Building in California, A Year End List of Insanity
A couple years back, Alex Tabarrok posted a statistic on Marginal Revolution that has always stuck with me:
Last year authorities in the Houston metropolitan area, with a population of 6.2m, issued permits to build 64,000 homes. The entire state of California, with a population of 39m, issued just 83,000.
California has a housing problem and in the spirit of the holidays, I have put together a list of some of the insane stories I have collected about the depth of this issue.
In the Bernal Heights neighborhood of San Francisco, a 77-year-old developer finally got approval for 10 new units of housing after working on the project for 40 years. As reported in Mission Local: “[T]he project finally won support from many neighbors, including Kathleen Campbell, who lives on York and had opposed the development since 1997. After seeing the latest design, she changed her mind and wrote a letter in support of Quinlan.”
From Kevin Burke on Twitter: “Falafel shop wants to open in SF, however thanks to SF’s anyone-can-appeal-anything permitting process, nearby gyro shop pays $700 for Discretionary Review and blocks the falafel shop permit for months.”
Matt Farah was recently on the Joe Rogan Experience and ended up talking a bit about his new business in Los Angeles. He’s putting up a building and half the cost came in digging the basement for the mandated parking spots. The kicker? His business is in luxury car storage. Farah also noted:
- He has been told to wait a year for his electricity bills before he attempts to put solar on his new building.
- He poured 110 cement trucks largely due to the seismic code.
- The building has been under construction for four years.
- “Dealing with the city is so, so hard…It has taken me so long to do one stupid fucking building…I don’t know how anything got built here.”
When the Sunset’s San Franpsycho sought to combine sales of apparel with a pie and ice cream café and also hold product launch parties at its store, the owners learned they had to undertake a bureaucratic process with the added torture of public input and comment. S.F. requires retailers to notify every neighbor within 150 feet of upcoming changes — and anyone who chimes in with opposition to the change, for any reason, can gum up the works by demanding a hearing at the Planning Commission called a discretionary review. In the end, they were able to open the café, but the process was “pretty expensive and pretty painful,” according to an employee who didn’t want to be named I spoke with in early August.
This is the leverage that overinvolved neighbors, including now-Supervisor Aaron Peskin, used in North Beach to stop a Rite Aid drugstore from opening in an empty theater in 1998. That building, known to locals and flocks of pigeons as the Pagoda Palace, remained vacant for nearly 20 years. Today it’s a condo building with a restaurant space that’s hard to rent.
According to the Marin Independent Journal, Marin County property owners have taken longtime North Bay resident George Lucas, yes that George Lucas, to court over his new vineyard, alleging potential violations of the California Environmental Quality Act. Instead, they don’t want anything developed. Curbed has the story.
Building in SF is, by one measure, the most expensive place to build in the world. In the city, it costs $417 per square foot, far exceeding the next most expensive market of New York City at $368.
Modest upzoning could be a good solution to California’s housing problems. If 10 percent of lots in the LA metro area allowed four units, an additional 1.1 million homes would be available. In the San Jose-San Francisco-Oakland region, that kind of upzoning would mean 600,000 more units.
From the City Journal:
According to the San Francisco Chronicle, Oakland will produce almost 50 percent more housing units this year than San Francisco — 6,800 versus 4,700 — though Oakland has half the population and only 40 percent as many jobs as San Francisco. Just as surprising is the jump in Oakland’s housing production: the number of units brought to market in 2019 will be almost 15 times the number completed in 2018 and more than three times the number of units produced between 2013 and 2018 combined.
What caused this burst of production? Simple: Oakland told developers that they could build homes. In 2014 and 2015, the city passed a series of neighborhood plansin and around downtown that relaxed zoning and removed parking requirements, making it easier and cheaper to build. Now, after the four to five years required for design, permitting, and construction, Oakland is reaping the benefits of private development. By contrast, San Francisco continues to make it hard to build housing, with byzantine planning regulations, expensive development fees, restrictive zoning, and long delays.
From Reason Magazine comes the story of Joey Mucha, a national skee ball champion who wanted to convert his warehouse into a restaurant, bar, and arcade. Then community activists intervened.
What a year friends.
