OPINION: Alarming housing bill heading for approval

Senate Bill 35 is a huge game-changer about to hit SF and other gentrifying cities

Senate Bill 35, heading to Assemblymember David Chiu’s Housing and Community Development Committee Wednesday/12, is a potentially serious threat to California’s most vulnerable urban communities. It will disenfranchise working-class communities of color who bear the brunt of gentrification and prevent them from having a say in how their neighborhoods are developed and from pressing for housing development to be affordable.

A huge market-rate housing project at 16th and Mission could lead to gentrification -- but SB35 would undermine community oversight
A huge market-rate housing project at 16th and Mission could lead to gentrification — but SB35 would undermine community oversight

SB 35 is one of 130 housing and development-related bills in the State Capitol – a record number – and so far, it’s been quietly gliding through under the radar. SB 35 is different from the other housing bills that seek to enforce zoning, or create funding for affordable housing or strengthen local tools like Inclusionary Housing. Despite some real potential benefits in suburban anti-housing jurisdictions, SB 35 could actually end up making housing development less affordable in low-income neighborhoods of San Francisco, Oakland, Richmond, East Palo Alto and many similar urban core communities across the State.  

Known as the “By-Right Development” bill, Senate Bill 35 would eliminate the role of the community and the local planning commission or city council in the approvals of “infill” real estate development projects. Virtually every project in San Francisco qualifies as infill, and the same is true of Oakland, Richmond, San Leandro, East Palo Alto, and much of San Jose. Most of the “by right” development pursuant to this bill will likely happen in urban communities.

Under the SB 35 legislation, cities will be required by State law to approve market-rate projects “by-right” unless developers have built 100% of a city’s market-rate housing planning goals, regardless of how much or how little affordable housing has been built.

Eliminating public process is a simplistic scapegoat that ignores the real impediments to housing: a lack of cheap land zoned for housing, limited funding for affordable housing, and the boom-bust nature of economic cycles. But SB 35 is a convenient way for its proponents to “do something” to address the crisis, without changing the underlying fundamentals of the crisis. And of course the real estate industry absolutely loves the idea of eliminating public process and local city “control” over approving development.

So what is there to possibly like about SB 35?

The premise on which SB 35 is supposedly based is a fine one: “all cities need to do their fair share to build housing.” We wholeheartedly agree.

The idea behind SB35 is that the principal reason for California’s affordable housing crisis is that communities abuse public process to stop or delay housing development. We all know of cases where that has happened, including to stop affordable housing. With Silicon Valley pumping out thousands of jobs while cities like Palo Alto, Cupertino, Menlo Park, Brisbane, and many other slow-growth, middle-class cities do little to facilitate new housing, there’s a lot of “fairness” that needs to be spread around the region. 

From an affordable housing perspective, the big upside is that SB 35 will make proposed affordable housing projects By-Right throughout the State of California. Given the opposition to affordable housing projects in many California communities, streamlining could benefit affordable housing in suburban jurisdictions – which is why a few affordable housing developers have endorsed SB 35.

But even with these benefits to affordable housing, our Council of Community Housing Organizations coalition representing San Francisco’s affordable housing and tenant’s rights organizations, along with tenant, housing and social justice organizations up and down the state, still think SB 35 in its current form will do far more harm to urban gentrifying communities than it will do good in suburban exclusionary cities. A broad coalition of statewide organizations has made calls for amendments to SB 35 that would address the issues with the bill, and mediate the potential threat it poses to low-income and communities of color.  These appeals have been repeatedly ignored.

What are the downsides of simply “streamlining” more development?

The real problem is in the way SB 35’s authors fail to distinguish between communities where eliminating discretion of approval and public process is harmful and where it could be a benefit. The By-Right bill makes no distinction between communities that have “hot” real estate markets and communities with little development activity, or between communities with low-income populations vulnerable to displacement and those neighborhoods and cities that are totally stable with no gentrification risks.

SB35 is supposedly meant to incentivize market-rate housing only in cities that have not met their market-rate housing goals for a given period. But even in “hot market” cities like SF, San Jose and LA, which in most years build even more market-rate housing than their planning goals, SB 35 could end up eliminating public participation after a recession period when production goes down, precisely at the time when developers begin ramping up for the next development boom cycle.  

As currently written, the practical outcome of SB 35 will be to further expedite and accelerate market-rate approvals in the small handful of California communities where the real estate market is already hot – communities that are overwhelmingly urban, low-income, and predominantly people of color. These are the same communities that are currently grappling with displacement and gentrification, and typically have terrible imbalances of market-rate housing development compared to affordable housing. Simply accelerating approvals in those communities is just a recipe to spur even more aggressive gentrification. 

Yes, we need a lot more infill housing in California, but we need development that is fairly distributed across all communities and that really meets the needs and incomes of existing and incoming residents. If there were a “safe harbor” in SB 35 to ensure that streamlining doesn’t apply in communities already experiencing rapid development and displacement, then the benefit of the bill could be to steer some new development activity to cities with truly low housing production, but SB 35 does nothing to ensure this. 

And in a one-two punch, SB 35 not only encourages accelerated market-rate approvals in vulnerable neighborhoods, but then takes away some of the very tools low-income communities rely on to mitigate gentrification impacts on their neighborhoods. With public participation cut out of the approval process, communities lose their ability to negotiate for higher levels of affordable housing and other community benefits like public open space and pedestrian improvements and protections for small businesses. Moreover, SB 35 explicitly prohibits cities from requiring more affordable housing from By-Right projects than already locally required, preventing communities from re-capturing any of the monetary benefit given to developers by this By-Right Development bill.

Does this trade-off really get anything?

While SB 35 will clearly accelerate approvals in hot market areas, we think it’s unlikely that it will have the positive impact of speeding up development in slow-growth areas of the state with little ongoing housing construction. Many of these are areas that have intentionally ducked their responsibility to provide housing, or where the developers cannot get high enough returns from low rents and sales prices. And, because of the sloppy way it is written, the bill lets many middle- and upper-class growth-averse cities off the hook, places like Dublin, Pleasanton, Danville, Lafayette, Orinda, Walnut Creek, Corte Madera or Los Altos or many other places across the state that aren’t doing their “fair share” to absorb new housing needs, while urban communities struggle with gentrification and displacement symptoms of over-concentrated development.

SB 35 also critically lacks the key element of a meaningful two-year “use it or lose it” provision, which would give the By-Right approval an expiration date to ensure that developers actually build their approved projects in a timely manner, rather than simply selling off their “approved project” to the ever-larger speculative pool of “entitlements” (San Francisco, for example, even though it’s building units at the full capacity of available labor and building cranes, already has a pipeline of 38,000 approved units). Under SB 35 development sponsors have up to four years to apply for a construction permit after getting by-right approval.

Even if a soup-to-nuts project approval for, say, a 50-unit development was pushed through in 12 months, under SB35’s streamlining rules, if the developer can sit on that approval for up to 4 years and then with a typical 2+ year construction period, that is a total of 7 years to get “By Right” housing units on the ground and ready to occupy. That’s “streamlining?” 

More significantly, SB 35 does little to tackle the underlying issue: that development investors – not city government, nor public policy goals, nor actual community need — determine where, when, how fast, and what types of housing are built.  Instead of addressing this, SB 35 makes it even easier for investors and developers to pick and choose the best way to play the California real estate market—it doesn’t take much imagination to see the outcome of developers continuing to focus on the most profitable housing in the most profitable areas, irrespective of broader regional need. In the absence of use-it-or-lose-it accountability or other mechanisms that ensure actual housing construction in places where development isn’t already happening, SB 35 gives a lot but gets very little in return.

Silencing those most impacted: race and class

Even if it does succeed in encouraging more development in slow-growing areas, which is a laudable goal, the SB 35 By-Right bill in its current form makes an unconscionable trade-off: sacrificing vulnerable urban communities in the hopes of facilitating development in stable ones.  SB 35 will silence the voices of working-class communities facing potential displacement in cities like Richmond, San Pablo, East Palo Alto and Oakland, and even in gentrifying neighborhoods of San Francisco during “hot market” years.

The rapid gentrification of California’s urban core communities is real. The outmigration of low-income and working class residents to far-flung suburbs as a consequence is also real – much has been written about the increasing suburbanization of poverty. The shrinking African American and Latino populations from city neighborhoods and the changing race and class profile of many low-income communities is a real thing. “Trade-offs” have historically decimated vulnerable communities that found themselves on the front lines of real estate agendas. This trade-off feels all too familiar, and is not one we can afford to make again, especially under the guise of increasing affordable housing.

The SB 35 bill may have some good intent, but for low-income urban communities already struggling with gentrification and displacement from San Francisco and Oakland to Los Angeles, Long Beach and Fresno, it is a potential looming threat.

So what can we do to fix this mess?

Our coalition organization, CCHO, continues to work with dozens of other local and state affordable housing and tenant advocate organizations to press for amendments to the bill addressing these concerns. The minimum “fixes” for SB 35 should include:

  • A safe harbor provision exempting low income communities where development is already “hot” and communities are already grappling with gentrification and displacement pressures;
  • A higher affordable housing requirement in exchange for By-Right approval;
  • At least half of the affordable housing in By-Right projects should be for households under 50% of the median income;
  • A meaningful two-year “use it or lose it” expiration date on how long a By-Right approval lasts before the developer must start actually building the project.

So far these proposed amendments have been rejected by the bill’s author, raising the question of whether this bill is really intended to steer development to no/slow-growth cities, or whether the goal is to accelerate gentrification and constrain public participation by communities of color facing the brunt of displacement. In the way that legislation in Sacramento can sail through the process inside the political bubble of what is known as “the building” at the Capitol, this SB 35 By Right Development bill has advanced seamlessly and disconnected from any community voices on the ground.

The primary support testimony at the June 28th Assembly Local Government Committee hearing on SB 35 was an interesting display – they were representatives from the California Association of Realtors, the California Apartment Association, national developer Bridge Housing, and San Francisco Mayor Lee.

But we remain hopeful that legislators in the Capitol will do right with By-Right and not do harm. That said, it will require making enough noise so up there in “the building” they hear voices from the ground.

The SB 35 bill now heads to the Assembly Housing and Community Development committee on Wednesday July 12th, chaired by David Chiu. As chair of that key committee, much rests on Chiu’s leadership to push for amendments addressing these concerns with the serious unintended consequences of the By-Right bill, including a safe harbor to communities impacted by gentrification and displacement. If you are concerned about the consequences of this By-Right Development bill for San Francisco and other urban gentrifying communities, let your voice be heard.

Emails and calls to:

David.Chiu@asm.ca.gov 

916-319-2017

 

A sign-on petition has also been created and you can access it here.

Fernando Marti and Peter Cohen are co-directors of the Council of Community Housing Organizations

 

  • FunnyBecauseItsTrue

    Peter Cohen is a nimby and he is acting in bad faith.

  • sebra leaves

    Where the the politicians who are working to increase the public’s power and influence? Where are the people who are fighting the overreach of government into our lives?

    • Dirty Burrito

      Sebra, I hate to break it to you, but this bill is designed to limit overreach of local government.

      • renew

        And designed to roll out the red carpet to developers and investors. You must be all hot to profit from it somehow…

        • Dirty Burrito

          Omg, the horror! Those evil developers are going to come and build housing during this terrible housing shortage! What will we ever do?

        • Dirty Burrito

          Also, I know it’s hard for you to believe, but lots of people are waking up the horseshit that so called progressive housing activists are pedaling, and are coming to the realization that you can’t fix a shortage with price controls. Beneficiaries of more housing include anyone burdened by market rate housing, not just developers.

  • Dirty Burrito

    Fernando Marti is such a classic nimby, claiming SB35 would be fine if only applied to affluent suburbs, where he doesn’t live, and where CCHO doesn’t operate. He claims that only affluent suburbs are anti-housing, and yet he seems to oppose almost any project that is not 100% affordable, including the so called “monster in the mission” which would have brought 90 much needed affordable units to the mission, and would be 26% affordable.

    CCHO has been here since 1978, and in that time we have become the most unaffordable city in the nation, and one of the most expensive cities in the whole world. CCHO’s approach is not working, and it’s time to try something different.

  • Yonathan Randolph

    Most of Cohen and Martí’s complaints were already covered back when Wiener accused them of lying when misrepresenting SB 35. I don’t have a copy of the letter from Cohen and Martí that Wiener was responding to, but it seems that nothing has changed since then. Cohen and Martí still think a 2 year “use it or lose it” provision is more meaningful than Wiener’s 3 year automatic expiration (and optional extension with documentation) but don’t attempt to address Wiener’s rationale for 3 years. Cohen and Martí demand a “safe harbor” for “hot” markets. They don’t explain that there is already a safe harbor in SB 35 for hot markets. In SB 35 city that met its above moderate RHNA target is exempt from streamlining of projects with less than 50% of affordable housing. How would Cohen and Martí define a hot market differently? For most of the points, Cohen and Martí seem to be repeating their demands which Wiener already responded to.

    They do have a point that SB 35 lets wealthy communities off the hook too easily, since (as Thomas Lord pointed out) the above moderate income RHNA target is set lower in communities that are already predominantly above moderate income and is set higher in communities that are predominantly low income. It would be better if SB 35 used total RHNA production targets as the goal that communities have to meet before streamlining will apply in their community. Total RHNA targets make more sense as a goal anyway if we are serious about meeting the regional population growth.

  • sfsquirrel

    Why do you pro-development trolls always lament the shortage of housing but never talk about a vacancy tax? There is plenty of housing that sits empty here in SF that no one can afford to rent, bought only as investments. Think it’s not true? Why not just try imposing a vacancy tax and see what happens?

    • Kraus

      Why do you anti-housing trolls always try to deflect from actual solutions to the massive housing shortage with “let-see-what-happens/nibble-around-the-edges” approaches like a “vacancy tax.”

  • Mike

    What is wrong with upgrading a deteriorating district to one that more economically beneficial and improves the tax base? What drives stability in one’s own life is education — those that don’t have it and don’t want to get it or are happier having subsidies will have to look elsewhere to live at some point. No one has the “right” to live in a specific location if they don’t have the means to do so. Just saying I have lived here and I want to live here is not enough. Choice is freedom– how one chooses to spend their time improving their lives via education is a choice. This is the STEM world today not the world of yesteryear.