Editor’s Note: This is the second in a three-part series to educate myBurbank readers and our community about the bad housing bills pending in Sacramento this year. Part Two: We dive into two current bills being discussed in Sacramento and Accessory Dwelling Unit (ADU) laws.
by Sharon Springer
Burbank City Council
former MAI, Member Appraisal Institute
Master of City and Regional Planning
Please note: The opinions expressed herein, are not necessarily those of the entire Burbank City Council.
In recent years, there’s been a frenzy of legislation activity, such as density bonus and Accessory Dwelling Unit (ADU) laws, to correct, overnight an issue that has been developing for nearly fifty years – the shortage of affordable housing. Please be aware of active Senate Bills 9, 10 among others that if passed will have lasting social, economic well-being, and quality of life impacts on Burbank for generations to come. Local control is being stripped away and cities are threatened with lawsuits and funding losses if we don’t obediently fall in line and accept this legislation that empowers Sacramento bureaucrats to make decisions for local communities using one-size-fits-all policies. The existing and proposed legislation has contributed to a speculator and investor boom and ordinary Burbankers are priced out of the housing market.
Cities are shamed and bullied and the stability of all Burbank neighborhoods is threatened. Burbank and other cities are blamed for the undersupply that has been in the making since at least 1970 and was accelerated by the loss of tax increment financing which had been used very successfully to subsidize and produce affordable housing.
Reliance on inconsistent data calls in to question the State’s assertions. For example, the California Department of Housing and Community Development estimates that California needs 1.8 million units by 2025 while at the same time 2018 Census data estimates that there are 1.2 million vacant homes in California.
The housing commoditization trend and short-term vacation rental conversions will only exacerbate the situation. We face outcomes equal to a feudal system of land barons and serfs/peasants. If you’re not already a property owner, sadly, you’ll likely be pushed further into a peasant position, as the opportunities for ownership will be further out of reach than ever as a result of misguided policies.
Early Signs Show ADU Law Contributed to Increased Housing Cost
An ostensible goal of Senate Bills 9 and 10 is to increase affordability with density as the magic bullet. We’ve heard this before and had policy pushed through with these same goals. Given that we’ve already bought into that line of reasoning once, it’s worth asking: When do these State laws start to work for the hardworking people of Burbank and other California cities?
On January 1, 2020, California State ADU laws overrode Burbank’s and other cities’ local, carefully planned ordinances. Burbank did its best to edit for health and safety issues within the confines of the law (ADU is Accessory Dwelling Unit, also known as a granny flat.) Effectively, single-family zoning was eliminated and the entire State of California was up-zoned so that three units are now allowed on a single-family lot. Owner occupancy requirements were eliminated. What were once single-family lots and homes are now more valuable due to multi-family and income-generating potential. Did the promise of increased affordability become a reality then?
– Burbank home prices exploded almost 24% from $838,000 at the beginning of the statewide up-zoning to a shocking $1,036,481 in June 2021 (Zillow).
-Burbank applications for ADU construction more than doubled from 142 in 2019 to 315 in 2020. The annualized rate for 2021 is 406 applications.
When does State ADU policy deliver on its promise of affordable housing? Now, any Burbanker trying to buy a home must compete with investors and other cash offers that in some cases are hundreds of thousands of dollars over asking prices and appraised values. From a recent Bisnow article dated June 22, 2021: “With so many Americans priced out of homeownership, investors can turn an easy profit by buying up properties and renting them out.”
Similarly, statewide median California home prices surged 35% from $607,040 to $819,630 after the January 1, 2020 up-zoning to June 2021 and the Affordability index slid from 31 to 27. This increase is more than that of the previous 4 years combined!
Los Angeles County median home prices bolted 29% from $617,310 to $796,120 over the same time period, and the Affordability Index declined from 27 to 25. Affordability Index measures the percentage of households that can afford to purchase a median-priced, single-family home. (California Association of Realtors) Therefore, only 25% of Los Angeles County households can afford to buy a median-priced single-family home, a decreasing number that is only going to get worse if we can’t demand policy with accountability.
State ADU law seems to have created a positive feedback loop. ADU up-zoning policy is driving up prices and results in the need for families to construct housing in the garage or backyard for family members priced out of the housing market due to the up-zoning. Or, for new purchasers, a rental ADU is constructed to help pay the high mortgage that is required to finance the higher home price resulting from the up-zoning. There are no requirements for affordable rent.
According to Forbes, over this same 2019 to 2020 time period, California’s richest residents increased their net worth 18% to $815 billion. Purchase of second and vacation homes was the highest in 4 years. The bottom line is that owning a home has become a dream that is less and less achievable for families, while at the same time the wealthiest among us have seen their opportunities continue to rise.
Where’s Sacramento’s accountability? What and where are the measures of success or failure? What recourse is there for these failed housing laws? How much time do we give these laws?
SB9 and SB10 are being pushed through the California legislature primarily by the Bay Area politicians responsible for the damage already done. These bills would increase the number of housing units allowed on a single-family lot to four (and more) in SB9 and up to 14 in SB10.
Who will Benefit? Ordinary residents and families likely will not. Renters trying to become homeowners likely will not. Families unable to accumulate a generational nest egg will not.
Investors benefit, the wealth gap widens, absentee corporate landlords thrive, ordinary residents are shut out of the housing market, and affordability declines; homelessness increases, and residents leave California just trying to survive, and in pursuit of the American Dream. California Annual 2020 net migration was negative 261,000.
The proposed Sacramento housing legislation is the newest wave of redlining: If you’re not already in, you’re out. The impacts are as insidious as the old redlining that the proponents of Senate Bills 9 and 10 claim to decry.
These bills are being promoted with the same empty promises as the previous misguided bills, and have the potential to wreak exponentially higher damage to working households as a result. Density at all cost and without consideration for the nuances and residents of every community will result in the further exploitation of families trying to live and thrive in our great state. There has been no accountability for the broken density policy of yesterday, so why the rush to expand something that clearly not only hasn’t lived up to its promises but in fact has made ownership and wealth disparities worse?
Next Up: What can be learned from the experience in Minneapolis? Did the up-zoning from one full home to 3 full homes result in increased affordability or not?