COMMENTARY
Housing Arguments Over SB 50 Distort My Upzoning Study. Here’s How to Get Zoning Changes Right
Whether more buildings and greater density make units more affordable is a good question, but results from Chicago are being misinterpreted. Turns out that the nuances and details matter.
[Editor’s note: In the heated debate over legislation to address the housing crisis in California—namely a bill by state Senator Scott Wiener, known as SB 50—many antigrowth advocates, affordability activists, longtime homeowners, recent renters, NIMBYs, YIMBYs, and others in between weighed in. An academic paper by MIT’s Yonah Freemark became a powerful part of that discussion. The Frisc reached out to Freemark about this, and we’re happy to publish his perspective. Last week, SB 50 was put on the shelf by a state committee until at least January 2020. Maybe it’ll be revived, but like everything housing, it’s complicated.]
How do we shape local land-use policies to encourage more housing — essential to accommodate a growing population — without displacing low-income families from their neighborhoods?
This question has become a matter of pressing public concern. In communities across the country, attention has focused on upzoning, a policy that typically means allowing more housing units on an individual parcel — often, but not always, through bigger buildings. The idea is that upzoning encourages more development and expands the housing supply, accommodating demand and increasing affordability.
In January, I published the results of my peer-reviewed research on a series of upzonings that occurred in Chicago in 2013 and 2015. I compared areas that were upzoned with equivalent areas that stayed as they were previously to identify the short-term effects of the policy. I found that the sort of upzoning implemented in Chicago produced a series of problematic outcomes. One, over the five-year period I studied, the areas that were upzoned saw no increase in the number of housing units built compared with equivalent areas that were not upzoned. Two, upzoned properties did see a significant increase in property transaction prices. This indicates that the short-term response to upzoning was speculation on land, not new housing units. Put otherwise, land became more valuable, as we might expect since the city gave landholders the ability to build more on it. But new construction, the actual addition of housing units, did not soon follow.
While construction may follow over a longer time frame, Chicago’s experience of a rise in property values combined with a lack of growth in dwelling unit construction raises concerns regarding affordability. It suggests that the short-term effects of some upzonings — but perhaps not all — will be property speculation, whose immediate benefit accrues to incumbent landowners and whose impact may be negative, at least for a time, for local communities.
The study, however, does not mean that such an effect is inherent to the act of upzoning itself. The results invite us, rather, to ensure that if we adopt upzoning reforms, that they contain mechanisms addressing concerns of continued affordability in the time between upzoning and a future increase in housing availability. It pays to be deliberate about how we work to increase housing.
I am chiming in because my study has been invoked in the discussion taking place over California’s SB 50 legislation, sponsored by state Senator Scott Wiener. The bill would effectively upzone many areas of that state, while providing new tenant protections. My research has been cited in some quarters as a reason to oppose the legislation and its upzoning policies. For example, the San Francisco Telegraph Hill Dwellers neighborhood organization and the South Bay Cities Council of Governments sent letters to the Senate Housing Committee, using my research as evidence against the legislation.
I have repeatedly and publicly cautioned that results from Chicago should not be interpreted as reflecting what may or may not occur if SB 50 were to pass. Still, after an invitation from The Frisc, I wanted to clear the air. I’ll do so in three ways: One, I’ll describe specific instances in which my work has been misinterpreted, and explain why. Two, I’ll point to aspects in the legislation in California that suggest it may produce different outcomes than the upzoning in Chicago — particularly because it includes vital components designed to preserve affordability. And three, I’ll point to the kind of future research needed to understand such policies.
As my study continues to be mentioned, I wish to explain in more detail why this use is inadequate. I also want to explain why I have been hesitant to take a direct stand on SB 50 over the past few months, as several organizers have asked. This is for two reasons.
First, as I’ve written previously, academic research can only be taken so far. (The fact that my work is being talked about can be seen as a positive; in most cases, scholarship languishes, ignored by the public. Plus, this type of analysis has so far been surprisingly rare; there are few studies measuring the effects of upzonings on specific neighborhoods.) I don’t want to imply that my work can answer the question of whether we should undertake a certain policy, particularly one that is different from the one I studied. Moreover, I do not want to exaggerate my role by intervening so directly in a conversation in a state where I’ve never lived; I wish to not diminish the role of local organizers.
Second, the scholarly evidence is still incomplete as to the effects of upzoning, which would make it especially difficult for me to state that I knew what SB 50 (or any other specific upzoning proposal) will or will not do. As such, I’ve focused my public comments on the issues I believe are raised by my findings from Chicago.
Measuring allowed density is not measuring built density
Upzoning does not automatically mean neighborhoods will densify. As a matter of public policy, upzoning allows for an increase in building size and housing units, but that allowance must be followed by actions by public and private stakeholders for density to increase. And even if the number of housing units does increase eventually, change may take many years or even decades.
Let me give you an example. Let’s hypothesize that the city of Chicago has an enormous parcel of land on the South Side, previously used for some industrial purpose. The land has been sitting dormant for several decades, despite an arguably beautiful site along the waterfront. In the interest of economic development, the city rezones the parcel for a relatively dense mix of uses. Let’s call that a form of upzoning.
But that change in public policy alone does not produce additional construction or housing units. In fact, the South Side of Chicago faces tremendous obstacles relating to decades of racialized disinvestment, white flight, suburbanized industry, and classist American housing policy, and as such new construction may not occur at all. In which case density wouldn’t increase, since there would be no more housing. Thus upzoning by itself does not necessarily mean more construction. (As I’ve noted, I found no additional new construction from the actual Chicago upzoning in the short term.)
A study of upzoning, therefore, is not a study of increased built density. Unfortunately, some have interpreted my study as doing just that — not as assessing the impacts of upzoning (which it does evaluate), but rather as assessing the impacts of increased density (which it does not engage).
To wit, Tim Redmond, writing for 48 Hills, contended that “the YIMBY narrative — that higher density in U.S. cities will bring down housing prices — doesn’t work in real life.”
In addition, Cupertino Mayor Steven Scharf said in his state of the city address: “There was just a study I read today from MIT that was looking at the cost of high-density housing, and said, oh, it’s actually, it drives up prices enormously because it makes the land so much more valuable, and it’s just a myth that if we build really tall buildings suddenly all the prices will come down. It hasn’t worked that way anywhere in the world.”
My study of Chicago cannot be interpreted in this way. Since I did not find any increase in construction resulting from the upzoning, I was not measuring the impact of higher density. So it is inaccurate to argue that I identify increased density as a cause of reduced affordability.
Dig what you’re reading? Sign up for our free newsletter, written by The Frisc editors every week (or two) with new stories, plus extra thoughts, notes, photos, and updates from around the city.
This matters a great deal, because people who favor upzoning typically argue that improved affordability will stem specifically from an increase in the housing supply, made possible through greater density. My study does not disprove that claim, nor for that matter does it support it. It does suggest that if we want housing supply to increase following upzoning, cities can do more to work for speedy construction by developing their own projects, as well as by making deals with developers.
Moreover, other scholars have studied the impact of new housing supply on overall affordability, and they do find an increase in affordability. Vicki Been, Ingrid Gould Ellen, and Katherine O’Regan, for instance, write that “adding new homes moderates price increases and therefore makes housing more affordable to low- and moderate-income families.”
I have no reason to believe that their assessment is incorrect. When it comes to upzoning, what we need to know is whether it will increase the housing supply, a different question to which I will return below.
Upzoning can include affordability
We can’t conclude from my study that more housing units and increased housing density reduces affordability. Where does this leave us then with regards to upzoning, namely the reform that allows higher density? Since I find that the short-term consequences of upzoning in Chicago are increased speculation, we should be concerned that such policies may reduce affordability in affected areas, at least in the short term.
Greer Stone and Pat Burt, vice chair of the Santa Clara County Human Rights Commission and the former mayor of Palo Alto, respectively, noted after reading my study that “upzoning … leads to increased housing costs … when land is rezoned for increased density, it becomes more valuable, and the price of housing and rents rise.” Francisco Dueñas, a housing advocate for the Alliance of Californians for Community Empowerment, said the following: “Similar to what happened in Chicago, [SB 50] is just going to increase the value of that land, fueling greater speculation, and then that gets translated into increased rent and more people getting pushed out.”
Since I did not find any increase in construction resulting from the upzoning, I was not measuring the impact of higher density. So it is inaccurate to argue that I identify increased density as a cause of reduced affordability.
These are largely accurate descriptions of my study. I did find increased housing costs following rezoning in Chicago, including among existing units. Yet the problem of jumping from a study that evaluates one policy to drawing assessments about a different policy is, to put it simply, that the devil is in the details. Chicago’s upzoning and California’s SB 50 are not the same policy, and it is important to bring their differences into stark relief because they should really caution us into making overly general conclusions.
In fact, there are features of the California bill that are not in the Chicago change that could potentially address or ameliorate concerns about speculation. First, SB 50 applies to an area far broader than did Chicago’s rezoning. One possible response to my study is that, because Chicago rezoned a relatively small portion of land (just about 6 percent of the city’s total parcel area), it encouraged intense interest just in the areas that were affected.
It’s hard to see SB 50 produce a similarly focused interest since it would affect a far larger portion of California’s cities. That said, one could make an alternative argument, which is that the Chicago results were simply property values adjusting to increased allowed densities; in that case, one would expect similar outcomes as in Chicago. This is an issue that certainly requires further research.
Second, SB 50 will affect areas zoned for single-family homes: It allows fourplexes (four units) on most California areas that are now zoned only for individual houses (plus accessory dwelling units). In areas with many jobs in large counties, density limits are waived and parking limits are reduced. This was not the case for Chicago, where only areas zoned for mixed-use business, commercial, and downtown areas were affected by an increase in allowed housing densities — but not single-family, residential-only areas. There might be a different response to upzoning in single-family-home areas than in mixed-use areas. In Chicago, the policy also did not encourage the sort of low-density multifamily complexes that are key to the Golden State’s proposal.
Third, and more importantly, SB 50 includes significant protections for renters, low-income people, and potentially gentrifying areas. These protections were not incorporated into the Chicago rezoning.
For instance, SB 50 does not allow the demolition of existing rental housing. It requires 15 to 25 percent affordable housing or an equivalent affordable-housing payout for projects with at least 10 units built under its provisions, a higher share than is the case in Chicago. Finally, it provides a five-year community review period to establish new zoning rules for areas deemed to be sensitive and more likely to face threats of gentrification. This latter area includes about half of San Jose, much of central San Diego, and most of central Los Angeles, among others.
Many of the these features — the renter protections, requirements for affordable housing as a part of new development, and the time given to communities facing the threat of gentrification — are changes Wiener added to his bill since its previous version, SB 827, failed.
That these protections were each added to an earlier bill in and of itself illustrates how upzoning can take many forms, and that some versions confront affordability head-on in a way that others do not.
Together, these provisions will likely moderate the potential negative, speculative impacts of upzoning. The additions to the bill will protect existing renters (through strong enforcement will be necessary) and push new upzoning-related development not into low-income areas, but rather into higher-income communities that historically have been mostly off-limits because of zoning laws that make developing apartments there impossible.
Lots more to learn
There is broad evidence in the academic literature that strict land-use regulations, when compared at the metropolitan scale, block new construction, restricting supply and increasing costs. And tighter zoning restrictions are associated with income segregation and racial exclusion.
As such, there is plenty evidence to support upzoning as a general policy approach. But we also have much more to learn about how upzoning will impact jurisdictions that are considering it. Apart from my work, there is very little causal evidence for how upzoning affects housing construction in the specific neighborhoods where it occurs. We need more studies to explore other facets of the issue, not only in different places, but also over different time periods.
For one, while my finding that property values increase in upzoned communities suggests that future construction is likely, the study does not confirm future construction, nor does it show how long it will take that construction to occur. Wiener recognizes that “it takes a lot more time to build the housing, and that’s frustrating for us who wanted to see housing built yesterday.” We need to better understand how long the development process takes, and use that to inform our policymaking.
As UCLA Professor Michael Lens notes, my study is “a part in … a larger body of research that is really early.” Scholars and practitioners have to conduct significantly more research to confirm or contradict the generalizing of my findings. If we cannot be entirely sure about how upzoning will affect neighborhoods and cities, it is also true that simply leaving zoning as it is today does not seem likely to induce more housing construction than under an upzoning scenario. In fact, the opposite is almost certainly the case.
Blocking SB 50 maintains low construction levels in many of the state’s most exclusive communities. It will preserve single-family home neighborhoods; in doing so, it will continue to deny many people — disproportionately low-income and minority — access to the well-financed public services that often accompany such communities. SB 50 opens up the possibility of a future with denser construction that includes new affordable units, and broadens access to such places.
Of course, we must recognize — as most YIMBY groups do — that upzoning can only be “one part of the answer,” as Richard Florida argues. When Michael Storper warns that with upzoning, “the market will naturally respond best in areas with the greatest returns on upzoning — mostly places with dense, white-collar employment where high-income people will want to live to be closer to their jobs,” he’s right. Upzoning is a strategy that relies on the market to produce housing. The market is ultimately going to build units that are profitable to a select class of individuals.
To return to my previous example, no upzoning, no matter how dramatic its parameters, will bring new construction to neighborhoods like many on the South Side of Chicago that have been systematically marginalized for decades, and for which there is little demand from middle- and upper-income families.
If there is new construction in neighborhoods where such families demand relatively higher-end units, we can expect some “filtering down” of existing units to lower-income families, which would be an important step toward affordability. But we also must recommit to directly supporting low-income families, ensuring they can afford housing, and providing tools for marginalized neighborhoods. That means, among other things, investing directly in social housing and providing housing vouchers as entitlements for low-income families rather than subsidizing mortgages for higher-income households.
What’s next for SB 50
As I’ve said, I have been reluctant to take a public stand on the California legislation because I cannot be sure of the bill’s outcome. It is unquestionably true, though, that housing in California today is extremely expensive and becoming only more so. The cost of housing reflects, at least to some degree, demand for that housing. Increasing the supply of units should play a role in moderating costs. And reason suggests that upzoning should lead to an increase in housing production over the long term.
Moreover, many of my concerns about the negative impacts of the Chicago changes have been addressed in SB 50. The bill’s inclusion of significant protections for existing renters, high affordability requirements, and a pause on changes for potentially gentrifying neighborhoods are good ways of addressing the effects of the short-term speculation I found. It is not the same type of upzoning as Chicago’s, and it should not be discussed as such.
More research is needed. Even so, SB 50 is a positive attempt to address California’s housing woes.
UPDATE: A previous version of this article attributed a remark to Noe Neighborhood Council cofounder Ozzie Rohm, referencing a tweet. Rohm reached out to say the tweet was in fact a misquotation. We regret the error.
Yonah Freemark is a doctoral candidate in the Department of Urban Studies and Planning at the Massachusetts Institute of Technology. In addition to his scholarly work, which focuses on the connections between politics, land use, and transportation in the local-government context, he runs the website The Transport Politic. Follow him on Twitter: @yfreemark.
The Frisc encourages submissions of opinion and commentary from diverse perspectives. The views we publish are not necessarily those of The Frisc, but they are of San Francisco. Please email your idea with COMMENTARY in the subject line.
Thanks for reading The Frisc! Take a moment to sign up for our free newsletter. No spam, no tricks, just handcrafted notes every week or two from our editors.
