Opinion

Developers Aren’t Always Wrong

Developers Aren’t Always Wrong

 

I got some strong feedback from yesterday’s defense of Andrew Keatts’ look into density restrictions and the 40th anniversary of the 30-foot height limit along the coast.

In it, I said that government solutions were only a “drop in the bucket” of the local housing supply and therefore unlikely to move the market in favor of affordability.

Restrictions on density and development curb housing supply and therefore buoy the cost of property and, thus, housing.

I knew that’d get some response — and it did. Here’s Lucas O’Connor, communications strategist for the Labor Council:

There are many paths to “affordable” — generally overlapping. While supply and density is relevant, it seems unproductive to treat degrees of supply-side, trickle-down market saturation as the best way or something close to the only way. It doesn’t mean that you’re shilling for developers, but it does suggest that you’re (probably subconsciously) accepting their premise even before grappling with the issue.

I’ll go ahead and say I’m consciously accepting the premise that supply and demand is determining the price of property and that that’s having a major effect on housing affordability.

If someone evil also holds this view, I guess I’ll have to deal with the consequences of agreeing with them.

As I have reviewed previously, those who manage to secure a subsidized apartment are very fortunate. The number of people being served by subsidized city efforts is rather tiny. I’m hard-pressed to imagine how these efforts can expand so much that they impact the market of very low-income residents, let alone the entire market.

Frankly, the whole market needs to be influenced. If high earners spend less on housing there’s more to spur the rest of the economy, to help them improve their quality of life and to encourage investment and entrepreneurship in sectors apart from housing.

When the city put together the housing element of its general plan, its researchers identified five impediments to affordable housing in San Diego:

• Land costs.

• Infrastructure deficiencies in older urbanized communities.

• Permit processing and development review procedures.

• Construction defect litigation.

• Community opposition to higher-density and affordable housing developments.

All of these are about housing supply or adding to housing supply.

Here’s how Matt Yglesias describes it in his book, “The Rent Is Too Damn High”:

Suppose we not only want everyone to afford a “place to live” but specifically a place in a safe neighborhood with decent public schools within a reasonable commuting distance of the central business district of an economically vibrant metropolitan area … That is, by today’s standards, a nearly utopian vision. Yet technologically speaking, it is almost within our grasp. The actual cost of building homes is hardly trivial, but it’s not too much for the vast majority of American families to be able to afford one. The scarce factor is land and permission to build on land. … progressives must see that scarcity is the enemy of equality.

Murtaza Baxamusa, a maven of affordable housing issues also from labor, explained land costs like this on our site:

In a land-constrained area like San Diego, the high value of land is one of the largest components of home prices. In 2004, land value accounted for 81 percent of the market value of a home in San Diego compared to 50 percent of the market value of a home nationally. In other words, housing is not affordable because land prices keep rising. Land prices rise because supply is fixed (our city is cradled within beautiful canyons, deserts, beaches and mountains), yet demand keeps growing (population and jobs).

As Baxamusa wrote, the need for housing is greater than ever.

Seems he is accepting developers’ premise about supply and demand as well. As he points out, the city will need 88,000 units by 2020. Even if that projection is 150 percent too high, it’s still a significant challenge.

If there’s even one irrational restriction on density, or one stupid bureaucratic impediment to building, it’s one too many.

Baxamusa proposes some quid pro quos for allowing developers to build more. I don’t think they have to be ignored.

Supply of homes isn’t the only way to address affordability, but it’s more than just a “relevant” discussion.

Community opposition to higher density developments is a given and it’s far more risky to address it than to just go along with it or even stoke its flame.

There is a flame. Developers have baited and switched this community over and over again, simultaneously managing to secure public property for their own use while using political games — or worse — to get unpopular projects through a grimy system. Then they wonder why they have so little public trust when the city lines up for a big collective effort.

Don Wood, the commenter who thought we were on a “jihad” against the height limit, added this on my post:

Sometimes it seems that VOSD reporters are more interested in stirring up controversy than they are in reporting the news. “Let’s you and him fight” journalism. Throwing out unsupported assertions claiming that coastal height limits are the cause of suburban sprawl, when the simple economics of zoning bribery causes it. If we repealed Prop D tomorrow, McMillan and Baldwin would continue building sprawl subdivsions on Otay Mesa and north county, since its [sic] the land upzones that are making them richer. Please, let VOSD focus on reporting the real news instead of manufacturing “news” and controversy where there is none.

I think we highlighted another person’s comment that height limits and building restrictions in urban areas cause sprawl. It’s not something we took a huge stand on. And nobody’s proposing that we repeal the height limit.

That’s not “manufacturing news.” The housing affordability crisis and its effect on the economy is a perpetual story.

Across the city, if the economy continues to improve and population swells, we’re going to see fight after fight of dense development proposals pitted against a community that doesn’t want them. The proposals will need City Council support, because they’re often going to be vastly different than projects imagined by decades-old community plans.

And while our streets, sidewalks, parks and other infrastructure deteriorate, these are going to be awful debates.

Let’s do better.

I’m Scott Lewis, the CEO of Voice of San Diego. Please contact me if you’d like at scott.lewis@voiceofsandiego.org or 619.325.0527 and follow me on Twitter (it’s a blast!):

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Scott Lewis

Scott Lewis

I'm Scott Lewis, the CEO of Voice of San Diego. Please contact me if you'd like at scott.lewis@voiceofsandiego.org or 619.325.0527 and follow me on Twitter (it's a blast!): @vosdscott.

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66b7e6aa-7173-11e2-88e2-33cdcb2acfeb
66b7e6aa-7173-11e2-88e2-33cdcb2acfeb

Regarding loans/interest/currency, we have similar problems with student loans. The gov't doesn't care about debt. They'll print an endless amount of money to give to students, and universities will continue to raise their tuition sky high. No biggy. Now you just need an extra 10k of debt to get a degree. Don't worry. The government can always print more for you, and you can always work a few extra years to pay off the loans (assuming that you can get a job). Somehow the gov't attempts to subsidize education and housing always seems to hurt us more than it helps. Inflation results in a form of indirect taxation by reducing what we can buy. The excess debt required to go to school just means less buying power for college graduates who can actually find jobs. The gov't is here to help. Noble, but sometimes counterproductive.

shawn fox
shawn fox subscriber

ir "affordability" problem? Market theorists say, well then we need fewer janitors so that the scarcity of labor will require their wages to be higher. Now some planner will come along and say that we need to figure out how many janitors there should be and try to educate or direct people into higher paying professions so that we have just enough people in each profession!

shawn1874
shawn1874

ir "affordability" problem? Market theorists say, well then we need fewer janitors so that the scarcity of labor will require their wages to be higher. Now some planner will come along and say that we need to figure out how many janitors there should be and try to educate or direct people into higher paying professions so that we have just enough people in each profession!

Erik Bruvold
Erik Bruvold subscribermember

At the core, the issue for me ultimately is what is more environmentally friendly - building up along the coast where mass transit is actually possible and the environmental impacts from cooling and heating less or sprawling all the way to Brawley - and having people commute in for 2+ hours each way? You really DON'T get door #3 of trying to limit growth in both places.

ErikBruvold
ErikBruvold

At the core, the issue for me ultimately is what is more environmentally friendly - building up along the coast where mass transit is actually possible and the environmental impacts from cooling and heating less or sprawling all the way to Brawley - and having people commute in for 2+ hours each way? You really DON'T get door #3 of trying to limit growth in both places.

Richard Ross
Richard Ross subscribermember

It would appear that those who keep advocating increasing population density here in San Diego continue to ignore the facts of life here. This was originally desert like and as population has increased our water supplies have both decreased in availability and increased in cost. Developers advocate projects like the convention center expansion because the long term jobs are low paying and their workers need affordable housing..which means more construction work for the developers. AKA in San Diego another "scam whot am"

Activist
Activist

It would appear that those who keep advocating increasing population density here in San Diego continue to ignore the facts of life here. This was originally desert like and as population has increased our water supplies have both decreased in availability and increased in cost. Developers advocate projects like the convention center expansion because the long term jobs are low paying and their workers need affordable housing..which means more construction work for the developers. AKA in San Diego another "scam whot am"

Allen Hemphill
Allen Hemphill subscribermember

Seems crazy to demonize developers.

Akamai
Akamai

Seems crazy to demonize developers.

Erik Bruvold
Erik Bruvold subscribermember

It is essentially worthless because that housing will never/can't be built. All things being equal - do you think North Park or Midway would be better for housing? I know my vote. Ditto North Park vs. PB.

ErikBruvold
ErikBruvold

It is essentially worthless because that housing will never/can't be built. All things being equal - do you think North Park or Midway would be better for housing? I know my vote. Ditto North Park vs. PB.

Erik Bruvold
Erik Bruvold subscribermember

By focusing on teachers I think we ask a different question - what kind of home do we want folks required to get a 5 year college degree to live in on 50K a year? Even after the collapse that is still a market that is being ill-served and, in my mind, supply is the ONLY answer. You are not going to subsidize your way to affordability for that group and having teachers have to commute in from Hemet is a bad thing.

ErikBruvold
ErikBruvold

By focusing on teachers I think we ask a different question - what kind of home do we want folks required to get a 5 year college degree to live in on 50K a year? Even after the collapse that is still a market that is being ill-served and, in my mind, supply is the ONLY answer. You are not going to subsidize your way to affordability for that group and having teachers have to commute in from Hemet is a bad thing.

Kim Elliott
Kim Elliott subscribermember

As for the headline, it is being printed out and posted on my wall. :)

Kim Elliott
Kim Elliott

As for the headline, it is being printed out and posted on my wall. :)

Carolyn Chase
Carolyn Chase subscribermember

Capital costs are currently low. This is a situation where if you build the right designs for the right places, things can get done. I saw some of them when I was on the Planning Commission and visited some older examples in the City to see how they work. The definition of Affordable matters. You cannot expect the real estate market to provide for those who can't afford rising rents and rates. You can identify how many units can be subsidized via zoning policies and specific projects.

Carolyn Chase
Carolyn Chase

Capital costs are currently low. This is a situation where if you build the right designs for the right places, things can get done. I saw some of them when I was on the Planning Commission and visited some older examples in the City to see how they work. The definition of Affordable matters. You cannot expect the real estate market to provide for those who can't afford rising rents and rates. You can identify how many units can be subsidized via zoning policies and specific projects.

Jim Jones
Jim Jones subscriber

The things we need to fix here are the things that are eating away at our quality of life and that are driving business away. Planning to warehouse "those people" in little stacked boxes with forced mass transit isn't doing either.

Jim Jones
Jim Jones

The things we need to fix here are the things that are eating away at our quality of life and that are driving business away. Planning to warehouse "those people" in little stacked boxes with forced mass transit isn't doing either.

Joe LaCava
Joe LaCava subscribermember

Also lost in the conversation is that the current community plans and zoning *already* allow for the housing growth projected for our city. As noted our city's share of state-wide growth is 88,000 units over the next 10 years. The city has the land use regulations in place to add 126,000 units (http://www.sandiego.gov/planning/genplan/heu/pdf/novemberhouse121115.pdf). Whether the current plans/zoning is the right way for our city to grow, whether our communities have the infrastructure to support that growth, whether we as a city can afford to grow in that matter, whether those plans will provide for unsubsidized affordable housing, and whether current economics will allow that growth to happen are all important questions to be debated.

jlacava
jlacava

Also lost in the conversation is that the current community plans and zoning *already* allow for the housing growth projected for our city. As noted our city's share of state-wide growth is 88,000 units over the next 10 years. The city has the land use regulations in place to add 126,000 units (http://www.sandiego.gov/planning/genplan/heu/pdf/novemberhouse121115.pdf). Whether the current plans/zoning is the right way for our city to grow, whether our communities have the infrastructure to support that growth, whether we as a city can afford to grow in that matter, whether those plans will provide for unsubsidized affordable housing, and whether current economics will allow that growth to happen are all important questions to be debated.

Don Wood
Don Wood subscriber

Hope you'll do some more article after you read up and do your homework.

Don Wood
Don Wood

Hope you'll do some more article after you read up and do your homework.

Murtaza Baxamusa
Murtaza Baxamusa subscribermember

There is no such thing as a free lunch.

Murtaza
Murtaza

There is no such thing as a free lunch.