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Local Programs, Not Taxes, Will Solve NorCal Housing Crisis

Nov 7, 2018
by Josh Anderson

SAN FRANCISCO, CA – At CapRE’s Fourth Annual Northern California Apartment Summit, a particularly salient theme of the day was barriers to entry (and expansion) in the Golden State, largely focusing on entitlement and construction costs. However, some Bay Area insiders on the panel San Francisco, East Bay, South Bay Multifamily 360: Still Strong and Growing in the Face of a Potential Macro Economic Shift, Rising Interest Rates, Proposition 10 and Construction Challenges who revealed that taxes and politics are also to blame for many barriers.

For example, Ronnie Turner, Owner/CEO, Turner Development Resource Group offered some sage insight on this. “I’m part of the jobs and housing coalition in Oakland. It’s an opportunity for us to come together as developers and colleagues to work on these issue and work with the local politicians as far as some of these local initiatives,” he shared.

“And you know, unfortunately, politicians, when the coffers are filling up, they don’t understand what a rainy day is,” Turner continued. “Or they forget what a rainy day is. So it makes it very difficult for them. They look to us to be able to contain the feed for that trough. And so when we have these conversations as a group, and it’s a good thing to have a group like this, that can go in and have these kinds of conversations behind closed doors, to really get to the nut of what they’re proposing with this legislation locally.”

“Some of it works. Some of it works in our favor. Some of it doesn’t,” he mused. “But at least we know where it’s coming from and what the effects are going to be early on, so it helps that way. But yeah, we see a lot of things happening in Oakland as the tide is rising there. we’re trying to keep the politicians from just shutting us in a box, since this would just shut the door on development.”

Next, John E. Hyjer, First Vice President for Investments at Equity Residential chimed in. “They can’t keep going to the trough and putting the burden on providers of housing,” he stressed. “We are the ones that are actually trying to solve the problem. And I don’t know who many times I stand in front of communities and explain to them, that if you continue to add a fee on top of a fee on top of a fee, it just doesn’t make sense economically. We’re at that point in several locations currently. And it’s got to stop.”

John Hyjer,

Hyjer then shared analogy he likes to use. “If someone walks into a grocery store, walks down the aisle, puts all of the food in their cart, walks up to the cash register, and says, “Geez, I don’t have any money to pay for this.” Is San Francisco going to make Safeway give them a 50% write off on their food? No it’s not going to happen with that. We have set up a national program that helps with this problem, where everyone has to share the burden. It’s called Food Stamps. We can’t expect the providers to continue to be burdened with this all of the time.”

According to Hyjer, there needs to be a regional or state level program put in place to address this. “And we, as many of the regional institutions, are having these conversations at high levels,” he shared. “So we can increase density and speed up development entitlement timeframes. Relax the CEQA process in certain aspects. These are certain things that will help developers develop product faster. And more efficiently. It’s not putting the burden on any particular developer to make up the different in any particular municipality.”

For more coverage of this panel, check out earlier CapRE Insider Reports:

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