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The Naive Economics of SB 50: Part I – Understanding Supply and Demand

January 27, 2020

By Michael Barnes :marinpost – excerpt

San Francisco State Senator Scott Wiener, along with our own State Senator Nancy Skinner (in the news recently), have resubmitted their zoning bill SB 50, which was converted to a two-year bill at end of the last legislative session. The final version of the bill is not yet available, but the flaws in previous incarnations of this bill no doubt will remain.

The rhetoric from the bill’s supporters has been sloppy enough that I think it’s time to frame the issues the bill raises in the rigorous analytic framework of neoclassical economics. SB 50’s emphasis on housing supply recalls the supply-side economics of the Reagan administration. But neither supply-side economics nor SB 50 are based on mainstream economics.

In what follows, I’ll lay out the groundwork my analysis, which will be familiar to any undergraduate economics major. I know this because in the early 1990s, I taught economics at UC Berkeley as a graduate student instructor and as an acting instructor…(more)

RELATED:

The Naive Economics of SB 50: Part II – The Limits of Upzoning

By Michael Barnes :marinpost – excerpt

In the real world, building housing is subject to many constraints. In the current Bay Area context, zoning rules are typically not the binding constraints for two reasons. First, there are many other constraints that are binding. Second, zoning rules don’t work quite in way that many SB 50 supporters seem think they do.

In an excellent letter date June 14, 2019 (here), the City Council of Rohnert Park sent to various legislators a list of the many constraints on building new housing. Excerpts from the letter appear in italics below:

There is a flood of proposed legislation in California intended to address housing that are a result of a misdiagnosis of the root causes of the housing shortage. The bills seem to assume that a lack of approvals is unduly constraining housing construction. In reality, it is a complex problem with many contributing factors to the housing shortage including:

An economic expansion including significant regional construction demand in Silicon Valley and San Francisco for office buildings and campuses A lack of specialty trade construction subcontractors A lack of construction workers Immigration uncertainty and hostility from federal government Cost, long delays, and uncertainty associated with the California Environmental Quality Act lawsuits Tariffs and trade uncertainty driving up materials costs A building boom to replace homes lost due to wildfires Lack of available sites due to land use protections such as urban growth boundaries, community separators, etc. High costs associated with mitigating water, sewer, transportation, and environmental impacts including endangered species (e.g. California tiger salamander, various vernal pool wild flowers) State regulatory requirements such as low-impact-development storm water requirements Affordable housing inclusionary requirements added to market rate housing projects Loss of redevelopment which was the greatest affordable housing producer in the history of California Federal tax reform which lowered the value of affordable housing tax credits leading to a widened funding gap for affordable housing projects Increased local government capital project spending from new gas taxes, regional tolls and other revenue improvements Whole-house-vacation-rentals taking housing stock off the market Lender reticence to extend credit to construction projects post 2008 melt-down Lack of affordable housing gap funding. Rather than address those issues within its control, some state legislators are seeking to impose “by-right” development projects on local governments, elimination of fees, removing parking, overriding local plans, and limiting public input(more)

Inside Livable California’s fight for single-family neighborhoods

January 26, 2020

By Marisa Kendall : mercurynews – excerpt

The anti-SB 50 group is trying to diversify, shed its NIMBY image.

As the state attempts to regulate its way out of a bone-crushing housing shortage, one group has emerged as the voice of residents and city officials who don’t want Sacramento taking away their power to control development in their neighborhoods — Livable California.

Not yet two-years-old, the small San Francisco-based nonprofit has already twice helped block Sacramento’s efforts to force cities to approve larger residential buildings. Now, as round three of the epic state vs. local control battle unfolds, Livable California is expanding its reach and unveiling new strategies it hopes will help kill Senate Bill 50 once and for all this legislative session.

The group is trying to shed the suburban, “NIMBY” image it has in some circles by diversifying its board, emphasizing concerns about the zoning reform bill’s impact on affordable housing, and aligning with anti-gentrification groups — even protesting alongside Oakland activists Moms 4 Housing earlier this month.

It is also ramping up its presence in Southern California, and working to become a truly statewide organization with local chapters…(more)

LC Article

Good article on the battle between the forces for and against local control. Watch what happens as the economy shifts and the population moves with it. We know there are a lot of empty condos on the market and developers are not building projects they are entitled to build. SB50 does nothing to persuade faster building on entitled properties. What is truly amazing about Livable California is that it has remained bi-partisan with Republicans, affordable housing groups, anti-tax liberals, and socialists rallying around concerns about the loss of liberties and choices of lifestyles. When you can fire up such a disparate group of people around a common goal you have accomplished quite a lot. Some of the candidates might take note of this.

State Sen. candidate Jackie Fielder introduces housing plan, says SB 50 is on its ‘last legs ’

January 25, 2020

By Julian Mark : missionlocal – excerpt

State senate candidate Jackie Fielder on Wednesday announced a housing plan that drew a sharp contrast to the policies of the incumbent she’s running to unseat. It focuses on the production and preservation of affordable housing, instead of the streamlined construction of dense, market-rate developments.

Sen. Scott Wiener “has stood by the conservative economic framework that we can simply build our way out of the housing crisis,” Fielder said, standing among some two dozen supporters at the 16th Street BART plaza at noon.

By contrast, the 25-year-old Fielder laid out a platform, called “California Homes For All,” which emphasized that “housing is a human right.” That notion, she charged, has been lost on city politicians who have “welcomed real estate development with open arms.” She called Wiener the “most real estate-backed politician sitting in the California state legislature.”

Meanwhile, “thousands of working-class people and people of color are being evicted out onto the street without just cause,” she said. “And that’s why I’m running to replace him.”… (more)

If you feel like you prefer to support Jackie’s proposal to protect existing housing and tenants and put the needs of residents over greed for profits, you may want to support the opposition by contacting the state reps to let them know you oppose the bill. Ultimately, the voters will determine how the state performs through the election process. Quite a few candidates are running to protect local control. Easy actions you may take are here: https://www.livablecalifornia.org/act-now/

‘Mad Mob’ aims to influence SF City Hall on mental health policies

January 25, 2020

By Joshua Sabatini : sfexaminer – excerpt

They are fed up with City Hall telling those who need the services what’s best for them

Calling themselves the Mad Mob, a new group of those with mental health disabilities in San Francisco marched on the Department of Public Health Friday demanding increased spending to expand voluntary services.

They are fed up with City Hall telling those who need the services what’s best for them and want to play a larger role in the future of policies around mental health services.

The name has several intentions, including to show “we are a forceful group working together as a team,” said one of its organizers, Eddie Stiel, a longtime Mission District resident who suffers from from depression and anxiety…(more)

The group, launched with the help of the nonprofit San Francisco Senior and Disability Action, formed largely in reaction to the Board of Supervisors and Mayor London Breed approving a program in June to increase The City’s authority to compel people into court-ordered conservatorship under SB1045, which they consider a “war on unhoused and disabled people.”

No one has yet been conserved under the program eight months later, as previously reported by the San Francisco Examiner. A mayoral spokesperson has said The City remains working out the logistics for the legal process through the courts but expects “we will be able to proceed with advancing cases soon.”…(more)

California legislators should take a breath on housing ‘crisis.’ Looking at you, Scott Wiener

January 24, 2020

By Susan Kirsch, Special to CalMatters : calmatters – excerpt

Sen. Scott Wiener’s controversial Senate Bill 50 is huffing and puffing its way back to the 2020 California legislative session. It aims to blow down formerly protected constitutional authority for cities to tackle their own planning and zoning.

Wiener’s march to Sacramento is with a choir of politicians who sing an off-key song of crisis. The tune goes like this:

“We have an affordable housing crisis. Cities are to blame. We have to do something. We’ll replace local control with top-down rezoning in the form of unfunded mandates dictated by developers and real estate investors.”

Let’s unpack these lyrics to discover why it should be stopped.

In the first verse, Wiener and some colleagues have accepted unproven assumptions about the crisis…

In the second verse of this irritating song, Wiener and friends claim cities are to blame for housing woes. They ignore corporate complicity…

Instead, they peddle the idea that housing and affordability will improve if they abolish long-held practices of community engagement with guidelines from elected officials, general plans, housing elements, and hard-fought provisions to protect the environment.

How did we get to this place so lacking in harmony?…(more)

Impact Hub San Francisco Closure

January 23, 2020

impact hub – excerpt

Impact Hub San Francisco has been a driving force in growing both the Impact Hub Network and social innovation movement in North America and beyond. However, after over 10 years of operations we are sad to share Impact Hub San Francisco has had to close.

As one of the first spaces to open in North America by joining the Impact Hub network in 2009, Impact Hub San Francisco has had significant impact in their community including housing and supporting the Social Capital Markets Conference (SOCAP) in its early years. In 2016, they took a grand leap to relocate to a 25,000 sq/ft location in the Mission District and signed a landmark Community Benefits Agreement that outlines their commitment to the Mission community. For the last few years, with the recent relocation came unforeseen higher costs and intense competition, and have been unable to make the business model within this new building work. As a result, unfortunately as of January 21st 2020, they have had to make the difficult decision to close doors.

We are saddened to lose this landmark Impact Hub and seek to support their members and partners during this transition. The Impact Hubs in North America and around the globe remain committed to supporting collaboration efforts focused on the Sustainable Development Goals (SDGs) through incubation, acceleration and scaling programs for social entrepreneurs and innovators from all sectors.

We thank Impact Hub San Francisco for their years of dedication to social entrepreneurs and bringing greater awareness to impact driven work.

To find out more about Impact Hub we invite you to take a look at our other Impact Hubs in the region:…(more)

Fact or Fiction? A Look At Claims About SB 50, One Of California’s Most Controversial Housing Bills

January 22, 2020

By Chris Nichols : polifact – excerpt

California’s Senate Bill 50 would allow cities to boost housing density near transit and job centers.

When one of the most contested California housing bills in years resurfaced at the state Capitol this month, so did the heated, often exaggerated claims about how it would ease the state’s affordable housing crisis — or possibly make it worse.

Senate Bill 50, authored by Democratic state Sen. Scott Wiener of San Francisco, would require cities and counties to allow higher-density housing near job and transit centers. Most new units would be priced at the market rate, but the bill requires up to a quarter to be affordable…

Housing experts don’t dispute the idea that SB 50 would lead to greater supply. They say high-paying jobs are increasingly concentrated in the state’s urban cores near mass transit. And there’s strong demand for more housing in those areas from upper-income earners.

But the experts say the prediction about prices dropping for the middle class is oversimplified and not likely to materialize, unless many other conditions are met

If more moderately priced housing is built, prices could decrease somewhat as owners vacate their older apartments, providing more affordable units for those who earn less.

He said achieving an overall drop in prices also assumes California’s population stays constant. Growth has slowed in the state, but not completely…

In a follow-up interview last week, Wiener acknowledged SB 50 would not provide “an overnight change.” He said, however, that “increasing the supply of market rate housing, over time, will reduce costs.”…

In the end, the experts agreed that under certain scenarios, the growth in housing prices could start to stabilize with more market-rate supply. But that’s not the same thing as bringing those prices down…

“It’s still a gentrification machine. It still favors new luxury units,” wrote Livable California, another group opposed to SB 50, in a list of talking points it distributed this month…

“It is completely inaccurate to say [smaller counties] have been excluded from the bill. They are in the bill. The bill applies to them. The bill was amended to provide a lighter touch to small counties,” Wiener added.

He said he wanted to treat all counties the same, but the change was part of a compromise in a Senate committee last year to move the bill forward…

We will let Wiener’s words stand as our best argument against SB50.

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