What transit-oriented development should look like

What transit-oriented development should look like

When Scott Wiener released his proposal to spur up to 3 million new homes near transit (Senate Bill 827), it received swift condemnation and praise from all corners. Whatever its merits for housing policy – and I happen to think they are quite good – it is not great transit-oriented development (TOD) policy. Good TOD is about far more than housing.

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New housing mitigates displacement? Seems like so.

New housing mitigates displacement? Seems like so.

It’s often assumed that new development pushes out poor people. But it seems as though development is actually slowing or halting the shrinkage of poor neighborhoods and drawing new low-income families into the city. At least, that’s what a first analysis of Census data shows between 2009 and 2014.

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Not great, but pretty good: SB2

Either today or tomorrow, a housing package will go up for a vote in the California State Assembly. The final sticking point seems to be Senate Bill 2 (SB2), which would create a new dedicated funding source for affordable housing and homelessness rapid-rehousing. If it fails, it may scuttle the whole package. It should pass, but even if it doesn’t, it shouldn’t force the governor to veto the whole package.

What does SB2 do?

In brief, SB2 will raise fees on real estate paperwork filings by $75. The one exception is for home buying and selling: if you sell your house to someone who will live in it, then there is no fee increase for either your paperwork or theirs. All other transactions, including refinancing, liens, and commercial transactions, will be subject to the additional fee.

The fees will raise between $200 million and $300 million. 20 percent will be earmarked for state-supported affordable housing construction, and the rest will be earmarked for localities for a grab-bag of housing programs, including rapid-rehousing for the homeless, supporting construction of new homes, and down payment assistance [1].

Who does it impact?

Real estate owners who are doing more than buying or selling their own home. Investment buyers, developers, commercial owners, and people doing other things with their property are going to see their fees rise.

These are predominantly wealthier people. According to the US Census, the median household income of a homeowner is $91,056, vs. $47,237 for a renter [2]. Though some of that difference might be made up by household size differences, that is unlikely.

The coalition opposed to SB2 published a table of some of the alterations in their opposition letter [3]. Given that many transactions require more than one document, the result is sometimes a significant increase in filing fees. Foreclosure increases from $43 to $268 and construction loans increase from $128 to $353, for instance. Sob-story filings, such as in the death of a spouse, go up from $36 to $261.

It’s still worth it

Fees are not great ways to raise revenue. They ought to be used to cover whatever costs the fee-payer incurs, especially if that cost would otherwise be borne by society at large. They are not well-suited to be general-purpose revenue-generating devices. However, they can be a way around making politically poisonous decisions about what taxes to raise and what programs to streamline. In an optimal world, SB2 would probably raise taxes or find savings elsewhere and not raise filing fees.

Unfortunately, we do not live in an optimal world. We can damn political realities to hell as much as we like, but they will remain political realities nonetheless. So, living in this second-best world, fees can be a way to target a certain set of users for revenue. By raising fees only on real-estate transactions, the target will always only be those who are wealthy enough to buy or own property, even if the homeowner is in more dire straits than normal.

Another way to look at this bill is whether or not a similar bill should be repealed if it were already in place. Would it be fair to lower fees on some real estate transactions to cut off support for affordable housing, homelessness, and down payments? Not really. Those who will be helped by SB2 are likely in more need than those who would be hurt. Further, the argument against raising fees in that letter [3], that it hurts people who are otherwise in dire straits and results in bad recordkeeping, is an argument against the fees in general.

California is desperately short on housing [4]. $200 million is a drop in the bucket, but it’s $200 million more than California had before. The funding mechanism isn’t great, and it will hurt some that shouldn’t be, but the funding is targeted at the neediest of Californians. SB2 deserves to pass.

Works Cited

[1] Lisa Engel, “Assembly Floor Analysis: SB 2 (Atkins), As Amended August 29, 2017” (Sacramento, CA: Housing and Community Development, August 29, 2017).

[2] “Table B25119 Median Household Income the Past 12 Months (In 2016 Inflation-Adjusted Dollars) by Tenure,” 2016 American Community Survey 1-Year Estimates (Washington, DC: US Census Bureau, 2010).

[3] “SB2 (ATKINS) - OPPOSE (as Amended August 29 2017),” August 29, 2017.

[4] Adam Nagourney and Conor Dougherty, “The Cost of a Hot Economy in California: A Severe Housing Crisis,” The New York Times, July 17, 2017, sec. U.S.

California to Marin: Follow your code

Some of Central Marin's zoning and general plan areas. These might actually be worth a damn someday. Image from MarinMaps.

Update: If you think Marin could do more to support affordable housing, contact Marc Levine and tell him you support Senate Bill 35, which this post is about, and Senate Bill 2, a package that would provide a permanent stream of funding to fight homelessness in California.

There’s no doubt that the San Francisco Bay Area is in a crisis: there are too many jobs, too many employees, and not enough housing to fit them all. Among other things, it is a massive drain on the economy, cutting national wages by somewhere around $9,000 per year on average [1]. Yet rather than taking up the responsibility laid before us, Marin and other communities around the Bay Area have chosen to shirk their responsibility to build homes for the region’s most in-need. The state looks like it has had enough obstruction, however, and will start to force cities to live up to their zoning codes. Under Senate Bill 35, cities that fail to live up to their Regional Housing Needs Allocation (RHNA) obligation will need to approve new housing that meets their zoning codes.

What does SB35 do?

In a nutshell, cities have a choice: either meet their RHNA obligations through whatever means they deem fit or allow developments that meet city rules to go through. The bill will allow for public and design feedback, but the design review board, planning commission, and town council cannot reject a project unless it violates a specific section of that city’s zoning or planning guidelines.

This kind of process is called by-right development. When someone purchases land, they have a right to do with it what they want within the boundaries of city law without needing to meet the unwritten rules that often come out in public processes. It is common for projects to be halted because of they are “too dense” or “too tall,” even if that density or height is allowed under the existing zoning. Under SB35, cities that don’t meet RHNA will not be able to stop those projects, at least not for those reasons.

To ensure density or height is whatever the community actually wants, the city will need to change their zoning code to reflect those densities or heights, ensuring a developer knows going into the project what is okay and what is not.

The only code not left in place by the SB35 are parking requirements. If a development is proposed under this law and is within a half-mile of public transit (no quality of that transit is mentioned), the city can’t impose a parking minimum. If it’s beyond that half-mile radius, a city can’t require more than one parking space per new unit.

Regarding CEQA, SB35 calls development proposals in places under the SB35 process “ministerial,” then goes on to define that ministerial process. For CEQA, actions classified as “ministerial” are important, as they are not subject to CEQA review. However, it is unclear in the Legislative Analyst’s report whether these developments are only ministerial as far as SB35 are concerned or if there are ministerial as far as the corpus of California law is concerned. If it is the former, then CEQA would still apply. If the latter, then CEQA would not [2].

For a developer, having a clearly-written development code written down would be a game-changer. It would allow investors to know at the outset how many homes can be built here or there, and what the likelihood of success really is. The fact is that the region has a critical shortage of housing is a crisis, and it is hurting the region, state, country, and even the planet by suppressing innovation and preventing the creation of billions of dollars in new wages [3].

Spotswood got everything wrong

Dick Spotswood, in his latest piece, rails against the legislation [4]. He calls it a threat to liberty, a back-door way to densify Marin. His article got just about everything wrong about the legislation – indeed, it was borderline journalistic malpractice to publish a piece, even an opinion piece, with such a tenuous grip on the facts – so it’s a good place to start on the myths.

“SB 35 uses an entirely different geographical term to define communities subject to fast-track, by-right rules fostering high-density housing.  Instead of applying the rules to ‘urban’ communities, Wiener’s criteria is that if even a village is an ‘urban cluster,’ then rules encouraging big-time development without pesky environmental review are applied.”

First, SB35 defines communities subject to by-right development as those which did not meet their RHNA requirements and says developments that qualify for the by-right designation need to be somewhere (an urban cluster), not in the middle of nowhere.

Second, this definition won’t reclassify rural or suburban places as “urban” for the sake of RHNA’s density requirement of 20 or 30 units per acre, as Spotswood seems to think.

Third, the only “big-time,” “high-density” development allowed would be those allowed under a town’s existing development rules. You won’t end up with dozens of Wincup-style developments unless the city already allows them.

“It wouldn’t be as bad if Wiener’s San Francisco wasn’t hypocritical when it comes to addressing the so-called ‘housing crisis.’ High-rise condos and apartments belong in job centers like San Francisco with comprehensive public transit networks.”

Here, Spotswood tells San Francisco, “You started it!” and expects that to be a valid reason for Marin to do nothing. That’s hogwash. Marin has been a horrible offender when it comes to adding housing for its own workforce, adding 17 times more jobs than homes in the past 7 years [5]. It’s a myth that Marin primarily sends workers to San Francisco, as more people commute into Marin than commute from it [6].

Further, it shirks the responsibility Marin has for its own workforce. Sure, the county couldn’t possibly absorb all the need, but Marin is one of the region’s minnows, nor is it the only one to be affected by SB35. Every town, city, and county in California would be subject to the law, so San Francisco would be even more on the hook – with its more permissive zoning codes – than would Marin’s towns.

Second, nowhere in Marin allows high-rises. Even downtown San Rafael has a 3- to 5-story height limit, hardly towers.

Third, Marin does have a comprehensive transit network in Marin Transit and Golden Gate Transit; it just doesn’t run as frequently as we would want because there isn’t the population density to support such a network. Deepening the system should be one of Marin’s goals for the future, as should other measures that would encourage travel by means other than driving. More homes, when coupled with a better transit system to serve them, keeps traffic stable [7].

“What’s good for Marin ought to be good for the city’s cherished people-scaled neighborhoods [like the Castro and Telegraph Hill].”

The irony of Spotswood’s argument is that these City neighborhoods are the neighborhoods we should want to keep, but they are illegal under Marin’s existing planning and building codes. They are at least 30 units per acre but often go up to 40 or 50. Shared walls generally aren’t allowed in the county, and neither is the kind of commercial/residential blend that makes much of San Francisco livable. High parking minimums of 1.5 spaces per home, coupled with a ban on tandem parking, means that what could be a great front yard needs to be a wide garage door instead. Not only that, but these neighborhoods were built long before the public process choked out much new housing in The City and region.

Given that SB35 keeps much of the planning and zoning codes intact, however, we won’t see much new growth of this kind of home.

Follow your code

If Marin and other places around the state want to keep going as they have, they are welcome to do so, but they will be forced to adhere to the letters of their own law. If they want to avoid the difficulty of writing down the laws they really want, then they need to figure out how to meet their RHNA goals. Those are the choices that SB35 will give communities. Doing nothing – or as good as nothing – will no longer be an option.

Works Cited

[IMG] MarinMap. MarinMap Map Viewer, 2017.

[1] Ronald Bailey, “Zoning Laws in New York, San Francisco, and San Jose Cut Americans’ Wages by $8,775,” Reason.com, Hit & Run, (May 25, 2017).

[2] Scott Wiener, “Planning and Zoning: Affordable Housing: Streamlined Approval Process,” California Senate Bill 35 (2017).

[3] Chang-Tai Hsieh and Enrico Moretti, “Housing Constraints and Spatial Misallocation,” NBER Working Paper (National Bureau of Economic Research, May 2015).

[4] Dick Spotswood, “Lawmaker’s Proposal to Extend ‘urban’ Zoning in Marin,” Marin Independent Journal, August 22, 2017, sec. Opinion.

[5] David Edmondson, “Ten Homes Is Not Enough,” The Greater Marin, August 7, 2017.

[6] Edmondson, “Marin’s Towns Are Destinations,” The Greater Marin, June 3, 2013.

[7] Canaan Merchant, “As Arlington Booms, Traffic Drops,” Greater Greater Washington, September 30, 2014.