Terner Center Blog: No Limits

Category Archives: Expanding Access to High Quality Homes and Communities

From Small Steps to Giant Leaps: What Must Come Next for the California Housing Agenda?

On Friday, September 15th, the California Legislature approved a package of 17 bills aimed at putting a dent in the state’s housing crisis. While the votes came down to the wire, in the end, the need for solutions won the day, and in the coming weeks the Governor is expected to sign each piece of legislation, officially ushering in the most significant housing policy changes in recent memory. You can read our recap of these bills in an earlier blog post here.

Drafting, amending, defending and eventually passing these bills was no small feat, and the legislature, the Governor and his administration, and the many groups who participated in the legislative process are to be congratulated. The housing package includes several significant changes, including funding streams to subsidize housing for the state’s most vulnerable, accountability measures to ensure all localities are producing their fair share of housing for all income levels, and measures to streamline development approvals that will accelerate the delivery of homes.

Yet, as Senator Scott Weiner (D- San Francisco), the author of the SB 35 project streamlining bill, has described it, this housing package represents merely a “down payment” on solving the state’s chronic housing shortage. We believe that this is an apt description. While the slew of new legislation makes important improvements, much more must be done to truly reverse the decades of inaction and exclusion that led to our current crisis.

Given the severity of California’s housing deficit, now is not the time to rest on our laurels. The legislature has created momentum which must be built upon and expanded to ensure that significant structural housing reform becomes a reality. As hard fought as these recent victories were, truly bold decisions are needed in the near future to adequately address what has become a seemingly intractable problem.

To move in the right direction, we need legislation that will actually substantially lower the cost of production. While SB 2 and SB 3 add much needed revenue to subsidize housing production, a considerable gap remains in the total funding needed to build enough homes to meet demand. This gap will widen as the cost of development continues to rise. While some of the streamlining bills in this recently passed package may reduce holding and predevelopment costs for select projects, none of the new pieces of legislation directly address the astronomical and growing cost of new construction, and some are likely to add new costs, largely cancelling out any savings achieved from streamlining.

This unresolved cost issue coupled with disincentives for cities to approve their fair share of housing means that leaders across the state need to think bigger. To do so, we first need to understand what is driving these growing costs, and understand what proportion are levied unnecessarily on the backs of new projects through exorbitant fees and exactions, well-meaning yet costly wage requirements, and ever costlier planning and building code restrictions and processes that can string projects along indefinitely. Armed with this knowledge, cities will also need stronger financial tools to produce a range of housing and the infrastructure needs that come with it. To that end, Terner Center is undertaking an array of new research, from understanding the drivers of construction cost increases in California to examining the variability and consistency of local impact fees. This work will help to inform the next generation of policy solutions.

In California, our economy is powered by the very people who struggle to find housing and keep up with excessive rents and prices: from teachers, first responders, and tech workers, to artists, small business owners, charitable organization employees, and healthcare workers. Recent research from UC Berkeley’s Enrico Moretti shows that our inability to house these populations costs the US economy $1.6 trillion a year in productivity. Ultimately, this is not simply a housing crisis: it encompasses significant threats to our environment, social fabric, and economy. We need a next generation of policies that foster a better functioning housing market that can serve the families that comprise the backbone of our economy, while protecting public resources for our most vulnerable populations facing displacement and inadequate housing options. We must also be focused on climate change realities and help bring down greenhouse gas emissions through housing production that reduces the miles Californians travel by car. We need homeownership opportunities for young families just starting out and micro rental units for others. And the opportunity to live affordably should be available everywhere, from dense downtowns to mid-rises in infill areas and even in our single family neighborhoods—which are by far the largest geographic areas in most California cities.

The decisions ahead will require the courage to pursue effective reform with politically difficult solutions. The legislature and Governor will need to summon their strongest political will to meaningfully challenge our entrenched and inequitable housing system with “both/and” solutions that truly support smart growth with controlled costs. The recent housing wins must serve as a catalyst for impactful next steps, and it is our optimistic hope that this momentum is sustained until real, tangible results emerge for housing California’s families in affordable, sustainable and vibrant communities.


Modular Construction in the Bay Area: The Future is Now

This post originally appeared on the ULI San Francisco Blog on August 2, 2017. After years of abstract discussions and false starts, modular building may finally be gaining the momentum it needs to make an impact in the Bay Area. Why now? And why here? On Tuesday, July 18, the San Francisco District Council of the Urban Land Institute hosted “Modular Construction in the Bay Area: The Future is Now”, an event moderated by Terner Center for Housing Innovation Faculty Director Carol Galante. The panel discussion featured four leaders committed to bringing this innovative housing method to scale in the Bay Area: Developers Rick Holliday of Holliday…


Highlights from the Terner Center Promoting Affordability Conference

Though U.S. cities like Boston, New York, San Francisco and Los Angeles are important engines of the American economy, their rapid growth in jobs and populations has not been met with a comparable pace of growth in housing. The result? Increasing pressure on both the rental and for-sale housing markets, and skyrocketing costs of living for a larger and larger proportion of the people who live in these cities.  On Thursday June 1, the Terner Center hosted a special convening intended to delve into this issue, exploring solutions to that could help expand the supply of housing, lower the cost…


Opening Doors to Homeownership Series Part 1: Lease-Purchase

Posted on by Carol Galante, Carolina Reid, Rocio Sanchez-Moyano

A number of recent studies suggest that the American Dream, with its promise of upward mobility, is diminishing for current and future generations as the racial wealth gap grows and access to opportunity shrinks. This troubling trend is most evident in one of the dream’s most potent symbols: homeownership. In recent years, alongside widening inequality, rates of homeownership among young adults and minority families have declined precipitously and, in 2016, the national homeownership rate fell to its lowest level in more than 50 years.  What explains this trend? Working families (and especially lower-income and minority households) seeking to buy their…


Balancing the Burden: Proposing a FAIR Tax Credit for Renters Facing Affordability Challenges

Posted on by Carol Galante, Carolina Reid, and Nathaniel Decker

By most accounts, rents have never been higher. In the United States, over 21 million people see more than 30 percent of what they earn go to rent each month. And over 11 million Americans are paying more than 50 percent of their income to rent their home, leaving little left over for other essentials like healthcare and food, and leaving too many facing a precarious stretch of days until their next paycheck. And this is not just a problem of poverty: because rents have risen faster than incomes, even renters who are working full-time and earning modest wages are…