How Much More Important Are Homes Than Cars to California’s Elected Officials?

By Mat Wahlstrom

Even by the terms of the recent years’ fire sale of our city, this week has been exceptional.

On Monday, March 7, we got the launch of “Bridge to Homes,” a plan to spend over $80 million in public funds to make construction of 662 units of low income housing ‘financially feasible.’

Tomorrow – Thursday at 1pm, the loosening of affordability requirements for accessory dwelling units will be made official by the Land Use and Housing committee of the city council, which if finally passed by the city council, will allow developers to set ADU rents at 80% of the Area Median Income (AMI) for only ten years than 110% AMI for fifteen. (This again is on top of waiving the impact fees these permanent structures will have on infrastructure.) Oh, and, the committee will hear the final proposed changes by Councilmember Joe LaCava to community planning groups.

And Wednesday – this afternoon – is the vote on the Tailgate Park sweetheart deal, the biggest proposed municipal sellout since the Sports Arena redevelopment fiasco.

Although it’s claimed that this transaction doesn’t include a public subsidy, the city is selling land appraised at $76 million for only $35 million.

While we’re being told that 15% of the units will be affordable, it’s actually only 10% that are set at 60% AMI. The remaining 5% will be rented at 150% AMI — an amount that is effectively market rate but also fails to even meet the state’s defined top limit for moderate income of 120% AMI.

And the biggest tell about who this deal will benefit is the bum’s rush to get it finalized before the end of the year, explicitly in order to exempt it from the state’s surplus land law that would require any development from its sale provide no less than 25% of all housing be deeded affordable.

But it does include a requirement to provide 1,060 parking spaces, so there’s that.

Why are we repeatedly told by our public officials that private real estate investment — the one sector of the global economy now more profitable than any stock exchange — requires the sacrifice of both the public commons and public funds to produce even a pittance of public good? In what other line of business would we accept this?

Why are supposedly very serious people asking us to believe them about these things?

There are three necessities for human existence: food, clothing, and shelter. But whereas food and clothing can be brought into economies of scale, we are suffering the folly of treating shelter as a fungible commodity.

It’s not just that we’re being asked to accept that where and how we live is as interim as what we eat or what we wear. It’s that we’re forced to subsidize it.

In 2019, nearly half of all Californians were already “cost burdened,” defined as spending more than a third of their income on rent or mortgages. These numbers have exploded in the wake of COVID despite all our policies to ‘incentivize’ new construction.

No matter how much new housing is built, none of it will be affordable unless it is required to be. The market has never and will never provide something less valuable than what it replaces.

Referring back to the title of this article: an analogy helpful for understanding our situation is to compare homes to cars. Both are easily the highest price tag items on which we spend our money.

But while housing is a necessity, cars are strictly speaking necessary. They’re not required to support life — except of course when they are also shelter — but to live as social and economic circumstances require. (And until transit that is efficient and exceeds the need for personal vehicles exists, they will remain the default.)

Yet consider how successful California has been in making motor vehicle production serve its needs.

Our state has long led a successful fight for safety, cleaner emissions, and greater fuel efficiency, setting standards for the rest of the nation. Even when Trump sued California over its fuel-economy standard agreements with the major automakers they knew that this was a losing proposition; and just over a year ago the last of them finally dropped their opposition.

And why? Because we are the single largest market for personal vehicles in the country. And no matter how onerous manufacturers find our regulations, they go along because they’d rather make a reasonable profit than miss out on selling at all.

Rather than treating homes as we have been, we need to start treating them more like we do cars.

Make affordability a non-negotiable demand the same as other construction standards, period. Institute caps on returns scaled to reward lower-end construction. Ignore the howls of the real estate lobby who claim that it “won’t pencil.” We would never allow a builder to claim he needs to cut costs by not installing fire suppression systems, so treat affordability the same.

Of course this will require we undo the massive upzoning that is artificially inflating the costs of land. As I’ve said before, the primary goal of investors is to make money. If they can do it by not building any housing or only building certain kinds of housing, then that’s what they’ll do. We need to treat upzoning to produce affordable housing as self-defeating as subsidizing the price of gasoline would be to reduce car travel.

The demand to live in California isn’t the problem, it’s the cost to do so — and that is driven by an industry too long used to double-digit profit margins, enabled by the electeds their campaign contributions have captured. And the more of our money thrown at them is only making an intolerable situation unbearable.

As the late Peter Marcuse, a brilliant practical academic and truly progressive urban planner, wrote, “Housing prices are high not because the costs of providing housing to its residential users are necessarily so high, but because we allow the system to act as a source of substantial profit to multiple powerful material interests, who are able to block equity-based changes to the system.”

As California goes, so goes the nation. It’s time for California to lead the way once again — to pry the polished shoes of capital off all of our necks.