Why ABAG housing quotas lead to displacement

Places with more low-income residents will be forced to add more higher-income people

The Regional Housing Needs Assessment (RHNA), a product of the Association of Bay Area Governments (ABAG), assigns to each Bay Area Jurisdiction quotas of new housing. Each city is urged to incentives and permit construction of its assigned number of new housing units, with some reserved for “very low,” some for “low,” and some for “moderate” income households. The majority of units to be built are supposed to be market rate units. Most of this new development is planned to take place in designated “priority development areas.”

This chart shows how the income of rich people increases faster than the income of everyone else, meaning that AMI in places like the Bay Area keeps going up while people at lower-income levels see little benefit and can less afford even affordable housing
This chart shows how the income of rich people increases faster than the income of everyone else, meaning that AMI in places like the Bay Area keeps going up while people at lower-income levels see little benefit and can less afford even affordable housing

These quotas, sometimes erroneously called a city’s “fair share” of new housing, are taking on steadily greater legal significance. There are pushes these days in Sacramento, such as Scott Wiener’s “streamlined approval process” bill (SB-35), which are meant to make RHNA quotas mandatory by reducing local control over development decisions. Wiener’s bill would make certain project approvals automatic in cities that have not met their assigned RHNA quotas.

Perhaps this anti-democratic push at the state level might be justified if, in fact, the RHNA quotas were designed to protect and enhance the public welfare.  Alas, they are not.

I think if more policy-makers discussed what the RHNA math and maps imply, our local housing policies might be very different.

RHNA, looked at carefully, is a pro-displacement, pro-gentrification policy which — by design — will permanently destabilize low-income community in the Bay Area. I’ll explain how, with particular attention to the example of Berkeley.

In the short term, the RHNA demands that the most affordable parts of the region become less affordable. Let’s consider the case of Berkeley:

Using Census Bureau data (from the American Community Survey), ABAG determined that, around 2009, about 32% of Berkeley’s households were “very low income” (or below), compared to the Area Median Income.

ABAG also found that in the region as a whole, only about 24% of households were “very low income.”

Because Berkeley currently has a larger share of very low income households than the region as a whole, ABAG demands that Berkeley build:

  1. A disproportionately large number (47%) of housing units for “Above Moderate” (i.e. high income) households.
  1. A disproportionately small number (18%) of units affordable to very low income households.

What does this imply? First, if not a single household were displaced while Berkeley achieved its RHNA allocations, Berkeley would nevertheless become less affordable. Second, in reality, displacement is occurring at a fast rate, and ABAG demands that Berkeley try to provide greater options for high income households, and fewer options for very low income households.

In the short term, Berkeley’s loss of very low income households is ABAG’s plan functioning as explicitly intended.

From the Regional Housing Need Plan, San Francisco Bay Area, 2014-2022:

Allocating a lower proportion of housing need to an income category when a jurisdiction already has a disproportionately high share of households in that income category, as compared to the countywide distribution of households in that category from the most recent decennial United States census. The income allocation method compares each jurisdiction’s household income distribution to the regionwide household distribution, based on data from the US Census 2005-2009 American Community Survey. A jurisdiction that has a relatively higher proportion of households in a certain income category receives a smaller allocation of housing units in that same category. For example, jurisdictions that already supply a large amount of affordable housing receive lower affordable housing allocations. This promotes the state objective for reducing concentrations of poverty and increasing the mix of housing types among cities and counties equitably.

Berkeley is steadily losing existing affordable housing units through a mix of rapid turnover in rent-stabilized units, loss of rent-stabilized units, and loss or turnover of other units with historically low rents or low owner-occupant expenses. Following ABAG and Sacramento, Berkeley has wholeheartedly embraced the strategy of income-restricted housing.

I see a problem with that.

For decades, wage growth has followed this pattern: The income of high income households increases much faster than the income of middle income households.  The income of middle income households increases somewhat faster than the income of low income households.

As a consequence, over time the rise in the median income moves many moderate income households to the lower income category, and many lower income households to the very low income category.

The number of income-restricted housing units available for each category is not changed by that change in incomes, but the range of incomes in each category change. For example, the upper limit on incomes that qualify for very low income housing rises, and it rises faster than the incomes of households currently in those units.

Even though income-restricted units are allocated randomly among qualified applications (i.e. by lottery), the tendency over time will be for competition for very low and low income units to grow, faster than new units can be created.

The odds that a displaced income-restricted person can relocate within the region, never mind her local community, will continually fall.

Every step of the way, politicians who are unconcerned about that human reality will be able to point to the large pool of income-restricted units. They can say — following the dubious method of measurement used by the UC Berkeley Anti-Displacement Project — that displacement has not taken place because the percentage of poor people remains the same, even though poor households are constantly being expelled from the region and replaced with newly poor but higher-income households.

Here is a straw-man policy proposal. It is not meant as a fully worked policy. It is not meant to convince you such a policy is definitely possible.  It is a just a way to point out that there MAY be better options.

Instead of income-restricted units, Berkeley could emphasize the need to grow a large pool of social housing whose rents could be flexibly determined, such as through means-testing.

Social housing does not have to mean “housing projects” meant solely for poor people.  Social housing can be available, in various degrees, even to high income households – households whose rents then subsidize very low income households as necessary.

Such a system could help to stabilize communities. It could help foster economic growth that rises from the community rather than growth which is alien to and imposed upon the community.

Whether social housing is the future or not, though, the ABAG plan is a recipe for permanent displacement, always putting capital ahead of community.

Thomas Lord abides in Berkeley, for some reason.