On February 18, Housing Is A Human Right released an investigative report, “The Garcetti-fication of Los Angeles: A Gentrification Cautionary Tale.” We examined, among other things, L.A. Mayor Eric Garcetti’s embrace of trickle-down housing. Housing activists believe it’s a troubling policy that triggers gentrification while generating billions for luxury-housing developers. California State Sen. Scott Wiener is one of the most aggressive proponents of trickle-down housing, pushing the troubling bill SB 50. The following excerpt from the report delves into trickle-down housing, Wiener, and SB 50.
The Garcetti-fication of Los Angeles: Trickle-Down Housing
Yet Mayor Eric Garcetti has been inclined to pursue more of a “trickle-down” housing agenda, which pushes for mass construction of luxury housing, to address L.A.’s housing affordability crisis. It’s popular among city and state politicians in California and throughout the U.S., but housing activists believe it’s a disaster.
In 2015, for example, Garcetti was warned by his own housing department chief, in a 2015 Housing and Community Investment Department report, that L.A.’s luxury-housing overkill had created a huge 12 percent vacancy rate (5 percent is considered healthy) in all housing built in L.A. since 2005. The housing department found that city officials had approved “150 percent of the units needed” by high-earning residents and “only 37 percent of the housing needed for low-income earners.” (Judging by those numbers, one could say Garcetti and the City Council were hell bent on turning L.A. into a gentrified, luxury city.)
Urged to create a “more equitable and sustainable housing market,” Garcetti was further warned by the housing department: “The severe lack of affordable housing is a pervasive problem facing the majority of City residents.”
Zillow, the real estate site, backed up the housing department’s assessment, noting that in L.A. and other cities “very high demand at the low end of the market is being met with more supply at the high end, an imbalance that will only contribute to growing affordability concerns for all renters.”
Trickle-down housing is based on supply-and-demand theory: flood the market with more apartments and eventually rents will drop. What’s more, proponents say, as new apartments age, the rents for those units will decrease, too. A trickle-down housing approach conveniently allows Garcetti and other politicians to give developers free rein to build as much luxury housing as they want, shamelessly using the housing affordability crisis as political cover to build more high-end housing.
(Download the full report: The Garcetti-fication of Los Angeles: A Gentrification Cautionary Tale.)
Trickle-down housing, though, is seriously flawed. First, it’s common sense that building luxury housing doesn’t directly address a housing affordability crisis that’s unfolding right now. Second, building more luxury housing in middle- and working-class neighborhoods brings a rush of speculative investment that drives up rental costs in an impacted area. Third, there’s no guarantee that luxury housing will diminish in price. According to the California Legislative Analyst’s Office, it will take some 25 years for the possibility that luxury housing will become more affordable. Many activists believe trickle-down housing is a scam to help developers rake in more billions.
Even Richard Florida, a kind of urban planning guru for city politicians like Garcetti, recently wrote that “the markets—and neighborhoods—for luxury and affordable housing are very different, and it is unlikely that any increases in high-end supply would trickle down to less advantaged groups.”
Trickle-down housing is the main thrust of California State Sen. Scott Wiener’s agenda. Wiener, a Democrat who represents San Francisco, styles himself as a housing expert. Similar to Garcetti, Wiener has taken boatloads of campaign cash from developers, landlords, and other real estate honchos since he first ran for office, as a candidate for San Francisco supervisor, in 2010.
For his 2020 re-election campaign for the state senate, Wiener has so far hauled in $153,816 from real estate players such as Spieker Realty Investments; Build, Inc; the California Apartment Association, which sponsored the main committee to stop Proposition 10; and many more. With such political patrons, it was hardly surprising that Wiener refused to endorse Prop 10, which would have repealed statewide rent control restrictions. But more than 525 grassroots organizations and civic leaders supported it. Supporters included the California Teachers Association, the California Democratic Party, California Labor Federation, the Sierra Club, the ACLU, and U.S. Senator Bernie Sanders.
Wiener is now pushing a statewide bill known as SB 50, or the More HOMES Act. It’s a reboot of the bill SB 827, which was killed in committee in the spring of 2018 by a coalition of social justice, housing justice, and tenants rights groups. They were deeply concerned that the legislation would fuel gentrification up and down California.
In a 2018 letter opposing SB 827, the Los Angeles-based Black Community, Clergy, and Labor Alliance (BCCLA), wrote: “Private interests and practices intended to reclaim urban space to profit a global investor class and real estate speculators are direct threats to our right to the homes and communities that we built in the face of their oppression.
“Unfortunately, public policies like SB 827 are not a defense, but rather an aid for these oppressive and discriminatory policies and interests. And there is nothing courageous, new, or innovative about advancing land grabs and economic exploitation.”
The Democratic Socialists of America – L.A. chapter, which also opposed the legislation, stated: “SB 827 will result in luxury housing exclusively for the wealthy while displacing and dispossessing the poor and working class.”
SB 50 and SB 827 have both been sponsored by California YIMBY, a fake grassroots group that receives major funding from Big Tech executives and political support from developers. (Wiener is also backed financially by tech companies or their executives, such as Lyft, Twitter, and Stripe.) Like Scott Wiener, California YIMBY refused to endorse Prop 10. Understandably, housing activists have been leery of the YIMBY movement.
That distrust only deepened in 2018 — months before California YIMBY sat on the sidelines for Proposition 10. Outside San Francisco City Hall, in April 2018, a peaceful crowd of activists, seniors, and working-class residents — many of whom were people of color — gathered for an anti-SB 827 rally. People spoke in front of reporters, explaining how the bill would ruin their neighborhoods and force them out of the city. Suddenly, YIMBY members, who are widely known for using bullying tactics on social media, showed up — and went off. They combatively shouted down the speakers. Things got so out of hand that a 77-year-old senior citizen fainted and was taken to the hospital.
SB 50, which activists say should be more accurately called the “More LUXURY HOMES Act,” isn’t much different from its predecessor. Wiener has conceded that. It will override local planning rules that protect middle- and working-class neighborhoods from runaway luxury development and allow upscale developers to build dense, market-rate—or luxury—housing near transit stops. It also has a somewhat mysterious provision allowing developers to construct near so-called “jobs rich” areas, a seemingly broad term that Wiener has yet to define.
Additionally, SB 50, so far, does not provide the percentage of affordable housing units that developers must build. Activists believe Wiener will ultimately propose a wildly insufficient figure that won’t come close to fixing California’s housing affordability crisis.
In an attempt to overcome opposition from housing and social justice activists, Wiener has included temporary (note, temporary) protections for “sensitive communities” under threat of gentrification. But, once those protections expire, the sensitive communities—middle- and working-class neighborhoods—will be open territory for developers seeking to utilize SB 50. Tellingly, the fact that Wiener included temporary protections is a tacit acknowledgment that the housing policies in SB 50 will cause a gentrification nightmare.
Garcetti, though, appears to be joining forces with State Sen. Scott Weiner, tentatively supporting a bill that has government-sanctioned gentrification written all over it. SB 50 would not only impact L.A., but San Francisco, Oakland, San Diego, and all other cities in California.
The media, often unwilling to seriously acknowledge the gentrification threat inherent in SB 50, regularly write glowing articles about Wiener and the bill—as though it were a magic bullet to solve a housing affordability crisis. Garcetti, Wiener, and many reporters—either purposefully or with little awareness—refuse to consider the ethics of gentrification. In other words, they fail to take into account who will be hurt by trickle-down housing bills, spot zoning, and other tools politicians and developers use to push forward policies and projects that harm middle- and working-class people.
In response to the grassroots uproar over Amazon’s plans to build a headquarters near a low-income housing area in New York City, which activists believed would hyper-gentrify the neighborhood, Penn State University Professor Alexandra Staub wrote in a persuasive essay:
“Amazon’s move to Washington and New York along with an influx of well-paid employees brings us back to the question of how we might apply the ethical concept of utilitarianism to understand the greatest balance of happiness over suffering for the greatest number of people.
“In my view, this number must include the poor and working class. In an area threatened by gentrification, the economic and social costs for displaced residents is typically high.
“To make ethical decisions, we must consider the people who suffer the consequences of rapidly rising costs in the area they call home as part of the ethical question.”
Garcetti, Wiener, and many politicians, in California and across the U.S., have consistently failed to do what Staub suggests. Perhaps because their political patrons—developers, landlords, lobbyists—would vigorously object.
(Download the full report: The Garcetti-fication of Los Angeles: A Gentrification Cautionary Tale.)