Capitol Alert

Could this new bill help solve California’s housing crisis? New study suggests otherwise

It’s often held up as a key strategy for solving California’s housing crisis: increase the supply of cheaper housing by encouraging more dense construction near transit centers.

New research, however, suggests that the approach known as “upzoning” isn’t necessarily a magic bullet.

A study published in Urban Affairs Review last month found that such zoning policy changes in Chicago over a five-year period led to higher housing prices and no increase in housing supply in the affected areas.

Yonah Freemark, the study’s author and a doctoral candidate at MIT, found “no evidence for short- or medium-term increases in housing-unit construction.”

Over a five-year period, housing prices in the affected areas went up, but the number of housing units constructed did not.

In California, Sen. Scott Wiener has proposed SB 50, also known as the More HOMES Act, which would let developers bypass certain zoning restrictions when building multi-family housing in “transit-rich” and “job-rich” areas, putting more units than typically allowed on those parcels.

SB 50 is co-sponsored by California YIMBY (Yes In My Backyard) and the Non-Profit Housing Association of Northern California (NPH) and has earned praise from San Francisco Mayor London Breed, Oakland Mayor Libby Schaaf, the California Apartment Association, and the State Building and Construction Trades Council, among others.

Wiener said he doubts the study can lend many insights to the conversation around his bill given that the research concerns zoning changes in Chicago.

“I appreciate the study, but you also have to take it for what is,” he says. “Chicago is not a good comparison for California.” He pointed to the city’s declining population and struggling real estate market as two reasons why the research isn’t easily applicable to California.

Wiener also said he’s not surprised Freemark didn’t find an increase in housing units given the study’s time frame. The research focused on a five-year period, looking at the impacts of zoning changes that occurred in 2013 and 2015.

“It takes a lot more time to build the housing, and that’s frustrating for us who wanted to see housing built yesterday,” Wiener said.

Brian Hanlon, president and CEO of California YIMBY, acknowledged that California might not see new housing construction immediately if SB 50 were to pass. However, he said the bill is still a key component of the solution to California’s housing crisis in the long term.

Gov. Gavin Newsom has pledged to build 3.5 million new housing units by 2025.

“What’s the bill that’s really going to enable Governor Newsom to hit his 3.5 million target? It’s going to be SB 50,” Hanlon said.

Freemark, the study’s author, acknowledged that his findings might not be replicable in California but also cautioned that upzoning is only effective when used in concert with other policies.

“We have a housing crisis in much of the U.S., and that crisis needs to be addressed by providing funding for construction of more units and subsidies for people to afford those units,” Freemark said.

At a hearing last year for SB 827, an earlier version of Wiener’s bill with fewer tenant protections, many advocates expressed concerns about the effects zoning changes can have on vulnerable communities when not accompanied by the proper protections.

“We’re very concerned that state planning mandates, if not carefully crafted, can have significant impacts on existing low-income communities.” said Anya Lawler, policy advocate for Western Center on Law and Poverty. “We know that the gentrifying effects of increased densities can trigger displacement. We’ve seen this play out over and over again, and we shouldn’t continue to repeat the same mistakes.”

Wiener appears to have heeded those concerns, reworking SB 827 to include additional protections for people who might be displaced by new development prompted by upzoning.

In the latest version, communities deemed “sensitive” to displacement and gentrification by the Department of Housing and Community Development and community organizations would be able to delay the application of the standards for five years, giving them time to plan for ways reduce displacement.

The bill also prohibits developers from seeking to take advantage of the new policies by demolishing buildings in the affected areas that are currently or were recently occupied by renters.

Michael Lens, associate professor of urban planning and public policy at UCLA, says it’s difficult to tell how SB 50 might actually affect housing in California based on the limited scholarship that exists around zoning changes.

“It’s important to view a study like this as a part in maybe, modestly, a small part, of a larger body of research that is really early,” he said.

“We need to hear from tenants. We need to hear from and listen to developers as to what they say would be a reaction to policies like this,” he said. “We need to read carefully the text of these bills that outline various protections that are pretty robust in terms of communities vulnerable to gentrification and displacement.”

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