California's Bad Party: SB50 Fails Again

California's third attempt to pass a statewide zoning-reform bill to allow denser and taller housing construction in more places—Senate Bill 50, sponsored by San Francisco's Scott Wiener—has failed, voted down in the state senate 18-15 (with a number of abstentions).

The New York Times has a good article out already on the bill's failure, and is clear about the stakes of California's ongoing housing crisis:

It is hard to overstate the threat posed to the state’s economy and prosperity. Housing costs are the primary reason that California’s poverty rate, 18.2 percent, is the highest of any state when adjusted for its cost of living, despite a thriving economy that has led to strong income growth and record-low unemployment.

The consequences are in plain sight. Cities are struggling to deliver basic services because teachers and firefighters can’t afford to live near their jobs. A surge of sidewalk tents and homeless camps has prompted city leaders to urge a state of emergency — and led lucrative business conferences to find other locations. Many Californians are moving to cheaper states, and homelessness routinely tops the polls of residents’ biggest concerns.

The Golden State seems stuck on this fight—while several other states and cities are lapping it with different (generally broader and simpler, less technocratic) approaches. What's going on? Why is California, with unified one-party control of state government, an extremely active and organized pro-housing ("YIMBY") movement, and the most severe housing crisis in the U.S., not the place that's pushing the envelope on this issue?

California is the End State of the Bad Party Problem

Check out this map and analysis by LegalPlanet of the final vote on SB50. Their takeaway is simple, and I think accurate:

This bill was ultimately defeated by affluent suburbs. Most senators representing dense urban areas (though not all) voted in favor, as did legislators from some (not all) of the state's most rural and conservative areas.

SB50's opponents, to be clear, are not all suburbanite NIMBYs—they're a weird coalition of many interests. But at the end of the day, the wellspring of opposition was from places that largely look like this:

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And that's unsurprising. California is the state, more than any other, that pioneered America's post-WWII suburban experiment: the notion that everyone remotely in the middle class (and even many people struggling below it) could have a single-family detached home with a yard in a quiet neighborhood built to never ever change, accessible by car on a huge network of publicly-funded roads. The development industry and government at all levels, working together, achieved this through a new mass-production model—communities built out all at once, to a finished state, at an enormous scale.

And for a while, primarily in the 1950s and 1960s, it looked like it was working. California grew explosively in those decades because its endless sun-drenched suburbia offered a pretty good quality of life at a shockingly reasonable up-front cost. (Sound like anywhere you know today?)

The key words are "up-front." You can make a lot of things look cheap if you're willing to pass the costs on to the next generation. This is the story of suburbia everywhere—a pattern of development that generates unsustainable long-term costs—but California simply went at it earlier, faster, bigger, and harder.

The story of much that's gone wrong in the state since is the story of the unraveling of the Growth Ponzi Scheme's unfulfillable promises. By the 1970s, residents were revolting against tax increases and passed the astoundingly ill-conceived Proposition 13 to lock in taxes at artificially low levels for an incumbent generation of property owners. By the '70s and '80s, efforts to pass slow-growth measures and development moratoria were also common. In the 21st century, the state's institutions are sclerotic, its transportation system is a mess, and there's nowhere near enough money to fix it all.

We've written extensively about how suburban development is like a bad party, where each new guest makes things worse for the guests who were already there. More traffic. More crowded schools. Few obvious, immediate benefits, because the way of life you bought into was based on privacy and exclusivity, on elbow room and access to natural amenities, and all of that is threatened by extending it to a lot more people after you've got yours.

This applies to plenty of other places too. But every problem is supersized in California. The traffic is worse. The resource scarcity in general is worse, from water to available land. Inequality is worse. The threat of displacement facing vulnerable low-income communities by a wave of well-to-do newcomers is more real. Housing and development costs are so high that basically all new market-rate homes are unattainable to the middle class, and thus utterly dismissed by many on the political left as having any role to play in a housing solution; the scorn directed at "market-rate housing" by left-leaning activists is something I've never seen to the same extent outside of California.

California's middle class is in collapse, and this breeds zero-sum politics as people fight to retain their toehold in it.

Is SB50's Approach Not Radical Enough?

SB50 is a complicated beast, and evolved over the years to become, in some ways, more complicated and technocratic, as I wrote a few weeks ago. It comes with lots of maps: standards for transit-rich areas, high-performing school districts, and job-rich areas. This year's iteration added a sweeping sort-of-escape-clause for "sensitive communities" to make their own rules that would achieve the same goals.

Ultimately, I think SB50's technocratic-tinkering model is not disruptive enough to the logic of the Suburban Experiment. It is a bill that would further entrench California's tendency to hyper-regulate and micromanage development, which will always end up working to the benefit of connected insiders who know how to play a complicated game.

The deeper dysfunction here is that California is a place built on a promise that was never possible to extend, indefinitely, to everyone who wanted to live there. It’s not that California is “full”; it’s just that California’s suburban dream is a dead end. (And this includes for the people in the heart of dense cities who are still trying to live that dream.) The state’s cities could accommodate many more people in a way that’s actually a win-win—by returning to the traditional development pattern that produced the built form of places like San Francisco. These are places in which a good party is imaginable: growth and density don’t inherently threaten the very things that attract people to them. So it’s conceivable for growth to work to the benefit of existing residents as well as newcomers, creating an ever more productive, vibrant and culturally rich place.

California’s pre-suburban cities and would-be strong towns need to reestablish a culture of incremental development and wealth building by many hands within a community. A lot of existing institutions (regulatory, financial, and to some extent cultural) stand in the way of this. But at least a path forward is imaginable. SB50—an additional layer of top-down micromanagement—is not going to be that path.

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