Photo by Flickr user Shawn Clover, CC BY-NC 2.0
From the 1930s to the early 1970s the Democratic Party stood for two policies that successfully addressed the country’s chronic housing crisis: public housing and the minimum wage.
Public and publicly subsidized housing policies gradually began ending with the Nixon administration in the early 1970s and in California with the dissolution of redevelopment agencies in 2011. These shifts were possible because the adoption of neoliberal (trickle-down) housing policies was totally bipartisan.
The Democratic Party had regularly championed minimum wage increases, beginning with 25 cents an hour in 1938 and reaching $7.25 an hour in 2009. The minimum wage has been stuck there for 12 years.
If the 2009 minimum wage law had been indexed to inflation or gains in productivity, it would now be $25 per hour.
If it had tracked compensation to corporate CEOs, it would be $44 per hour now, and if it had been indexed to the cost of housing in California, the minimum wage would be $37 an hour for someone renting an average two-bedroom residence in Los Angeles.
If you look closely, however, you can find evidence of the cozy relationship between real estate investors and the Democratic Party’s housing policies as far back as the 1950s. Since then the Democrats have been the political party of choice for the urban growth machine, a complex set of mutually reinforcing real estate interests first identified by Harvey Molotch, former University of California, Santa Barbara sociologist. This pulled the party to the right on housing issues. But even in the Truman, Kennedy, and Johnson administrations, the seeds for these policy shifts were present in urban redevelopment agencies (i.e., urban renewal). With support from the federal government, local municipalities used eminent domain to acquire parcels in older neighborhoods, relocate residents, reassemble small lots into larger ones, transfer these enlarged parcels to corporate real estate developers, and then reinvest the increased tax increment income in additional urban renewal projects.
In California this game ended in 2011 when Gov. Jerry Brown and the state legislature dissolved 400 local redevelopment agencies. Since then, however, the real estate reinvestment process has continued, albeit at a smaller scale. These new municipal policies allowed mansionization, the building of the largest possible spec home on a residentially zoned lot, and unplanned upzoning programs, facilitated by local, state, and now federal programs to increase permitted densities, essentially providing financial gifts to property owners and real estate developers. In LA these programs go by many names, including Community Plan Updates, Measure JJJ/TOC Guidelines, SB 1818, Ellis Act evictions, Cash for Keys, Small Lot Subdivisions, Transit Priority Areas, Community Plan Implementation ordinances, and community benefits agreements, with more upzoning programs in the wings.
[RELATED: Which Community Benefits Agreements Really Delivered?]
Regardless of the name, the goal is always the same: top-down intervention to increase property values and the profitability of real estate investments through privatization and deregulation. In this way Democrats at the municipal level, including LA’s recent mayors and city councilmembers, have become the midwives of the neo-liberal urban growth machine. Despite this awkward term, local governments now assist private developers in acquiring highly profitable redevelopment sites, in effect repackaging previous urban renewal programs at the parcel level.
From the national level to the local level, the Democratic Party’s housing policies have turned to the privatization of low-cost housing in lieu of the U.S. Department of Housing and Urban Development’s public housing program and the deregulation of zoning laws instead of comprehensive planning. This approach was previously called Reaganomics, but it is now bipartisan. Applied to housing, it relies on private developers, not housing authorities, to build low-cost housing in exchange for lucrative increases in zoning and tax breaks. It is peddled through the (mistaken) story that these policies increase the production of private sector housing, including a small number of low-cost housing units. Some analysts consider these updated versions of Reaganomics to be responsible for the current housing crisis.
The results of these housing policies are painfully visible. Assisted by city hall, real estate speculation is widespread and highly profitable. Meanwhile, the assorted justifications for these giveaways survive on faith, devoid of evidence. Transit ridership and the supply of low-priced housing continues to decline, while inequality and homelessness continue to grow. In cities like LA, this is the shameful legacy of Democratic mayors Tom Bradley to Eric Garcetti, even though city hall’s current trickle-down approach to housing originated with the Nixon and Reagan administrations.
In LA the city’s Democratic officials have pursued trickle-down housing policies for nearly three decades. They wholeheartedly support privatization and deregulation but won’t take credit for the resulting havoc. If they did, they would monitor their trickle-down policies, even though they made LA’s housing, transit, and climate crises worse. Plan monitoring, in fact, is clearly called out in LA’s general plan, but the results would so undermine their trickle-down housing policies that city hall ignores its own adopted General Plan monitoring policy requirement.
“General Plan Framework Chapter Two – Growth Monitoring Policy: After the Framework Element is adopted, the City will establish a growth monitoring program that will provide important information regarding the accuracy of future growth estimates and the distribution of that new development by community plan area. This monitoring program will annually document what has actually happened to the City’s population levels, housing construction, employment levels, and the availability of public infrastructure and public services. Information on environmental conditions will also be monitored on a yearly basis to maintain and update an environmental database, which will be used to facilitate but not replace, environmental review for subsequent programs and projects. …”
This slide into trickle-down housing programs has percolated to the construction unions, environmental groups, churches, nonprofit housing organizations, some left-liberal political groups, and well-funded advocacy groups that make up the base of the local Democratic Party. This was apparent in their opposition to Measure S, the Neighborhood Protection Measure, in 2016, when these groups fronted for the large real estate corporations, especially Crescent Heights and Westfield, that funded the No on S campaign in Los Angeles.
We also need to keep an eye on the many housing policies that the Democratic trickle-downers avoid, even though these policies would alleviate the worsening housing, transit, and climate crises:
- Raising wages to reduce economic inequality and poverty, one of the major drivers of homelessness.
- Restoring HUD and redevelopment agency public and subsidized housing programs to fill the low-priced housing gap.
- Stopping density bonus programs and other forms of upzoning since they are responsible for the declining supply of affordable housing in Los Angeles.
- Strengthening the state’s and LA’s Rent Stabilization Ordinance. The cutoff date could be moved up from 1978 to 1995 or even 2006. This could save many existing lower-priced housing units from the developers’ bulldozers.
- Restricting investment groups that drive up the cost of housing by buying homes and apartments as investments and then keeping them off the market.
- Requiring LA’s Department of Housing and Community Investment (HCID) to create reliable, accessible public registries of density bonus housing and vetted low-income renters.
- Requiring HCID to physically inspect pledged density bonus housing, to certify that it exists and is rented to certified low-income tenants.
- Adopting tougher anti-mansionization ordinances to prevent the demolition of older, lower-priced housing and its replacement with expensive, resource-intensive McMansions.
- Reforming California’s Ellis Act to prevent the eviction of low-income tenants so real estate developers can create infill building pads for expensive apartment buildings.
How long can this game continue before local officials and the active public realize they have been subjected to a host of real estate scams? That is the open question.
This article first appeared on CityWatchLA.
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Incredibly disappointing that Shelterforce would publish this piece with its canards about “trickle-down housing” and blaming upzoning for diminishing numbers of affordable units. It’s incredibly ideological and misunderstands (unintentionally or deliberately) the very clear underlying cause of the affordability crisis: there are simply not enough homes for people to live in, period. Once again, we have a commentator looking at the 2.5-million-home deficit in California and coming up with any reason he can think of that is not the obvious cause of the state’s housing woes. Shelterforce should be helping enlighten people about the complexities of housing and community development, not spreading disinformation that will only lead to further immiseration of poor and minority communities and enrichment of wealthy landowners.
Agreed, Josh! This author is claiming LA’s famous housing shortage doesn’t even exist. I would like evidence why supply and demand doesn’t apply to LA.
See: https://www.google.com/amp/s/www.nytimes.com/2021/06/22/arts/design/los-angeles-housing-crisis.amp.html
“ Today, the region has the fewest homes per capita of any metro area in the country, and the second-lowest rental vacancy rate of any major metropolis. More than 75 percent of residential land in the city, representing more than 400,000 parcels, is zoned for single-family houses, according to Christopher Hawthorne, the city’s chief design officer.”
The “argument” that 75% of residential land in LA is zoned-for single-family homes (which at least 80% of Americans of all stripes prefer) is an irrelevant statistic considering how much already-zoned unused capacity exists within the city. Dick Platkin has pointed this out. (The LA urban area also happens to already be the most dense urban are in the entire US). Josh Geyer suggests Shelterforce shouldn’t “spread misinformation,” yet he uses a figure of a purported 2.5 million home deficit in CA, which is itself misinformation (according to housing giant Freddie Mac, the figure is around 820k, while CA has 1.2 million vacant units). He also talks about the “complexities about housing and community development,” while suggesting that the cause of the state’s housing challenges is “clear,” “simple,” and “obvious.” (Never mind he tacitly accepts policies which would further financialize housing for the benefit of corporations and the Urban Growth Machine, mentioned by Dick).
Using bogus “supply and demand” tropes (while ignoring the actual demand for housing, i.e. the kind of housing most Americans of all stripes prefer) is a great way to shill for developers and the UGM. Probably would be more productive to look at progressive solutions coming from Justin Trudeau in Canada and in Berlin, which look to decommodify housing.
(And while we’re quoting irrelevant statistics, let’s not forget that 95% of land in California is rural… which is probably just as irrelevant, I suppose, as the 75% of LA residential land being used for the kind of housing 80% of Americans prefer. No, density is not “destiny,” nor is it “diverse.” If people like it, fine, but forcing it upon other people for the benefit of private equity is both intolerant and wrong. Sometimes density is just… well, dense).
As long as political campaigns are privately funded and government policies are at auction to the highest bidder, both parties will need to serve the rich and their interest in profitability. Furthermore neither party will be able to produce what the voters want, resulting in the regular replacement of vulnerable incumbents who soon will be replaced in turn. It also guarantees more politics of generating outrage and blaming victims, as a substitute for helping people, as well as abusive nuts and bolts features like gerrymandering and voter suppression as incumbents seek to hold power. This change in the system of government, where democracy is limited as an overlay picking between options chosen by wealthy elites, has not been talked about much.
Up-zoning increases the value of existing parcels, which then enriches wealthy landowners and real estate investors. If and when this results in new housing, it is often in lieu of existing housing which must be demolished to create building sites for new market-rate and luxury housing. The evidence for this can be found in many Los Angeles neighborhoods, such as Hollywood. New luxury housing has reduced the overall supply of low-priced house and local population as it pulled up the price of housing and evicted or pushed existing residents out or into homeless encampments. It also contributed to the decline of transit ridership because the new residents are upper income and seldom take buses or subways. If anyone wants to help people who are low-income, it is essential to build public sector non-market housing, not expect that private developers, whose investment criteria is the maximization of profit, will somehow build low-priced housing through never inspected (in LA) density bonuses.
If we don’t upzone, dense affordable housing is not allowed to be built. Single family zoning protects wealthy homeowners from the “blight” of low income development. #YIMBY
Again the only way to build more housing is to allow it. “Luxury housing” is market rate (if it rents or sells, it’s market rate).
These out of date ideas are what has created the housing shortage. This article is thinly veiled NIMBYism.
In the city I know best, Los Angeles, none of these claims hold true. First, dense housing is allowed on hundreds of miles of commercially zoned corridors, and in some neighborhoods, like Downtown LA, Koreatown, Miracle Mile, Hollywood, Valley Village, and Warner Center there is new dense housing built by-right on these commercial lots. But, it is expensive, often luxury housing, and therefore has high vacancy rates. Second, many single family neighborhoods are now predominantly Black or Latino without any zone changes, and these homeowners are not wealthy. Third, there is no shortage of housing in rental units in the Los Angeles area. If those who are in poverty or on the edge had more money, they would have tremendous choices on where to live. But, they don’t have enough money to rent the thousands of vacant apartments.
In Los Angeles, and the two island cities of West Hollywood and Beverly Hills, there are thousands of vacant apartments. These are not just luxury apartments, which had high vacancy rates before the pandemic, but also missing middle apartments that emptied out as the pandemic unfolded. A few people moved to houses, but at least 50,000 people moved out of Los Angeles, and the others doubled-up. The tight housing market only applies to houses, not to apartments, which continue to have high vacancy rates. While the construction of new luxury apartments continues, they have not lowered prices. At best, landlords give a month’s free rent to attract tenants. In LA, like other cities, the housing market is segmented, without any evidence that building houses or luxury apartments reduces the rents for middle income apartments.
Dick, the claim you’re arguing against is that upzoning is needed in order to *allow* dense, [more] affordable [than single-family] housing to be built. You say, yeah, well, the dense housing in LA is very expensive, so expensive that there are lots of vacancies, so expensive that only the market for houses is tight. Even if that’s true in LA (you don’t cite any sources other than your experience, whereas Marissa in response to Josh cites the NYT for the opposite proposition), which seems doubtful, it doesn’t disprove the claim that upzoning is needed in order to *allow* dense, [more] affordable [than single-family] housing to be built in the rest of the country. Salem, Oregon, for example.
My argument is that LA’s zoning laws already allow dense housing. Every single-family house can automatically add three by-right Accessory Dwelling Units. And, every commercially zoned parcel and three of six manufacturing zones automatically permit R3 or R4 apartment buildings. Plus, nearly all of these commercial and manufacturing parcels are on transit lines and near stations, so they qualify for density bonuses that can more than double their size. The City’s General Plan states that Los Angeles has sufficient housing capacity for every conceivable market scenario in the entire 21st century. But, I have a caveat. The privatization of public housing through up-zoning and density bonuses rarely produces low-priced housing in Los Angeles. Nearly all of the new housing in LA is expensive and far beyond the financial reach of the homeless, people living in cars, the rent-burdened, and the over-crowded. In fact, the neighborhoods with the most new, transit-oriented housing are the same areas with many homeless encampments and declining transit ridership. Meanwhile, Los Angeles currently has 25,000 apartments for rent, with probably many more that do not show up on rental sites because landlords depend on For Rent signs, not rental agencies. If the over-crowded and homeless had more money, they could easily find a vacant apartment in Los Angeles.
Hmm. The public sector definitely needs to be involved, but Switzerland has a great model for developing shared housing in partnership with housing cooperatives. As I understand it, municipalities dedicate land under community land trusts for innovative shared housing development. They then get architects, engineers, and designers to compete for a winning design, turning projects over to cooperatives to manage and maintain. In Austin, I am part of a group working to develop a limited-equity housing cooperative in one of Austin’s premier developments. If limited-equity options are thrown into the shared housing mix, we can begin to help low- to moderate-income earners grow their way into more traditional housing.
You cannot build a duplex in Single Family zoned spaces (until recently, since Cali copied Oregon’s upzoning law). ADUs are not up-zoning, plus they require space. Once again, the reason housing in LA is expensive is because of the infamous housing *shortage* (see NYT article posted previously with 2nd lowest vacancy rate of all major cities- many more than 25,000 people rent apartments each month and that number does not necessarily mean they are currently vacant). Time to catch up with the data.
Here’s new evidence from Finland:
https://fullstackeconomics.com/how-luxury-apartment-buildings-help-low-income-renters/?fbclid=IwAR3dZ48TE_3AdQYUJi24ZjT3QtUPhB4oxXXI7GHVJYsK_41_b5vf2bQfPrc
The “redevelopment by eminent domain” shtick was a crony capitalist scam. It was a great advance in social justice to get rid of it.
There are two types of up-zoning. One is an actual zone change. The other is to change the definition of a zone. ADU’s follow the second tract, in which the definition of a single-family zone now allows four residential units, not one, in California. Since one of these units can be a stand-alone 1200 s.f. house, this has already turned R1 parcels into de facto duplex lots. But the ADUs do not have an affordability requirement, and they have, therefore, not reduced homelessness in Los Angeles. Plus, there are existing duplex lots in Los Angeles, but developers have discovered they also allow for single-family houses. As a result, the developers demolish the existing duplex and replace it with a super-sized McMansion, which is more profitable than two smaller duplex units. Los Angeles also has zoning and neighborhoods with four-plexes, such as Beverly-Fairfax. These four-plexes were built in the 1920s and now rent for about $4,000 per month. In several cases developers have demolished these 95 year old four-plexes and replaced them with modern apartments with full amenities. In these cases, tenants pay $6,000 per month. Those who think that up-zoning once single-family to four-plex lots will create lower priced housing need to go back to the drawing board. In the real word, it only increases the supply of over-priced apartments, while burdening infrastructure and public services that can no longer meet the needs of lower density areas.