Unpacking The Real Impact of By-Right

I’m hearing a lot of things from advocates on all sides of housing issues in California, with folks operating from sets of assumptions that are contradictory in nature.  I’d like to unpack them for a bit.

First, two key points are emerging from the YIMBY narrative:

  • Restrictive zoning makes a lot of naturally affordable housing impossible to build.
  • SB 35 (Wiener-D San Francisco) will make housing great again by imposing by-right on cities that fail to meet their RHNA.

I’m not convinced both of these statements can be true at the same time to the extent they are being sold by supply-siders.  SB 35 brings “by-right” to any city that isn’t meeting its Regional Housing Needs Allocation, yes.  But a project can only be by-right if it is within existing zoning for a parcel (sans the density bonus, of course).  If the YIMBY narrative about restrictive zoning is true (it is, see figure below), then it’s probably very easy to overstate the impact of SB 35.

Zoning Capacity Changes in Los Angeles (Morrow 2013, pg. 3)

In theory, by-right will help the red line in the figure above intersect with the black (for every jurisdiction, not just L.A.). By-Right will help reduce the ability of local community members to block new housing at existing zoning capacities + density bonus allowance.  That’s mostly it. It will not increase zoned capacity.  And I have my doubts about that really being enough to put a dent in the supposed need. I say supposed because 85% of any new housing produced through by-right will be market rate, and the state is producing a significant, albeit insufficient, amount of market rate housing.  Furthermore, the public draft of the Statewide Housing Assessment suggests this market is impacting low and very low income residents the hardest, with most above moderate income households doing ok.

But let me use the 2015 ACS one year wave for California to explain this to you in a different way.

California Households’ Area Median Income (AMI) Designation, Sorted By The AMI Designation Of Their Rental Units. Data: 2015 ACS PUMS 1-Year Wave

There simply aren’t many above moderate income households paying too much for their housing.  In contrast, quite a few low income households pay too much when they rent at these above moderate levels.  All the households colored a shade of blue in the two furthest right columns are paying at or near market rate rents they simply cannot afford.  This encompasses nearly a million households, and doesn’t include the almost one million households who manage to pay less than this yet still cannot afford their rents.

In contrast, the folks in green and yellow in the middle column (Low Income units) have it pretty good.  What makes anybody think that if new Above Moderate units are built, those folks will leave their great situation and pay higher rents (shifting from the middle to furthest right column, paying more rent for what is presumably a higher quality unit)?

Ask yourself: what single person in San Francisco making $7,000 a month will “trade up” from paying $1,500 for a room in an old Victorian in a neighborhood they love, to paying $3,000 in a 20th floor studio where it takes 10 minutes to get to street level and there’s nothing fun nearby because it’s in the FiDi (the CBD)?

I really like the idea of holding cities accountable for their failure to build, but I think we are overstating the impact this legislation is going to have on the affordability aspect of the vaguely termed housing crisis.  This is why, at the very least, SB 35 needs to be paired with a permanent source of funding for programs that produce housing for those low and very low income families the market cannot help.

Published by mattdpalm

Doctoral Student UC Davis USDOT Graduate Eisenhower Fellow 2014-2015

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