Y Combinator’s Sam Altman recently launched a program to recruit and support candidates for California governor, lieutenant governor, and Congress. Chief among his priorities is finding candidates who make it easier to build more housing in California.
I have but one question for Altman.
Will they be honey badgers?
A 2016 New Yorker profile indicates Altman might be able to make a difference where others have failed. The piece describes Altman’s great strengths as “clarity of thought and an intuitive grasp of complex systems.” These have helped him figure out what caused the problem.
Housing is unaffordable in California’s big cities because there’s not enough of it. And we’re not building enough of it because the most politically engaged, powerful people don’t particularly want to.
Who’s holding things up?
Ending the housing crisis requires taking on the Baptists and Bootleggers.
In a policy fight, the Baptists are the true believers. They’re wrong, but they’re earnest. In housing, they’re well-meaning but misinformed community activists. They’re people like Luis Granados and Erick Arguello, who claim without evidence that building more market-rate housing in the Mission “harms our most-vulnerable community members.” Or Peter Cohen, co-director of the Council of Community Housing Organizations. “The losers in this deregulation agenda will be the working class and lower-income communities of color in these hot markets, which are the major cities of California,” Cohen said.
This is demonstrably untrue.
Rent increases drive displacement. Rents go up when there’s insufficient residential construction relative to job growth. Empirically speaking, this isn’t even a debate. San Francisco added 8 jobs for every new home over the past decade, and Bay Area rents increased 43%. The fact that not building enough new housing is causing rent spikes across the US “is readily apparent” in the data.
Number of new jobs per residential construction permit against median rent growth from 2005 to 2015:
The bootleggers are people who support prohibition because it serves their interests. In housing, it’s construction labor unions and homeowners.
Labor costs, regulation, tax incentives and the fact that communities get to vote down new housing proposals that meet all zoning requirements for any and every reason make it difficult to build more housing. Homeowners consistently choose to oppose or downsize new housing to keep their property values high, their amenities to themselves, and their communities rich and white.
In the regulation category, CEQA can add up to $1 million to the cost of building and is “By far the biggest regulatory impediment to new housing.” Reform is a widely supported way to facilitate denser building.
Unions oppose CEQA reform unless it comes with guaranteed wages because it will make it more difficult for them to leverage CEQA to negotiate wage increases. There’s money in it for the community organizers as well. Erick Arguello and Luis Granados shook $1 million out of the developer for 1515 S. Van Ness and nonprofit ownership of eight apartments from the developer of 2675 Folsom by threatening CEQA appeals.
At its core, the problem is simple.
Over the past decade, Bay Area rents have increased 43%. Meanwhile, salaries for teachers, firefighters, service workers, and basically anyone outside tech have stagnated leading to unprecedented income inequality and a lower standard of living for all but our city’s wealthiest residents.
“Today, we have massive wealth inequality, little economic growth, a system that works for people born lucky, and a cost of living that is spiraling out of control,” Altman’s website states. “Housing is super important,” Altman said. “It should be as affordable as possible. I believe that lowering the cost of housing is one of the most important things we can do to help people increase their quality of life and to reduce wealth inequality.”
In this environment, it’s actually what the New Yorker calls Altman’s greatest weakness that gives me the most hope that he can do what others won’t. The piece describes Altman as having an “utter lack of interest in ineffective people.” Indeed, in a 2015 interview Altman didn’t mince words when he accurately blamed “incompetence of governance” for San Francisco’s housing shortage.
Altman supports by-right construction and CEQA reform, both of which would go a long way toward getting more housing built in the Bay.
Luckily, Altman has a model. We’ve got a honey badger in the Governor’s office in the form of Jerry Brown, who himself has a certain clarity of thought and an intuitive grasp of complex systems. Newsweek called Brown “the rare progressive who can balance the books.” Brown has refused to pour more money into housing without bringing the astronomical per-unit costs down first.
“Last year Governor Brown proposed a bold piece of legislation to help alleviate this problem,” Altman writes on his website. “The legislation would have fast tracked housing construction by expanding “by right” construction to projects that meet certain affordable unit requirements. Unfortunately special interests helped kill the legislation and the people of California lost out on more housing.”
The main “special interest” that killed by-right was labor. Which is why “prevailing wages” for developer-subsidized housing and small- to medium-size developments was the first of Senator Scott Wiener’s compromises on his by-right bill, SB35.
Building more housing in California will lower inequality, spur economic growth, and ease displacement pressures. But to get the job done Altman will need more politicians who also have an utter lack of interest in the thoughts, feelings, dollars, and votes of some very vocal, powerful, and well-funded special interest groups.
To fix the housing crisis, he’ll need to find more politicians who don’t give a shit.
Cathy Reisenwitz writes about software for a living, sex on the side, and policy for fun. Her column “Unintended Consequences” appears regularly in the Bay City Beacon. She’s pro-sex, pro-feminism, and pro-market. Sign up for her newsletter and follow her on Twitter.
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