By Deborah Goonan, Independent American Communities
A highly controversial affordable housing legislative proposal, SB 50, is making waves in California. This week, the legislation introduced by Sen. Scott Wiener (D-San Francisco) cleared its first Senate committee, with some amendments.
If the hotly debated legislation passes both houses and gets Governor Newsome’s approval, SB 50 could increase property rights and remove local control of cities and counties.
According to an LA Times report, several provisions of SB 4 were rolled into SB 50, a compromise between Sen. Mike McGuire (D-Healdsburg) and Sen.Wiener.
If SB 50 becomes law, owners of single-family homes in most of California would be permitted, by right, to divide their property into 2, 3, or 4 apartments, regardless of current local zoning restrictions for single-family use. And local governments in “transit-rich” areas would have to permit 4- and 5-story apartment buildings.
Presumably, most of these units would be built specifically as rental apartments, but others could be condominium units for sale.
Whether that’s good or bad depends on your political perspective.
The “affordability” controversy
The bill’s supporters — home builders, Chambers of Commerce, AARP, and some of the state’s major employers — say that SB 50 is the answer to California’s housing affordability crisis. They say housing near transit and job centers is needed for middle and low income employees, to reduce lengthy highway commutes to and from work.
In the Legislative Analysis for SB 50, bill’s author is quoted as follows:
“Small and medium-sized apartment buildings (i.e., not single-family homes and not high rises) near public transportation and high-opportunity job centers are an equitable, sustainable, and low-cost source of new housing. SB 50 promotes this kind of housing by allowing small apartment buildings that most California neighborhoods ban, regardless of local restrictions on density, within a half mile of rail stations and ferry terminals, quarter mile of a bus stop on a frequent bus line, or census tract close to job and educational opportunities. Around rail stations and ferry terminals, the bill also relaxes maximum height limits up to 45 or 55 feet — that is, a maximum of four and five stories— depending on the distance from transit. Job-rich areas and those serviced only by buses do not trigger height increases, but these areas will benefit from relaxed density and off-street parking requirements that encourage low-rise multifamily buildings like duplexes and fourplexes.”
SB 50 may appeal to a homeowner who values the freedom to divide a large home into a duplex or fourplex, creating the opportunity to house extended family or to generate income from tenants.
And, if that were the sole intent of SB 50, it might be a good thing for housing affordability.
After all, more lenient zoning could potentially increase the number of apartments provided by small “mom and pop” landlords, while also reducing the need for expensive senior housing and assisted living.
Grandma and adult children could have access to affordable housing close to a family support system. Tenants would have more options, and greater competition among small landlords would help to keep rents reasonable.
But, of course, the bill goes much farther.
There’s no question that SB 50 creates more density incentives for real estate developers, and appears to invite corporate and institutional landlords to concentrate their wealth and power in near commercial and transit population centers.
Needless to say, the bill faces stiff opposition from city governments, tenants’ unions, neighborhood and homeowners’ associations, and scores of housing, community, and environmental nonprofit groups.
City and County leaders say that SB 50 would take away local control of land use decisions and zoning, by handing over excessive control to state government to dictate development patterns at the local level.
Other opponents of the bill say SB 50 is all about creating higher residential development profits for home builders, while reducing labor costs for employers. They point to all of the standard arguments against increasing housing density: crowded schools and transit lines, overtaxed water and sewage utilities, scarcity of parking, and poor storm water drainage.
Ironically, as pointed out in the April 22, 2019 legislative analysis, increasing allowable housing density makes land more valuable, which, in turn, increases the cost of housing.
Despite claims of supporters that more density increases affordability, it almost always had the opposite effect.
Valuation of real estate is complicated, but a fundamental principle is that property is as valuable as its highest and best use allows. Land that can only accommodate construction of a few new units of housing is less valuable than land that can accommodate more, all else being equal, and same goes for larger developments versus smaller ones. When zoning rules change to allow more building, property values go up—an effect that was demonstrated in a recent study of upzoning in Chicago. SB 50 allows more units to be built and reduces costs associated with developments by granting additional waivers and concessions of development policies and letting developers off the hook for building expensive parking spots. SB 50 also allows developers to choose the density at which they build, potentially allowing them to maximize profits by building larger luxury units instead of smaller, lower priced ones. In exchange, developers must build or fund some affordable housing. However, California’s existing density bonus program already provides increasing benefits to developers for increasing levels of affordability, and SB 50 grants additional benefits without requiring much beyond density bonus in the way of additional affordable housing.
What about deed restrictions and HOAs?
Notably absent from the list of supporters and opponents of SB 50: community association trade groups and Realtor associations.
And it’s also curious that SB 50 makes no mention of state law overriding covenants and deed restrictions, most of which are enforced by homeowners, condominium, and cooperative associations throughout the state.
So, it’s hard to imagine that an owner of a single family home in an HOA-governed common interest community could ever get away with turning that home into a duplex, triplex, or fourplex.
The CC&Rs would rarely allow it.
And, given the volume of deed restricted housing in California, it’s hard to believe that SB 50 could make even the slightest dent in housing affordability. ♦
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