Social Housing in California
Mixed-tenure! Mixed-income! Going big on a big idea.
California Housing 5: Where We Go From Here 5
The bill would create a new State housing agency - currently called the California Housing Authority - which would build and own housing, often through non-profit intermediaries. The housing would be mixed-income, with units for wealthier occupants cross-subsidizing the units for less wealthy ones. The housing would also be mixed tenure - some residents would be renters, others would be able to purchase units in a limited-equity homeownership arrangement.
The bill as it stands is the product of a long series of negotiations amongst a wide variety of housers who are interested in ‘social housing’. Generally speaking, ‘social housing’ programs in the United States have three core characteristics:
They place state and local governments in the driver's seat as more active developer/owners of housing, instead of more passive funders and regulators
They seek to build mixed-income housing that uses cross-subsidization as a core economic and social model, as opposed to ‘public’ or non-profit models which are exclusively for low-income residents
They are based on models from overseas - Singapore, Finland, Sweden, Vienna (Austria), Amsterdam being amongst the most common
As I hope my readers appreciate, this newsletter is dedicated to finding the good in housing ideas, and to offering suggestions for building and growing the coalitions needed for big ideas like this one - because big ideas are needed. In the days that followed the bill’s introduction, numerous hot takes emerged that either celebrated or denigrated the bill, both from the left and the right. Some of the issues raised are subject of ongoing conversations and negotiations between housing groups and the bill sponsors, and I hope those conversations continue and are productive. I don’t want to get into some of the specific sticking points, or the tensions between different groups that have been engaged, only to offer encouragement to those who are willing to stay at the table.
Instead, I offer the larger housing community five areas to think about when thinking about Social Housing in California.
Hold on to the key pieces of the mechanism: This bill is an attempt to create a new mechanism - a state-owned development corporation - that can become a machine for housing production. The details of this machine matter, and some of the details won’t be perfect. (Bills are meant to be drafts, and I wish people could see them this way - maybe this is one benefits of being an academic). For me, there are four pillars that are essential to making this work better than our current mechanisms:
Mixed-income → Cross-subsidization. Most of us would agree that we can’t continue to live in such segregated fashion. This bill is one of the most important efforts in years to build housing which has residents from different economic walks of life. This economic integration also helps build a better economic model for producing housing. This has been one of the most important parts of Asian and European examples, and we should keep it.
New and more bold State role. We desperately need more and more creative state action on housing, and this model helps push us one step farther. This can radically help jumpstart production if done right. This doesn’t mean we are removing the private sector from housing - far from it. We are simply emphasizing its role as builder more than developer. More on the difference below.
No more expiring use! This program is meant to support the housing it builds forever. Most of our affordable housing programs have an expiring use clause which puts residents at risk of mass displacement at the end of a period of time (often 30 years, sometimes less or more). This is a poison pill built into so many of our programs, and it has to go.
Mixed tenure. The program allows for both rental and ownership models. This is exceptionally important - socially, economically, politically. For many households, wealth building is critical, and any just housing model has to include some form of ownership as a possibility. It also should include many tenures not on the current list, and should embrace tenure diversity as a founding pillar.
Let’s correct the misinformation, and leave the ideology at home. Anytime you get a big progressive idea, the usual tropes about subsidies and the private sector and government will emerge to rehash ideology. Ideology is a death sentence for good housing ideas, the dry rot of housing policy.
This isn’t removing the private sector. What this program would do is shift the model towards one more akin to how we build roads and transport systems. Private sector builders would bid to build the housing, and would be paid for service, with bonuses for meeting deadlines, etc. What it would change is their outsized role in deciding what gets built where for whom, and their growing role in owning the product afterwards. For all those private sector folks who really just want to build homes for people and make a decent living doing so, this bill is the answer to your prayers, not a threat to your way of life.
Every home in America is subsidized - this just changes how. The mortgage income tax deduction is the biggest housing subsidy in America, by far. Property tax rules like Prop 13 in California subsidize the homes of the whiter and wealthier. All that infrastructure we all pay for every day subsidizes the homes people live in. We need to move beyond the subsidized v. unsubsidized myth, and talk about how we subsidize and for whom.
Be careful about Decommodification. I appreciate why many of my fellow folks on the left talk about decommodification, and I will address this issue in a coming “Bigger Ideas” post. But the very idea of market v. non-market holds us back. This bill is a step towards changing the way certain real estate markets work, which is what we need to focus on. It doesn’t remove homes from “the market”, but shifts it into a different market with different rules than other markets. We need to talk about fixing markets - making them healthier and fairer, making them work for people, eliminating exploitation to the greatest degree possible.1 There is even a market in supportive housing in San Francisco - and it too doesn’t work.
Let’s make the role major institutions will play under this bill clearer to everyone. One of the challenges with so many good and big ideas is that they tend to be tabula rasa, as if nothing existed on the ground. For this bill to succeed, it will have to work with the communities, institutions and infrastructure that already exists.
Non-profit developers. Many non-profits will be nervous or skeptical about this bill, as it changes the game. Many will become building and program managers, which better suits their models (as opposed to builders of housing). Let’s also give them a pathway to convert some of their units to the limited equity homeownership model, so that they can play a greater role in wealth building - and generate capital for more production.
Community Land Trusts and other creative models. The program needs to become even more open to diverse tenures, and not fall into the rent/own dichotomy. The new program has a lot of time for resident voice, which is great, and CLTs are some of the best actors when it comes to resident engagements. Let’s find them a role in this program.
Existing public housing agencies and residents. If I was an existing public housing resident or worker, toiling under decades of under-investment, I’d be asking how this helps me. Let’s find a way to safely convert and revitalize existing public housing, and give those residents and workers the same possibilities as new builds.
Builders. Let’s work with the parts of the for-profit building industry - the Trades and Carpenters, the General Contractors, some Developers - who get up in the morning to build homes, not just own them or exploit a rent gap. We can demonstrate how this program can reduce risk, create a proper pipeline to guarantee jobs, and free them from the parts of the development community primarily focused on landlording or entitlement politics. This is most of the humans in California who build housing, and they are a critical part of any coalition needed to build this properly.
Let’s reconcile this bill with the California Dream for All idea. I wrote about this plan in Newsletter #3, and these ideas are both big, both support new forms of ownership and new forms of production, both change the nature of housing finance and are bold enough to actually change the way certain housing markets operate. These two ideas can work together - and even be combined. Let’s not have big idea v big idea, but rather think about how these two components can work together to really do something historic. Stay tuned for a future Newsletter on a Homeownership Plan for California that combines individual and community ownership.
Let’s think more about this new agency. As I mention, the bolder State role is essential here. But there are a few areas we can keep working on.
The structure of the Agency, and how it relates to the existing housing agencies we have. Ultimately, I think what we are doing is changing the nature of the California Housing Finance Agency, which already exists. Housers have long bemoaned the fragmented structure of housing agencies at the state level, the lack of a true cabinet position, etc. This bill, and bills like it, have to move us in the direction of institutional reform and coherence, not just stand up a whole new and separate agency. New powers and new governance, not a new agency.
Call our new State developer something else. While I am all for confronting the mythology about the ‘failure’ of public housing, the California Housing Authority drags us into the historical mire as opposed to out of it. Many advocates wanted the California Housing Corporation, which does a better job of explaining what it actually does.
Let’s make promises to lower-income Californians, and let’s keep them. Some of the skepticism you see out there comes from the people who need this housing the most. California has promised it would solve the housing crisis for lower-income people for decades, and has a number of programs and projects that have never come close to meeting the need. Most electeds would say we need to house the unhoused, and provide housing regardless of income, but doing so is another matter. This program - because of it’s size, scope and those all important parts of the mechanism - cross-subsidization, mixed-tenure, etc. - has the potential to actually address this challenge at scale. But to convince people to have faith after all these years and all this suffering is another matter. Making commitments without hamstringing the machine is hard, but it is necessary and doable.
There is a lot to build on in this bill. Let’s stay at the table.
Things which need reading:
Really excited to see Molly Solomon and Erin Baldassari continued the KQED tradition of doing great work in California suburbs (and giving a shout out to American Suburb, which has a special place in my heart). Sold Out is going deep on evictions and the housing crisis. Extra shout out to the folks who decided to transcribe these - nothing better than being able to read a podcast if you are a reader like me!
An important piece of journalism on empty supportive housing units in San Francisco. All the more reason to view housing as a set of different sub-markets with different rules, institutions, etc. We need to make all of them work and work better.
Sacramento became the first ‘pro-housing’ city in California. I will talk more about this program when I write about implementation, but this is a critical evolution that gets lost in the increasing Housing Accountability Act enforcement.
Supply chains matter. Another good Emily Badger piece on missing garage doors and supply chain issues. Yes, we can read it as a reason not to build garages, but there is more there than an argument for transit-oriented development and density.
Thanks to Josh Hawn for a smart point on this. I hesitate to talk about eliminating exploitation, as this is a blurry and hard line. Less or more is a better metric.