Thursday, June 9, 2016

Local solutions to regional problems

Housing in the Bay Area is beyond ridiculous.

I'm not an expert in any of the policy areas surrounding housing and how to help improve it.

But, this election season, there is a lot of activity around housing issues. There are measures on the ballot, there are people petitioning, there are candidates making housing a major part of their platform.

Here in my town (Alameda), there has been a lot of activity. The City Council passed Ordinance 3148, making certain new rules.

There is now also a Rent Review Advisory Committee

The Rent Review Advisory Committee (RRAC) reviews complaints of significant rental increases, providing a neutral forum for renters and residential property owners to present their views. It evaluates increases, determines whether they are equitable, and, if not, attempts to mediate a resolution acceptable to all parties.

The Rent Review Advisory Committee does not provide legal advice. Each landlord and tenant is responsible for seeking the advice of legal counsel on any matters or document related to their specific circumstances. The Committee’s recommendations are not legally binding.

The ordinance has only been in effect for a few months, so it's very early days.

Meanwhile, there are already efforts underway to extend and amend the ordinance: Renter’s Coalition Submits Petition

And, as you might expect, there are also efforts underway to repeal the ordinance. It's not unusual to meet both sides collecting signatures on the same trip down the block to the market.

The activity has attracted a bit of media attention: Battle Over Rent Control Heating Up In Alameda

Last year, a raucous city council meeting over rent control in Alameda, population 75,000, resulted in two arrests. Farther north, city leaders of Sonoma County’s Healdsburg, population 11,000, approved voluntary guidelines to keep rent increases to 10 percent or less.

Tenant activists in Alameda and Richmond — a waterfront industrial town of nearly 110,000 — are fighting to place rent control on municipal ballots this fall. So are residents of Burlingame, a pricey, leafy city of 30,000 on the San Francisco Peninsula.

The burst of Bay Area suburban squabbles doesn’t surprise analysts. The median rental price in the five-county San Francisco metropolitan area for February was $3,350, up 10.5 percent from a year ago, according to Zillow. Wages, while high for Silicon Valley professionals, have not kept pace for many other people.

There's a broader discussion going on throughout the Bay Area, too, which is good. U.C. Berkeley Professor Emeritus Richard Walker has a piece in the East Bay Weekly: Why Is There a Housing Crisis?

The prime mover of housing prices is economic growth. The Bay Area has been booming for the last five years, creating more than 500,000 new jobs on a base of 3 million. This is the global capital of tech, the world's most dynamic industry, and all those jobs have drawn in thousands of newcomers looking for housing. Moreover, tech delivers huge profits and pays high salaries and wages, as do other key sectors, like biomedical and finance. The Bay Area's per capita income has long been one of the highest in the country, and high incomes give people the wherewithal to pay top dollar for housing.

Walker favors active local government policies in this area, and encourages regional governments to work on the issues:

It is absolutely necessary to question developers and city planners over what is to be built, how high, how big, and where. A livable city demands good design, historic preservation, neighborhood protections, mixed use, and social diversity, among other things, and figuring out what those things are should be a collective, democratic and, yes, conflictual process of politics and public debate. Nonetheless, opposing all new building, greater density, and neighborhood change is not a viable policy, and we cannot cling to the idea that our town or neighborhood will remain the same in a dynamic urban system.

Here's a thoughtful response, by U.C. Riverside Instructor Nicholas Warino: The Bay Area Housing Crisis is caused by and can be solved by local government

However, if supply cannot keep up with demand--perhaps because local zoning codes are designed to guarantee supply continuously falls further behind demand--then that increase in demand will not lead to those good things I mentioned, but will instead be captured by the owners of the existing supply of housing--landlords and property owners--in the form of higher prices. This is known as "rent seeking," and is closer to theft than honest profit-making. The resemblance to theft is because the increase returns on investment for these property owners is due to a failing of the market to increase competition to their business. Because no one can build new homes to compete with the homes already on the market, the existing landlords are PROTECTED FROM FAIR COMPETITION and can therefore jack up the price without improving what they are selling.

Here in Alameda, of course, one major complicating factor is the decades old "Measure A", which severely limits what types and quantities of housing are allowed to be built in the city.

But there are other complications as well; at least some of them are due to Alameda's nature as an Island City.

For example, consider this intricate arrangement: Council to Consider Taking Over Estuary

The Army Corps of Engineers wishes to split the Oakland Inner Harbor Tidal Canal and transfer half of the ownership to the city of Oakland and the other half to Alameda. The corps’ staff met the council on Sept. 2, 2014 and again on Feb. 3, in closed session to discuss whether the city would be interested in negotiating the transfer and if so, under what price and terms.


The transfer would include three parcels; the open water, commercial and residential parcels. The city will be responsible for the survey, mapping and maintenance of the commercial parcel.

There are various posters and placards posted around the city about upcoming open meetings; the project apparently is moving forward, and involves some complicated arrangement where the city will acquire ownership in the land and then, essentially simultaneously, turn around and sell that land to various private development companies which will in turn do the various things they want to do to develop the land (housing projects, marina projects, office projects, industrial projects, etc.)

I've heard it said that: "if you think the law of the land is complicated, it's nothing compared to the law of the sea".

Here in Alameda, we get them both.

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