Affordability mandates spark fights on many fronts

The newest buzz-word in anti-housing policy is “inclusionary” zoning. As I explained in an earlier post, this “zoning” policy is a price mandate imposed on portions of high-density (not single-family) housing developments. The costs of price caps are, of course, borne by residents of the market-rate homes, or can reduce developers’ profitability to the point of preventing construction (as the policy, as originally developed in upscale, car-dependent suburbs, intended), particularly with low-end and historic rehabilitation projects. Unintended consequences of simplistic mandates (as even pro-inclusionary zoning studies agree) discourage high-rise construction in favor of less dense, but more price-flexible, mid-rise projects. As many housing activists point out, the blanket mandates don’t help truly low-income people and can’t provide social services.

These mandates come in a few standard flavors. In large pro-development cities like New York (and according the letter, but not the actuality, of California policy), developers voluntarily add low-income units in exchange for density bonuses. This applies to large-scale projects and pays for itself with the bonus. In cities like San Francisco, every development, no matter what its makeup, must include “affordable” (a ill-defined term that includes families making $100,000/yr) units or pay fees amounting to $110,000 per bedroom. In cities like Berkeley, projects are zoned down so that developers need to seek density bonuses and include large portions of price-capped housing. These policies include absurd clauses demanding that “affordable” units have the same granite counter-tops and Bay views as the market-rate units. These policies explain why condos in Oakland are hundreds of thousands of dollars cheaper than in our neighboring cities, despite having higher rents than Berkeley and similar construction and land costs as San Francisco.

In Contra Costa County, supervisors are considering such an ordinance tomorrow. While I don’t know much about politics out there, it seems like there is vigorous opposition to this flawed approach. The Contra Costa Council wrote a very clear op-ed arguing against the policy based on its unfairness and the likelihood of a net decrease in affordability and all types of housing construction, while praising the county’s steps towards creating a housing trust fund.

Meanwhile, increasingly aggressive developers (who realize that the streamroll toward “inclusionary zoning” is being slowed by its obvious flaws), are suing Santa Monica over its Berkeley-style set-aside. They argue, quite persuasively in my view, that the policy discourages housing construction and is therefore out of compliance with housing element requirements, and that it isn’t approved by the state Department of Housing (which neither Schwarzenegger nor Angelides would change). In addition, they say that the inflexibility of this mandate amounts to a “taking,” since the policy can make properties undevelopable (which the policy was designed to do in its Marin County infancy). San Diego’s ordinance was found unconstitutional in the spring, although developers settled the suit for lower fees. If any part of the lawsuit succeeds, of course, all affordability mandates would be void. That would be a welcome outcome for anyone concerned about California’s lack of middle-income and low-income housing.

The Los Angeles City Council did not bring inclusionary zoning to a vote in its last session. Community groups are pushing for a vote. My rough guess (I know little of LA local politics) is that the council will not pass the measure. I cannot imagine the cheerleading Villaraigosa, and the generally pro-business council, imposing arbitrary mandates on the housing development on which the city’s continued revival is staked.

Assuming Proposition 90 doesn’t pass, and the Action Apartments Santa Monica lawsuit isn’t immediately successful, Oakland may be facing a huge fight over an affordability mandate once Dellums takes office. He is on record advocating a mandate twice as high as the California average (of the one-fifth of municipalities that have such an ordinance), and has also instructed his task forces (which probably don’t include aspiring homeowners) to come up with “no-cost” ideas (as simplistic socialist mandates portray themselves). Hopefully the Council can be convinced of the dreadful harm to middle-class and first-time homebuyers a mandate would cause, but the unfortunate nature of our ideological local politicians suggests that won’t be an easy task.

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