California’s Major Housing Bill, Take 3: New Amendments Announced For Local Flexibility

Will Governor Newsom now put his weight behind Sen. Wiener’s SB 50?

California State Senator Scott Wiener launched his third legislative attempt today at boosting California’s housing supply. SB 50 aims to address the state’s massive housing shortage, which has resulted in high home prices and rents, gentrification, displacement, inequality, homelessness, and a mass middle-class exodus to high-emission states like Texas and Arizona.

Because this housing undersupply is caused primarily by restrictive local land use policies in the state’s coastal job centers, Wiener’s approach has been to require cities and counties to allow apartment buildings near major transit centers. His first attempt in 2018 (SB 827) died quickly in committee. His second attempt last year (the birth of SB 50) was unilaterally shelved for a year by State Senator Anthony Portantino, who represents the affluent Southern California city La Cañada Flintridge (that city quickly became a poster child to housing advocates for high income single-family homeowners who don’t want to allow new residents in apartments into their neighborhoods).

The clock is now ticking on SB 50 in 2020. Under legislative rules, the bill must pass the full Senate by the end of this month — and first make it out of Sen. Portantino’s committee.

So Sen. Wiener is trying again, unveiling at an Oakland press conference this morning a critical amendment to delay statewide implementation for two years in order to give local governments the opportunity to develop their own plans that meet or exceed the housing, equity and environmental goals of SB 50. Otherwise, SB 50’s provisions relaxing height, parking and density requirements around major transit stations will automatically prevail.

Specifically, the state (through the Governor’s Office of Planning and Research) will develop guidance for these “local flexibility plans” by mid-2021. Cities and counties must then submit their plans for approval to the California’s Department of Housing and Community Development. That agency will then certify that the local plans are as stringent as SB 50. The local plans must be in place by January 1, 2023 in order to avoid defaulting to SB 50 statewide standards.

Otherwise, the substance of the bill remains essentially unchanged from last spring (here’s my rundown on the last changes before Sen. Portantino shelved it).

These new amendments seek to mollify critics who complained that the statewide approach undercuts local flexibility to meet the targets in a more tailored way. For example, rather than having uniform four-story apartment buildings around a major transit stop, perhaps a city would prefer to meet the overall housing production goals with a taller building in one spot and a shorter building across the street.

Will these changes be enough to satisfy local government objections? Probably not in many cases. The objections are less about local control and more about visceral dislike for apartment buildings and the residents they may bring. Arguments about local control — and relatedly against market-rate housing and instead building only subsidized affordable units — are often not made in good faith. Critics quickly move the goal posts as soon as amendments are made in their direction.

Take for example Sen. Portantino’s initial reaction to these amendments, complaining about not enough affordable housing, per his spokesperson to the San Francisco Chronicle:

“It was the senator’s hope that by taking a breath with SB50 it would focus efforts on actually building affordable housing as opposed to the market-rate housing predominant with SB50.”

This comment ignores that SB 50-type reform would result in the biggest boost to subsidized affordable units in the state’s history, at possibly a seven-fold increase. All without raising taxes or issuing bonds, and without delay about where to build these units even if public funds are available.

Still, these amendments may persuade critics who are on the fence. And perhaps most critically: will Governor Newsom now throw his weight behind the measure to help it pass? This is a big test for the governor on one of his signature campaign issues.

All in all, the next few weeks will be instructive as to whether or not California leadership can meaningfully address the the housing shortage and its severe equity, economic and environmental consequences.

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Reader Comments

11 Replies to “California’s Major Housing Bill, Take 3: New Amendments Announced For Local Flexibility”

  1. How do you know there is a “housing” shortage, as opposed to an affordability crisis? You seem to assume rather a lot – although I do admire your sense of enthusiasm and optimism.

    Thank you.

    1. California’s housing-unit-to-population ratio ranks 49th in units per capita, behind only Utah, which tends to have many large families in single homes. The McKinsey analysis shows that California has 358 homes per 1,000 people, whiles New York and New Jersey (for example) have more than 400 homes per 1,000. You can also look at LAO reports on rates of housing construction vs. population and job growth over time. Since “affordability” is a function of price, which is determined by supply and demand, this shortage (and the high demand) is a critical.

  2. Thanks, I will chew on those stats.

    I disagree about affordability being just a function of S and D … we have a ton of poor people in LA. I do not at all believe that sb 50 would help them. I think it would be gentrification on ‘roids. (Arguably, not allll that different from what we have, I suppose.)

    And 2 years? 5 years? That’s a nano-second in planning time. Please.

    I am hopeful it will be killed off soon. And in my neighborhood, the new recent construction has led to a drop in population, bc it is almost all pricey. And as an added benefit, the new people drive more. So there are more emissions and fewer transit users. (Well, not that I have done one of those soup to nuts ghg studies of them. They just seem less green than the people who got replaced.)

    Anyhow … maybe you’re right and I’m wrong. But wouldn’t a pilot project be nice, bc then we might have a better idea. These Bay Area legislators are so arrogant … and I don’t see where it comes from!

  3. Here is a piece that may contain actual facts (unlike most of what I wrote):

    https://www.laweekly.com/hollywoods-urban-cleansing/

    I feel like the public is being bamboozled. The number of units that would need to be built here to bring prices down is just not achievable. You can check out this guy if you don’t believe me (scroll down to p 48):
    https://www.anderson.ucla.edu/documents/areas/ctr/forecast/reports/uclaforecast_Sept2017_Nickelsburg.pdf

    Moreover, I have this feeling that most economists know perfectly well that this yimby rahrah stuff is flimflam – building would slow down long before “affordability” happened. At least, if it happens, it won’t be because of the market.

    I admit though I am definitely on the other side of this, and I will try harder to see the other side. Although … one way to meet our ghg targets is to *not* have 10 million more people here. Just sayin’.

    1. The displacement and gentrification that we’ve seen in places like Hollywood is largely a function of the lack of new supply elsewhere to soak up the new demand. If no new housing is built, new homebuyers/renters will buy up existing stock. Look at Venice as an example. Meanwhile, SB 50 could potentially result in a seven-fold increase in new affordable units (per UC Berkeley study on predecessor bill) due to its inclusionary requirements. So we’re talking about a massive boom in affordable units without any new voter-approved bonds or taxes required. As for pilot jurisdictions, look to Seattle: they’ve increased their transit-oriented housing stock significantly in recent years and as a result it’s one of the few major metro areas in the country to see increasing transit ridership and stabilized home prices/rents.

  4. What new demand? Do you mean the foreign buyers? LA’s population is not growing that much. Neither is the supply of living wage jobs. (I have a link for that too somewhere.)

    Or do you mean the Wall Street firms that now own such a large chunk of LA residential now?

    Sb 50 is much too high a price to pay for a small amount of “affordable units,” imo. I am now wondering – is this the reason the homelessness crisis was allowed to get so bad? So that this huge foist could happen? If so, fiendishly clever. My hat is off. (I don’t mean you personally of course. You seem very nice.)

    All I know about Seattle is that it’s in another state and is in no way comparable to LA, having as I understand it a proper downtown job center, and functional transit. Moreover, I have seen indications that once prices “stabilize,” the building stops. If I can find the link I’ll post it.

    Well, you seem pretty married to this classic econ stuff. That limits the discussion that is possible. I will go read your new post. I am glad you aren’t upset at my questions and I appreciate the civil responses.

  5. Btw, I apologize for the links, I suppose. I have a day job and I’m not able to offer any original research.

    Link about LA economy historical perspective:
    https://www.bloomberg.com/opinion/articles/2018-08-28/
    the-los-angeles-economy-is-a-drag

    Link re limits to price “stabilization”:
    https://www.washingtonpost.com/business/economy/in-expensive-cities-rents-fall-for-the-rich–but-rise-for-the-poor/2018/08/05/a16e5962-96a4-11e8-80e1-00e80e1fdf43_story.html

    But we could trade links all day. What I really want to know is … why do you believe in TOD? Is it only Seattle, or do you think the theory of it actually makes sense logically?

  6. The demand is mainly from the job boom the LA region has experienced since the end of the Great Recession. But even with just natural population growth we’re still under-building. The overall population exodus is statewide, and it’s largely due to high housing costs (among other – not unrelated – factors). I support TOD for environmental, economic and quality of life reasons. Environmentally, it’s a demonstratively successful strategy for reducing driving miles and therefore air pollution (including greenhouse gases). It preserves open space and farmland by building on existing urbanized land instead of the hinterlands. Economically, it’s cheaper to live in a TOD because you save money on transportation. Quality of life-wise, it can lead to better social outcomes by fostering community and more physical activity. Personally, I’ve lived in TODs for most of my adult life and find them more enjoyable and convenient than living in sprawl areas (where I’ve also lived).

  7. I understand why the theory appeals to people. Infill as a concept seems to make sense.

    What I don’t understand is, why do people think it actually happens? I don’t buy into the “demonstrable” part. And if people *don’t* use transit when they move into these new units … then there goes the entire TOD facade. I do not seem to see any kind of tracking being done, and no, this is not something to take on faith.

    Do you watch “Seinfeld?” To me, the sb 50 yimbyfest happening is like when George said he had taken a house in the Hamptons. You can’t just let it pass. “You call them on it!”

    I will stop bothering you now though. ; ) Well at least for a little while … you probably don’t know this, being an academic, surrounded by people who like to debate all the time … but there’s actually not many places online to discuss this kind of thing. There are a few places that raise the issue but usually there are just trolls and no in-depth analysis. And the MSM are completely falling down on the job. (Which is part of what makes me a bit paranoid. I can’t ignore the influence of the 1%.). Btw … I hope you read Platkin on citywatchla. You may not agree but he’s very informative.

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Ethan Elkind

Ethan Elkind is the Director of the Climate Change and Business Program, with a joint appointment at UC Berkeley School of Law and UCLA School of Law. In this capacity, h…

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