Three on Housing: Walkability, Taxes, and ADUs

17 Replies to “Three on Housing: Walkability, Taxes, and ADUs”

1. https://en.wikipedia.org/wiki/California_Proposition_13_%281978%29

   2016-1978 = 38 years. That’s how a piece of legislation that can do a lot of damage can stay in effect. Read the link for the result and the political dynamics behind it and start thinking.

   Tim Eyan’s worst has been around what, half that? If anybody’s got any strategy and tactics, I think this is a major priority for anybody wanting to get anything like transit done.

   Wikipedia piece uses the quote “Third Rail” to indicate sudden political death for any elected official even to mention it.

   I suspect that since major supporters are people nearing the end of their lives, Nature’s own term limits could start to turn down the voltage. Though in 38 years, somebody 30 now will be about 70.

   Any ideas?

   Mark

   1. Proposition 13 has begun to create a European-style medieval gentry, where retirees live in homes that are ill-suited to them for way too long because the taxes are lower than they would be in a small condo. Then, the last parent dies and strategically arranges to transfer their home to a child, who moves into the house again without a reassessment on taxes. It’s systemic madness and this neo-feudalism is encouraged by this referendum action. Tech money is the only thing that is interrupting this emerging pattern. Pacific Heights is increasingly becoming a neighborhood of Downton Abbeys.

2. Ha. Just when I thought I’d heard every stupid thing possible about Bay Area politics…

   1. Finally scientific evidence against Natural Selection. Or maybe even a starving giant prehistoric hyena has his limits.

      Seriously, read the Wikipedia page. It looks to me like the people who benefit have every reason to defend this legislation, and the ones who don’t either are either too busy to vote, can’t see where it hurts them, or just leave.

      But maybe also, if younger people who want to stay and live in a nice neighborhood, and also get educated once they have schools to let them earn enough not to move, will start hating shopping malls and office parks bad enough to dispossess them.

      Worst thing, Al, is that Prop 13 has existed so long nobody knows it’s there.
      Pretty much like Tim Eyman’s work, except older. So maybe first political move is an ad campaign in its favor.

      Mark

      1. Prop 13 is indeed a thing. I used to live in the Bay Area, where I worked in a cubicle, which gives the illusion of privacy but doesn’t block the sound when you make phone calls. So one of my colleagues unwittingly shared his somewhat shady-sounding machinations to avoid property tax reassessments with the entire office! At the time I thought it was pretty annoying, but now I appreciate it as a perfect illustration of the tech industry’s cultural attitude toward personal responsibility: everyone must be responsible to me, but I must be responsible to no one!

         … I just hadn’t heard cities were actively avoiding zoning for housing because of Prop 13. Truly, the Bay Area’s short-sighted, irresponsible cities all deserve each other.

      2. Of course, the impulse behind Prop 13 is a noble one: to keep people with low or fixed incomes from being driven out of their longtime homes in boom cycles! California and the Bay Area in particular sure have seen some wild booms! It may seem odd for someone sitting on a house representing over a half-million dollars in accumulated wealth to cry poverty, but as some people have pointed out around here, if you don’t have much income, it’s not a very liquid asset! Any other place you’d live would break you just as badly!

         So the trouble comes when:
         1. High-income people with lots of other accumulated wealth and many good options hijack this noble impulse to maintain rock-bottom tax bills for themselves.
         2. Leaders treat Prop 13 as a substitute for serious housing policy.

         Prop 13 (or something with its general shape) might be fine if it was means-tested. In the meantime, city leaders need to start acting like leaders — if they want to do nothing but maximize revenue they should go into business.

      3. Yeah, but wealth is wealth. Reverse mortgages are possible, and in cases like that, make a lot of sense.

         The big problem is that California had a mix of problems. Housing prices that went up like crazy (especially with inflation), an over reliance on property taxes and an initiative process that is way too powerful. It is quite reasonable to pass legislation, for example, that allows for a lean against the house, if the owner feels like the property tax is too high, then just let the bill pile up. This would be similar to having a reverse mortgage — once the owner dies (or the house is sold) the state gets their share.

         It is quite possible that the property taxes were just too high, and needed to be lowered a bit (while other taxes went up). But instead there was an initiative, and like most initiatives, people want it both ways. We have passed initiatives in this state at roughly the same time which limit taxes while increasing spending on education. That is nuts. That is contradictory. There is no way a legislature would do that, because it just doesn’t make any sense. But California did the same thing. Proposition 13 and three strikes and your out. In other words, greatly increase the amount of money spent on prisons while decreasing taxes. It makes no sense, but that is what voters do — they want magic.

      4. It’s possible to protect elderly homeowners with a narrower tax break or other program. Although there should be a limit on how grand a house and for how long. I didn’t read or watch news in my teenage years (“It’s all mind-control propaganda”) so I don’t know what proponents were saying then, but extrapolating backward from more recent events, I’d assume that protecting the elderly was only a small part of it, and most of it was a general rant against taxes and government, and a chance to get a low tax bill. I also wonder how much people then could foresee the population explosion and housing-cost explosion after that.

         I know Santa Clara County grew significantly in the 60s and 70s but it still wasn’t outrageous, then it got much more expensive by the 90s and 00s. And in Pugetopolis in 1979, housing was cheap and everyone had one. I had friends who volunteered in streetkid ministries in the early 80s, and a the time there were 300-500 kids, and they were mostly there for social reasons rather than economic ones. Now families are homeless simply because they can’t afford an apartment. In the early 80s people did not expect things to change much, but then it did. That may have been the feeling in California when Prop 13 passed.

3. I’ve noted on STB before that the obsession with one unit per lot is something that didn’t evolve until the middle part of the 20th Century at the same time there was a movement away from walkable communities. In the days of ‘servant’s quarters’ there were often two units on a lot — and kitchens have only been in homes about 200 years. The current legal controlling definition is focused on two things — the kitchen stove and the key control. Ironically — although there is increased demand for extended family housing, senior caregivers, in-home childcare givers and immigrants from places that customarily expect additional units on a lot — there remains this ingrained ‘Leave it to Beaver’ fantasy about single-family suburban housing that has little basis in history.

   1. Nuclear families rose in popularity, and a house for a young couple and their kids became the American Dream, and suburban tract houses made it accessible to the middle and working classes. This dream influenced the zoning codes, which were created in the early and mid 1900s. I don’t know why the focus is on kitchens, but the planners may have seen it as a convenient sign of a housing unit at the time.

      Christopher Leinberger in “The Option of Urbanism” outlines how “Leave it to Beaver” was not the norm in the 1950s: it was an aspirational dream. He traces the dream back to at least the Futurama exhibit at the 1939 world’s fair, where General Motors modeled a future world of cars and leisure. But most people lived in apartments and tenements and farms through the 1960s, and it was only in the late 70s that the majority lived in suburban houses. Generation X was the first generation to grow up in that environment, and they more or less spearheaded the back to the city movement.

4. If Frank has been a bit underwhelmed with the potential for ADU/DADU, I have probably been a bit too excited about it (ever since I read Alan Durning’s great series of articles about them — http://www.sightline.org/2013/03/15/adus-and-donts/). There are a few reasons why ADU/DADU has the most potential for affordable housing, in my opinion:

   1) It effects the most land. Very little of the city’s land is zoned for apartments, while well over half is zoned for single family. Eventually you just run out of affordable land to develop.

   Almost all land in the city is being used for something. There are a few empty lots, but very few. Even a parking lot makes money. A house most certainly does, or if nothing else, is valuable as a house. When it comes to buying up lots for development, that is the order: empty lots, parking lots, houses that need work, small houses in good shape, then nice houses (and that assumes someone is willing to sell). When you get to a house like this: http://www.capitolhillseattle.com/2012/10/capitol-hill-house-standing-since-1890-wont-get-landmark-protection/, you know property is very hard to come by. To justify destroying a multi-million dollar house and replacing it with a 70 story tower is one thing, but if all you do is replace that with 31 measly units, the cost of rent must be sky high. It is, because all the cheap properties in the area were bought up. Or, at least, all of the cheap properties that could be developed were bought up. Just a few blocks north of there, there are a ton of houses that are big, just like that one. They could easily be converted to apartments. Except it is illegal under current code. So you can’t buy the empty lot or the house that needs work or the nice tiny house to see if you can convert or replace it — instead you buy a beautiful house like that and tear it down. As time goes on, that supply just gets smaller and smaller. Of course rent is expensive. It wouldn’t make sense to do any of that if it wasn’t.

   2) With ADU/DADU, construction costs are very cheap. If you ignore property costs and zoning regulations for a second, it should be obvious that apartment conversions are very cheap. Turning a big house into an apartment is really simple. Add a door here, a wall there and you are good to go. Even DADUs are not that expensive. A two story place is very cheap. Once you include the price of the property, it is obviously cheaper to redevelop. Imagine no market for a second — imagine if all housing was socialized, but we wanted more units. Would you tear down that house and put up only 31 units, or would you convert that to a half dozen apartments? Of course you would do the latter. So just from a construction standpoint, our rules make it more expensive.

   All of this means that ADU/DADU have the greatest potential for affordable housing. If we encounter a bubble again — a housing crash, imagine what would happen. In some cases, it just isn’t worth building a building. The construction costs are too high. So that means you could easily have empty lots or abandoned buildings, waiting for rents to go up before construction can begin. But with a basement apartment, you can have dirt cheap rents and still justify the construction. But only if the regulations aren’t crazy restrictive. If you require extra parking (like we do) or limit the size (like we do) or otherwise put up crazy hurdles, then most people won’t bother. But if we do the right thing, then it could mean that a lot more affordable housing is built.

   It wouldn’t be that hard to have ADU/DADU laws that are as liberal (or more so) than Vancouver BC’s. We just have to stop pretending to be a liberal city, and act like one.

   1. The answer is both. Both apartments and ADUs. The majority of land is single-family, but one ADU on 20% of the lots is probably not enough, and I doubt half the homeowners will build ADUs even if they can. At the same time, apartments alone aren’t enough, especially if they’re quarantined in their current zones. And ADUs offer a greater choice of housing: something for larger families, or those who don’t want to live in a multifamily building, and are cheaper for homeowners to build on their own or with a small loan. We also need to look at duplexes and small apartments (4-8 units). Those are also easier for homeowners to build and manage, and less expensive for them and tenants, but zoning makes them practically impossible to build.

      What we don’t need is a lot of buildings over ten stories. Those are more expensive to build, and 70 stories is even more expensive than that. We just need a few highrises downtown and around train stations. But the bulk of our housing needs to be 4-10 story buildings. There’s no shortage of land for that; there’s just zoning restrictions preventing it. Chicago’s north side is in that range, and it still has some single-family houses scattered around. But they’re the exception rather than the majority of housing. We need large 2-dimensional districts with that kind of housing and mixed-use development, and then we’ll have more vibrant and transit-oriented neighborhoods.

      1. I agree — we need both, and the apartments don’t need to be that tall. Much of Brooklyn is as dense as Seattle’s densest place (Belltown) yet the buildings are no taller than our houses.

      2. Brooklyn doesn’t have a bunch of people trying to outbuild eachother to get mountain views above the neighboring building.

   2. A two story DADU does not seem that cheap to me right now.

      We are working with a design builder to put a two-story, 800 sf DADU in our back yard so my mom can “age in place”. Just got a very preliminary design with a cost estimate – $300-$360K just to build a small house in the back yard.

5. California’s messed up housing policy is big part of the reason I don’t live there. (The other big part is that I actually prefer our oceanic climate to their Mediterranean one; I like the seasons you get here. Why should I pay a price premium for something I don’t prefer?)

   What’s worse than California messing itself up is that California has used its political power to warp Federal policy to continue to shield existing beneficiaries of California housing policy from the adverse consequences of same. I’m talking about inheritance tax exemptions for homes.

   Ideally, the Federal government should be ignoring California prices entirely and setting the exemption based strictly on national norms. If that means many California children will no longer be able to inherit homes from their parents, so be it. (Why should it be the Federal government’s job to create a privileged aristocracy that’s shielded from the consequences of the NIMBYism they advocate?)

   Perhaps if existing residents had to worry more about housing affordability for their children there would be some rethinking of harmful policies taking place.

6. Part of the problem in the Bay Area (and elsewhere in California) is that most of the property tax revenue (and some of the sales tax revenue) flows to local cities rather than to any higher level body.

   So it’s in every city’s fiscal interest to try to beggar thy neighbor. Commercial uses, especially retail, bring in sales tax and other taxes. But houses bring residents who want schools, well paved streets, streetlights, parks, etc. So the incentive is for cities to zone too much land for commercial use, and not enough for residential. I’ll have the tax flow, you have the residents. You can see this most egregiously in what I call (after the English) the “rotten boroughs” of Southern California, like the City of Industry, whose borders were drawn to exclude residents–especially low income residents.

   In some places, there’s been some success in pressuring cities to either rezone, or allow housing in commercial areas. That’s a good mixed use area. But in and near Silicon Valley, the biggest economic engine in the region, most cities are allowing tech space to be added way faster than housing. Then they scream about traffic jams. Some cities may be allowing housing because they want “millennial” residents but I’ve been told about suburbs with downtowns that actively don’t want millenials!

   It’s a really dysfunctional system that needs big changes. There are lots of lessons learned in this for Seattle, but maybe the most important is don’t get your tax structure locked in so that it can only be changed by vote of the people, especially a 2/3 vote.

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