Investment without Displacement: Increasing the Affordable Housing Supply MIRIAM ZUK, PH.D. UC BERKELEY ANNA CASH PAIGE DOW JUSTINE MARCUS
Bay Area on the Rise $100,000 Bay Area Gross DomesDc Product (GDP) Per Capita GDP (Current US $) $90,000 $80,000 $70,000 $60,000 $50,000 Bay Area California United States $40,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sources: US Bureau of Economic Analysis, MTC Vital Signs, CA Dept. of Finance
Declining poverty Growth in high wage jobs Low unemployment Income inequality Rising rents Jobs and housing mismatch Suburbanization of poverty
Homeownership Out of Reach $1,200,000 Median Home Value, 1997-2016 Median Home Value (2016$) $1,000,000 $800,000 $600,000 $400,000 $200,000 $- San Jose Metro Area San Francisco Metro Area Bay Area Average California United States Source: Zillow, ZHVI All Homes (SFR, Condo/Co-op) Time Series January 1997 November 2016
Rent Over Time: Bay Area vs. California $4,000 Median Rent, 2011-2015 Median Rent (2015$) $3,500 $3,000 $2,500 $2,000 Bay Area Average San Jose Metro Area San Francisco Metro Area California $1,500 2011 2012 2013 2014 2015 Source: Zillow Rental Index Multifamily, SFR, Condo/Co-op Time Series
Economic Prosperity is Not for All $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 Computer related Doctors EducaDon, training, and library ConstrucDon Building and grounds maintenance Food preparadon and serving $0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: American Community Survey, 1-yr estimates,, 2006
Wages Have Not Kept Up With Rents 15% Median Rent and Income 10% Percent Change Since 2007 5% 0% -5% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Income Rent -10% Source: American Community Survey 1 year estimates Note: All values adjusted to 2015 dollars
Not Enough Supply to Meet the Demand 700,000 600,000 Bay Area Renter Households 2015 500,000 237,252 ShorXall 400,000 480,407 LI (Low Income) 300,000 200,000 100,000 0 163,187 202,644 Renter Households 81,651 17,456 23,569 Affordable and Available Rental Homes VLI (Very Low Income) ELI (Extremely Low Income) Source: US Census Bureau, American Community Survey
Low-Wage Job Growth vs. Low-Cost Housing Production 22,500 Low-Wage Jobs and Housing Permits, 2007-2016 17,500 12,500 7,500 Low-Wage Job Growth (2010-2014) New Low-Wage Housing Permits (2007-2016) 2,500-2,500 Alameda Contra Costa Marin Napa San Francisco San Mateo Santa Clara Solano Sonoma Sources: US Census LEHD On the Map, Annual Housing Element Progress Reports (APRs)
High-Wage Job Growth vs High-Cost Housing Production 80,000 High Wage Jobs and Permits, 2007-2016 70,000 60,000 50,000 40,000 30,000 20,000 High-Wage Job- Growth (2010-2014) New High-Wage Housing Permits (2007-2016) 10,000 0 Alameda Contra Costa Marin Napa San Francisco San Mateo Santa Clara Solano Sonoma Sources: US Census LEHD On the Map, Annual Housing Element Progress Reports (APRs)
Majority of Housing Permitted is for Higher Income Groups 100% Permits Issued 2007-2015 Percent of Permits Issued 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Above Moderate Moderate Low Very Low Source: Association of Bay Area Governments
Affordable housing production lags behind From 2007-2014, region has permitted < 1/3 of the units allocated for low and moderateincome >99% for abovemoderate Percent of RHNA Requirements 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Percentage of RHNA Requirements Met (2007-2014) Very Low Low Moderate Above Moderate Total Source: Association of Bay Area Governments
Subsidized Housing Cannot Keep up with Demand Affordable housing developments in the Bay Area have large waitlists: San Leandro Marea Alta development: 18,000 interested in 115 affordable units Fremont MidPen Housing: 7,000 interested in 64 units Oakland MacArthur BART and Lake Merritt developments: 10,000 interested in 176 total units After an affordable housing development is leased up, waitlists can still have thousands of people on them. East Bay Asian Local Development Corp. properties waitlists often range 2,000-3,000 Source: KQED News
What are some of the barriers to creating new affordable housing?
Barriers High land and $400,000 construction costs Construction labor in $350,000 CA metros = 20% higher than the rest of $300,000 the U.S. $250,000 Tax policy $200,000 fiscalization of land use $150,000 NIMBYism $100,000 Entitlement $50,000 uncertainty, timing and costs $0 Land Cost (Per Acre) Land Costs Comparison Average U.S. Metro Area California Coastal Metro Area San Francisco Source: California Legislative Analyst s Office
Loss of Funding Source: California Housing Partnership Corporation
Why is it important to create new housing affordable to low income households?
Why not just build more marketrate housing? Some argue that we should focus on building market-rate housing and allow the process of filtering to bring naturally affordable housing to the market. But
The limitations of filtering It doesn t work in gentrifying neighborhoods: Changes in housing preferences to architecturally significant property has disrupted the filtering process More likely to see reverse filtering, also known as filtering up in hot neighborhoods It can take decades. Rent of a typical unit only declines 0.3% each year 15 years before units filter down to 80% median income 50 years before units filter down to 50% median income
Subsidized housing is more effective Market rate housing production in 90s resulted in lower median rent today, but also higher cost burden for low income renters Subsidized affordable housing produced in 90s had twice the impact as market rate housing in mitigating displacement
What are some of the tools to build affordable housing?
Creating New Affordable Housing Leveraging the Market Density bonus Accessory Dwelling Units (ADUs) Tax exempdons Permit streamlining Reduced parking requirements Inclusionary zoning Commercial linkage fees Impact fees GeneraDng Units Public housing Land banking Land value capture Community Land Trusts Public land disposidon Public Investment Bonds for affordable housing construcdon Housing trust fund Housing levy GeneraDng Funds
Success Story: Commercial Linkage Fee in Redwood City City Council passed Affordable Housing Impact Fee Ordinance in 2015 Includes both residential and commercial linkage fees Commercial rates: - $20/sq.ft. office - $5/sq.ft. hotel and retail Impact fees go to new City Affordable Housing Fund Utilized San Mateo 21 Elements Nexus Study
Success Story: Tax Incentive for Affordable Housing in Portland, OR 10-year property tax exemption on new housing projects with at least 20% below market rate units Targeting areas close to transit, pedestrian infrastructure, and in areas with limited affordable housing $3 million/year cap on tax break Example: Burnside Street Tower, 57 workforce housing units (<60% AMI)
What are some success stories and challenges in the Bay Area?
Today s Panel Rick Jacobus Gloria Bruce Kristy Wang Lewis Knight Street Level Advisors SPUR East Bay Housing Organiza8ons Facebook