☆ Mayor Blankley on tackling CA's Housing Elemental Struggle via the free market

In this Opp Now exclusive, Marie Blankley—mayor of Gilroy since elected in 2020—deconstructs why CA Housing Elements' top-down artificial housing mandate targets don't improve issues of supply, affordability, and meaningful urban design.

Opportunity Now: In the Bay Area, tremendous housing scarcity and housing costs are a double whammy to interested homeowners, many of whom are just giving up and accepting the forever-renter fate. How did this all start?

Marie Blankley: As a lifelong resident of Gilroy (since 1964!) whose family comes from farming throughout Santa Clara County, I’ve lived through the change of our once prevalent orchards to what the world knows as Silicon Valley. Personally, I couldn’t get away from farming fast enough; and as compared to the number who barely got by, the successful ones were as few and far between as making it in Hollywood or to the major leagues. And thus began my interest in business and the economics of supply and demand.

As Silicon Valley developed and job opportunities soared, so did the cry for housing. Understandably, people protective of their existing neighborhoods as housing demand grew encouraged their elected representatives to go against market demand and deny housing developments. Sadly, however, such action caused what basic economic principles have taught us all along: that limiting supply in the face of demand serves only to increase the value of what’s in demand.

ON: Have the State's attempts to mitigate NIMBYism, and increase local housing supply, been effective?

MB: Yes and no. The process of the State’s certification of each city’s Housing Element every eight years (an element within each city’s General Plan) has become the mechanism by which local jurisdictions are measured for compliance with the State’s housing goals, a step that aims to increase housing production and presumably to correct cities at fault for setting contrived growth limits regardless of housing demand. The certification process, however, sets its own contrived housing limitations by placing artificial numerical targets on housing mandated to sell or rent by category of household earnings as a percentage of each County’s Area Median Income (AMI). Furthermore, these artificial targets in the name of solving a statewide housing affordability problem ignore the primary roadblock to making housing affordable in California, which is the State’s inaction to reduce building costs. Building housing at market costs (that is then forced to sell or rent below market) causes a feasibility problem for construction, which can only lead to less building, limited supply, and an increase in value of what’s been limited but is still in demand.

The cost of housing will always be higher near thriving job centers and convenient transportation services, and less expensive the farther away it is. Here in my part of the world, Gilroy is the most affordable place to live in Santa Clara County because we are the farthest away from the job centers. Unfortunately, we have not shared in the employment surge of Silicon Valley, and our residents don’t have access to public transportation viable for commuting. In our case, and in that of cities in similar circumstances, adding housing through mandates does less for the welfare of our own residents and more to entice those looking to move to Gilroy to get more for their housing dollar. Aside from the burden this adds to our city services, it exacerbates traffic congestion by adding more commuters where viable public transit services don’t yet exist and job centers are out of the area.

Nonetheless, the State has been effective in reducing NIMBY attitudes, which, in my opinion, is a big win. We should never stand in the way of opportunity for all, yet too many people in the past have argued that growth in their community should be contrived for the benefit of those already there and should close the door to those seeking opportunity in the same community. While I was serving on Gilroy’s Planning Commission from 1992–1999, I can attest that Gilroy was no exception to NIMBYism, despite the logic of supply and demand and the developer applications that existed and tried to meet that demand.

But reducing NIMBYism while contriving housing numbers by type will continue to leave local jurisdictions with too much of this and not enough of that. Due to Federal tax credits for low-income housing, Gilroy has met over 400% of our housing allocation in the category of Low Income in this last 8-year cycle. However, we’ve met only 66% in the category of Very Low Income because we’ve received so few applications to build due to lack of feasibility. Even with Santa Clara County Measure A, passed by the voters in 2016 to provide nearly $1 billion to help finance very low and extremely low-income housing throughout the county, Gilroy has benefited from only one housing development (75 units) and one smaller one in the pipeline. What’s left of Measure A dollars is already spoken for. All of these efforts to meet contrived housing targets by category only perpetuate the problem of limited supply—first by local jurisdictions trying to limit supply to slow down growth, then by the State limiting supply by category, whether by trying to manipulate local zoning or making it infeasible for developers to build.

ON: How, then, can the State get out of local jurisdictions' business and let them start making reasonable, informed housing decisions?

MB: If our state is serious about traffic congestion management, then housing cannot be forced where proportionate jobs and transportation services do not exist first. If our state is serious about addressing the rising cost of housing, then address why housing costs so much to build today. If our state is serious about enticing developers to build housing at market costs that cannot then be sold or rented for market value, remove the roadblocks to feasibility caused by state legislation. If our state is serious about striving for a mix of housing types, then remove contrived housing targets and let market demand drive the numbers of apartments, condominiums, townhomes, duplexes, triplexes, 4-plexes, single-family homes and accessory dwelling units. Let the people drive demand for the opportunities they seek.

Leave authority with local jurisdictions who are the best equipped to balance housing, jobs, and transportation services within their communities. Limit State intervention to (1) ensuring minimum land zoning standards within each jurisdiction that provide land capacity for all housing types and densities, (2) ensuring that local jurisdictions are not denying housing applications that meet zoning criteria, and (3) ensuring that all jurisdictions plan for future neighborhoods that avoid segregation by including a mix of housing and consider necessary amenities for complete neighborhoods (such as proximity to parks for those living without yard space and necessary parking). State mandates seeking to reduce or eliminate single-family zoning in hopes of replacing it with high density housing will instead bring skyrocketing prices for single-family homes and foster a more segregated society. Rest assured that continued efforts to artificially limit supply will raise the price of what’s being limited, creating in this case a benefit to those who already own a single-family home (and their heirs) at the expense of those who never will. We’ve come so far with attitudes that strive to reduce segregation and disparity; it’s disheartening when legislation meant to provide opportunity for all comes with consequences that raise housing prices and put opportunity further out of reach.

ON: So it sounds like the answer to affordable housing is to take the politics out of it and follow the economics.

MB: Exactly. Build various mixes and forms of housing in quantities that satisfy demand for all types. Keep authority with local jurisdictions to ensure that housing is in balance with local employment opportunities and accessible public transportation services, and that neighborhoods are planned for a mix of housing types within them. Subsidized housing should not be combined with efforts to produce housing intended to be paid for by the inhabitant. Reduce the cost to build housing in California to increase housing supply and make housing of all types more affordable.

ON: But for now, cities such as Gilroy are still being foisted into State-dictated Housing Elements using the same contrived limits for which they faulted local jurisdictions and justified intervention.

MB: As of June 30, 2023, 212 jurisdictions in California (about 40%) according to State records are still being told that their Housing Element does not yet comply with State Housing Element Law. With 40% of California jurisdictions still in “non-compliance” since first submitting their Housing Elements by October 31, 2022, one has to question the leap of political power that may be underlying this process by the State to force a “one-size-fits-all” solution to housing statewide, which brings a multitude of unintended consequences to local jurisdictions trying to balance the needs of their communities.

Marie Blankley is the mayor of Gilroy. She has been in practice as a Certified Public Accountant for over 35 years.

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