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Amy Kalish, photo taken in San Mateo
Affordable Housing isn’t Happening and Other Comments on California Realities
Our new housing laws and policies were sold as boosting affordable housing production, but what I’m seeing is an explosion of market rate units statewide.
With relaxed zoning and concessions for developing dense multi-unit housing, huge projects are being proposed and approved, and the percentage of affordability just continues to drop.
The state has doled out huge housing mandates (RHNA — Regional Housing Needs Determination) for every city and county in California. Roughly 60% of the housing is supposed to be “affordable.”
But market rate is where the profits are, and developers don’t want to add one more unit of affordable housing than they have to. Cities can’t make them. Their job now, as enforced by about 200 new state laws, is to remove obstacles that inhibit housing and approve multi-family projects, no matter how impactful.
One of those obstacles? Stringent requirements for affordable units at a percentage that could impact a developer’s bottom line. Cities are dropping their standards in desperation, with the state breathing down their necks, threatening legal action for resistance.
Marin County has gone the extra mile to be accommodating.
The market rate unit count bloats even larger with state density bonuses — which only increase the number of luxury units; the affordable unit count is unaffected.
Affordable units are those priced Below Market Rate (BMR). They’re divided into three income categories: very low, low, and moderate, based on area median income. It’s not as “affordable” as it sounds. In Marin it includes families of four making $93,000 to over $200,000. The needs of the true bottom are not served at all in any of these scenarios.
Here are some recent projects representative of this trend. I show the total number of units, the breakdown between Market Rate (MR) and Below Market Rate (BMR) units, followed by the percentage of affordable units the project is providing.
- San Rafael at Fourth and D: 162 units. 148 MR units to 13 BMR. Under 10%.
- Oakland at 24th and Waverly: 330 units. 314 MR to 16 BMR. 5%
- Costa Mesa “One Market West”: 1163 units. 1,057 MR to 106 BMR. 9%.
- San Ramon “Iron Horse Village”: 117 units. 112 MR, 5 BMR. 5%
- Culver City “The Crescent”: 129 units. 112 MR to 17 BMR. About 15%
- S.F. Third and Harrison: 524 units. 440 MR to 84 BMR. 16%
- S.F. Franklin St: 40 stories, 380 units. 342 MR to 38 BMR. 10%.
- Torrance “Torrance Del Amo”: 272 units. 244 MR to 28 BMR. 10%
The required number of affordable RHNA units will never be met at this rate, but the market rate numbers will be made hundreds of times over.
These are many approved projects (with 85% to 95% of the apartments and condos designed for the luxury market), but theres no telling how many will ever get built. With requirements this soft, developers are taking advantage of “an age of entitlements.” Once they have approvals, they can sit back and decide if and when to build. The state doesn’t count the project until the developer pulls the permit — even though the cities have already done their job.
There are exceptions: 100% low-income developments, usually by non-profits. At costs around $1 million per unit, even huge grants go very quickly. Covering the construction of all 9,000 + affordable units mandated in Marin County would cost billions. No funding on that scale is forthcoming. Relying on for-profit developments sprinkling a few less expensive units at a time means failure is inevitable.
Encouraging large, dense developments reducing possibilities of homeownership. State policy is supposed to have an equity component, and supporting home ownership would be a good place to begin. But starter homes are a thing of the past, at least for buyers. In Fairfield, near the proposed “California Forever” site, a developer wants to create the Bay Area’s largest “build to rent” housing development, with 400 single-family homes. the San Francisco Chronicle reported. The company plans to add 1,000 more to the market every year for those seeking the pleasures of single family home living “without the commitments.”
In another world there would be incentives to create starter homes for sale as a way to allow more people to build generational wealth. The Fairfield project locks up 40 acres with perpetual rental properties.
Meanwhile, many large city landlords are defaulting on loans and going under. Some buildings with excess vacancies are offering short term rent concessions to lure tenants, and there are new condo buildings with so few owners that HOA fees can’t cover maintenance. The market will determine when, where, and what gets built, but cities are still on the hook for developers’ actions. Vacancy rates vary by city, and even by neighborhood, but when the market is saturated the building will stop, regardless of state housing mandates.
We’re just two months into 2024 and the Bay Area has already lost about 8,000 tech jobs, with Cisco’s announcement mid February. That’s on top of the 35,000 tech job losses over the last couple of years. These numbers don’t even include related job losses for building maintenance, other industries, or retail closures. Who is this market rate housing for?
By the state’s own metrics, California’s population is predicted fairly flat all the way out to 2060. The unreasonable demand for 2.5 million units of housing — one million of them mandated at market rate — is completely severed from reality.
We have an insurance crisis, and an unreliable and dangerous power grid. The state isn’t reining in either industry — instead the CPUC is allowing PGE rate hikes so we can pay for their failures. Many homeowners affected by recent floods and landslides are just now realizing — too late — that they’re not covered for flood damage. Like earthquake insurance, that requires a separate policy.
We’re running a huge deficit — just reported to be $73 billion, far exceeding Newsom’s optimistic $38 billion — and our infrastructure is crumbling. We’re barely keeping up with the destabilizing effects of extreme weather as it occurs — erosion, landslides, road washouts, floods, broken levee systems, etc. Our fire dangers remain epic.
But our government is weirdly detached, even on the actual implementation of housing.
HOW CAN WE TRUST THIS ADMINISTRATION WITH PROP 1?
More top-down control of a huge budget for mental health care reform and involuntary commitment — for a state with a terrible track record?
Last week, Newsom (who proposed $500 million in cuts to housing programs in the current budget) reneged on a promise to build 200 tiny homes in San Jose. Instead he just paid for half, and walked away.
The state did a terrible job overseeing the $3.75 billion Project Homekey program, created in 2020 to create convert motels and apartments into temporary and permanent homeless housing. It was supposed to create 12,500 units.
It supposedly funded 12,500 units, with an additional $15 billion doled out in homeless housing funds. At most, 9,000 units are accounted for.
In 2022 Gavin Newsom declared: “Some people have given up on the prospect that we can ever solve this issue, and I want folks to know you shouldn’t give up…I want folks to know we’re just getting started.”
https://therealdeal.com/la/2022/08/29/project-homekey-to-pump-452m-into-la-market/
Four years after the start of Project Homekey, a developer who was granted $121 million to convert 7 properties is being sued by multiple entities, including the HCD (California Department of Housing and Community Development), for fraud. Not only did he completely fail on all counts, he even moved $50 million into his own coffers. He created nothing, and additionally defaulted on $42 million in loans tied to the projects. Where is the oversight?
This is why I am voting NO on Prop1. I wish it was better. I wish I’d seen a decent track record in our state for delivering on goals like these. I haven’t. We have an underfunded mental health system in place that is doing good, but Prop 1 eviscerates it and shifts emphasis back to the new default: construction. The building of beds.
https://calmatters.org/commentary/2024/02/mental-health-risk-proposition-1/
PRO HOUSING DESIGNATION: A BAD DEAL
Starting in March, cities can apply for the second round of this designation, if they are willing to give up even more local control in exchange for grant money and other perks. In the realm of building housing, a seemingly generous $9 million is a pittance; it could help create 10 - 12 units of housing, out of the thousands assigned. Newsom’s proposed budget cuts eliminated $500 million of housing program funding — before the deficit was acknowledged to be a whopping $78 billion — potentially affecting that grant money. If your city hasn’t applied, I’d encourage them not to. https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/prohousing-regulations-oal-approval-0101024.pdf
TAKING BAD POLICY NATIONWIDE
YIMBY is officially expanding nationwide. Their new slogan is “Sue the Suburbs.”
They are pushing the same trickledown policy that has so far resulted in massive amounts of market rate housing to a small percentage of affordability, and denigrates the concepts of community and single family housing. This expansion should light a fire under activists to expose these trickle down policies for what they are, before they spread too far. They can “sue the suburbs,” but cities are not allowed to sue the state over housing mandates.
“We’re looking forward to holding more cities accountable and making sure we achieve abundant, affordable housing everywhere in the U.S.,” Sonja Trauss, executive director of YIMBY Law, said in a statement on Feb. 8.
There is plenty of documentation that the housing mandate numbers (RHNA) were created “ad hoc,” and the HCD can’t substantiate the numbers for either current or projected need. The eventuality? In about two years, all cities fail RHNA and are subject to eternal SB35/423 projects, builders remedy, and by-right development (all hugely impactful and unstoppable) until the laws change. That is the end of responsible city planning and stewardship.
https://marinpost.org/blog/2024/2/5/think-those-razor-sharp-rhna-numbers-are-based-on-something-scientific?query=Amy+Kalish+§ion=blog
COMMENTS ABOUT MARIN COUNTY DISTRICT 2 SUPERVISOR RACE:
All four candidates are competent. But beyond competence, what the Board is missing is an independent voice. Someone willing to pause a steamrolled discussion about housing policy. Someone who will continue to point out that we have been intentionally set up to fail RHNA and lose more local control. Someone who is appalled that the system creates massive amounts of unneeded market rate housing and very little for those who need it. These two top my list:
- Ryan O’Neil has actively participated with both Citizen Marin and Catalysts to get a handle on the problems with our housing policies and laws for many months. I believe he would be that voice. He is also the only candidate against rent control, if that is your issue.
- Heather McPhail Sridharan was interested enough in our issues to attend a Citizen Marin meeting with an open mind.
IN MEMORY OF MARIN ACTIVIST SHARON RUSHTON
With heavy hearts we say goodbye to Sharon Rushton of Sustainable TamAlmonte, a tireless community activist and environmentalist who recently passed away. I was lucky to have met and worked with Sharon, as our goals overlapped. I learned from her, and will continue to refer to the huge body of work she has left with us.
For decades Sharon kept us abreast of local and state issues of special import, and focused us on actions that helped make a difference. Her ability to sift through detailed documents and find relevance was astonishing.
We have lost a wonderful human being, a dedicated, resolute advocate. Utterly irreplaceable. Gracious, clear, and one of a kind. She has my eternal respect.
RECOMMEND:
Catalystsca.org — Monday night zooms: speakers and statewide updates. Ourneighborhoodvoices.org — working on a ballot proposition to end this.
Draft initiative here: https://ourneighborhoodvoices.com/wp-content/uploads/2023/07/Our-Neighborhood-Voices-Initiative-July-2023.pdf