YIMBY 2019 Plan - Are We All Keynesians Yet?

Members of the Sunrise Movement campaigning for The Plan For a Green New Deal, proposed by U.S. Representative Alexandria Ocasio-Cortez and which CA Senator Scott Wiener supports.

Members of the Sunrise Movement campaigning for The Plan For a Green New Deal, proposed by U.S. Representative Alexandria Ocasio-Cortez and which CA Senator Scott Wiener supports.

The California housing crisis has generated unending dialogue, mostly emanating from the stack-and-pack side. The stack-and-pack rationale is clever, effective and persistent. Their strategies are meticulous. Legislation that overrides city and county laws continues to come down from Sacramento, and neighborhoods continue to change with or without residents’ say so.

However, housing costs have not decreased, nor has middle class exodus to more cost-friendly states abated – probably because one cannot fool Father Market just as one cannot fool Mother Nature. So, as is often the case with supporters of attempted solutions that do not work quite as purported, pro-unmitigated-development factions continue to up the ante.

One such faction is the increasingly visible and vocal YIMBY groups. The YIMBY strategy is radical and long-term. It uses a wide-variety of tools (legislative, legal, social, journalistic) to chip away at a perceived undesirable status quo, to achieve their vision of a desired housing outcome at some point in the undetermined future. As such, YIMBY strategy is worth noting.

A recent article in City Lab, “California’s Pro-Housing YIMBYs Are Making Their Move,” by City Lab writer Kriston Capps offers an excellent picture of YIMBY rationale and strategy. Here is a summary of the article, together with our clarifying notations.

Rationale

YIMBY rationale can be paraphrased or interpreted as a way to grow the movement by gaining sufficient support from lower-income residents to overcome the objections of higher-income residents who will pay the freight of subsidized housing or transit they don’t ever intend to use.

There’s no better example of the tyranny of the ballot measure than Article 34 ... It’s a powerful weapon for communities that want to keep low-income families out—a legal path to de facto segregation along race and class lines.

The words “tyranny of the ballot measure” constitute a contradiction in terms, but have enough gravitas to overcome that problem. Article 34 of the California Constitution is the result of the successful passage in 1950 of Proposition 10, an initiative which stated that before any State or Federal “low-rent housing project” (i.e., taxpayer subsidized) could be built, a majority of qualified voters of the city, town or county in which the project would be built needed to approve it at a special or general election. For example, if residents did not wish their property and other taxes raised, they could vote “no.”

California Strategy

YIMBY strategy aims to build support to change the state constitution in order to remove all roadblocks to housing growth and push for “structural solutions to California’s affordable housing crisis.” These are the principal targets according to the City Lab article.

* Article 34 of the California Constitution, mentioned above: State Senators Ben Allen and Scott Wiener introduced on December 3, 2018, a proposal to repeal Article 34. In a press release posted on Senator Scott Wiener’s website, Senator Allen says,

Voters have made their priorities clear. California must address its housing, affordability, and homelessness crises. And yet we have a decades old law that creates an unnecessary roadblock for cities who are trying to do right by their constituents. It’s time to repeal Article 34 and let cities do what they are intended to do; ensuring that there are safe, livable spaces for all.

It is not entirely clear how “voters have made their priorities clear” that California must address its housing, affordability, and homeless crisis via subsidies and density. High-profile legislation supporting stack and pack such as SB 35, SB 1, and SB 828 emanated out of Sacramento, not the ballot box. However, yes, voters did approve several bond measures intended to fund housing development.

* Article XIII of the California Constitution (Proposition 13): On December 3, 2018, California Assembly Member Cecilia Aguiar-Curry introduced Assembly Constitutional Amendment 1, a resolution to propose amendments to Article XIII. This proposal calls for,

… an additional exception to the 1% limit that would authorize a city, county, or city and county to levy an ad valorem tax to service bonded indebtedness incurred to fund the construction, reconstruction, rehabilitation, or replacement of public infrastructure or affordable housing, if the proposition proposing that tax is approved by 55% of the voters of the city, county, or city and county, as applicable, and the proposition includes specified accountability requirements.

The other exception already imposed on Proposition 13 is the funding of school districts. ACA 1 adds funding of public infrastructure or affordable housing. It also lowers the threshold by which projects involving public infrastructure or affordable housing can pass.

Please note that the proposal specifically mentions not only affordable housing but also “public infrastructure.” For purposes of clarification, here are definitions stated on the proposal:

Affordable housing:

... shall include housing developments, or portions of housing developments, that provide workforce housing affordable to households earning up to 150 percent of countywide median income, and housing developments, or portions of housing developments, that provide housing affordable to lower, low-, or very low income households, as those terms are defined in state law.

Public infrastructure:

... shall include, but is not limited to, projects that provide any of the following,” water or protect water quality, sanitary sewer, treatment of wastewater or reduction of pollution from stormwater runoff, protection of property from impacts of sea level rise, parks, open space and recreation facilities, improvements to transit and streets and highways, flood control, broadband Internet access service expansion in underserved areas, local hospital construction.

Homeowners need to understand that under this proposal, they will be financing with property taxes levied on their property pretty much of an open-ended agenda, with every piece of the agenda approved by a lower percentage of voters. The City Lab article summarized here and Scott Wiener’s website mentioned here do not make that clear.

* California’s Voter Initiatives: “… rule-by-ballot-measure doesn’t seem to be an item on anyone’s agenda. It should be.” Note the previous quote above regarding Article 34, in which voter initiatives are called “tyranny of the ballot measure.”

Beyond California Strategy

The City Lab article summarized here notes YIMBY solidarity with one U.S. Congress proposal and distaste for two items in the U.S. Constitution:

* Plan For a Green New Deal: U.S. Representative Alexandria Ocasio-Cortez is campaigning for the formation of a Congressional Select Committee to draw a climate change plan that would end U.S. use of fossil fuels.

The select committee shall have authority to develop a detailed national, industrial, economic mobilization plan (hereinafter in this section referred to as the “Plan for a Green New Deal” or the “Plan”) for the transition of the United States economy to become greenhouse gas emissions neutral and to significantly draw down greenhouse gases from the atmosphere and oceans and to promote economic and environmental justice and equality.

California Senator Scott Wiener Tweeted on December 5th,

I’m all for the #GreenNewDeal but w/o zoning reform - ie, allowing higher density housing at all income levels near jobs & transit - it’s an incomplete climate agenda. We won’t achieve carbon neutrality w/o changing land use patterns so ppl can drive less.

* The United States Senate and the Electoral College: Both the U.S. Senate and the Electoral College are part of the U.S. Constitution, and therefore out of the reach of reformers without a constitutional amendment. In YIMBY view, they are “structural issues.”

In a way, California’s push for structural solutions to California’s affordable housing crisis mirrors the national Democratic Party’s turn toward process issues to safeguard the nation’s democracy … Certain structural issues—like the permanent advantage that Republicans enjoy in the U.S. Senate or the anti-democratic nature of the Electoral College—are beyond the reach of reformers.

We note that our nation is not a democracy but a republic, precisely so that all states – populous or not — and all residents in those states would have a say. Since at present the populous states happen to be progressive in their view of private property, taxation, public subsidies, and climate policy, obviously progressive groups such as YIMBYs are not happy campers in their need to abide by a national Constitution republican (small “r”) in nature.

Are We all Keynesians Yet?

As we have noted on numerous occasions on this website, creation of abundant housing within limited spaces (within Priority Development Areas and along transit corridors) and in proximity to concentrated job-rich areas (Silicon Valley, San Francisco’s financial district) creates more challenges than it solves.

One obvious challenge is that such strategy does not bring housing prices down within a time frame believers would like to see. Residents today do not want to see changes in 10 or 20 years; they want to see changes that will be useful to them now. Prices for those chosen by central planning as deserving come down in the here and now only through heavy subsidies.

Thus, the extreme need felt by pro-development groups to eliminate roadblocks to tax increases. Taxes are necessary to finance publicly-funded housing, taxes from some are necessary in order to provide incentive tax abatement to others, and taxes are necessary for infrastructure that supports housing development.

High taxes and heavy subsidies make pro-development strategy fall in the Keynesian demand side of the economic spectrum, in spite of all the talk about housing supply decreasing costs. An alternative is application of real supply-side remedies, which require a free market with free choices as to where and how much to build, and residents willing to allow responsible job creators in their neighborhood.

As long as there are disadvantaged people who can’t access housing themselves, there will need to be both demand-side and supply-side solutions. But for the broader affordable housing debate, the emphasis should be much more on the latter. San Francisco is a case study city where every last demand-side strategy—rent control, inclusionary zoning, public housing, an affordability trust fund—has been tried. It remains unaffordable because it hasn’t combined these solutions with a valid agenda to have supply keep pace with population growth … And that gets to the heart of the answer: even the most dogged demand-side analysts must agree that if more supply, and a broader climate of deregulation, does not exist, it will diminish the effectiveness even of their pet programs. Ones like Section 8, LIHTC and Inclusionary Zoning will become inflicted with red tape, higher costs, and less ways to be used. The loser in that situation will be the person trying to pay their rent. “Does America’s Housing Crisis Need Supply-Side Or Demand-Side Solutions?”  The Market Urbanism Report, October 11, 2018.