Carrying the Message

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Mark your calendars and make your travel arrangements for the 2017 NAA Capitol Conference and Lobby Day which will take place March 7 and 8 in Washington, D.C. The Capitol Conference will start after lunch on March 7 with an issues orientation and advocacy training session. We will train you to be an effective advocate for the apartment industry through this high-impact programming, including a presentation by presidential historian and Pulitzer Prize-winning author Doris Kearns Goodwin, our keynote speaker. Both the House and Senate will be in session on Lobby Day, giving everyone an opportunity to connect with their members of Congress. Remember, NAA’s goal is to reach all 535 Congressional offices—that’s 435 Representatives and 100 Senators. There are also more than 50 new members in the 115th Congress making this Lobby Day especially important.

In 2016 NAA focused on three issues during the Capitol Conference—mitigating “drive-by” Americans with Disabilities Act (ADA) lawsuits, streamlining the Section 8 Housing Choice Voucher program and opening up more private sector options for flood insurance. We scored a victory on Section 8 vouchers with passage of the Housing Opportunity through Modernization Act that eliminated much of the bureaucracy around the inspections process.

We were not as successful on the other two issues though our preferred legislation on those topics advanced a great way towards passage. The issues remain critical today so we are reprising our focus on ADA lawsuits and flood insurance at the 2017 Capitol Conference and Lobby Day. The effort on flood insurance has added importance this year as the National Flood Insurance Program (NFIP) will expire in September. Without the NFIP apartment owners and operators would have few, costprohibitive options for flood insurance. This program must be extended and improved.

Added to the list of issues for the 2017 Capitol Conference is tax reform. Back when we all thought Hilary Clinton would be the next President of the United States, the odds of tax reform actually happening were low. There was simply too wide of a gulf between Secretary Clinton and the GOP. Those odds are now flipped on their head. Reform of the tax code was a hot topic during the campaign and President-elect Trump’s team has stated it is a “200-day” priority after the repeal and/or replacement of the Affordable Care Act.

Meanwhile, House Republicans have crafted a proposal they call a “blueprint” for tax reform which suggests some fairly radical changes to the code, including areas impacting real estate. Their goals are generally the same or similar to those of the President-elect but it’s the details that matter. That will be the first level of negotiation.

A critical decision the majority powers must make is what kind of bill they want to pass – the preferred Republican package or a negotiated bill that includes Democratic priorities. Recently, the concept of durability has come up a lot in this context.

Specifically, according to advisors close the President-elect, Congress should take a bipartisan approach to tax reform (like was done in 1986) so that whatever bill is passed survives beyond the GOP majority. The obvious comparison is to the Affordable Care Act—a bill passed on party lines without a single GOP vote that now is almost certain to be repealed or significantly weakened. The President-elect wants a legacy which demands a bipartisan approach.

No matter what route tax reform takes, the apartment industry will have to be involved. Anyone who was in the industry when the Tax Act of 1986 was passed will remember how significant – positive and negative—this legislation was for commercial real estate. This new round of reform is shaping up to be potentially as significant with a lot of specific implications for our industry. Literally everyone who develops, owns or manages apartments or who works for a company that does will be impacted by tax reform. As such, everyone needs to be involved. The table is being set and it’s up to you if you want to be a guest or a main course.

Your lives are very busy and it can be extremely challenging to cram one more task onto an already overflowing list. The good news is that NAA now makes it easy to do your part for the industry. Our new Advocacy365 App puts Congress in the palm of your hand. It’s your year-round indispensable tool that’s packed with resources to keep your finger on the legislative pulse of the apartment industry. The app’s key elements include talking points and fact sheets on the issues, the ability to directly communicate with your legislators, Congressional directories, year-round mobile action alerts sent directly to you and much more. Download the app now and take apartment advocacy with you wherever you go.

Great advocacy means carrying the message to your elected officials all year long. But, the NAA Capitol Conference and Lobby Day is the once-a-year opportunity for our advocates in Washington, D.C., to show the Congress the power of the industry. Go to the NAA website (www.naahq.org) to register and talk with your local affiliated association about being part of the effort. I know you care about the future of your industry, your business and your bottom line and want to be part of our effort to make the voice of the apartment industry heard.

Tradeshow!

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Trade Show… with a Side of Vote “NO!” on Prop 10


It is that time of year again—one of our favorite times at the AACSC—the Trade Show and Industry Awards Breakfast! There is nothing better than seeing the smiling faces of all those who have been nominated, along with those who have won awards in our industry. It is such a great time for coming together and finally being rewarded for (what mostly seems to be) a thankless job doing the hard work we do running the businesses of housing pro viders and managers. What a tough job it is and what talent, thought, and precision is needed to be successful in any of that.

So much goes into the education and training for these jobs, and it is fantastic to be able to award others, thank them, recognize them, and pat them on the back for so many jobs well done! I know I cannot wait, and I hope you feel the same. Let’s get everyone we can to the Trade Show to accept their awards and nominations as well as to look at updating and/or expanding the use of our masterful vendors and their updated technology, wisdom, and raw desire to help others. The NAA (National Apartment Association) our “Mothership” will also be sharing a booth with the AACSC and we could not be happier that they are stopping in for a visit.

Another thing we love about September is that it’s not November! Yes, the doom and gloom of getting out the vote and combatting the lies and/or myths of what we truly do, think, and wish to see in our industry. We often cringe at the bewildering and unchecked myths being promoted like, “evictions cause homelessness.” Not true—the lack of work/jobs causes lack of funds, which leads to foreclosures/evictions, and unpaid debts of all kinds, which then leads to homelessness. If a person who is working and making a decent wage receives a notice to move, other than being a major inconvenience (I abhor moving too), that doesn’t make them homeless—they can find a new place, which state law gives 30-60 days (more than plenty of time) to do so.

Simply put, as a great friend of the AACSC, Charles Del Campo says, “Homelessness isn’t a housing issue, it’s a jobs issue, and our politicians need to do what’s right to bring the better paying jobs here, and the lost ones back. Instead of using pity to promote a damaging, knee-jerk agenda, put pressure on the politicians to bring better paying jobs back.” I would go further to say that we also need to bring better life and job skills training to our schools and young ones, and we are wasting valuable time and money getting away from these sub jects by focusing on the very broken “fix” of rent control.

Consider this: If people don’t have money to eat, the government and our “feed the hungry” friends never petition/protest supermarkets demanding egg, milk, and produce control (at least they’re not given the time of day if they do). No—the government issues food stamps or EBT (“Electronic Benefit Transfer”) cards, or the Federal Government provides grants to states for food (like with WIC). Why not have an ERT (“Electronic Rent Transfer”) card where people are assisted in that way? If we had a Federal “RENT” and/or “ERT” card program in place the burden is shared (via taxes) and no one group is singled-out or punished; however, well-paying jobs backed by skilled training would be even better! Another great thing to consider about our supermarkets though, is that since there are so many of them they all must compete for business, thus driving prices down. Imagine that…

Housing providers are doing the right things to make our economy flourish and thrive in a free market and our elected officials need to work to do the same. We appreciate and congratulate the officials we have been speaking with who have really been attentive over the last year — truly hearing us out and understanding the consequences of pulling things like Costa-Hawkins off the books and further expanding rent control. The Long Beach City Council, along with our representatives in the State Legislature, have all been especially understanding on approaches for a fair and sustainable fix. This hasn’t moved for too long, but now the wheels are finally turning and eyes are opening to the solutions—and not price control or constant intervention. See you at the Trade Show … and remember: Vote “No!” on Prop 10!

June 2018

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As I opened my email to look over those things I needed to respond to, or action items to take care of throughout my day, I stumbled upon the news of the passing of Governor George Deukmejian. It is hard not to reflect on a person of his stature and his lovely wife Gloria. I was fortunate during the time he was Governor to meet him on several occasions. He was a kind and gracious man. Gloria and George were married for over 60 years, a rarity in today’s world and you could see the love they had for each other simply by looking at them. I also had occasion to meet and talk with Gloria in Sacramento at Junior League events while he was in office and she was just as warm and welcoming as he.

It is not often you get to meet people like George and Gloria, and I feel honored that I had that opportunity. I wish Gloria and his family the peace and solace they need during their time of grief and healing. He is one of those rare individuals that will truly be missed.

As we enter June, the wait is on for the outcome of the Long Beach Rent Control Ordinance. However, as was announced in mid-May we know that the repeal of Costa-Hawkins fight will be on the November ballot, so there is still another fight to be waged. AACSC would like to thank all of our members who are contributing to help fight for your rights. If you have not contributed yet, please hesitate no longer; your industry is under attack and we need every bit of assistance you can give to this cause. As such, I keep asking the question, what happened to the “Private” in Private Property Rights? Now is the time to keep the pressure on and make sure that your rights are protected, and AACSC is working every day to make sure that we are doing all we can to fight this fight. Come alongside and help us win this battle.

On a lighter note, I hope that you are all keeping up to date with The Beacon, our weekly e-newsletter, because we have added some NEW events, namely the June 27 Wine Tasting at 4th & Olive at 5:00 p.m. If you haven’t been there yet, this is an excellent chance to experience some great food and wine.

This unique restaurant is owned and operated by Veterans, and everyone who works there is a Vetso come out and support the event. An added treat is that the owners are sommeliers (that’s someone who is a Ph.D. of wine), and you just might learn a thing or two about wine while networking with others in your industry. Seating is limited so call today to make your reservations.

Be sure to check out our calendar to stay up to date on all the events and start to think about who you would like to nominate for our 23rd Annual Saluting Our Stars Awards—there will be a new format this year, so dust off your cameras. We are going digital and looking for videos this year as your submission process. More info to come on this.

See you at 4th & Olive on June 27th, and as my 13 year old daughter would say, “Be a Nice Human This Month.”

California Housing Crisis: Part 1

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Editor’s Note: This is Part 1 of a three-part article. Part 2 will appear in the June Apartment Journal.

Early in 2018, California lawmakers tried but failed to repeal the State’s Costa Hawkins Rental Housing Act—the law that restricts the ability of local governments to establish extreme forms of rent control. Had the repeal effort been successful, local governments would have had the authority to restrict rents on single-family homes, condominiums, and all newly constructed housing units. Repeal would also have brought back vacancy control—the prohibition on rent increases when a housing unit becomes vacant.

While repeal would have provided protections for tenants against rent increases in the short term, the long-term effects would have devastated the State’s housing supply as extreme forms of rent control make owning and developing units unprofitable and unmanageable. Moreover, rent control often leads to severe gentrification in which higher income earners eventually push low-income individuals and families out of their rent controlled units.

The long-term negative impact of extreme forms of rent control on tenants and on property owners and managers was precisely the reason the Costa Hawkins Act was originally signed into law in 1995.

It was a bipartisan effort to allow for moderate rent control provisions while curbing out-of-control regulation on the rental housing industry. The resulting bill did just that: it reigned in some of the most extreme forms of rent control by outlawing vacancy control and price ceilings on single-family homes and new construction, while preserving local government’s ability to place rent control restrictions on properties built before 1995.

The decision to repeal the Costa Hawkins Act comes at a time when the State is in dire need of affordable rental housing. According to the State’s nonpartisan Legislative Analyst’s Office (LAO), California’s ongoing housing shortage and affordability problems are getting worse. The problems stem from years of population growth and a long history of costly government regulatory roadblocks to housing development, local government favoritism toward commercial development and job growth over housing development (“fiscalization of land use development”), high permit and impact fees, and rising land and housing development costs. As is clear from the LAO report, many of the State’s housing problems are directly attributable to government action and inaction.

The irony here is that government leaders are attempting to address government created housing shortage problems by adopting legislation that will serve to further restrict the State’s housing supply.

The government’s repeal effort, as counter productive as it may be, however, is consistent with a long history of government decisions that have contributed to, rather than solve, the ongoing housing crisis. This paper focuses on those very government decisions which have contributed to the housing shortage and have kept California in a perpetual state of housing crisis for the last 50 years.

I. The Wisdom of the Legislative Analyst’s Office’s 2015 Housing Report.

California is building too few homes in coastal areas, the now infamous 2015 LAO housing report says.1 Land costs are too high, but can be offset by more density, the report continues.2 Building costs, development costs, and permitting fees are also through the roof according to the report (and not in those words).3 To the question of why coastal areas are not building enough, the housing report provides four answers: a) NIMBY (“not in my back-yard”), b) stringent environmental reviews, c) local finance structures which incentivize nonresidential development over homes (also called fiscalization of land use), and d) limited vacant land.4

Notably, while the LAO report notes that rent control eases housing costs for some,5 it also does not recommend rent control or other housing regulations as viable options to address the State’s crisis. It does state, however, incentivizing development of private housing is the number one priority to begin easing housing shortage and affordability problems.6

II. Government and Its NIMBY Policies.

“Not-In-My-Back-Yard,” the policy or principle of being anti-development in one’s own neighborhood or city, has long been recognized as one of the catalysts for California’s housing shortage. As summarized by the LAO:

For decades, California’s local communities—particularly coastal communities-have built too little housing to accommodate all those who wish to live here.

California’s cities and counties make most decisions about when, where, and to what extent housing will be built. Many local communities have used this authority in ways that have constrained housing development. These community decisions understandably reflect residents’ concerns about the changes that new housing may bring. New housing—and the associated new residents—can exacerbate traffic congestion and parking shortages, stretch local facilities, slow home price appreciation, and alter the community’s character.7

Interestingly, but not surprisingly, NIMBY-ism has racist roots. In San Francisco, for example, as affordable housing needs increased, it began building segregated housing projects by race.

San Francisco did not want its Chinese American residents to live anywhere except in Chinatown. To ensure their confinement in their picturesque ghetto, the Housing Authority imposed a whites only rule for the first three projects it built, all of which still stand: Holly Courts, Potrero Terrace and Sunnydale.


* * *

The official policy [of the San Francisco Housing Authority] was to accept only tenants who conformed to a “neighborhood pattern”—the racial and ethnic demographics of a given neighborhood. Since the city was largely white, minorities were allowed to live in public housing only in a few rundown areas.8

Housing was not welcome in San Francisco. Many neighbors and city leaders opposed the development of public housing projects, fearing the projects would be populated by an undesirable class of people, depress property values, give a false portrayal of the city or an area as a slum, and endanger children.9

As San Francisco’s population continued to rise, NIMBY-ism morphed, at least on the surface, from discriminatory sentiment to one justified by preserving the city’s physical character and environmentalism. Privately, many were concerned with preserving property values.

Over the years, these anti-development sentiments were translated into restrictive zoning, the most cumbersome planning and building approval process in the country, and all kinds of laws and rules that make it uniquely difficult, time-consuming, and expensive to add housing in San Francisco.

This anti-development sentiment has kept San Francisco from meeting its housing needs. When San Francisco should have been building 5,000 new units a year to keep up with demand, it has only averaged 1,500 units a year for the past two decades.10 All across the city, instead of building up and more densely it has created roadblocks and restrictions. One of the biggest roadblocks is the city’s height limits, which limits buildings to no more than 40 feet.11 On average, San Francisco is three stories high.12 Compare that to Paris, which aver ages seven stories, and many Asian cities, which are much taller.13 By density, San Francisco does not even figure on the 50 densest cities in the world.14

NIMBY-ism perpetrated by local governments is one of the root causes of the State’s housing shortage. Governments’ prioritization of city character over meeting housing has led to the adoption of many anti-development laws which in turn has slowed development. Only recently has the State Legislature acknowledged the problem. To combat government sponsored NIMBY-ism, it passed several bills in 2017 to address the issue. One of the bills forces cities to approve projects that comply with existing zoning if not enough housing has been built to keep pace with housing tar gets, while another bill penalizes governments for rejecting housing projects that comply with zoning requirements.

Editor’s Note: This is the end of Part 1 of 3. Part 2 will appear in the June issue of the Apartment Journal.

Ron Kingston can be contacted at This e-mail address is being protected from spambots. You need JavaScript enabled to view it No portion of this article may be reproduced or copied without the permission of the author (Copyright © 2018 CALPCG).



1 Mac Taylor. California’s High Housing Costs: Causes and Consequences. CA Legislative Analyst’s Office. An LAO Report.
March 2015. Web Jan. 2018.
2 Id. at 12-13.
3 Id. at 13-14.
4 Id. at 15.
5 Id. at 7-9.
6 Id. at 34-35.
7 Mac Taylor. The 2016-17 Budget: Considering Changes to Streamline Local Housing Approvals. Ca. Legislative Analyst’s Office. May 2016. See Summary at 1. Web January 2018.
8 Gary Kamiya. “How SF’s Housing Authority kept its early projects all white.” San Francisco Chronicle. July 22, 2016. Web January 2018.
9 Id.
10 Gabriel Metcalf, Sarah Karlinsky and Jennifer Warburg. “How to Make San Francisco Affordable Again.” SPUR. The Urbanist. Issue 530. February 2014. Web January 2018.
11 Madeline Stone. “This Is What San Francisco Could Look Like If It Had Enough Housing For Its Growing Population.” Business Insider. May 22, 2014. Web January 2018.
12 Christian Nicholson. “Nostalgia and NIMBYism: Rebecca Solnit’s San Francisco — The Bold Italic — San Francisco.”
The Bold Italic. February 18, 2014. Web January 2018.
13 Id.
14 Id.

 

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