SERIES

A SPECIAL REPORT BY THE CENTER FOR CALIFORNIA REAL ESTATE

EXPLORING SOLUTIONS TO

BAY AREA HOUSING CRISIS

THE

ABOUTPublished ByCALIFORNIA ASSOCIATION OF REALTORS®All rights reserved. This whitepaper, or parts thereof,may not be reproduced in any form or by any meanswithout the permission from the CALIFORNIAASSOCIATION OF REALTORS®.

Author: Jack Needham

BackgroundThe Center for California Real Estate (CCRE) is an institutefounded by the CALIFORNIA ASSOCIATION OF REALTORS®(C.A.R.) dedicated to intellectual engagement in the field of realestate. Its mission is to advance industry knowledge andinnovation with an emphasis on convening key experts andinfluence-makers. CCRE reflects C.A.R.’s increasing role inshaping the future of the industry by advancing innovativepolicy solutions and active dialogue with experts and industrystakeholders. Additional background on CCRE and C.A.R.can be found at centerforcaliforniarealestate.org.

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INTRODUCTIONThe fact that California is facing one of the worst housing afford-ability crises in the history of the United States is, by now, well doc-umented. The San Francisco Bay Area – the birthplace of some of America’s greatest technologi-cal and social achievements – is widely regarded as the epicenter of the crisis, regularly breaking historical precedents in terms of home values, supply and rental growth.

What is less clear is the far-reach-ing repercussions of the crisis on a local level, including on busi-ness confidence, talent acquisi-tion and retention, social mobili-ty, public health, diversity, social cohesion and political engage-ment.

What have the repercussions of the housing crisis been for the workers behind the region’s rep-utation as an economic power-house?

Moreover, what work is being done, at a policy level, to sustain the Bay Area’s place as a dynamic, diverse community where people can afford to live and work, and how can we avoid repeating the mistakes that lead to the afford-ability crisis in the first place?

It is with these pressing ques-tions in mind that the CALIFORNIA ASSOCIATION OF REALTORS®’ think tank, the Cen-ter for California Real Estate, convened an expert panel con-

sisting of some of the Bay Area’s foremost corporate, legislative and academic thought leaders to discuss solutions to the region’s housing affordability crisis.

On the numbersAs of March 2018, California main-tains the highest average home prices in the country, sitting at a median price of $564,830 accord-ing to data from the CALIFORNIA ASSOCIATION OF REALTORS®.

In the nine-county San Fran-cisco Bay Area, that figure was $980,000. In San Francisco County the average sales price was $1.68 million in March, down from a record $1.73 million in Feb-ruary - a 35.6 percent increase from the same period a year ago. San Mateo County recorded the next highest figure, at $1.62 mil-lion, followed by Marin and Santa Clara counties at just under $1.4 million.

Eight of nine Bay Area counties recorded annual sales increas-es in March, with San Francisco (24.4 percent) and Santa Clara (28.7 percent) leading the charge.

Meantime, the state’s popula-tion has been surging. Between 2000 and 2007, Bay Area cities accounted for only four percent of the state’s total population growth, according to the U.S. Cen-sus. Between 2010 and 2017, near-ly 20 percent of all new Califor-nians were either being born in or moving to the San Francisco Bay

Area.

The Department of Housing and Community Development es-timates that we need to build 180,000 new housing units a year, or 1.8 million by 2025, to keep pric-es stable. Over the past 10 years, California has averaged less than half of that. McKinsey’s 2016 re-port, A Tool Kit to Close California’s Housing Gap: 3.5 Million Homes by 2025 puts the estimated housing deficit even higher at as much as 3.5 million.

Official homelessness statistics remain relatively stable - San Francisco’s latest point-in-time homeless tally, conducted on a single night in January 2017 and overseen by the San Francis-co Local Homeless Coordinating Board (LHCB), estimated the city’s homeless population at 7,499 peo-ple. That’s fewer than 2015’s 7,539 persons, but more than 2013’s 7,350.

But these official statistics don’t tell the full story. The Universi-ty of California Berkeley’s Urban Displacement Project studies the issue of displacement and gentri-fication in the San Francisco Bay Area, including monitoring the populations who are experienc-ing, or at risk of, displacement. The Project’s study of displace-ment in San Mateo County found that approximately one in three displaced households was facing a period of homelessness or mar-ginal housing in the two years fol-

lowing displacement.

How did we get here? A trend of hyper-localized control over the planning and permit pro-cess for housing developments has long been accepted in Cali-fornia communities, undeniably leading to the state’s reputation as being biased in favor of sin-gle dwelling development and urban sprawl. This trend can be pinpointed to the 1970s – the last time the state saw housing con-struction on an adequate scale. The political power of residents to oppose new development – neatly encapsulated by the phrase "Not In My Backyard" or NIMBY – has been fostered by a local govern-ment process that is weighted toward the interests of existing homeowners. A housing project will typically go through multi-ple government agencies during the approval process, including the planning department, health department, fire department, building department and a city council – resulting in both a sig-nificant time delay to new devel-opments and multiple opportuni-ties for community opposition to manifest.

Councilmembers who allow new developments are faced with the threat of a negative backlash from dissatisfied community members at the ballot box. Per-haps as a result of this political pressure, two-thirds of California coastal cities and counties have adopted policies that explicitly limit the number of new homes that can be built within their bor-ders or policies that limit the den-sity of new developments.

California’s current housing cri-sis has also been attributed to abuse of regulations in order to prevent or delay new develop-ment. The California Environmen-

tal Quality Act, or CEQA, requires that local agencies consider the environmental impact of a new housing development before ap-proving it. A 2015 analysis by the Legislative Analyst’s Office found that CEQA appeals delay a project by an average of two and a half years.

A new political force Nimby-ism has led to the creation of a new type of political force. The YIMBY – or Yes In My Backyard – movement has emerged as a sig-nificant political player through-out California and the United States, but in the Bay Area in par-ticular, over the past two years. Initially a grass roots movement, it has spawned several different organizations united in a com-mon goal: build more housing.

Consisting primarily of millenni-al, politically active profession-als fed up with the San Francisco Bay Area’s astronomical hous-ing costs and the lifestyle com-promises that come with it, the movement aims to promote pol-icy change that enables greater housing density and increases construction efficiency and has promoted several pro-housing candidates in San Francisco Bay Area elections. Collectively, the YIMBY movement has been a sol-id proponent of pro-housing leg-islation proposals such as SB 827.

More action needed This panel took place the day fol-lowing the defeat of Senator Scott Wiener’s SB 827 legislation. SB 827 continued the trend of state intervention in the planning process triggered by a raft of 15 housing policies signed into law by Governor Jerry Brown in 2017, including SB 35 – which forces cities to approve projects that comply with existing zoning if the city’s homebuilding targets are

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not being met.

Known as the Transit Zoning Bill, Senate Bill 827 would usurp cer-tain local building restrictions for new construction near transit hubs, setting looser state stan-dards instead. It would allow res-idential developers to circumvent local rules on height, density, and parking—if their buildings were within a prescribed proximity to a transport hub. Since Senator Wiener announced the proposed legislation, the bill had triggered a widespread and, at times, con-troversial discussion around the need to address California’s housing affordability crisis.

The bill was killed in its first hear-ing before the Senate Transporta-tion and Housing Committee, with just four of the 13-member com-mittee voting in favor. Although a positive step toward increasing housing supply in the state, the fate of SB 827 made it clear much more is needed to be done to get the political establishment to take proactive steps to resolving California’s housing affordability crisis, and combating the threat to business strength and public health that it poses.

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PANE

LISTS

Jeremy Stoppelman, Co-founder and CEO, Yelp

Jeremy Stoppelman founded Yelp in 2004 with Russel Simmons, a former colleague at PayPal. He currently serves as the San Francisco-based com-pany’s CEO. Prior to Yelp, Stoppelman completed his first year of Harvard Business School, but dropped out after founding the company. Before attending business school Stoppelman was VP of engineering at PayP-al. He holds a B.S. in computer engineering from the University of Illinois.

Sonja Trauss,Founder, San Francisco Bay Area Renters’ Federation

Sonja Trauss started the San Francisco Bay Area Renters’ Federation (SFBARF) in 2012. Trauss co-founded the YIMBY Party and started the California Renters Legal Advocacy and Ed-ucation fund, 501(c)3 non-prof-it focused on legally enforcing housing law.

Trauss is a graduate of Temple University and Washington Uni-versity

Scott Wiener, State Senator, Senate District 11

Elected in November 2016, Senator Scott Wiener represents District 11 in the California State Senate. District 11 includes all of San Francisco, Broadmoor, Colma, and Daly City, as well as portions of South San Francisco.

Before his election to the Sen-ate, Senator Wiener served as a member of the San Francisco Board of Supervisors. Wiener re-ceived a bachelor’s degree from Duke University and a law de-gree from Harvard Law School.

Miriam Zuk, Ph.D., Director, Urban Displace-ment Project and the Center for Community Innovation Univer-sity of California, Berkeley

Miriam Zuk, Ph.D. is the director of the Urban Displacement Project and the Center for Community Innovation at UC Berkeley. Dr. Zuk completed her Ph.D. in 2013 at UC Berkeley in the Department of City and Re-gional Planning. She previously served as the Deputy Director of Air Quality Research for the Mexican Ministry of Environ-ment. Dr. Zuk received her M.S. in Technology and Policy from MIT and her B.A. in Environmen-tal Sciences from Barnard College.

Steve White,C.A.R. 2018 President

Steve White is a 32-year REALTOR® in the San Fernando and Santa Clarita Valleys of the Los Angeles area.

Active in organized real estate since 1986, White is co-own-er of Keller Williams VIP Prop-erties and Pathway Escrow, Inc, both in Valencia, Calif. He is also co-owner of Keller Wil-liams Realty Central and Clos-ing Solutions Escrow, both in Northridge, Calif.ornia.

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Q&ASTEVE WHITE: Senator, given the disappointing vote on SB 827, what do we do now?

SENATOR WIENER: We keep work-ing. We keep working to change California’s broken housing policy, a broken policy that’s really got-ten us into this problem. Funda-mentally we have a severe housing shortage in California. It’s about a 3.5 million home deficit in Califor-nia.

Part of the solution in creating those 3.5 million homes has to be homes that are affordable to lower income residents. That means in addition to inclusionary housing, a significant investment of pub-lic resources needs to be direct-ed to building housing affordable to lower income residents, work-ing-class people who are not mak-ing much money, and our lowest

income, very impoverished resi-dents. It has to be a mix of the two.California basically decided some time ago that having enough housing for a growing population was not a priority. We used to prioritize it, and we built a lot of housing in California early in the century, up until really the 1960s. Then we slowed down dramatical-ly. We did a few different things. We dramatically down-zoned. We said you can only have single-fam-ily homes or two- or three-unit buildings, even by major transit infrastructure. We put hurdle after hurdle in the way. We have tradi-tionally had pure local control over housing, with some state laws that either weren’t enforced or had no teeth. Local communities were allowed to decide if they wanted to opt out of housing entirely, build only a little bit of housing, or not build any low-income housing. It

was almost pure local control.

We are starting to rebalance that. Just like we do with public educa-tion or healthcare, we would never say a city can do whatever it wants. The state sets standards, and cit-ies have to comply. We need stan-dards, state standards for housing because it’s a statewide issue.

SB 827 was the next step to get at a very specific issue, low density zoning around major public trans-portation infrastructure. It was an aggressive bill. It was a different way of doing things. It’s not sur-prising that a bill this hard would not succeed in its first year. Some-times it takes several years.

STEVE WHITE: Mr. Stoppelman, you’ve taken the unusual step for a tech CEO to engage on hous-ing policy debate by publicly ad-

vocating for affordable housing and contributing significantly to pro-building organizations. What motivated you?

JEREMY STOPPELMAN: When I look at my business, I see lots of em-ployees earning compensation at various levels. I see them having a lot of trouble finding housing here in San Francisco, here Bay Area wide. As a large employer, that’s very troubling. I want to grow my business. I want to attract talent to the Bay Area.

I can tell you that already the conversation in boardrooms has shifted dramatically as the cost of housing continues to escalate. At a recent board meeting, I had a couple of folks who are both ven-ture investors ask me, “What is your strategy for building a big tech team outside of California?

When are you opening up that next big office?” I know that conversa-tion is happening at every major tech firm, and many of them al-ready do have significant offices that they’ve opened elsewhere.

Most municipalities would love to have the problems that the Bay Area has with the job creation and high salaries and so forth. But if we don’t start addressing this problem, I think you eventually choke off the economic engine. It eventually affects revenue. You know it has ramifications that spread throughout the state.

Policymakers over the years have really focused on people who tra-ditionally vote, which tend to be homeowners, older people. That meant that younger people that are just moving to the Bay Area, starting out their careers, had no

say in what was happening with housing and were finding the com-munities that they arrived in were completely unaffordable. They’d try it out, struggle for a bit, and leave. I felt like something had to be done, and so I started getting aligned with some of these young organizers.

STEVE WHITE: In your experience, what are the most difficult chal-lenges to overcome for builders and housing advocates?

SONJA TRAUSS: I think that there’s a lot of vitriol, but I think it is very natural for people’s immediate reaction to be “No.” “That empty lot? I use that as a dog run.” Or, “I shop at that hardware store.” When we live in a neighborhood for a long time, whether owner or renter, you have good memories in all these different parts of your

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neighborhood. Your neighborhood becomes part of your life memory. It is very, very dislocating, the idea of tearing something down.

The only time that people are en-thusiastic about something being built in their neighborhood is if it’s going to replace a lot that has been a nuisance. Before I was in poli-tics, I thought political conflicts were all like Planned Parenthood, like people are either for abortion or they’re against it. Or the death penalty, they’re for it or against it. But every single individual is both for and against housing.

We call our movement the YIMBY movement, Yes In My Back Yard. A lot of times we talk about the "Yes" because that’s exciting and feels good. But really it’s the "My." I ask people to commit to supporting something, even though it feels bad. We have to do that because, if we don’t, there are only two ways to deal with an increasing popula-

tion - that’s displacement or add-ing more housing. Displacement’s horrific. It’s ruining people’s lives. In extreme cases, people die. There’s a bigger societal need out there, and we have to go beyond ourselves and support it.

STEVE WHITE: Where in the Bay Area has displacement been most acute, and how do you balance the need for housing with protecting vulnerable neighborhoods?

MIRIAM ZUK: In our work at the Urban Displacement Project, we’ve been focusing on this issue of dis-placement, and specifically dis-placement of low-income, mostly renters, where we see the most vulnerability. People who live in rental units who aren’t making a ton of money, and, because of the way the housing crisis is unfold-ing, they’re getting priced out and pushed out. We’ve done some ex-tensive mapping in the Bay Area, in Southern California, even up to

Portland, where they’re seeing very similar processes as we’re seeing here.

One thing that we found when we first started our mapping project in 2015 was that the issue of dis-placement is pervasive across the Bay Area. Originally we thought displacement is happening in the Mission. Then we thought, “Okay, well, maybe it’s actually happen-ing in the Temescal neighborhood of Oakland.” But what we found when we actually looked at the data is that it’s happening every-where, and that these markets, our housing markets and our job mar-kets, are all interconnected spa-tially.

We looked in neighborhoods in the City of Concord, a place that you would not think about in terms of gentrification and displace-ment. What we heard from land-lords there was that they wanted to attract the tech crowd because they were near the BART. They were evicting all of their low-in-come tenants in their building and making room for – they called them “the laptop crowd” – higher income tenants. Those aren’t peo-ple that are necessarily working in Concord. They were expecting that they might be working in San Francisco. Maybe they’re working in Silicon Valley. We know that all of the housing market is all inter-connected here in the Bay Area.

STEVE WHITE: Is subsidized hous-ing the answer?

MIRIAM ZUK: Absolutely we should be subsidizing housing. Some of the questions that we look at are how do we protect tenants, and how do we stabilize neighbor-hoods? Subsidizing housing is certainly one of those solutions. When we looked at some of the things that predict lower displace-

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“If we want people to be taking transit, we need to build hous-ing near transit, and we hav-

en’t been. I mean, historically we haven’t been. It makes

absolutely no sense.”

-Miriam Zuk

Panelists Miriam Zuk, Scott Wiener and Moderator Steve White

ment rates, it was how much sub-sidized housing do you have in a neighborhood, because those ten-ants are typically protected from the housing crisis and the housing markets.

But we also know that we need to be building housing of all prices, of all sizes, because we’re in in-credible deficit. We know that it’s going to take a long time if we’re just building market-rate housing, that that’s not necessarily going to help our vulnerable tenants today. That might help them 30 years from now, but they’re probably not going to be here 30 years from now. A lot of what we’re looking at right now are tenant protections and thinking about things like just cause for evictions protections.

SCOTT WIENER: This is a really im-portant point, that there are short-er term approaches in terms of creating stability in housing and stabilize people, and then there’s the long-term. In the short term, various anti-displacement mea-sures, really trying to accelerate production of subsidized hous-ing for lower income people, both through inclusionary and through standalone projects. That’s in-credibly important because, for people who are struggling today, we need to provide help today.

There’s an incentive as an elected official to do things that you can accomplish in a year or two years, and then go before the voters and say, “I got this done. I cut the rib-bon on this. We did this tangible thing.” Building, say, an affordable housing project, you can do that. But in terms of solving the broad problem, I’m not going to be in of-fice anymore.

STEVE WHITE: Is the desire to just build being pursued to address the immediate problem without

consideration of the long-term im-pact on a community?

SONJA TRAUSS: Filtering works. It’s a real thing, but it also doesn’t take 20 years. It works immedi-ately. Because, as Miriam pointed out, there is displacement every-where. Demand moves around. One city’s displaced person is the next city’s gentrifier. If somebody is living in Concord and taking the BART to San Francisco, I guarantee you that was not their first choice. Their first choice probably was San Francisco, but they just went out until they could afford something.

Super high-income people can af-ford to live in San Francisco. The next highest income people can afford Oakland, West Oakland. The next highest income East Oakland. And then you start getting farther and farther out. The most famil-iar example, for those of you that sell houses, there are only so many houses for sale in a year. Maybe there are 500 houses for sale ev-ery year. There are 700 people that want to buy a house in San Fran-cisco. If there are 510 houses for sale in San Francisco, then that’s 10 people that buy a house in San Francisco and not in Oakland.

Those 10 people that bought a house in San Francisco aren’t shopping in Oakland, and then they’re not outbidding somebody who actually wants to live in Oak-land, and so on down the line.

MIRIAM ZUK: We’ve been doing some surveys, especially in San Mateo County and Santa Clara County. We’ve been looking at the impact of displacement on low-in-come households. What we found was really alarming. We found that families who are evicted from their homes had to move, not only out of their neighborhoods, but out of the county entirely to lower – we

talk about neighborhood opportu-nity - so I would say lower quality neighborhoods.

All of our market in housing is re-lated. But where you move mat-ters, and where you live matters. While some people may not be able to afford in San Francisco, so maybe they move to Oakland, and then people who can’t live in Oakland anymore are moving out to Concord. Well, that matters. Where you’re moving [affects you] in terms of the quality of schools you’re able to access, how far it takes to get to your jobs, what kind of neighborhood quality you have, parks, etc.

We found that people who are dis-placed are moving to lower quality neighborhoods. What was really alarming to us is that, of the house-holds that we surveyed, a third of them experienced some moment of homelessness in the two years after they were evicted from their homes. I think it’s becoming com-monly understood that the hous-

ing crisis is intimately related to our homelessness crisis. We knew we had a homelessness crisis, and it’s going up everywhere. We knew we had a price and affordability crisis. But we now know that these two phenomena are very related.

SCOTT WIENER: It’s also import-ant to note that, even for people

who are not displaced, the crisis is impacting them. If they’re pay-ing 60 percent of their income to rent, then they’re maybe not buying the food that they should have, or they’re foregoing health-care or school supplies or what-ever the case may be. You have a lot of people who have never been evicted, but are just hanging on

by their nails. Or they’re living in overcrowded conditions. We know we have low-income multiple fam-ilies living in, say, a one-bedroom apartment, or people having six roommates. That has health im-pacts, both mental health and emotional well-being and physical health.

It’s even broader than the people who are actually physically evicted or displaced. Most homeless peo-ple we never see. These are people who are holding down one, two, or three jobs.

We know that we have in San Fran-cisco Unified School District 2,100 or 2,200 homeless students, to the point where one school in the Mis-sion has so many homeless fam-ilies in that one school that they are opening up their auditorium as an overnight shelter. They’re filling their auditorium just with homeless families in their school community. We have people living

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“California basically decided some time ago

that having enough housing for a growing

population was not a priority.”- Scott Wiener

Panelists Scott Wiener and Sonja Trauss

in their cars, people couch-surfing. It’s just a really significant issue that is directly correlated to the lack of available housing that peo-ple can afford.

In terms of SB 827 [and displace-ment] – to be clear, no one bill is going to solve this problem. You can’t put everything in one bill. You’re not going to solve it all at once. There are always going to be different approaches. SB 827 is designed to solve one aspect, that is, we add 3.5 million homes.

Where are we going to put those homes? We don’t want to keep do-ing what we’ve always done is just build out and out and out, cover up farmland and open space, have to expand our freeways, have grid-lock all the time, increased carbon emissions, people having to drive two hours each way to work, so they get home at 9:00 o’clock at night, and their kids are in bed al-ready. That’s what we’ve created by just growing out. We need to fo-cus our housing production in our existing urbanized areas, not just cities, but our inner suburbs, do it where people at least have the op-tion of using public transportation.SB 827 was always a work in prog-ress; over the course of the legisla-tion we made some modifications, making sure that the definition of good bus service was correct. The eight-story buildings were freak-ing people out, so we decided the core of the bill was the wood frame construction of four to five stories. Eight stories is steel construction, much more expensive. Focusing on those four- or five-story very midrise apartment buildings. We put some pretty robust tenant pro-tections and affordability require-ments into the bill.

We borrowed an idea from L.A. about some tenant relocation and right to return benefits. We don’t

want to see a lot of demolitions, but there are some communities that are more permissive on dem-olition. We put some demolition restrictions in the bill, and they may end up being stronger. But if a demolition happens, if someone is displaced, we’ve said the devel-oper has to put them up for up to 3.5 years where they’re not paying any more rent than they were be-fore, and they have a right to re-turn to the new building, to a com-parable unit, at the same rent they were paying. It’s never going to be a perfect system, but it’s a pretty strong protection.

We something called “no net loss” that, let’s say there’s a four-unit building that has lower rents with lower income people living there, and it’s being replaced with a 50-unit building. It’s a significant in-crease in the amount of housing, which is a good thing, but you’ve now lost these four more, let’s say, naturally affordable units where people were paying lower rent. Those four units must be replicat-ed within that new project at the lower rents. It’s essentially rent control. These are all different ap-proaches to not losing affordable housing, to reducing displace-ment.

We imported, for any building of 10 units or more, you have to have a certain percentage that is afford-able to low or very low income peo-ple or sometimes both. We used the percentages in the State Af-fordable Housing Density Bonus - it gets higher as the building size gets higher. There were groups that were not satisfied with what we had done, and we’re going to continue to talk to them.I’m a strong supporter of inclu-sionary, but as I like to say, people don’t live in percentages. People live in number of units. Some-times we focus so much on what

is the percentage, is it 10 percent, is it 20 percent, is it 40 percent. If you have a statewide inclusionary that’s too high, you’re going to see smaller projects in a lot of commu-nities not pencil out anymore. We want to find that sweet spot with what percentage of inclusionary will produce the maximum num-ber of affordable units.

SONJA TRAUSS: The last time we had affordable housing was ‘60s, ‘70s, when the state and really the country was undergoing a build-ing boom. That’s when the sub-urbs were being built. Every day thousands of houses, right, were coming online, constantly. It was a cheap kind of housing, hous-ing that’s only 15 feet high, maybe three stories high. This is a cheap kind of housing.

What we’ve done in California is made it illegal to build this cheap kind of housing, which is three sto-ries, multiunit. On the West Side it used to be legal to build three- to five-story small multifamily. Peo-ple deride them as a “Richmond Special.” They think it’s ugly. They think it ruined the neighborhood. Great. That’s illegal. Then they up-zoned District 6, Soma. What you get is the Rincon Towers, the Infin-ity. They’re beautiful, it’s great, but it’s an extremely expensive type of housing. We’ve essentially illegal-ized Toyotas and said, “Okay, you can build Lamborghinis,” and ev-erybody’s wondering why housing is so expensive. Part of the prob-lem is the shortage, but it’s also that this cheap type of housing is illegal.

We don’t want to keep building out into farmland. That’s fine. We don’t want to displace exist-ing renters. The least impactful thing to do is to allow someone who has died and their kid is sell-ing the house, or they’re selling

the house because they’re retiring, people who don’t need their hous-es anymore, we have to allow them to tear their houses down and re-place them with three- or four-unit condos or three- or four-unit apartment buildings. That is de-velopment without displacement. It’s a low-cost kind of housing. It’s the least disruptive thing that we can possibly do.

In Vancouver they’re trying to le-galize that. Minneapolis has a proposal to legalize fourplexes everywhere. I think a lot of people here are like, “Oh, housing pric-es are up, that’s great for REAL-TORS®.”But it’s not. You guys need volume. Regular people can’t pay $1.6 million for a house. But they can maybe in some places pay $800,000 for a condo, and in oth-er parts of the state hopefully pay $300,000 for a condo.

STEVE WHITE: Accelerating home building along transit corridors seems to have broad support, higher density along transit cor-ridors. What are the downsides to that strategy, if any?

MIRIAM ZUK: I think absolutely we need to densify around transit. If we want people to be taking tran-sit, we need to build housing near transit, and we haven’t been. I mean, historically we haven’t been. It makes absolutely no sense. Rid-ership is declining beyond the peak hours. So clearly that needs to happen. I would say what we heard from a lot of the arguments around SB 827 in terms of what are some of the cons is that not every transit neighborhood is the same, and that you really need to be looking at what’s going on in that neighborhood right now. What’s the history of that neighborhood? Who lives in that neighborhood? What is the unit mix there? How vulnerable are the existing ten-

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ants in that neighborhood?

I think what we need to see is re-ally contextual neighborhood geo-graphic-specific policy – so we’’’be able to say, “Where should we be upzoning? Where should we be building more, and what types of housing?” It becomes very specif-ic.

SCOTT WIENER: One thing I will add to that, and every neighbor-hood is different, but one of the things that we encountered – there was a lot of mapping on SB 827, which was a double-edged sword. Mapping is awesome, and being able to look at what’s covered and what would be a 45-foot height or a 55-foot height, that was great in a way. The downside of that is that people look at it, and they say, “My neighborhood’s covered. Oh, my god. In six months I’m going to wake up, and all the buildings are going to be gone, and they’re going to be replaced by these new taller buildings.”

What we try to convey to people is that SB 827 is the kind of bill that will play out over years and frankly decades. You have to have an avail-able parcel. You have to have a de-veloper who’s willing to do it. You have to have the funding. You still have to go through the same ap-proval process. It doesn’t change the approval process. There was this mantra out there that SB 827 wiped away all local control.

That was absolutely false. The politics around land use is al-ways hard. But this bill would give local communities the ability to do a lot of things to reduce displace-ment.

Historically what we have done is we have basically upzoned histor-ically and densified in lower in-come neighborhoods, while down-

zoning in wealthier areas. There are exceptions to that. But we have a lot of lower income areas that are already zoned for densi-ty. Even though there are some lower income areas that would be impacted by 827, I fully acknowl-edge that, there are also a lot of higher income single-family ar-eas that are impacted. That’s why Marin County and Beverly Hills and parts of the Peninsula and Silicon Valley and Orinda and all these communities were fighting like crazy against this bill.

MIRIAM ZUK: I think what’s been amazing about this bill is that it’s brought fair housing and dis-placement to the center of con-versations about housing and making people really have very difficult conversations in public, even though they might say one thing and then vote a different way.

One of my colleagues found that

in the Bay Area, under 827, the new version of it, you would have – they look at market feasibility. So does it pencil out to build on these lots? Not necessarily. Are landowners willing to sell? But if they were will-ing to sell, they found that you in-creased your developable land by fourfold in the Bay Area. So pret-ty amazing.

[Using SB 827 in its original form] we finally were able to overlay our displacement maps with the SB 827 maps. What we found was that 70 percent of the SB 827 zones in the Bay Area were in low-income neighborhoods. But 30 percent were in higher income, what we would call “exclusionary neighbor-hoods.” So I guess one thing that I would love to see is, if we want to open up those exclusionary plac-es, which might be much more po-litically dangerous – and I’m not a politician, so I won’t even try that. But what if we target those places very intentionally?

CENTER FOR CALIFORNIA REAL ESTATE • EXPLORING SOLUTIONS TO THE BAY AREA HOUSING CRISIS PG. 16

“I think a lot of people here are like, ‘Oh, housing prices are up, that’s great for REALTORS®.’ But it’s not.

You guys need volume. Regular people can’t pay $1.6 million for

a house.”

- Sonja Trauss

Panelists Sonja Trauss and Jeremy Stoppelman

STEVE WHITE: I think it’s fair to say that most Bay Area residents would consider themselves en-vironmentalists. Does eliminat-ing environmental review for new housing, new affordable housing in transit zones, challenge what the Bay Area has stood for in this arena for generations?

SONJA TRAUSS: There are no pro-posals to eliminate environmental review. That’s a lie spread by our opponents. It sounds like you’re referring to SB 827, which wouldn’t have affected environmental re-view at all.

SCOTT WIENER: This bill did not. But SB 35, when you streamline, you’re taking it out of CEQA be-cause it’s no longer a discretion-ary permit. We had environmental organizations supporting that bill, by the way.

In terms of CEQA, it’s a really mixed bag. I think sometimes there are some positive changes that can be made to CEQA, particu-larly just putting more time limits in so it’s not being drawn on for-ever. But I think sometimes CEQA gets blamed for things that are not CEQA’s fault. For example, in San Francisco we’re building bus rapid transit on Van Ness. We’re planning hopefully to build it on Geary. Each of those CEQA EIRs, it took over 10 years to certify those EIRs. Nothing in CEQA requires that that takes 10 years. That was because in San Francisco we have a real problem, as a city, declaring an end to any public process. We just let it go on and on, and then start over again and go on and on.

So sometimes CEQA is not the is-sue. It’s how a local community applies it. When a project gets ap-pealed to the City Council, that City Council can reject the CEQA ap-

peal. If they choose not to because they don’t want the development to go forward, that’s not CEQA’s fault, that’s the City Council. CEQA does have some issues. But some-times it’s not CEQA. By the way, SB 35, it wasn’t labeled CEQA reform. It was. If you have a project under SB 35, you are out of CEQA entirely. I think that’s significant.

SONJA TRAUSS: The way we have it now is that there are two duplica-tive, redundant rounds of environ-mental review. It’s not that we’re taking it away. We’re taking away the second redundant one. What happens is, when a city does a re-zoning, they do an environmental review at the time of the rezon-ing. Zoning is a law that you pub-lish. You tell everyone, you say on this piece of land you can build an apartment building. This piece of land is for a gas station. This piece of land is supposed to be a church or whatever it is.

In most parts of the U.S., once the locality does the zoning, they publish it. People look it up when they’re thinking about buying something. They rely on that zon-ing. They believe it. In most plac-es, if you propose to do something within your zoning, you can just do it. You don’t need to have another decision process because the city already made a decision.

Here in San Francisco and in many places in California, you don’t get that. Even if you have a piece of land where they say, "Four-story apartment building? No problem.” When you go to actually build that, you might have to do an environ-mental review again. You will have to go to the Planning Commis-sion again. So that’s what we’re trying to take out. The benefit of that would be housing could come online faster. The whole process would be less risky.

For the smaller stuff, too, it’s a real equity issue. People say they want community development, but if you need to be politically sophisticated in order to do de-velopment, then you’re only going to get big developers. If you real-ly want community development, then you have to make the devel-opment process something that’s fair and easy to understand.

SCOTT WIENER: On the environ-mental front, I think that Miriam was right that SB 827, wheth-er people love it or hate it or are somewhere in between, it did spark a long overdue conversa-tion. The number of people who said, “Yeah, I was at a dinner party last night, and we were debating your bill.” That’s great. If nothing else, it has forced people to have those public, uncomfortable con-versations. It’s also forced, as a subset of that, a very overdue and important internal conversation in the environmental community.

On this bill, similar to SB 35 last year, the Sierra Club opposed the bill, even though, if you look on their website, they’ll say we sup-port dense transit-oriented de-velopment. They were the only statewide environmental group that opposed it. Natural Resourc-es Defense Council supported it, Environment California, a group called Climate Resolve did. There were some environmental justice groups that did oppose the bill, as well, that were I think less fo-cused on the environmental is-sues and more focused on afford-ability and displacement, which are obviously very legitimate and real issues. But there is a debate within the traditional environmental com-munity, it’s what we might call the “John Muir model.” It’s about

nature and open space and clean water and clean air and all things that we all support and are very, very important, but viewing de-velopment as negative. It’s a neg-ative environmental impact be-cause it creates traffic or dust or just covers up open space. There are other environmentalists, that’s a category I happen to fall into, that say that’s all really im-portant, but it’s also not pro envi-ronment to say we’re not going to allow density in cities and by tran-sit and therefore push housing into sprawl and more driving and climate emissions, and urbanism is environmentalism. That debate is happening. It’s painful in the environmental community, but

CENTER FOR CALIFORNIA REAL ESTATE • EXPLORING SOLUTIONS TO THE BAY AREA HOUSING CRISIS PG. 18

“Your reaction over time is, ‘Well, do I have to have these

jobs here in the Bay Area? Or can I place

those in, say, Scottsdale,

Arizona, where we have a large

office?’"

Panelist Jeremy Stoppelman

it’s awesome that they’re having the debate.

STEVE WHITE: Aside from champi-oning reform initiatives to allow more building, how is Yelp helping current employees overcome the challenge of finding housing in the Bay Area?

JEREMY STOPPELMAN: Well, you end up paying more. That’s sort of the most straightforward solution. You see it, as a business leader, you see it as rising costs. Your re-action over time is, “Well, do I have to have these jobs here in the Bay Area? Or can I place those in, say, Scottsdale, Arizona, where we have a large office?” That is something that we are now able to do and take advantage of, when we’re thinking about adding to sales heads or ac-count management heads, we can do allocations into one of our sev-eral other offices. Those jobs then aren’t in the Bay Area.

It’s hard to see that impact on the Bay Area. But I know for a fact we’re not the only company that is able to think that way and is able to spread workloads across multi-ple offices.

STEVE WHITE: Do you believe that the Bay Area’s housing crisis is a challenge that can be fully ad-dressed?

JEREMY STOPPELMAN: I think over time, yes. I think it will take the will of both the communities with-in the Bay Area, but technology companies can play a role. I think you’re starting to see that. Face-book has engaged locally. I know Google has also started to engage locally. It was a bit frustrating, when I first realized the extent of the crisis, that more tech leaders weren’t paying attention to this problem as it was developing. There was sort of an ignorance is

bliss mindset, I guess.

But as the crisis has intensified, it’s impossible to ignore. Your employees, pretty much at any income level, are feeling it and talking about it and raising that with you as a tech leader, as a manager. I think employees with-in these companies are more ac-tive and engaged on this issue. The tech community is more ac-tive and engaged on this issue. We have the political will starting to form, the community organiz-ing efforts starting to form. It feels like a movement that has gained a lot of momentum in a very rapid period of time.

I think last year’s housing reform package was a surprise, a posi-tive surprise, at least to me. We’ve started to see actual housing pro-duction as a direct result of that. I think we got an incredible conver-sation started with SB 827. I think it’s disappointing that it didn’t go farther. But we’ve moved the puck forward.

STEVE WHITE: In talking about short-term solutions, each of you, briefly, quickly, what’s one thing that could be done in the near term?

JEREMY STOPPELMAN: I’ll just do a quick one, which is join the Yes In My Back Yard (YIMBY) movement. That would be my short-term im-mediate recommendation. Get on the email list and start getting ac-tive with us.

SONJA TRAUSS: Seriously, talk to your friends and neighbors. Try to talk people through their own anxieties about allowing building because, like I said at the very be-ginning, we’re all pro housing in the abstract. Keep an eye out for things that might be happening near you. Write a letter in favor of

a project that’s near you.

SCOTT WIENER: Two things that I will say. One is not in my self-in-terest, but I am a big believer in it anyway. I’m a huge believer in voters knowing politicians’ ac-tual positions. In my profession we’re really good hiding that. It is sometimes hard for voters to sort of figure out what their position is. When you are voting, don’t just vote for the person who is saying things that you like or seems nice or there’s something, you know, you just have a positive feeling. Try to really figure out what their positions are.

For example, there were some peo-ple who were very passionate for SB 827. It really energized a lot of people. They should ask for their representative, for their senator, or for their mayor. There’s a may-or’s race in San Francisco and oth-er supervisor races. Ask, “What’s your position on that bill?” Or on any other variety of issues, make people answer that question. In terms of what we can be doing in public policy in the short-term, one thing that I’m a big fan of that we can do quickly, and it not only creates permanently affordable housing, but it keeps people sta-ble, is something called a “small site acquisition program,” which we have in San Francisco. We’ve been gradually ramping it up, but there’s more we can do. We have a lot of small old apartment buildings that are deeply rent con-trolled. You have long-term rent-ers there. They’re terrified that they’re going to be evicted. You have small property owners who own them and are saying, “I’m not getting enough to rent to maintain the building.” That is a recipe for a speculator to swoop in, buy the building at a cheap amount be-cause that owner just wants out,

and then evict the whole building, under the Ellis Act or otherwise.The city has a program where we will come in, and we will buy that apartment building from the landlord. The landlord gets a fair price, gets to extricate him or her-self from the building, and that becomes permanent affordable housing, not just for those ten-ants, but for future generations. It is so much cheaper than building brand new construction. That is a program I would like to see ramped up.

MIRIAM ZUK: When we think about displacement, we need to be think-ing about and prioritizing protect-ing renters today and making sure they’re able to stay in their homes. There are tons of stuff happening at the state level, just cause for eviction protections at the state level. Call up your senator and your assembly member and make sure that they know that you care about these things. There are things like making sure that landlords can’t just price gouge their tenants. Then locally, especially, strength-ening the renter protections in your local communities.

CENTER FOR CALIFORNIA REAL ESTATE • EXPLORING SOLUTIONS TO THE BAY AREA HOUSING CRISIS PG. 20

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