☆ Scott Beyer's New Year's housing recommendations for new SJ Council
Nationally-recognized housing expert Scott Beyer (founder of Market Urbanism Report) suggests SJ's newly-electeds can take a look at best practices and be inventive to solve city’s housing crisis--if they retain a sharp focus on greatly increasing supply asap. An Opp Now exclusive.
It’s the new year! San Jose will have a new mayor and new city councilmembers. In November, mayor-elect Matt Mahan won a tight race over Cindy Chavez, and by the end of January the city will have two newly-appointed councilmembers.
San Jose candidates often run (like in other cities) on the promise to fix their city’s housing crisis. San Jose is among the most expensive cities in the country, with median home values now at $1.4 million.
Here’s how they can follow through with their promises, get their housing strategy on track and quit wasting money.
The first, most obvious solution: deregulation. Loosen the laws that prevent new housing, or pass new reforms that make more land uses “legal by right.”
Thankfully the state of California did some of the work for San Jose already. In September 2021, California passed the California H.O.M.E. Act, commonly referred to as Senate Bill 9. The bill makes it easier for a homeowner to create a duplex or subdivide an existing lot. A homeowner can build up to four units on a single-family lot.
Even though the law has been in effect for over a year, there’s been little impact. The San Francisco Chronicle reported that as of July 2022, San Jose only had seven proposed projects. It’s not surprising that applications are slow to trickle in. A report from the city of San Jose found, “SB 9 will have limited impacts; most parcels cannot feasibly build new homes.” City spokeswoman Cheryl Wessling told The Real Deal, “Planners say what we’re experiencing is that homeowners find it will be expensive and likely not financially feasible for most of them.”
Other municipalities that have tried similar legislation have also seen little success. In 2021, Memphis changed its law to make it easier for developers to build 3-6 unit structures. But Memphis still has some of the worst zoning rules in the country, cooling the impact of that legislation.
“The city’s zoning laws prohibit apartments,” writes Jacob Steimer in MLK50. “And its onerous rules about quadplexes, duplexes and small homes lead to few being built.”
Minneapolis also legalized triplexes in single-family areas. As of August 2022, 133 new homes were built over the course of 2.5 years. Alex Schieferdecker, writing in Streets MN, calls that “genuinely disappointing.” He says there are other regulations the city must reduce to encourage people to build more triplexes.
San Jose can learn from their mistakes by allowing SB9 to work as intended, for example by loosening the permit process that still inhibits the bill.
“It is nearly impossible to get an appointment with the permitting department,” says councilmember Dev Davis who, along with Mahan, opposed SB9. The group San Jose Neighborhoods for All suggests that the city should apply SB9 to more types of properties, like those zoned for duplexes (R-2) and historic districts.
But San Jose could go beyond the state bill by passing its own citywide rezoning. My criticism of these “upzoning” bills is that they’re too mild to spur redevelopment. To spokeswoman Wessling’s point, most homeowners don’t have the desire or capital to turn their single-family homes into duplexes. And most institutional developers don’t see a lucrative enough opportunity in such minor redevelopment to act.
An alternative - and San Jose would be an apt testing ground - is for one U.S. city to pass its own bill taking minimum allowable by-right densities much higher. Instead of allowing single-family homes to become duplexes, allow them to become 8-plexes, 10-plexes or more. As I explained on a Twitter thread, this extreme upzoning would incent developers to assemble multiple homes in a given acre and redevelop them at much higher densities, such as “5-over-1” podium buildings. But that point may be moot for San Jose, given that current leaders don’t even support the much milder SB9.
There are, however, other regulations that can be or already have been reformed. One area where San Jose leads is in eliminating parking minimums. This past December, it became the largest city to abolish parking requirements for new developments. The old rules required every single-family home to have two covered parking spots. Now developers can be more flexible about what they build, meaning new homes will be cheaper.
San Jose has relatively loose ADU laws, although more regulations could be eliminated to spur their production (it only issued 800 ADU permits in 2018 and 2019). And San Jose is leading on tiny homes. They were made legal in 2020. In many cities, tiny homes are banned for being too small. Mahan says he will incentivize their construction and urge the city towards legal changes that make them easier to build. For example, they are currently only allowed on single family properties, while accessory dwelling units are allowed on single-family, duplex, or multifamily properties.
These measures should help with affordability at the margins. But until the city reforms its zoning code - which allows only single-family homes on 94% of residential land - it won’t reverse its laggard home production.
Deregulation isn’t the only area where San Jose needs reform. Another goal should be making more efficient use of local, state and federal affordable housing funds, namely for homelessness prevention. Mahan says it costs $850,000 to build one unit of housing for the homeless, but believes that can be cut to $85,000 by “using pre-built modular units (the kind of tiny homes you see on TV) and placing these on government owned land.”
San Jose calls these tiny homes “quick-build” apartments. They can be built in months, instead of years, and each unit will contain a private bathroom and small bedroom. The city is already experimenting with these units.
But the city will need to have a more complex conversation about the root cause of homelessness - which is often substance abuse - and whether its housing programs prevent or encourage that. Mahan wants Santa Clara County to invest in inpatient drug addiction and mental health treatment facilities. He goes further than many politicians in the Bay Area and says “if any individual is a danger to themselves or others... we should require them to enter treatment.” Mandatory treatment is a costly solution, but may do more to address root causes of homelessness than giving away free housing.
The most important thing San Jose’s new leaders should understand as they try to address the housing crisis is the role their employer - and California’s larger bureaucratic infrastructure - plays in causing the problem. There are entrenched interests (namely current homeowners) who benefit from the home shortage, and who demand regulations that maintain it. For change to happen, Mahan and other officials must deliver this inconvenient truth to constituents.
This article featured additional reporting from Market Urbanism Report content staffer Rebecca Lau.
Mayor Mahan outlined some of his market-based housing principles in a recent SV Biz Journal interview, excerpted nearby.
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Image by Ron Cogswell