California’s high housing prices are fundamentally a supply problem. Of course, that hasn’t prevented statewide rent control—a counter-productive idea that will lead to still lower housing turnover, reduced investment in maintenance, and far less new construction.
To this bad idea we should add yet another: the revival of local redevelopment authorities. Though it’s being pushed in Sacramento in the name of public financing for “affordable” housing, the approach is both expensive and wrong-headed.
Local redevelopment authorities’ history goes back to the 1940s, when they were conceived as a way to combat so-called urban “blight”—which often meant the use of eminent domain powers to wipe out functioning, if modest, low-income, often minority communities to clear the way for subsidized middle-class development.
State subsidies for that generation’s progressive vision led to widespread displacement of low-income housing and businesses through the power of eminent domain—and misunderstood the essential fact of urban life that today’s “blight” can be tomorrow’s historic district. Or, as Jane Jacobs said, new ideas need old buildings (with cheap rent).
This time around, the authorities—with the power to use public financing to subsidize housing construction—are being pushed as the way to help localities meet state affordable housing goals.
This at least reflects a modest understanding that only supply will help meet growing demand. But new housing for low-income residents is in fact extremely costly. As the federal Governmental Accountability Office has found, the median per-unit cost of such housing is $326,000 in California with such projects in the state going as high as $606,000 per unit. Using redevelopment authorities to support such housing would be yet another costly burden imposed on the Golden State’s stressed local tax bases.
Legacy costs for retiree pension and health care has already hollowed out local services, including public safety. Diverting a shrunken local tax base to public financing for housing is the wrong way to go.
California’s housing shortage will not be solved by expensive public subsidies to locate low-income households in affluent municipalities. Instead, the “Yes In My Backyard” (YIMBY) movement needs to find a formula that can persuade local planning officials to permit additional construction. That would require incremental zoning changes to clear the way for smaller, denser housing, including small multi-family structures and smaller-lot single-family homes.
Density has always been the secret to affordability. Those who can see this will have to convince local governments that zoning needs to be modestly relaxed—an approach that would make way for young families to have access to starter homes, and for local teachers, police and firefighters to live in the localities they serve. Costly subsidies to build a small number of low-rent homes for a fortunate view will not address the state’s persistent housing shortage.
But state subsidy (through tax-exempt bonding) and eminent domain power cannot substitute for a local electorate that actually welcomes some new housing construction. Zoning has always been, and remains, a fundamentally local power. If local voters are to permit new construction—ideally the “missing middle” of small, often multi-family structures—they will have to be convinced that doing so is not only in the interest of newcomers but in their own interest as well. California awaits political leadership that can do that.
This piece originally appeared at the Orange County Register
Photo: Justin Sullivan/Getty Images