Editors’ note: This article was updated Sept. 14 to reflect legislative action.
It’s hard to fix a housing crisis.
Just ask the California Legislature. After months of tough negotiations to put together a package of bills aimed at plugging the 100,000 unit affordable housing gap, lawmakers finalized a deal only 24 hours before adjourning for the year.
Legislators shouldn’t feel alone in their frustration. While California tops the list of states with insane housing costs, it’s by no means a uniquely Golden State phenomenon. Building affordable housing—and particularly getting cities and other localities to permit its construction—is a tough endeavor that has bedeviled state policymakers across the country.
So where should Californians look to solve a problem that feels so intractable? Is there any state that’s doing it well?
Affordable housing experts suggest legislators find inspiration in Massachusetts. For more than 40 years, the state’s signature affordable housing policy—Massachusetts “40B”—has served as a model for how states can motivate and sometimes bully reluctant localities into meeting their fair share of affordable housing.
Massachusetts has led the way when it comes to ensuring housing is built for households of all income stripes, says Carol Galante, faculty director of the UC Berkeley Terner Center for Housing Innovation. “Massachusetts says, ‘We don’t take away your local control. We only take away your local control when you’re not meeting an important state goal.’ ”
What’s the secret sauce in Massachusetts? And do the three bills in California’s proposed housing package have it?
The Massachusetts Model
The first thing to know about Massachusetts 40B is that it’s old—the state legislature passed the law in 1969. At the time, Boston was creating affordable housing for its low-income residents, but the city’s wealthy suburban neighbors weren’t so keen on the idea.
“It kind of grew out of the civil rights movement,” says Aaron Gornstein, who was former undersecretary for housing and community development under former Massachusetts Gov. Deval Patrick. “It was the strength of urban legislators wanting to ensure people had access to affordable housing outside of Boston, and that it wasn’t Boston’s sole responsibility and it was more of a regional shared responsibility.”
Remarkably, 40B has remained intact for five decades without a single legislative change to the law itself (there have been some administrative tweaks, but no changes to the actual statute). That’s partly due to its simplicity, which many credit as a key to its success.
Here’s how it works. Massachusetts set a goal for every city in the state—10 percent of your housing stock must be affordable. Say a developer wants to build a new apartment complex in a wealthy Boston suburb that isn’t meeting that 10 percent goal. If a developer reserves 20 percent of the units in that complex for very low-income households—those making less than 50 percent of average income for the region—that project gets fast-tracked for approval from the local zoning board.
That means the project only needs approval once at the local level, as opposed to needing multiple permits from multiple departments (health, fire, historical commission, environmental, etc.), which add time, cost and political uncertainty to the project. And crucially, the zoning board can relax local land use guidelines to accommodate a 40B project.
“The key is being able to override local zoning,” says Gornstein. “The local officials are under a lot of pressure typically to reject these proposals for a variety of reasons. It allows (zoning appeal boards) to have some backbone and say ‘This is a state law that requires us to permit affordable housing.’ ”
If the local zoning board still rejects an affordable housing project, developers can appeal to a state board—one relatively immune to local “not-in-my-backyard” pressure. Knowing that reality, these projects get local approval 90 percent of the time.
The consensus both within the state and among national affordable housing experts: the Massachusetts law is achieving its goal of getting suburbs to allow more affordable housing. It’s credited with creating 70,000 units in 1300 developments across the state since its inception—with half of those units reserved for lower-income households. While the majority of localities still fall short of the 10 percent affordable housing stock goal, many notable high-income and well-populated suburbs like Lexington and Concord have exceeded the 10 percent threshold.
States like Illinois and Rhode Island have created their own adaptations of 40B. Perhaps the law’s most notable indication of success? A 2010 referendum to repeal the law was rejected by nearly 60 percent of voters.
Even backers of Massachusetts 40B will admit it’s by no means perfect. Applying the same affordable housing mandate to cities of all sizes—from Boston to Lexington to much smaller towns—may not make sense for a state as geographically diverse as California.
How Does California’s Proposal Stack Up?
The piece of California’s proposed housing package that most closely resembles Massachusetts 40B is SB 35, a bill from Democratic Sen. Scott Wiener of San Francisco.
SB 35 was adapted from Democratic Gov. Jerry Brown’s failed proposal last year to streamline local development regulations. But the goals echo those of Massachusetts 40B—getting localities to speed up approvals, especially for low-income developments. Home building in California’s major coastal cities, where the housing crisis is most acute, takes on average a third longer than your average American city.
“Senate Bill 35 came about on its own, and was drafted to deal with California-specific policies,” Wiener wrote via email. “California should look everywhere for good housing policies to model, and Massachusetts has certainly put out some creative policies.”
Opponents of the bill argue that SB 35 creates a one-size-fits-all approach to planning for all cities, while not equipping affordable housing developers with adequate resources to actually create more low-income housing.
“No matter how pro-housing the city or how streamlined the process is, if there isn’t significant investments in state money for affordable housing, those units can’t be constructed,” says Jason Rhine, legislative representative for the League of California Cities, which opposes the measure.
Under Wiener’s bill, if a California city fails to meet its state requirements for low-income housing production—or is not submitting adequate data on housing production, a surprisingly common problem—a developer could fast-track a proposed project. Those state affordable housing requirements in many cases actually may be higher than the 10 percent threshold in Massachusetts 40B, and vary from city to city. Nearly every city in California, including smaller cities and towns, could be affected by Wiener’s bill.
If a proposed development reserves half its units for households making below 80 percent of area median income, that project would be eligible for “by-right” approval—a local planning board essentially must approve the project if it fits local zoning guidelines. The project also could bypass California Environmental Quality Act regulatory hurdles, frequent stumbling blocks for new housing in the state. And much like the Massachusetts model, SB 35 also would ban local governments from imposing some local requirements that make it harder to build new housing—such as mandating more than one parking space per unit.
But that’s where the similarities end. What may very well be California’s new model for inducing cities to permit more housing differs from the Massachusetts exemplar in several ways—some of which are distressing to affordable housing experts.
Under SB 35, it’s not just affordable housing that becomes eligible to be fast-tracked. For cities not creating enough above-moderate income housing, developers who set aside 10 percent of their units as affordable would be eligible to have their projects expedited. That satisfies the growing call among middle and higher-income households in areas like San Francisco and Los Angeles to expand the supply of housing for them.
But it does not explicitly prioritize lower-income housing construction. Unfortunately, reliable data on the number of cities and towns not meeting above-moderate income housing requirements is hard to come by (local data reporting improvements are also part of SB 35).
“Hopefully we’ll see a lot of both,” said Wiener. “We do know that affordable housing developers who support SB 35 have been clear that this will be a good option for them, especially in those communities that traditionally fight affordable housing tooth and nail.”
SB 35 also provides cities more wiggle room in avoiding new housing construction by allowing them to shield certain types of available land.
“In Massachusetts, if you’re not meeting your housing obligation and the project qualifies, even if it’s not in the right zoning, even if it’s not in a certain district, it gets an expedited process,” says Galante, the UC Berkeley researcher. “And even if the locality doesn’t approve it, it goes to a state appeals board.”
That hammer of a state appeals board is crucial, according to Galante. Without it, if a local zoning board simply denies an SB 35 development, there’s not much recourse for those who want to build the project outside of the courts.
“Where’s the enforcement of SB 35 is a question I’ve raised along the way a number of times,” says Galante. “I’m not saying it won’t be enforced, but I think it will have to be enforced in legal action which takes time and money.”
Cities could also simply change their general plans and change the zoning for sites slated for affordable housing developments.
Wiener points to provisions in the bill that empowers the state housing agency to monitor how cities are implementing SB 35 and singling out cities that aren’t complying with the spirit of the law.
“If local jurisdictions are violating the provisions of SB 35, then the Legislature can address that,” said Wiener. “We will be working on housing for years, so there will be plenty of time to refine policies like SB 35 or any others that increase housing production.”
Those pushing for more affordable housing in California argue that while not perfect, SB 35 represents a significant improvement over the current balance of power in housing. The legislation has received bipartisan support, and a diverse coalition of interest groups—from affordable housing developers to Facebook to construction unions—support it.
Standing in opposition along with cities are some tenants rights groups and activists who fear that an influx of new housing will lead to more rapidly gentrifying neighborhoods in which locals are priced out.
And those who’d like to see even more homes built have criticized the bill for requiring that eligible projects pay construction workers the “prevailing wage,” often the wage local labor unions earn for similar work. Necessary to secure the support of key labor unions, the provision will make it more difficult for new housing projects to turn a profit, critics say.
Nor is SB 35 intended to solve California’s housing woes singlehandedly. Other components of the package include a $4 billion bond to finance affordable housing construction.
Massachusetts 40B was only one part of multi-pronged approach to building more housing, and came at a time when federal housing dollars were easier to come by than they are now.
“It should be viewed as an important tool, but not the only tool,” says Gornstein of Massachusetts 40B. “I don’t want to overplay it. This isn’t a magic bullet. But it certainly will help.”