For years, the easiest thing to doaboutbuilding new housing was nothing.
The federal government largely deferred to state and local governments on matters of land use, and states mostly deferred to local governments, which typically defer to their home-owning constituents who back restrictive zoning laws that bar new construction.
That’s slowly changing as the housing supply crisis ripples across the country. Experts say the US is short somewhere between 3.8 millionand 6.8 million homes, and most renters feel priced out of the idea of homeownership altogether. The lack of affordable housing is causing homelessness to rise.
In Washington, DC, Congress has held more hearings on housing affordability recently than it has in decades, and President Joe Biden has been ramping up attention on the housing crisis, promising to “build, build, build” to “bring housing costs down for good.”
But it’s at the state level where some of the most consequential change is taking place.
Over the last five years, Republican and Democratic legislators and governors in a slew of states have looked to update zoning codes, transform residential planning processes, and improve home-building and design requirements. Some states that have stepped up include Oregon, Florida, Montana, and California, as well as states like Utah and Washington. This year, Maryland, New York, and New Jersey passed state-level housing legislation, and Colorado may soon follow suit.
Not all state-level bills have been equally ambitious in addressing the supply crisis, and not all states have been successful at passing new laws, especially on their first few tries. And some states have succeeded in passing housing reform one year, only to strike out with additional bills the next. Real housing reform requires iterative and sustained legislative attention; it almost never succeeds with just one bill signing.
Trying to determine why exactly a housing reform bill passes or fails on the state level can be difficult, though advocates say it certainly helps when a governor or other powerful state lawmaker invests time and political capital in mobilizing stakeholders together. Given that housing challenges are not spread equally across a state, sometimes it can be hard to decide whether to pass statewide laws that apply equally to all communities or to pass more targeted legislation aimed only at certain areas.
Partly due to pressure from voters and from more organized pro-housing activists, legislative trends are starting to emerge. More states and housing experts are thinking not only about passing laws to boost housing production, but also about how best to enforce those laws, close loopholes, and demand compliance.
States can make it easier to build more housing in a wider variety of places
While states typically grant local communities a lot of discretion in land use policy, more lawmakers are realizing that balance may have tilted too far.
As researchers with the Federal Reserve Bank of Minneapolis outlined last fall, some states are now looking to increase housing production by enabling more multifamily housing and accessory dwelling units (ADUs) to be built without having developers first seek approval from local planning agencies or elected boards. This accelerated construction process is known as building “by right.”
For example, Oregon passed a law in 2019 allowing fourplexes (a multifamily home that typically houses four families under one roof) to be built anywhere in large cities and for duplexes to be built anywhere in mid-size cities. Before, a developer would have needed to seek special permission to build such housing.
States like Utah and Massachusetts are incentivizing the construction of new multifamily housing near public transit, while states like California and Florida are making it easier to build residential housing in places zoned for retail. Other states, like Maine and Vermont, are making it easier to build ADUs, which are second (and smaller) residential units on the same plot of land as one’s primary residence, like apartments or converted garages.
State lawmakers sometimes impose new rules on localities to adjust their housing planning requirements, which can mean lowering the barriers builders must go through to begin construction or incentivizing cities to set more ambitious targets for production. Sometimes it means easing requirements like minimum lot sizes or parking spot mandates.
Not all state-level bills will move the needle on the housing crisis
Under pressure to do something about the housing crisis, some state lawmakers are advancing bills that allow politicians to claim they’re taking action, although the legislation itself is weak and unlikely to make big dents on the various problems. Some bills may even make affordability issues worse over the long term.
For example, after failing to pass housing reform last year, lawmakers in New York came together again this year to push something through. Democratic Gov. Kathy Hochul and her allies in the state legislature are cheering their recently agreed-upon housing package, which includes tenant protections and incentives to spur new construction,but experts and activists say it lacks real ambitious zoning and productionmeasures and will be unlikely to drive new affordability.
Likewise in Maryland, Democratic politicians are cheering the passage of a new statewide housing reform package that includes renter protections and incentives to spur new affordable and dense development,though Yes-In-My-Backyard pro-housing advocates concede they do not expect the legislation to create much new housing, at least in the near term. Still, given that it was housing advocates’ first real attempt at passing statewide legislation in Maryland, they are hailing it as an impressive first step.
“This is the first time the Maryland legislature overrode local zoning in a pro-housing way, and I would say this is a surprisingly drastic shift from the status quo even though it’s not enough,” said Tom Coale, a housing lobbyist in Maryland.
When it comes to state-level housing reform, implementation and compliance matter
Passing legislation for housing reform on the state level is often just the first step, as opponents then sometimes seek to challenge the new laws in court or localities search for loopholes or other ways to avoid compliance. Sometimes lawmakers water down housing production mandates and other enforcement mechanisms before the bills even pass through the legislature.
While it’s not uncommon for local communities to try and avoid compliance when a housing law is first passed, somestates have also been firing back in subsequent sessions to close loopholes and ramp up penalties for local governments. While some statutes have strong enforcement mechanisms built in to begin with, many lawmakers are recognizing the housing reform process will just need to be dogged and responsiveto resistance and new challenges.
Housing experts with the Lincoln Institute of Land Policy say it’s likely to take at least three to five years after a statewide policy is passed before the public should expect to see any real changes in housing production, and they urge patience before claiming a reform has failed or succeeded.
“Many of the ambitious state housing policies that have been adopted are still in the early stages of implementation, so we don’t yet have definitive evidence about what works and what doesn’t,” they wrote in September. “Without realistic expectations about this time frame, pro-housing advocates may get discouraged, while opponents claim that zoning changes are ineffective—all before the policies have kicked in.”
Originally published at Voxon November 29, 2023. —
Before she moved into the first shelter village of “tiny houses” in San Francisco, Sharon Sandelin — a 66-year-old who goes by “Mama T” — had been sleeping on the streets.
Now she lives in a 64-square-foot unit with heat, electricity, a twin bed, desk, and chair. There is a combination lock on the outside. The gated community where some 70 other people now live is clean and cheerful-looking, painted teal and sea-foam green. Residents are connected with supportive services like health care and served three meals daily.
Sandelin detests traditional homeless shelters, and appreciates the privacy of her locked room on Gough Street, knowing she can rest undisturbed. But she still considers herself homeless. Though she likes her tiny cabin more than she liked being unsheltered, residents must use porta-potties, they are not allowed to have outside visitors, they can’t shower after 2 pm, and they can’t cook anything that requires more than a microwave or toaster.
“I want to eat my own cooking,” she told me. “My daughter can’t visit me, and there shouldn’t be no set time for a person to take a shower.”
Sandelin has a place to sleep in large part because of Elizabeth Funk, who spent threedecades working at investment firms andtech giants like Yahoo and Microsoft, while serving on boards of various homeless nonprofits. Since 2020, Funk, nowthe CEO of Dignity Moves, which fundraised and developed the San Francisco village,has brought her experience and Rolodex to bear on a singular goal: to, as Silicon Valley puts it, disrupt the problem of homelessness in America.
Since 2016, unsheltered homelessness — meaning those sleeping somewhere not designed for human residence, like a car, a park, or a train station — has been going up. Particularly on the West Coast where housing costs are often prohibitive, local governments have struggled to curb sprawling and politically unpopular tent encampments, and many unhoused people prefer sleeping outside to crowded shelters with bunk beds. The challenge has been exacerbated by Martin v. Boise,a 2018 court ruling that said people can’t be punished for sleeping outside on public property if there are no adequate alternatives available.
To Funk and other tiny house proponents, villages like the one where Sandelin now lives offer creative solutions to all these issues. The small, relocatable cabins provide leaders new ways to bypass restrictive zoning rules, by leveraging emergency building codes and “borrowing” rather than purchasing land. They also offer, at least for some, a more dignified shelter option, providing an affordable answer to the difficult reality that many people prefer to sleep outside rather than endure the rules and conditions of typical shelters.
Advocates of “tiny homes” as a solution to the homeless crisis say the units should be understood as a key tool to preventing chronic homelessness amid a brutal housing shortage. If people lose their homes but can get quickly off the streets into a temporary private dwelling, then they’re in a much better position to get back on their feet, and avoid the tumble into longer-term homelessness that can transpire from even just a few weeks without shelter.
For elected officials, the villages also mean that fewer people have to see — or think about — homeless people on a daily basis. Tiny homes provide leaders with a faster and cheaper alternative to building permanent housing or congregate shelters, and may provide cities with the legal authority to then clear out any remaining tent encampments: Funk told me she can determine “exactly how many units you need in order to make it illegal to sleep on the streets within the city limits in San Francisco.” All this has thrilled leaders eager to reclaim their cities from what they see as spiraling chaos and disorder.
Advocates for the homeless, meanwhile, worry that the tiny shelter boom will divert funds that could otherwise go to new permanent housing, preventing people from moving into a real home for even longer. The rush of private industry into the space also gives advocates pause, and they worry that cities will buy bare-bones, cheaper models, place them in remote parts of town, and criminalize those who refuse to go.
At the heart of the tinyhousesdebateis a questionaboutthemeaning of housing and shelter itself. As more companies rush to manufacturemodels with varying features — some out of plastic, some out of repurposed shipping containers, some built on factory assembly lines, others on-site or on wheels, some with in-suite bathrooms, kitchenettes, and storage space, others lacking plumbing and electricity and with virtually no amenities at all —there is little consensus on what a“tiny home”is, or what standards it must meet.
Tiny house shelter units are typically between 60 and 150 square feet, but the sharp variety of products within the industry creates confusion. How spartan is acceptable? Is anything better than sleeping outside?
Lots of arrangements can be tolerated if they’re understood as emergency solutions — but some communities have also started to explore the idea of treating the units less as temporary shelters and more as something approaching new housing options.
“Harnessing NIMBY” to expand tiny houses
America has a housing shortage in part because it’s become so expensive and difficult to build new housing. The cost to purchase new land has skyrocketed, byzantine zoning rules make residential construction hard, and people living in communities often protest new development — wary of decreased property values, new neighbors, noise, traffic, or general change. This barrier is so common it goes by NIMBY, short for “not in my backyard.”
Yet over the last few years, “tiny home” shelters have been built in communities through what you could call creative hacks of the zoning code. In some places, structures smaller than 120 square feet are not classified as permanent dwellings, and therefore not subject to the same regulations applicable to residential buildings. Other groups have capitalized on cities that declared local states of emergency, which give governments more flexibility to build units with faster permitting.
Dignity Moves is a transitional housing program in San Francisco. These 70 modular units are set at 33 Gough Street, right in the middle of San Francisco. They offer the unhoused a non-congregate shelter option.
Dignity Moves formed in 2020 as a task force within the Young Presidents Organization, a global networking group of chief executives. The group wanted to “apply private sector approaches and Silicon Valley-style ‘disruptive thinking’” to America’s homelessness crisis, as they describe it.
Funk could hardly hold back her grin as she outlined Dignity Moves’ theory of change. Instead of buying expensive land for tiny houses, she told me, they “borrow” it from developers who aren’t yet ready to use it.
Leveraging emergency building codes and word-of-mouth networking, “we take advantage of under-utilized assets,” she said. Maybe the shelters will go on a plot of land for two or three years, and then get transferred via forklift to another location when the developer needs their property back. (There are certain tax breaks available for landowners interested in making this deal.) The San Francisco village I visited on Gough Street rests on such borrowed land.
Sometimes Dignity Moves encourages faith-based groups or local governments to pony up their vacant property — like parking lots or land reserved for future infrastructure projects. In Santa Barbara, leaders countywide have jointly committed to finding locations for tiny houses in their neighborhoods and giving shelter priority to those sleeping outside in the surrounding areas. Funk’s group is spearheading this, and envisions the future playing out similarly in cities all over the country. By erecting many villages at the same time, Funk thinks it’ll be possible to get people off the street at once, a strong incentive for housed residents who are tired of seeing individuals living on sidewalks. “Then we can harness NIMBYism, which is a very powerful force,” she said.
There are at least some encouraging signs that local opposition to tiny house shelters wanes. When researchers at Portland State University surveyed housed neighbors who lived around various Portland “tiny homes” villages, they found the neighbors’ concerns about crime and decreased property values significantly diminished over time. “Some of the biggest initial opponents became some of the biggest champions,” Todd Ferry, a lead researcher of the study, told me. “I genuinely think it became beloved to many people in the neighborhood.”
Perhaps no politician has been more enthusiastic about the potential of tiny house shelters than San Jose Mayor Matt Mahan, who proposed this past summer to divert more than a third of his city’s housing funds to increase village production. Up for reelection in March, Mahan has made moving unhoused people quickly off the street a major part of his pitch.
San Jose started opening “tiny home” shelters about four years ago, originally to reduce the risk of contagion during the pandemic. About 500 units currently exist now in the city across six locations, and hundreds more are in the pipeline. Mahan credits their growth with reducing San Jose’s unsheltered homeless population by 11 percent in the last year, though he laments that new units seem to be taking longer to build than they did during Covid-19 and coming with new requirements.
“We were standing these up in six months at a cost of $80,000 or less all-in, including the utility hookup and common space, and now it’s taking progressively longer and costing more,” he told me, pointing to a new village project that cost the city $250,000 a door. Another San Jose village that took a year and a half to build saw costs go from originally $100,000 per unit to more than $175,000.
In September, Mahan urged his colleagues to quit making excuses for why they couldn’t build more units faster, and led a successful push to adopt a shelter crisis emergency declaration so San Jose could bypass certain building rules. Mahan says he’s motivated not only by a desire to help the homeless but to improve local neighborhoods generally. Calls for crime, fire, and blight in the immediate areas of the villages went down a year after they were built,according to a city analysis.
Each tiny house village in San Jose costs about $15 million to launch, and $3-4 million annually thereafter to operate. In June, the city’s budget director said funding roughly 1,400 of these shelter units will cost upward of $60 million by 2030, a “difficult” figure for San Jose to manage. The mayor, for his part, remains optimistic that external funding sources will come through.
Out of sight, out of mind?
Another reason some have grown excited about “tiny home” shelters is often left unsaid: to no longer have to witness homeless people outside on a daily basis.
Tiny houses provide elected officials with faster and cheaper alternatives to building permanent housing or congregate shelters, and may provide cities with the legal authority to then clear out any remaining tent encampments. This has roused city elites anxious about their increasingly visible homeless crisis.
A federal lawsuit led by Los Angeles business leaders frustrated with their city’s lack of action around tent encampments resulted in LA pledging to construct up to 16,000 new shelter beds by 2027, to house 60 percent of the homeless population in each of the fifteen council districts. These can include “tiny home” shelters, and in exchange, LA officials can sweep remaining tents and resume enforcing anti-camping bans.
“We are now getting much more excited about this 60 percent thing,” Funk, of Dignity Moves, told me. “I’m going to be working privately, quietly, but [to] give you a little preview, [we’re] thinking about doing this for San Francisco specifically as well in San Jose.” If San Francisco has about 4,500 people sleeping outside, according to the last Point In Time count, then Funk believes leaders can confidently estimate how many shelter beds will be necessary to build to start enforcing anti-camping laws again. “Let’s be clear,” she said, “one of the big motives here is Martinv. Boise, and people being concerned about getting sued.”
Funk’s legislative partner in the California state Senate, Josh Becker, plans to reintroduce a bill that would make it easier for cities to build tiny house shelters, and potentially even allow cities to count them toward their state-mandated housing production goals. Given that the tiny structures are much cheaper to build than both traditional housing and permanent supportive housing, a state green-light to include them in production targets could prove to be a major incentive. But that’s worrying news for those concerned the units may be less of a temporary, emergency solution after all.
Bryant Akers works on repairs at 33 Gough Street.
“We’re definitely seeing some cities focusing on this model as more than what I would call an interim solution and a gap solution,” said Amy King, the CEO of Pallet Shelter, a Washington-based company that produces tiny houses between $7,500 to $12,000 apiece.
When Becker’s bill was first introduced earlier this year and included the possibility that shelter units, including those produced by Pallet Shelter, could one day be considered permanent housing and even accept rent or housing vouchers, King’s company came out against it. “There’s just so much opportunity for people to take advantage,” King said of the idea.
Homeless advocates worry about a scenario where cities start to invest in lower-quality shelters that aren’t suitable for everyone, reduce investments in permanent housing, and grow more aggressive about fining or arresting those resistant to shelter offers. “We see sweeps and tiny homes going hand-in-hand,” said Alex Visotzky, with the National Alliance to End Homelessness.
A senior official with the US Department of Housing and Urban Development, who was not authorized to speak publicly, told me the agency has no hard-and-fast policy yet on tiny houses, but is currently “evaluating whether there’s a place for them” in their efforts to end homelessness. As part of that the federal housing agency is investigating whether communities have been abiding by fair housing and civil rights laws as they expand the units.
“Not just segregation, but are people put there by choice?” the official asked. “Are there potential consequences if you don’t go there — like subject to arrest or other penalties? We’re considering all of that.”
The line between housing and shelter
In 2020 a fire broke out within a Pallet Shelter community in Banning, California — destroying 19 prefabricated homes, and displacing 38 people. Two years later another fire broke out within a Pallet Shelter community in Oakland, California, burning down three of the structures. One resident told Curbedshe barely made it out as “the walls were melting” around her.
Pallet has denied responsibility for these fires, though the company did make changes to the building materials it uses. The two incidents loom large as leaders debate how cheaply they can build these structures and how tightly together they can pack them together on high-priced land.
Some housing advocates say the challenges cities are running into with building tiny shelters now mirror the same issues that often derail producing more housing at all. Proponents fear that as more pandemic-era emergency codes expire, and if more accidents like those in Banning and Oakland occur, such “quick-build bridge housing” will be built far less quickly.
“Our biggest challenge is the regulations, the code compliance to make sure everything meets all the parameters of the building code,” said Viken Ohanesian, CEO of Boss Cubez, which manufactured the prefabricated units used at the San Francisco shelter village. “It’s kind of like you can never have too much insurance, you can never be too safe in this world that we live in because it’s a litigious world.”
One option is to try and convince state lawmakers to pre-empt cities from tacking on new regulatory requirements. California lawmakers already took this step last year in banning mandates for fire sprinklers in “temporary sleeping cabins.” Funk says she’s “really, quite frankly, tempted to take the 10 other things that cities are starting to ask for, take them up to Daddy and say, ‘Can you break this rule?’” The costly rules and regulations, she believes, are a big part of how we got the housing crisis in the first place.
“I think our definition of housing with a capital ‘H’ is causing homelessness,” she said. “So we can either solve it or we can be stuck to our like, you know, our principles.”
Beyond worrying about building requirements and the practical longevity of tiny shelters, a broader, more existential set of criticisms have emerged around the policy idea.
One major concern is that investments in “tiny home” structures actually sustain homelessness, by diverting needed investments from permanent housing. Many people living in temporary shelters of all kinds end up returning to the streets after their allotted time to stay ends, not having anywhere else to go.
“Until there is more affordable housing, this ‘solution’ leads nowhere,” argued Josh Kruger, a formerly homeless journalist in Philadelphia. “Instead, these are just feel-good boondoggles so middle and upper class people can feel like they’re doing something … They’re storage sheds for human beings who otherwise remind us all of our society’s failure to care.”
In 2021 the Washington state’s Lived Experience Coalition — a group of current and formerly homeless individuals — issued a statement lambasting the “dehumanizing conditions and lack of services” some experience in tiny house villages, and warned of lawmakers who avert focus from more permanent solutions. In Seattle, for example, some residents lived in tiny wood huts that lacked heat and electricity, where school children had to do their homework with flashlights.
Barbara Poppe, the former executive director of the US Interagency Council on Homelessness during the Obama administration, said while some models are better than existing congregate homeless shelters, some are “far worse.” What really alarms her, she told me, is the “corporate investor model, for-profit industry” that’s cropped up, naming companies like Tuff Shed and Pallet Shelter as examples.
“Some of these are quite inhumane, and some of those cost studies — Pallet will say it costs $12,000 [per door], but that’s a sleight of hand, it’s very deceiving, because there’s all the site preparation cost on top,” she said. “It seems like what the public wants and by extension what the elected officials say they want is an easy answer and a cheaper answer to the fact that we have an extreme affordable housing crisis that sits on top of growing inequality.”
For advocates like Visotzky with the National Alliance to End Homelessness, conceptualizing housing and shelter as distinct categories remains important. “If we start calling [tiny homes] housing then folks are going to potentially lose eligibility for a lot of key services and resources,” he said. “We need to make commitments and not shortcuts.”
Supporters of building more tiny houses say their critics are stuck in the status quo, implicitly accepting that thousands of people will remain outside. They say it’s a false choice that cities can’t invest in both permanent and interim solutions at once, and that the crisis demands vision and urgency.
“One of the biggest hurdles that’s blocking us from ending unsheltered homelessness is lost optimism,” said Funk. “Dignity Moves’ value-add can be to come in and say, ‘Oh, no, it’s very possible, here’s exactly the paint-by-color map of how.”
What does a real dignified investment look like?
The Connect Homes factory in San Bernardino, California, located about an hour outside Los Angeles, had homeless shelters on the assembly line the day I visited in mid-October. The company was working to fulfill a contract for Long Beach, California, which plans to open its first village of tiny house shelters in early 2025.
Originally founded in 2012 to produce factory-built houses, Connect Homes leaders realized during the pandemic they could use virtually their same industrial tools to develop shelters, too. The company now wants to build shelters nationwide.
Gordon Stott, co-founder of Connect Homes, explains new homes in various stages of production. These will be used as interim housing in Long Beach, California.
“Is it housing, or is it shelter? Well I think what we’re seeing is it can be both,” said co-founder Gordon Stott. While at a higher price point than some of his competitors — units can be sold to cities at $80,000 per door — Stott believes his products are more durable investments, and prove homeless shelters don’t have to be ugly or stigmatized.
The shelter units set for Long Beach will be between 110 and 185 square feet (the larger ones will be ADA-accessible) and the city specifically looked for vendors who could build units with en suite bathrooms. The city used part of a $25 million state grant to finance the construction and expects to spend about $930,000 per year annually in operating costs.
“We’re in a moment where cities are having to step up and do things they haven’t done before,” Rex Richardson, Long Beach’s mayor, told me. “We’ve had a big history of dealing with homelessness and providing housing but we weren’t prepared for the crisis — the way it manifested — with a 62 percent increase between 2020 and 2022.”
Models with private bathrooms might deter some local governments, tempted to spend as little as possible. But if the structures are likely to stick around for years in a city, and if people are likely to live in them for extended periods of time, then investing in nicer units with higher standards makes more sense. Ferry, with Portland State University, said he tells municipalities considering tiny house villages “to think really carefully about” their request for proposals, or RFPs. If you put out a contract for a non-congregate shelter between 70 and 150 square feet with no other specifications, then you’re generally obligated to go with the cheapest bidder.
For now though, most leaders have been drawn to companies that offer cheaper upfront products. While most players on the market say their relocatable shelters can last at least a decade if not more, none have been operating long enough to really put their claims to the test, to truly see if “tiny home” units can last, bouncing around from plot of land to plot of land.
Patrick Monahan, a 42-year-old resident of the shelter village in San Francisco, had been sleeping outside off and on for almost 10 years before he moved into his tiny cabin on Gough Street.
Volunteers plant gardens for the residents at 33 Gough Street.Patrick Monahan is a resident at 33 Gough Street.
Monahan never wanted to stay in traditional homeless shelters, and he’s appreciative of what the village offers him: a “fairly safe” environment that’s “very pretty and clean” and where the “food’s not great, but it’s free.” He doesn’t love using a porta-potty but thinks it’s better than going on the street.
Still, Monahan holds out hope that one day he’ll have something more. “I can’t have visitors here,” he said. “I rather have my own place, that’s mine.”
Originally published in Voxon September 14, 2023. —
PORTLAND, Maine — All summer, the tent city grew.
Along a popular walking path, the Fore River Parkway Trail, more than 60 people had pitched tents. They brought with them piles of wood, drugs, abandoned furniture, bikes, and shopping carts. They were a visible sign of a growing crisis: The number of people experiencing homelessness in Maine has more than tripled since 2020, and the arrival of more than 1,500 asylum seekers in 2023 alone had put unprecedented strain on Portland’s shelter system. Over 240 tents were spread across the city, but the Fore River Parkway encampment was the biggest.
On a Thursday morning in mid-August, 13 community leaders gathered to decide what to do next. The city’s plan was to clear the encampment on September 6, cleaning the grounds and forcing anyone left to leave permanently.Before clearing began, the group that organized the meeting — the Encampment Crisis Response Team — was supposed to work closely with residents, using “empathy, innovation, and a coordinated approach.” All summer, nonprofit workers had delivered daily meals and tried engaging residents on finding housing.
But it was no secret that their efforts would likely fail and that most of the more than 50 people who remained in the encampment would not move into housing or shelter by the September 6 deadline.
So far, nearly all of the Fore River residents who had been offered shelter spots had turned them down — saying they didn’t like the options or preferred to stay outside. In the weeks leading up to the clearing deadline, few residents living in the Fore River Parkway encampment said they expected they would have to actually leave.
This left Portland with a dilemma, one shared with political leaders in much bigger cities grappling with the growing challenge of homeless encampments: what to do when people staying in tents tell volunteers offering shelter that they’d prefer to stay outside.
As encampments grew in size and number over the last eight years, research into unsheltered homelessness — meaning those sleeping somewhere at night that’s not primarily designed for human residence — has revealed why some people might prefer tents toshelters. Some people experiencing homelessness have had traumatic past experiences at shelters, or object to requirements in many shelters to relinquish their pets and personal belongings. Others do not want to be separated from a partner at agender-segregated facility or to comply withstrict curfews and rules around substance use. I heard several of these reasons from people staying at the Fore River encampment.
Studies estimate that roughly one-third of people experiencing homelessness in the US have problems with drugs or alcohol. Complicating matters is the fact that between one-quarter and one-third of those experiencing homelessness in the US have severe mental illness, with even higher rates for those experiencing unsheltered homelessness.
As public pressure to clear homeless encampments has intensified, a growing number of advocates have argued that if a city is unable to provide an unhoused person with the kind of shelter they need or want (like an apartment or a private hotel room), then the most ethical and compassionate thing to do is to leave them be. “Respect autonomy and self-governance for encampment residents,” advises the National Homelessness Law Center. “Homeless people are the experts of their own condition.”
Some of this positioning comes from a deep concern for civil liberties and a fear of returning to the ghoulish days of mass institutionalization. Some of it is about resource constraints: Most cities don’t actually have available housing to help everyone who might want it, and so advocates sometimes end up defending situations that, while far less than ideal, seem preferable to forcing unhoused people into living situations they don’t want.
In the windowless conference room where the Portland crisis response team had gathered, these debates were playing out. One outreach worker argued that some people were now in shelters because the deadline had provided a sense of urgency. The choice, he said, was either to continue the team’s approach, “or decide that it jives with us morally to support the concept of, like, forever encampments and forever outdoors.” For people like him, he stressed, “that is a far greater sort of moral surrender.”
A few advocates in the room worried that new pink flyers posted up at the encampment the day before, warning that everyone must leave by September 6, would further traumatize the homeless people living there. Many had moved to the Fore River Parkway trail after they were abruptly forced out from a different Portland encampment back in May.
City officials, meanwhile, were unwilling to acknowledge that an encampment sweep was surely coming or to discuss how it might harm those living there. To talk about the risk of scattering unsheltered people was seen as being unduly negative and insufficiently committed to the original plan.
“I would focus on, you know, the fact that we have 21 days, we have three weeks, let’s try to get as many folks housed as we can and then see where we are,” said Aaron Geyer, the director of Portland’s social services. It was too premature, Geyer told me, to even discuss what a sweep would look like, suggesting — rather improbably — that by September 6, there might be no unhoused people left to clear out.
Homelessness advocates have been organizing hard against these new civil commitment laws, stressing that only noncoercive treatment and “housing first” — an approach focused on getting people housing and services, rather than requiring them to address health or behavioral issues first — can provide the aid that struggling people need. They are rightly concerned about how new laws mandating treatment could cast a wide, indiscriminate net on those sleeping outside. But other leaders have argued it’s naive at best to suggest that everyone who needs help will ever voluntarily accept it.
Cullen Ryan, who leads the supportive housing nonprofit Community Housing of Maine, said many of his fellow advocates are too quick to back off from encouraging people into accepting help or housing. It’s a dodge, he said, to take people at their word about sleeping outside.
“I hope that wiser minds will prevail, that we as a society will truly care about one another enough to insist that people all deserve to be inside,” he said. “But, you know, to just say, ‘Okay, well, I feel good, because this person’s at least making their own decisions and they want to be outside.’ … I don’t think that’s right. It’s a cop-out, and it’s very easy for all of us to join the cop-out.”
Some lawmakers argue forcing people into treatment iscompassionate
Should people be forced to accept housing or treatment if it’s for their own good? The specter of old state psychiatric hospitals looms over the question. Originally meant to provide quality care to people with acute mental illness, these places became known in the 20th century as nightmarish jails not only for those with mental disorders but also for senior citizens, rowdy teenagers, gay men, those with drug or alcohol addiction, and those in poverty.
They were characterized by gruesome forced treatments: lobotomies administered without anesthesia and aggressive electroconvulsive therapies with severe side effects. A political movement to empty out these asylums gathered momentum in the 1970s. Deinstitutionalization was seen as a necessary corrective to decades of cruel state paternalism. The hope was that people with mental illness would be able to get care in their communities. Instead, many people who were released ended up on the streets.
Today, as politicians face pressure to act on homelessness and drugs, more elected officials have started to ask if leaders swung the pendulum too far in their turn away from involuntary care. In Oregon, Portland’s Democratic mayor, Ted Wheeler, told a group of business leaders last winter that he wants state laws changed to make it easier to force people into hospitals. “When I see people walking through the elements without appropriate attire, often naked, they are freezing to death … I don’t even know if they know where they are or who they are,” Wheeler said. “They need help and they need compassion.” Republicans in Oregon’s legislature pushedbills to expand criteria for involuntary commitment, though their efforts failed this year.
The state that’s gone arguably the furthest so far is California, where lawmakers have spent several years debating whether to amend a nearly 60-year-old law to expand involuntary psychiatric treatment.
The law, the Lanterman-Petris-Short Act of 1967, is regarded as a bill of rights for Californians with mental illness, but it’s been blamed for enabling the abandonment of sick people experiencing homelessness, among other problems. Lawmakers in favor of changing the law say they see it as a moral obligation to make it easier to get individuals into treatment before they die or end up in jail.
One of those lawmakers is state Sen. Scott Wiener, a Democrat from San Francisco, who has pushed bills since 2018 to expand access to state conservatorship — a court-ordered status whereby a family member, friend, or public guardian controls another’s treatment plan. “Clearly we went too far,” Wiener told Vox. “We had these terrible institutions where people who did not need to be institutionalized were, but we went way too far in the opposite direction and I think it was an overcorrection.”
San Francisco Mayor London Breed has also framed forced treatment as the more compassionate course of action, saying of people experiencing homelessness, “Allowing them to deteriorate on our streets when they are incapable of caring for themselves is not humane.”
In 2022, California Gov. Gavin Newsom signed a controversial new law creating “CARE courts” — ostensibly aimed at helping up to 12,000 people with psychotic disorders statewide who are not voluntarily seeking treatment. Individuals could be referred to a CARE court for an evaluation, and if deemed eligible, they could be ordered to a treatment plan for up to two years. Newsom framed the effort as California finally “tak[ing] some damn responsibility for implementing our ideals.”
And now California lawmakers are pushing two more controversial bills to further expand access to conservatorships, including one co-authored by Wiener that would make it easier to subject someone to involuntary treatment if they had a mental health or substance use issue. Wiener insisted his legislation — which is backed by the California State Association of Psychiatrists and the California chapter of the National Alliance on Mental Illness — would be a “very focused and targeted” effort. Supporters point to statistics like the overdose death rate among people experiencing homelessness, which has soared in recent years.
CARE courts and bills to expand conservatorships have been fiercely opposed by civil rights groups, which argue these policies are dangerous distractions from real solutions like permanent affordable housing and may even siphon funds away from voluntary programs. They also worry that forced treatment pushes poor people out of sight, and note that California has long failed to keep track of how many people are subject to such coercive plans.
“Conservatorship is the most extreme deprivation of civil liberties, aside from the death penalty,” said Susan Mizner, the director of the disability rights program for the American Civil Liberties Union, in 2019. Activists also warn that loosening the laws will affect far more people than California lawmakers claim now, widening the path to criminalize or isolate the state’s sick, poor, and disabled.
For now, California officials have largely dismissed these objections, arguing the need to expand other support services is no reason to not move forward with psychiatric care reform, too.
“This is setting the basic ground rules, and changing the standard doesn’t mean everything is going to get immediately implemented in a perfect way overnight,” Wiener told Vox. “Absolutely we need more resources in this area and in mental health. We need more beds, supportive housing, mental health workers, guardians, but step one is let’s at least set up modernized rules that make sense, and then hopefully as soon as possible we can really ramp up the resources.”
The heated debate over whether involuntary treatment “works”
As states move to expand laws for involuntary treatment, the debate about them has grown louder and more urgent.
Opponents of forced treatment argue there’s little empirical evidence to justify the practice and plenty to suggest it can backfire, partly by traumatizing patients and fueling long-term distrust in medical professionals. Many forced rehab programs take place in prisons, and too many addiction programs in America are low-quality, humiliating, and brutal. One review from 2016 found some involuntary treatment programs even increased the likelihood of criminal recidivism.
But the existing evidence is more unsatisfyingand murky than some critics of forced treatment acknowledge. Some studies have found involuntary interventions have led to improved outcomes, like being less likely to be hospitalized or staying fewer days in the hospital. The opinions of those forced to seek treatment vary: In surveys, 34 percent to 81 percent of involuntarily hospitalized patients have described their treatment as justified or beneficial. Patients are more likely to perceive forced care as fair and effective if they consider themselves ill, though people with psychotic disorders who report encountering barriers to health care are more likely to see forced care as unfair, even if they think it’s effective.
Researchers lack clear data on how many involuntary psychiatric holds there are in the United States, though estimates suggest they’re in the hundreds of thousands annually. Experts admit there’s a lot we still don’t know, partly due to poor reporting systems within and across states. There are few randomized controlled trials — often considered the gold standard for social science research, largely due to practical and ethical concerns.
Alex Barnard, a sociologist who has studied the push to expand conservatorships in California, writes, “there’s almost no recent evidence showing the efficacy of longer-term institutionalization or conservatorship.”
Barnard, who ultimately concluded that more people need psychiatric conservatorships in California than are receiving them, told Vox that he thinks opponents are sometimes willing to sacrifice lives in order to defend the principles of voluntary care and the “housing first” approach, which holds that housing should never be conditioned on getting treatment.
“There is a denial and unwillingness to figure out how to help some people who are never going to accept voluntary treatment,” he said. “I support ‘housing first,’ there’s a lot of evidence for it, but we have to figure out how to address the subset of those who just aren’t served by it.”
Critics of Adams’s new approach said that without significant new spending on psychiatric beds, mental health crisis centers, and permanent supportive housing, vulnerable people will invariably end up back on the streets. Giving police discretion to decide who might be a danger to themselves or others, advocates also warned, was a civil liberties disaster waiting to happen.
Earlier this summer the New York Times reported on the first few people subjected to Adams’s involuntary care directive, including Mazou Mounkaila, who was handcuffed and transported to a hospital, where he spent the next 104 days treated for schizophrenia. The city’s care contractor, BronxWorks, argued the new forced treatment policy was working, and that most of their clients have since either moved into permanent housing or are on track to do so.
Mounkaila told the Times he liked his new life and even some aspects of his involuntary care. But he had been medicated against his will and said he continues to take antipsychotic drugs so as to not upset BronxWorks staff.
Portland opened shelter beds — but had almost no housing
As Portland’s encampments grew over the summer, complaints from residents and businesses began flooding government lines, Reddit, op-ed pages, and other civic forums. Some argued for a more forceful response, saying it was the status quo that was cruel. Others expressed frustration that unhoused people were turning down shelter beds.
Local advocates describe homelessness in the state as a “perfect storm” — new asylum seekers have arrived as federal pandemic money has run out, remote workers have relocated to Maine, and the affordable housing crisis statewide has worsened. In all but one Maine county, “the average house price is unaffordable to the average income household,” said the state housing authority last year.
An annual census taken in January found 4,258 people statewide, up from 1,297 in 2020. Until recently, Portland, the state’s most populous city, never had large tent encampments, but unsheltered homelessness increased over the last half-decade as rents went up, and as property owners realized they could capitalize on the city’s tourism industry by converting existing apartments into Airbnbs.
Aaron Geyer, the director of Portland’s social services, said city officials wanted to find a “middle ground” between advocates who didn’t necessarily want the encampment cleared at all and the daily complaints they receive from business owners and the public. “Our job, which is never an easy task, is to try to thread the needle and make sure both sides may not be happy but amenable to it,” he told Vox.
Homelessness experts said they don’t wantpeople to draw the wrong conclusions about encampment residents who turned down shelter offers. Though Portland opened a new modernized facility in late March, it’s located in a more remote part of the city, is gender segregated, and bars pets that are not service animals. Other unsheltered individuals are worried about traveling too far away from the substances they’re addicted to. Some people I spoke with cited past bad experiences at shelters.
“When they say they don’t want to go into X shelter or X motel, it’s often because of some prior trauma that has resulted,” said Nichole Fiore, a national researcher on tent encampments with Abt Associates. “If the goal is to close down the encampment and get people indoors, I think we need to be asking, ‘What would it take to get you indoors?’ And really open up that conversation.”
Jessica Grondin, a city spokesperson, cited “health and safety” concerns as the main reason to clear out the encampment, though it was clear to anyone who walked through that there would be fewer sanitation issues if the city had dedicated resources to maintaining it. It was hard to escape the conclusion that the city, by keeping the encampment at a certain level of disorder and disarray, had made it easier to justify clearing.
“They blame things on it being dirty, but then they don’t provide resources to be clean,” said William Higgins Jr., the executive director of the Portland-based Homeless Advocacy for All.
In the weeks leading up to the September 6 clearing deadline, both residents living in the Fore River Parkway encampment and local business owners said they doubted the city would actually make unhoused people leave.
“If 21 of us just go to the courthouse on September 5 and protest, that’s how many people you need to stop something — at least temporarily,” Nate, a man living at the encampment, who’s being referred to by first name only to protect his privacy,told me in mid-August. “Whether that’s an official written rule or not, I don’t know, but that’s the number I heard and that’s what I like and it’s gonna work — guaranteed. Everybody knows it will.”
No mass protests happened, but on September 5, three Portland city councilors issued a statement, asking for a month delay at minimum. Leaders with Preble Street, a local nonprofit focused on homelessness, also asked the city to postpone its clearing.
But early in the morning on September 6, dozens of police officers, nonprofit staff, and city workers arrivedfor the clearing. Despite the city’s hopeful prediction that the people in the encampment might leave before the deadline, there were more than 65 tents and roughly 50 people still there on clearing day.
Portland’s parks director described the clearing as an “all hands on deck” situation. Kristen Dow, Portland’s director of health and human services, insisted their approach allowed them to employ “best practices.” But she and other city officials all declined to comment on the impact of displacing residents and the harms to people experiencing homelessness that research suggests such sweeps bring.
Over the summer, a total of 180 shelter beds had opened up — but just 18 people from the encampment had ultimately moved to shelter or housing. The residents’ remaining belongings were hauledto a local incinerator. Leaders were not sure where the people who had lived there would go.
Originally published at Voxon September 12, 2023. —-
A group of researchers at the Department of Housing and Urban Development have been quietly developing an idea that could fundamentally upend the nearly 50-year-old housing voucher program, which helps more than 2 million low-income families afford apartments in the private rental market every year.
The idea is relatively simple: What if, instead of traditional housing vouchers laden with convoluted red tape that landlords notoriouslyhate, low-income tenants could pay their rent with cash? Would that make it easier for tenants to find housing or move into better neighborhoods? Could that even save the government money by streamlining the aid?
Right now, due to funding constraints, only a quarter of those eligible for housing choice vouchers (formerly known as Section 8 vouchers) ever receive one. But if you arein that lucky 25 percent and are awarded a voucher, you might not be able to use it. The program is so cumbersome that only around 60 percent of beneficiaries can find a landlord willing to rent to them.
This isn’t the first time the federal government has explored questions around cash rental assistance: In the early 1970s, Congresssuccessfully piloted a program to 14,000 families across 12 cities. That research, however, was largely forgotten about in the following decades. It wasn’t until recently, when some HUD employees stumbled upon old reports buried on an agency bookshelf, that policymakers realized the cash rental assistance model might be more valuable for modern times.
The leaders behind this effort held their first official meetings last week, pitching philanthropic groups on the idea and asking for their financial backing. While the two virtual sessions were closed to the press, a HUD official told me “30 to 40 interested funders” came to their Tuesday pitch, and “dozens more” to their Thursday one. The team is convening a third meeting with nonprofits and housing researchers on September 19.
Though the HUD appointees who led the meetings — Brian McCabe and Aaron Shroyer — are framing the idea as a modest research project, officials involved are clear-eyed on where such a study could ultimately go. If, for example, a rigorously designed experiment provides new evidence for changing how vouchers are administered, that could have major implications for the $30 billion annual program and all the low-income families it serves. A small pilot could lead to a larger demonstration study, which could, officials say, then lead to pitching Congress on permanent change.
The wheels of federal policy reform move slowly: It might be 10 years until HUD makes any sort of long-term ask of Congress. But the wheels are turning now, in a way they never have before, to make the idea of cash aid a reality.
How the cash rental assistance policy might work
There are a lot of steps to getting housing with a federal voucher. First, a household has to prove eligibility. Thena public housing agency must issue the voucher subsidy to a landlord onthe household’s behalf. For the household to benefit, the landlord must accept that voucher, the unit must pass an inspection, and the landlord mustsign a contract with the public housing agency.
These are a lot of steps, and one hope is that by cutting out much of this bureaucracy, more people will be able to quickly move into affordable housing.
The proposed HUD study would look like this: Households selected from existing voucher waiting lists across a handful of diverse cities (ranging from smaller and suburban to dense and urban) would be randomly assigned to receive either the traditional housing choice voucher funded by HUD or a monthly payment for an equivalent value funded by philanthropy. The cash would not be unrestricted; it would need to go toward paying rent.
Researchers would then be able to study and compare the two groups over time (HUD says ideally for four years) to assess key housing policy questions, like whether one group had more success landing an apartment and staying in their unit.
A HUD official, who was not authorized to speak publicly, said they don’t have an exact number of tenant participants in mind, but stressed they’d want to involve researchers from the very beginning so they could design a study capable of providing strong statistical analysis. An example they put forward was studying five cities, with 200 households per city.
Landlords would likely still know if renters were using philanthropic cash to pay their rent, as it’s common to ask prospective tenants for income verification. But this kind of study could help clarify whether landlords are more biased against renting to low-income people who rely on aid at all, or if landlord resistance stems primarily from the logistical hassle of the traditional voucher program.
“The idea — to the degree possible — is to make the [public housing agency] invisible,” explained the HUD official. “So a landlord knows they’re dealing directly with the tenant, and not the tenant and the PHA.”
Jack Landry, who researches guaranteed income programs for the left-leaning Jain Family Institute, said he’s excited about HUD’s proposed idea because it offers something distinct from the rest of the existing evidence base.
“There are a lot of UBI [universal basic income] pilots out there, but only a fraction of them are being rigorously studied, and a lot of them are funded by American Rescue Plan dollars, making it unclear what happens when the money runs out,” he told Vox. “I’m enthusiastic because I think HUD’s idea has really clear policy implications and a fairly clear route to translating to large-scale policy change.”
Congress won’t let HUD distribute cash directly — but philanthropists could step in
Todd Richardson, a longtime HUD staffer whose team inadvertently discovered old federal reports of the cash rental aid program that ran in the 1970s, proposed in a little-noticed blog post in 2017 that perhaps those research findings could inform an existing voucher program known as Moving to Work.
Moving to Work, which allows public housing agencies to spend federal housing funds more flexibly than is permitted under the traditional voucher program, has been around since 1996 but was expanded by Congress in 2016.
Two years ago, in a meeting attended by local and federal housing officials and this reporter, participants discussed the idea of using Moving to Work to test cash subsidies for renters. Attendees expressed enthusiasm for the idea, though Richardson, who was leading the meeting, warned that it might not “pass muster” with the agency’s legal department.
The reason HUD is now pursuing a partnership with philanthropy is HUD’s lawyers ultimately determined it would violate existing congressional law to distribute federal housing dollars as cash, even under the Moving to Work program. Though some renters accessed federal cash rental assistance during the pandemic, officials say that’s largely because the American Rescue Plan was more vague on how funds could be spent, and thus more flexible.
But if HUD isn’t allowed to distribute its vouchers as cash, foundations could step in, and then HUD could study how that goes.
This public-private idea is being tried already in one city: In Philadelphia, researchers are almost one year into a two-and-a-half-year cash rental assistance experiment studying 300 households selected to receive money on a prepaid debit card every month. HUD officials have been in touch with Philadelphia program leaders, but they envision designing their federal study differently, partly because state and local housing agencies have more flexibility on how they spend public funds.
Sara Jaffee, a University of Pennsylvania researcher involved in evaluating Philadelphia’s cash rental assistance program, told Vox they’re just finishing cleaning up data and should be able to share some initial findings within the next month. She said they’re testing a lot of questions related to housing outcomes, including around housing quality and the experience of leasing with landlords.
According to a HUD official involved, the federal demonstration could conceivably get off the ground in the next six to nine months, depending on how fast governments find charitable partners. They’re hoping they can entice local philanthropies interested in putting money back into their communities — like the Pennyslvania-basedfoundations that are supporting Philadelphia’s study — as well as national tech and progressive groups that might want to grow the evidence base for universal basic income.
Last week’s meetings marked only the first step to potentially changing how billions of dollars in housing aid to low-income renters are spent. But as far as first steps in federal policymaking go, they were serious ones.
Over the last decade, whenever California lawmakers tried to pass new legislation aimed at boosting the state’s alarmingly low housing stock, they’d come face to face with a politically powerful barrier: organized labor.
It wasn’t that unions wanted no new housing in California, but their top priority was ensuring that any new units would be built with unionized workers, and that the nearly half a million members represented by the State Building and Construction Trades Council, or “the Trades,” as it’s locally known, would be well positioned to find good jobs in the future. Keenly aware of how sharply industry standards have declined in parts of the country with less union power, and still reeling from job losses during the last recession, the Trades have assertively fought bills they deemed threatening to their way of life.
In the Democratic and proudly pro-labor state, opposition from the Trades has often been sufficient to kill housing bills. Liberal lawmakers have been sympathetic to union arguments that the state’s housing crisis will not be solved by driving construction workers into poverty themselves. Sometimes unions would object to bills that failed to require certain wage standards, or bills that didn’t require enough union workers to do the jobs. And when they’ve objected, labor leaders have not been hesitant to flex their political muscle, running attack ads against bill sponsors and donating tens of millions of dollars to political campaigns.
Today, though, a major sea change is happening across California, with some unions now either actively supporting the major housing bills winding their way through the legislature, or otherwise signaling that they’ll no longer fight them. This shift in pro-construction, “Yes in My Backyard” (or YIMBY) politics has been dramatic, and one that hardly anyone foresaw just three years ago.
Getting to this point involved some unions being willing to break with the rest of organized labor, as they argued it was worth expanding the number of good-paying construction jobs even if lawmakers could not guarantee those would be union jobs per se. These dissident unions promoted an alternative vision for membership growth, and provided cover to California politicians who worried about being branded as anti-labor.
The stakes for workers, though, are high: The vast majority of California construction workers are not unionized, and toil away on sites with weaker protections, earn far less than their unionized counterparts, and fall too frequently victim to injury and wage theft. Though construction accounts for about 6 percent of California’s total workers, it makes up 16 percent of the state’s fatal workplace injuries.
A new coalition of pro-housing activists and labor unions has emerged in the Golden State, hoping to prove what is admittedly still an untested proposition: Can lawmakers accelerate housing production fast enough to meet the needs of their growing population without sacrificing standards for workers?
Early attempts at housing bills went, well, not smoothly
A number of issues have stymied housing development in California over decades: restrictive zoning codes that favor existing homeowners over potential new residents, lengthy lawsuit-laden approval processes, soaring costs for construction and land, and a shortage of available workers to build.
Starting in 2016, then-Democratic Gov. Jerry Brown pushed a plan aimed at tackling at least one element of this stalemate: He proposed accelerating the approval process for certain housing projects in California, so long as they included a portion of units dedicated to affordable housing. One reason housing production has been so slow is because individuals and organizations can challenge development in court, under the California Environmental Quality Act, or CEQA. Originally passed in the 1970s to ensure local construction considers possible effects related to issues like air quality, noise, and natural resources, CEQA court challenges have since become a top tool for NIMBYs (which stands for “not in my back yard”) to block or delay new housing, by dragging out projects in costly litigation.
Today, it’s typical for a proposed housing project to face at least three or four years in court battles, with added costs in the hundreds of thousands or even millions of dollars. Making this CEQA process both harder for opponents, and faster for developers, is referred to as “streamlining” in California policy circles.
But unions in 2016 objected to Gov. Brown’s proposed “streamlining” bill, arguing it would strip them of needed opportunity to negotiate higher wages for workers. Labor groups worried about accelerating the approval process for private-sector projects but not requiring developers to pay “prevailing wage” — which typically means the going union rate for labor costs in an area. Unions often use CEQA challenges to force developers’ hands on hiring union workers, though laws requiring the payment of “prevailing wage” historically have only been used for publicly financed projects, not the kind of private-sector development targeted by Gov. Brown.
The Trades mobilized hard against Brown’s legislative package, ran ads against his top housing official, and framed the whole effort as a giveaway to real estate tycoons. They successfully killed it.
The following year, to avoid a repeat of 2016, Democratic lawmakers introduced more modest streamlining bills, which notably included a huge shift in the state’s housing policies: Several proposed expanding requirements for prevailing wage from public works projects to also include some private-sector housing development. One of the bills — SB 35 — came from newly elected YIMBY state Sen. Scott Wiener, a Democrat from San Francisco.
In short, Wiener wanted to streamline not only 100 percent affordable housing but some market-rate housing too. If he could promise unions well-paid jobs on both, he reasoned, then labor would hopefully relinquish its fight to preserve CEQA lawsuits as a negotiating tool.
To get it across the finish line, however, unions bargained one more request. For any housing project of 50 units or more that was not 100 percent affordable (meaning not entirely subsidized), developers would not only need to pay prevailing wage but also recruit a “skilled and trained” workforce to build. This “skilled and trained” language refers to workers who graduated from state-approved apprenticeship programs, which are mostly free for students, and are almost entirely union-run. Nearly every apprenticeship graduate later joins a construction union, so requiring workers to be “skilled and trained” is effectively requiring the hiring of more unionized workers.
The Trades still had general qualms about streamlining the housing approval process, and in particular about how eliminating CEQA lawsuits could more easily enable private-sector greed. Rudy Gonzalez, the secretary-treasurer of the San Francisco Building and Construction Trades Council, told Vox his members opposed past housing bills because they weren’t focused enough on dedicated affordable housing. “Who actually benefits from streamlining?” he asked. “I think developers benefit.”
But ultimately the “skilled and trained” language was enough for the unions to back SB 35 in 2017. Developers, meanwhile, didn’t love the idea of paying prevailing wage, but they agreed it was worth it if projects could move through the pipeline faster. SB 35 became law.
But it soon ran into another issue: a worker shortage.
The Trades acknowledges there’s a shortage of workers for California’s needed residential construction, and they know their existing unionized workforce is getting older. A union-backed study from 2019 stipulated that to meet the state’s affordable housing goals, California would need to recruit at least 200,000 new workers.
But the Trades insist things are not so dire yet that leaders need to abandon “skilled and trained” requirements, and they say more people will be incentivized to become “skilled and trained” only if lawmakers guarantee good union jobs waiting on the other end of an apprenticeship. About 70,500 people have graduated from these apprenticeships between 2010 and 2022, according to the California Department of Industrial Relations.
In the half-decade since SB 35 took effect, it’s become clear that the law has helped significantly increase affordable housing construction in California (a recent analysis found it streamlined over 18,000 new housing units between 2018 and 2021), but it’s been far less helpful in accelerating any market-rate construction. This has been partly due to a shortage of available “skilled and trained” workers developers need to hire.
How the Carpenters changed the story
Battles over whether additional California housing bills would require “skilled and trained” labor continued over the next several years, ultimately killing a slew of pro-housing bills in the legislature.
The California Conference of Carpenters — a labor organization representing about 80,000 unionized workers who install and repair wood structures — was more open to bills that included language only for prevailing wage. But leaders from both the Carpenters’ northern and southern councils dared not cross the powerful then-president of the Trades, who said unions would accept “skilled and trained” or nothing.
Change finally came in August 2021, when Jay Bradshaw, a longtime union organizer, successfully unseated a 20-year incumbent to take control of the Northern California Carpenters Regional Council, the Carpenters’ northern affiliate.
“While the labor story has ebbed and flowed and can get really complicated, it really can be simplified to say that one person made a gigantic difference in changing the conversation and that’s Jay Bradshaw,” said Todd David, who led the California YIMBY-aligned Housing Action Coalition between 2016 and 2022.
At the same time that Bradshaw ascended to power, the Carpenters’ Southwest Mountain States Regional Council — which represents workers in Southern California — elected its own new leader, Pete Rodriguez. Historically the two California Carpenters’ councils have not been closely aligned on policy, but Bradshaw and Rodriguez saw eye-to-eye not only on organizing new members, but also on making it easier to build housing — even if that meant stirring the pot with the rest of the Trades.
This first real test came in 2022. An Oakland Democratic Assemblymember, Buffy Wicks, worked closely with the Carpenters’ new leadership to hash out language the union could endorse. Wicks ultimately introduced AB 2011, a bill that would fast-track affordable housing development of old office buildings, strip malls, and parking lots in exchange for paying workers the prevailing wage. On larger projects (meaning at least 50 units) developers would have to provide health care and new tools to guard against wage theft. Larger projects would also require developers to see if “skilled and trained” workers were available, but if they weren’t, the project could proceed without them.
The Trades, along with the powerful and larger California Labor Federation, fought hard against Wicks’s AB 2011, arguing it had too many loopholes and would fail to protect workers in practice. AB 2011 had other opponents besides just organized labor, including some environmental groups and groups that advocate for local control.
Butjoining forces with the Carpenters on Wicks’s bill were two other dissenting unions: the 250,000-member strong California School Employees Association, which represents janitors, cafeteria workers, and other school support staff, and the influential SEIU, which represents more than 700,000 mostly low-wage service and health care workers across the state.
David Huerta, the president of California SEIU State Council, said after surveying members on issues they’re dealing with, it became clear SEIU needed to stand up more on housing. “Regardless of if you’re a janitor or a nurse or a health care worker or a home care worker, everyone overwhelmingly said the number one issue was housing affordability,” he told Vox. “We have members sleeping in their cars, who have big families sleeping in one-bedrooms, who are traveling hours and hours to get to work because they can’t afford to live near their jobs.”
Bradshaw, of the Carpenters, argued creating more high-paying jobs for all construction workers was more important than having guaranteed union jobs — and that unions could then aim to organize those workers. “For the elected officials we framed it as they do have a real choice,” Bradshaw told Vox.
In the end, California lawmakers didn’t really have to make a choice, and ended up passing Wicks’s bill, along with another similar bill that included the Trades’ preferred “skilled and trained” language. For now, developers basically can choose which law they want to follow if they want to convert strip malls to housing. (Yes, really.)
“AB 2011 was a huge victory, but they allowed the building trades to save face by passing both bills,” said David, the YIMBY activist.
Scott Wiener, author of the 2017 law that has successfully streamlined affordable housing projects but less successfully produced mixed-income and market-rate development, decided this year to run with the labor compromise language Wicks pushed in AB 2011. In a new bill — SB 423 — winding its way now through the legislature, Wiener is aiming to strip the “skilled and trained” requirement from his 2017 law, and add in the other labor protections from AB 2011, like for wage theft and health care.
The new president of the California Trades, Andrew Meredith, declared strong opposition to Wiener’s new bill when it was introduced in February, arguing it would hurt safety standards and housing affordability. The California Labor Federation backed the Trades up, too. “More profits for developers, less benefits for workers,” the labor federation’s leader said. “That makes zero sense from folks who claim to be pro-labor.”
In the winter and early spring, it looked increasingly like Wiener’s SB 423 would be one of the most contentious bills in the California legislature this year — a new proxy fight over who was more sufficiently for affordable housing and workers’ rights.
But in April a major twist happened: two more construction unions — the California Council of Laborers and the state Conference of Operating Engineers — broke with the Trades to publiclysupport Wiener’s housing bill. “We believe the balance that this legislation strikes will result in more available housing and ultimately lead to more affordable housing that could be utilized by our membership and those in need,” said the Operating Engineers in a public letter.
Corey Smith, the new head of the YIMBY-aligned Housing Action Coalition, told Vox he thinks the leadership from the Carpenters, and bringing in the other unions, “is perhaps the single most positive shift in California housing discourse, conversations, fights, and politics in the last 40 years.” It’s “such a big deal,” Smith continued, “because the single largest individual problem for homebuilding in California has been local discretion and CEQA and the Carpenters’ union basically said, ‘Hey, we’ll provide a political path to tackle this.’”
In June, two months after the Laborers and Operating Engineers joined the Carpenters in supporting SB 423, Meredith, the president of the California building trades, resigned from his post.
In another big political twist, the Trades have recently announced they are no longer opposing SB 423. They’re currently “neutral” on the legislation, and neutral on another bill to develop affordable housing on land owned by religious groups, which failed in 2020 and 2022 largely due to labor’s opposition.
“We’re still working with the bill author and we would love to be able to support,” the Trades’ new leader, Chris Hannan, told Vox. “We’re trying to get the labor standards right for workers.” Whether or not the Trades ends up supporting the housing bills, however, won’t really matter as much in Sacramento as the fact that they’re not actively fighting them anymore. Passage for both bills in September looks likely.
Two different visions for growing union membership
One important factor shaping the politics in California is that not all labor groups see rapid membership growth as inherently positive.
Laura Foote, executive director of YIMBY Action, recalls one of her earliest memories of advocating to expand California’s housing supply. “I was just starting to map out who would be pro-housing, and anyone who built housing seemed like a natural ally,” she told Vox. Foote met with a San Francisco planning commissioner who was also a member of the electrical trades.
“I had a one-on-one with him like, ‘Okay, all the construction industry trades are going to be on board? Let’s build a lot of housing!’ And he was very blunt that no we do not want to unleash production … For him, there was a problem that if we unleashed housing production and grew our labor force, then when there’s a downturn all of his guys would be banging down the door at the union hall when times are low and out of work.”
The concern of maintaining union strength in a downturn is a real one. More than 365,000 construction jobs were eliminated in California during the last recession, between 2006 and 2011. “The point for them is not higher wages, the point is steady union jobs,” Foote argued. (The commissioner did not return Vox’s request for comment.)
Hannan, the new president of the Trades, told Vox his members want to build more housing at all income levels and pointed to the Trades’ support for growing their apprenticeship programs as proof they also want to add to their ranks.
“I don’t believe that to be true,” he said, when asked about certain guilds not supporting membership growth. “People are entitled to draw their own conclusions and come up with their own opinions but the building trade unions that I represent want to grow opportunities for their members and new members. The Trades has been a wonderful career for me and I want that for more people.”
Still, it’s true that membership growth may present a more uncomplicated opportunity for the Carpenters compared to other construction unions, making it easier for them to back YIMBY bills. It could help that the Carpenters offers its members 401(k) plans in addition to traditional pensions, and is organized in ways that might make an influx of new members less threatening to incumbent leaders controlling smaller geographic turfs. Over the last few years, the Carpenters have embraced an aggressive organizing strategy, growing its membership by 8 percent between fiscal years 2019 and 2022, according to the union.
Will the pro-labor compromise actually work?
An outstanding question is whether these union-backed streamlining bills will generate enough new private-sector housing in California, and there are skeptics.
Making it harder to file CEQA lawsuits should certainly help, advocates say, but the constant debate in housing policy circles is whether a market-rate project “pencils out” — meaning whether the developers’ projected earnings outweigh their building costs. Prevailing wage and other labor benefits raises the cost of a project.
Jennifer Hernandez, an environmental and land-use lawyer who has studied how CEQA lawsuits get abused by housing opponents, told Vox she thinks whether SB 423 works as intended is “a real bet.”
She pointed to Los Angeles, where a 2016 ballot measure that required paying prevailing wage failed to produce as much mixed-income housing as some LA leaders hoped to see. “It’s been too expensive and there’s not enough workers,” Hernandez said.
Hernandez thinks SB 423 will work best in the most expensive markets where developers can afford to charge tenants higher rents to recoup their costs.
No one could say exactly how much more a project might cost if prevailing wage is required, and different estimates abound. Ben Metcalf, the managing director of the Terner Center for Housing Innovation at UC Berkeley, told Vox his organization believes it increases prices in the 10-20 percent range, but can vary a lot by region. Some estimates have it lower than that, and some others have it higher.
Some YIMBY advocates say the higher wages for workers will “pencil out” if state lawmakers move next year to tackle the high “impact” fees that cities often attach to new housing in exchange for development approval.
Brian Hanlon, the president of California YIMBY, said he’s optimistic about the prevailing wage requirement, but only if these fees and other costly regulations like inclusionary zoning requirements are later addressed. “SB 423 is an important law to get rid of a lot of these CEQA lawsuits, but we need to get the math to work right,” he said.
Smith, of Housing Action Coalition, said it’s not clear yet how much will be saved by streamlining, but developers wouldn’t really care if they paid more for labor if they saved money elsewhere. The Carpenters and other unions have a vested interest in these projects penciling, too.
Ultimately policymakers and advocates of all persuasions recognize California is embarking on a major new chapter for housing politics — one where individuals will have less power to block housing production in court, and where the Trades have less power to block bills they don’t like in Sacramento.
“For years the way union politics worked in California is that each union would let the workers in that union lead on that policy, so you wouldn’t see the plumbers having a position on education, or SEIU getting in on housing,” said Foote, of YIMBY Action. “Now it’s like all bets are off.”
Originally published in Vox.comon June 15, 2023. —-
The challenges of homelessness and a lack of affordable housing are particularly acute in Oregon.
The state has seen a 63 percent increase in unsheltered homelessness over the last six years. While roughly 18,000 people are currently unhoused in the state, thereare only about 5,200 year-round shelter beds to serve them. One cause of homelessness nationwide is that, for years, the US has been building fewer homes than necessary to house a growing population. Oregon has among the largest housing supply gaps:statewide, 140,000 housing units are needed, and, without serious action, there’s a projected shortage of 443,556 units in the next 20years.
Voters, in turn, have grown upset. Frustrations around homelessness played a pivotal role in the 2022 election. Tina Kotek, a Democrat who had served as Oregon’s House speaker for the previous nine years, eked out a win in the gubernatorial election, but hertightmargins (she earned 47 percent in a three-way race) spoke volumes in a state that’s typically safely blue.
Kotek, in turn, has made housing and homelessness among her top priorities in her first six months in office — issues that leaders don’t oftenstake their capital on.
Her plans though, hinge on other community leaders taking action, and it’s too soon to say whether her ideas and policy prescriptions will succeed.
I talked with Gov. Kotek about making housing policy the center of her agenda, about dealing with NIMBYs, and lessons other states might learn from Oregon. Ourconversation has been edited and condensed for clarity.
Rachel Cohen
Oregon’s governorship almost flipped red last year for the first time in more than three decades, and voter surveysindicate frustration with homelessness was one of the top reasons why. What has changed about homelessness, in your view, to make it rise to become a such salient political issue?
Gov. Tina Kotek
That’s a great question because I’ve been doing public policy for 20+ years and the public has long perceived housing and homelessness as this second-tier issue. The change is really related to the pandemic, when we had to move people out of shelters because you couldn’t have the crowding. And people came out on the streets in tents, and then were there for more than two years. So in that sense, the most extreme example of our housing crisis — experiencing unsheltered homelessness— is just in everybody’s face now on a daily basis in a way that we didn’t have before.
You have both an empathy, because people don’t want to see folks living like that, and a frustration, because they want their communities back to what they were, which includes not having tents on the streets.
Rachel Cohen
Beyond Covid-19, what do you see as the root cause of Oregon’s high levels of unsheltered homelessness?
From the housing side of this, I definitely go back to the Great Recession, when housing construction literally stopped. But people continued to move to Oregon. So we’ve been behind with housing construction and keeping up with the influx of folks going on 15 years now. This has really driven the affordability issues. And what had been getting built since the Great Recession was very high-end housing, not what I would call workforce or affordable housing.
Then for homelessness, you have a lot of different populations who are out there who’ve lost their housing. And because they’re on the street they start to develop significant illnesses. Maybe you started your unsheltered homelessness because you lost your job, and you’re traumatized by this experience. So you’re starting to develop a mental health issue, you’re probably medicating with a substance to stay awake — for example, meth. Then you develop a substance issue. It’s this accumulation of illness that comes with being on the street that has led to the level of chronicunsheltered homelessness. It’s not the start of the issue, but the length of the issue that we’re now dealing with, and the depth of the illness on the street because of that.
Rachel Cohen
How do you planto measure the success of yourhousing initiatives over time?
Gov. Kotek
We’ve been very specific that by the end of the calendar year, we want to have a minimum of 600 new shelter beds, 1,200 people rehoused, and a minimum of 8,750 people being supported through rental assistance that we’re preventing from becoming homeless.
So the key there is making sure that the problem doesn’t get any worse. And we wanted to be very clear with local communities: You get state money based on a plan to hit your portion of that target. The public really needs us to show that the money is connected to outcomes.
Rachel Cohen
Elected officials in other states have been reticent to tackle housing and homelessness. What’s your case for why they should anyway?
Gov. Kotek
It’s certainly daunting, right? It’s easier to pick something less complex when you’re in elected office. But what I like to tell people is that housing is the core problem. If you don’t have stable housing, you’re going to be unhealthy, and those are health care costs. If you’re trying to recruit people to your community and there’s literally no workforce housing, that’s an economic issue. It’s a safety issue because when people are stable in their housing it reduces crime and disruption. And it matters for educational outcomes — when a child moves school districts within the same year, they fall months behind.
I think things are particularly severe in Oregon for a whole variety of reasons, but everybody has the same issue. We just haven’t built enough housing. Every governor has to take up housing, you cannot ignore it.
Rachel Cohen
How do you deal with NIMBYism in Oregon? There’s also a lot of cynicism about the power of individuals to block needed housing production.
Gov. Kotek
There’s a lot of fear when people see that their world is changing. In the 2019 legislative session, we had House Bill 2001, which was the “middle housing” bill. It was a reset of how we approached what it means to have a home, meaning they don’t have to be big apartments or single-family housing. And there was a lot of fear from people that we were going to change the aesthetics, the feel, the nature of their neighborhoods. And I said, “No, we’re going to make them more livable so people can stay in the communities they want. So they can have the ADU or the duplex or the townhome that in some places was actually not allowed to be built.” There was pushback, and now everyone’s accepting it because they understand that we have to have different types of housing options.
I always go back to personal stories with folks. They tend to help people understand that we can all have prosperity if we just let go of our fears that change is going to hurt us. And it takes a lot of conversations to do that.
I think you also have to involve the people who are doing the work early on. For example, my Housing Production Advisory Council — it would have been easier if I said, “This is the stuff we’re going to do.” But I wanted to make sure that the folks who are doing the work have buy-in to the solutions, and are willing to push for those solutions. It takes longer, but you’re going to have more success when everyone’s bought in.
Rachel Cohen
I recently wroteabout how the Ninth Circuit’s Martin v. Boise decision — which says people can’t be punished for sleeping outside on public property if there are no alternatives available — is shaping cities’ response to tent encampments.
Oregon is no exception, and earlier this year I know you raised concerns that Portland’s plan for unsheltered homelessness might amount to just shuffling people around. I wanted to ask you about some of the proposed solutions — like sanctioned encampment sites. What do you think about these as interim measures, and the fact that some advocates worry they’ll become more permanent fixtures?
Gov. Kotek
We have to be okay with some level of transitional shelter until we build more housing.
After the Boise decision, I helped pass legislation here to be very clear with our local governments of what they needed to do to be in compliance with that court ruling. It’s not enough to say you can’t criminalize people who are living outside, you have to also provide them a pathway to permanent housing.
And it’s also important to set some parameters about where people can be. I think it’s appropriate to have time, place, and manner guidelines for where people can camp, particularly in places that are very unsafe, like on the sides of highways and things like that.
My frustration has been that while that’s something cities have to do, they also have to provide the resources. In Portland, when their daytime camping ban takes effect in July, they have to be serious about providing more daytime shelters for people who can no longer camp on the streets during 8 am to 8 pm. We can do both, we just have to plan for it.
I’ve learned a lot in this process by listening to people who were actually on the streets. We need to lean into new ideas like Project Turnkey, which enables someone experiencing homelessness to walk into a converted hotel or motel, where they can then have a room with a locked door, services on site. And little villages, where people have their pod and their safety but they’re also living in community. Those things take a bit longer to set up but they are much more effective than what we’ve done in the past, where you just say here’s a big building with a bunch of beds in it. And you wonder why people don’t want to do that.
Rachel Cohen
I want to turn back to the 2019 “middle housing” law you helped pass, which ordered larger cities and the Portland metro area to legalize duplexes on all residential lots, and fourplexes, triplexes, townhomes, and cottage clusters on more than half of lots.
This was the first law of its kind in the nation, and as the Sightline Institute put it, “proved that it’s possible for state legislatures to take groundbreaking action against local bans on lower-cost housing types.”
You are credited with playing a major role in getting the bill passed, and on a bipartisan basis. Can you talk about any lessons you learned from that?
Gov. Kotek
My general take from the beginning was that legalizing these housing types needed to be statewide and it’s important for everybody to do it. I think other states have approached it as something you can opt into, or just for certain locales, and I really recommend against that.
The success came from building the right coalition of folks. Everyone from the land-use folks, to AARP, the real estate community, the development community, the climate activists. That level of support helped us push back on the NIMBYs.
Rachel Cohen
I want to zoom out for the last question. I’ve been writing about housing and homelessness for a long time, and it’s clear that many people see these issues as separate. I know your administration sees housing and homelessnessas connected, and I wondered, why do you think there is this disconnect in people’s minds? And how do we fight that misperception?
Gov. Kotek
I think it’s important for folks who work on these issues to not get rigid in either space. You will have some advocates who work for the unsheltered who think it’s all about housing — like if we just had more housing, then everything would be fine. That’s missing the point of the acuity of the individuals on the streets.
And then you go to the other extreme where people say, “We don’t have a housing supply problem, this is a personal responsibility issue. These are folks who are just on drugs, they have mental health issues.” And that perspective — which puts the blame on them — is also wrong. Because even if those folks got all the resources they need to be healthy today, there aren’t enough places for them to live.
We had an issue recently out in Clackamas County, which is one of our metro area counties, where they had approved a hotel to convert to a homeless shelter. I was told this was one of the best assets they had ever seen for one of these conversions, it was in a good location, good shape. And then around two weeks later they reversed approval for it because they thought it didn’t focus enough on people’s mental health and drug addiction issues. This is very short-sighted.
So I like to tell people, both are true. It’s true there are individuals who have significant health issues that are helping to keep them on the streets, and it’s true they have nowhere to live. So for us, it’s the short term of helping people get into transitional shelter, continue to get people rehoused, and keep them there. We’re also trying to say we have to provide some level of ongoing rent assistance for a time, so people can stay stable and still get services. Nothing is worse than spending money and having someone come back on the streets. It’s bad for them. It’s not cost-effective.
My message to everyone is, see the entire spectrum of the issue. Deal with the complexities and have a short-term and a long-term plan. But we have to help people right now who are suffering. So every day, it’s just like, gotta do both. You gotta do it all and they are interrelated.
Correction, June 15, 5:30 pm: A previous version of this story said Oregon’s goal for the minimum number of people supported by rental assistance was 3,600. After publication, the Oregon governor’s office amended that number to 8,750.
In most US communities, renters have very little assurance of staying in their homes long term if they’d like to. Landlords can hike rents, evict tenants through court with little difficulty, or simply choose to not renew their lease. Nearly 5 million Americans lose their homes through eviction and foreclosure every year, and millions more deal with threats of housing loss.
In July 2021, local lawmakers in Albany approved New York’s first “good cause” eviction law — a city ordinance affirming tenants’ right to renew their leases, defining what could lead to eviction, and protectingthem against “unconscionable” rent hikes exceeding 5 percent. Within a few months, four more upstate New York cities — Kingston, Newburgh, Poughkeepsie, and Beacon — followed suit.
But tenant advocates didn’t have long to celebrate. Landlords challenged the measures in court,arguing the local lawsviolated their stateproperty rights. In three separate rulings over the last sixmonths, the courts agreed, and “good cause” laws in Newburgh, Albany, and Poughkeepsie werestruck down. Kingston lawmakers preemptively repealed their own measure two weeks ago.
Landlord groups argue “good cause” eviction rules will upend the housing market during an already volatile period, and slow down much-needed new construction. Supporters of the protections say this is just real estate industryfear-mongering, noting that in states that have already passed “good cause” eviction laws, construction has continued apace.
No state has had a “good cause” ordinance longer than New Jersey, which passed its own version in 1974.
“There’s a thriving rental market in New Jersey, it has not collapsed by any stretch of the imagination,” said Peter Hepburn, a sociologist at Rutgers University-Newark and an analyst at Princeton’s Eviction Lab.
Julia Salazar, the New York senator leading the push in her state legislature for “good cause” eviction, said opposition is led largely by those “who want to exploit the need people have to be housed.” She argued there’s been a lot of misinformation about her bill.
“No one is saying we have enough housing stock or we don’t need to build, and I believe we urgently need to build more housing,” she told Vox. “If ‘good cause’ were in fact any impediment to that then I would certainly be concerned, but the reality that we’ve seen in states like New Jersey and Oregon is it’s just not.”
However, whether these laws will provide the kind of protection advocates yearn to see is not clear, since many common reasons for eviction — like being a nuisance or damaging property — are listed as “good causes” in the statutes. One hope, though, is that they could provide more regulation over the myriad informal evictions that typically take place outside of court. To date, there’s been littleresearch on the effectiveness of the laws in the states that have recently passed them, partly because they’re so new and partly because it’s challenging to disentangle the effect of “good cause” from all the other Covid-19 tenant protections.
In New Jersey, advocates concede, “good cause” has not been a strong deterrentagainst evictions, partly because its language barring “unconscionable” rent increases lacks a specific threshold (like 5 percent, for example), making enforcement difficult.
“The note of caution I would sound is that every ‘good cause’ statute permits eviction for nonpayment of rent,” said Hepburn. “And nonpayment of rent is far and away the most common cause that evictions are filed.”
How “good cause” eviction laws work
Laws requiring “good cause” for eviction (sometimes called “just cause” or simply eviction “for cause”) are tenant protections meant to give renters a greater sense of housing security and empower them to hold landlords accountable for poor conditions without fear of retaliation.
The laws vary from place to place but they always include specific reasons a landlord could choose to legally evict a tenant or opt not to renew their lease. A tenant can then challenge an eviction in court if they feel it was ordered without legitimate cause.
The National Low Income Housing Coalition lists three core components of “good cause” legislation. Beyond defining the legal grounds for an eviction, advocates say most place limits on rent increases (some of these limits are vaguer than others), and most laws also include enhanced requirements for written eviction notices, so tenants have enough time to gather any documentation they need to challenge it. In Oregon, for example, landlords have to provide a tenant they want to evict with 90 days notice.
While there has not been much research to date on the impact of “good cause” eviction laws, some evidence suggests they make a difference. One study found local “good cause” ordinances in four California cities lowered eviction rates between 2000 and 2016. The researcher concluded the measures “have a significant and noticeable effect on eviction and eviction filing rates” and provide a low-cost policy solution for other states and cities. Other advocates note that traditional eviction data — which relies on court filings — generally fails to capture the 72 percent of forced displacement that occur outside the court system.
Ned Resnikoff, the policy director for California YIMBY, said he doesn’t believe there’s any reliable data yet on California’s statewide “good cause” measure that took effect in 2020, partly because some eviction moratoriums remain in effect. “But the Terner Center has found that the rent stabilization piece of [the law] isn’t being adequately enforced, so I think it’s reasonable to surmise that we might face a similar issue with just cause protections,” he told Vox.
Progressives are throwing their weight behind the fight in New York
Progressive activists have named “good cause” eviction a top priority for this year, and powerful congressional Democrats including Reps. Alexandria Ocasio-Cortez, Jerry Nadler, and House Minority Leader Hakeem Jeffries have also come out in support.
The bill would bar rent increases that exceed 3 percent of the previous rental amount, or 1.5 percent of the Consumer Price Index, whichever is higher. This could provide significant protection: Even among New York City’s 1 million rent-stabilized apartments, tenants are looking at rent increases for next year that could range between 5 and 16 percent.
New York’s bill would go further in protecting tenants than the “good cause” laws that passed on the West Coast, as New York’s proposed limits on rent increases would apply not only to old units, but also to new and future housing.
The Community Service Society of New York, a progressive advocacy group, estimates that 1.6 million New York households would be protected from eviction based on unreasonable rent increases under Salazar’s bill.
Landlords are fighting back, arguing the eviction moratorium from the pandemic already put them under severe financial strain, will lead to more backlogged court cases, and will leave them financially vulnerable in an inflationary period. The right-leaning New York Post blasted the proposed law for potentially discouraging new housing and driving existing landlords out of business.
Tim Foley, the CEO of the Building and Realty Institute, which represents Westchester and mid-Hudson region real estate professionals, told Vox his members worry it will hurt their ability to get financing to complete their projects. He pointed out that banks, including the recently collapsed Signature Bank, paused or stopped lending following the passage of New York’s 2019 state tenant protections. His organization also found repairs and maintenance in rent-stabilized units decreased after the 2019 law,suggesting there could be “unintended consequences” to the tenant rights law.
Ann Korchak, the board president of Small Property Owners of New York, a landlord advocacy group with roughly 600 members, told Vox she believes her state “already has incredibly strong tenant protections” and disagrees with advocates who say otherwise.
Salazar told Vox she sees Democratic Gov. Kathy Hochul as their biggest political obstacle, and previously indicated she’s open to making modifications to her bill. Lawmakers tried and failed to pass a similar bill in 2019, but Salazar thinks there are more elected officials now who embrace a “housing justice” platform.
Hochul, who introduced her own housing agenda earlier this year, has thus far signaled disinterest in the proposed “good cause” eviction bill, though her proposals have failed to gain traction and pressure remains for lawmakers to do something on the affordability crisis.
Evictions are life-altering and preventable
Despite research showing harms related to eviction,it wasn’t until the pandemic that the government stepped up to help families avoid this traumatic experience. One of the most significant Covid-19social policy developments was the creation of the federal Emergency Rental Assistance Program, which authorized $46.5 billion to help people stay housed. Morethan half of states passed their own eviction prevention measures as well.
But now emergency rental aid has mostly tapped out, state and local eviction moratoriums have mostly expired, and a federal bill to establish a permanent eviction prevention fund died in Congress.
Advocates say “good cause” measures, especially since they can be passed at little cost to governments, represent a meaningfulinterim step lawmakers can take now as they continue fighting for more rental assistance, source-of-income discrimination bans, and right to counsel. To make “good cause” ordinances more effective, tenant advocates say local courts and legislators must also develop stronger enforcement mechanisms, including better ways to track and analyze eviction filings and judgments. The National Low Income Housing Coalition also emphasizes the need to pass “equitable marketing strategies” that can help tenants learn how to exercise their rights.
Hepburn, of Rutgers and the Eviction Lab, said “good cause” eviction measures are worthy ideas, especially in a place like New York, which has the highest share of renters among all 50 states. Yet he noted the unfortunate reality that gaps in housing security between blue and red states continue to widen.
“These laws should happen, but it should be noted that where they’re passing are in places that have tenant protections already,” he said. “These bills are not coming up in places like South Carolina, like Virginia, like Georgia. How do we do something like this in Indiana?”
Roughly 40 percent of American millennials have four-year college degrees, and if there’s one thing these highly educated young people have liked to do over the last 15 years, it’s move to big cities.
Researchers find they (well, we) have accounted for more than half the population increase in “close-in” urban neighborhoods in the country’s largest metro areas since 2010, and they credit our migration (and our taxes) with accelerating urban revival. We don’t have to guess as to why: Millennials like diverse, walkable environments with good public transit and bike lanes. They like the rich cultural amenities, including bars, restaurants, and concert venues. And they like the higher-paying work opportunities available.
All this might make you think millennials have moved to cities permanently. But as they get older, the number of urban children has continued to drop. Lower birth rates are part of the story, but economists say the strong correlations with population shifts strongly suggest that “out-migration” of cities explains a big portion of the loss. In other words, millennials now in their mid-30s and 40s with young kids have started decamping for suburbs to raise their families.
Some older adults nod smugly, seeing these suburban migration patterns as proof that there was never any meaningful difference between their preferences and that of millennials at all. Millennials did not start the trend of moving to cities in one’s 20s: Plenty of baby boomers and Gen X moved to urban areas in young adulthood, and then back to the suburbs to raise a family once they coupled up and needed more space.
And certainly some millennial families really do crave the kind of lifestyles found in suburbs: the bigger houses and lawns, the schools, and safety.
But for many other young people looking to start families, the choice to stay in the city or move to the suburbs doesn’t feel much like a choice at all. There simply aren’t many family-oriented housing options in cities, let alone ones young couples could afford.
For years now the shortage of housing, and the dearth of new housing built to accommodate a growing population, has been getting more attention. But only more recently have people started to discuss that, even in places that have loosened their zoning rules and authorized new housing construction, the overwhelming majority of new units are studios or one- and two-bedroom apartments, built with singles, childless couples, and adult roommates in mind.
Advocates for more housing say they’re aware that cities are losing families with kids, even in areas that are adding new units to the market — and they argue that it’s one reason why reforming zoning is only the first step toward building cities that house more people.
“Yes, there’s been a ‘build baby build’ attitude because we’re so far behind, but there are big asterisks and caveats to that,” said Matt Lewis, a spokesperson for California YIMBY, a pro-housing group. “If you just do zoning, you will end up with a whole lot of one- and two-bedrooms.”
Zoning reform is necessary but not sufficient
Housing demand outstrips supply in major cities, leading to rising costs for tenants and prospective homeowners. A top culprit for this scarcity is local zoning laws that bar new construction and empower homeowners who gain financially from restricting new housing to decide whether or not to make room for more neighbors.
Over the last decade, there has been a growing movement to loosen zoning rules to facilitate more construction. And among those few places that have changed their zoning laws, evidence suggests it has helped contain rising rents, largely by reducing competition among individuals for units.
Addressing restrictive zoning is a crucial first step to making cities more affordable, and most communities still haven’t even taken that step.
Orphe Divounguy, a senior economist at Zillow, analyzed the top metropolitan areas sourced from the American Community Survey and found that the most “doubling up” — meaning a family living with another family — occurs in the nation’s most expensive cities, like Los Angeles, Boston, Denver, Seattle, and Washington, DC.
While some might simply prefer these living arrangements, Divounguy observed that nearly 70 percent of families doubling up in these high-cost cities had incomes of $35,000 or less — suggesting their choices to live in closer quarters may be driven byfinancial need. “We need to build more units,” Divounguy told Vox. “If we had more units then buyers and renters would have more buying power and prices would go down.”
Christopher Leinberger, a longtime land use strategist, agreed that upzoning — altering rules to allow more densehousing in places previously zoned only for single-family homes — is the fundamental prerequisite for creating more family-oriented housing. Without that, he argues, land prices will remain “completely out of whack” and drive up prices.
“A few decades ago, the plot of land itself would be no more than 20 percent of a home’s price,” Leinberger said. “Today it can be up to 50, 60, or 70 percent.”
Higher land prices is also a top reason developers don’t bother building entry-level starter homes anymore, even in areas they’re legally allowed to; the increasingly expensive plot of land can’t justify the expense of building a low-cost affordable house.
Emily Hamilton, the director of the Urbanity Project at the Mercatus Center, echoes Leinberger and Divounguy in saying that liberalizing zoning laws would help expand family-oriented housing. “Freeing homebuilders to serve a wider variety of households at a broad range of incomes is the path to abundant housing,” she wrote recently in Discourse magazine. “It would allow more parents to have shorter commutes, freeing more time to spend with their kids.”
Other regulatory barriers stand in the way of family-oriented housing
The problem is, as housing advocates are learning, upzoning is not enough.
The basic back-of-the-envelope calculations of housing developers in America today are such that if a builder canconstruct more housing in cities, they will almost always build one- and two-bedroom apartments because smaller units generate more rent per square foot. Developers are, in effect, incentivized to try and pack inas many units as they can.
One option is to pass laws that require developers to include more family-sized units in their portfolio — more three- or four-bedroom places, for example. But housing experts say trying to force developers to build family-oriented housing will probably backfire. “Dictating to developers what their product mix should be is going to be difficult,” said Leinberger. “If you get into the business of legislating that, they’ll just go to some other town.”
So if you’ve fixed your city’s restrictive zoning, now what?
Lewis, of California YIMBY, said they’ve been learning out in the Golden State that the next step is to look at the building codes and other regulatory barriers that influence the types of housing developers choose to build.
“It’s like whack-a-mole,” he said, meaning just when pro-housing advocates think they’ve defeated the last barrier to new construction, new ones come into clearer view. “These are all arcane rules that no one was paying attention to until five-seven years ago.”
One such building code restriction is the requirement that most multifamily buildings have two stairwells. This is a rule rooted in fire safety, though most other countries allow one stairwell andopt for other fire safety strategies instead. One consequence of the double stairwell model is it ends upmaking architecture more homogenous and inefficient. (This is why most apartment buildings in America have long central hallways, with apartments on either side.)
Housing activists lately have been rallying around “single-staircase” reform, changing building codes to eliminate this requirement for a second stairwell. These reforms will make it easier to use different floorplans andhopefully make it more cost-effective to build family-oriented housing in cities — perhaps a three-bedroom, one-and-a-half bath apartment, with only one bedroom having a walk-in closet.
Other barriers include regulations like minimum lot sizes, “set-back” requirements that give towns power to dictate how far back from the curb a home can be built, and “floor-area ratios” — the ratio of a building’s total floor area to the size of the land on which it’s built.
California Sen. Scott Weiner has been leading the way in his to state to push bills tackling these barriers. “We need to reform zoning, but we also need to end loopholes that make it impossible for our communities to actually build the multifamily housing for which we have already zoned,” he said.
The risk-averse banks also need to be convinced
Unfortunately, adding more homes for families in cities will likely require even more than just making these land-use changes.
Bobby Fijan, a developer who has been trying to build more family-oriented housing in cities, said one of the biggest challenges is convincing American real estate investors that these projects are worthy bets. “I firmly believe it is a chicken and egg problem,” he told Vox.
“Real estate in the US is very conservative, they want to back things in a very standardized way, and they want to look and see heaps of data showing something already works,” he said. “In industries like tech and retail, people are obsessed with the question of ‘what does the customer want?’ That’s not a question that’s really asked in real estate.”
Right now, because the housing supply and demand gap is still so wide, it’s likely that real estate investors will keep backing projects that look like what they’re already building: buildings that cater to childless adults. These are safe bets, with strong track records of delivering returns.
But this doesn’t mean real estate trends can’t change. Fijan has been working to get financing from private equity and is hoping he can build enough “proof points” of successfully profitable family-oriented housing in cities to get the more risk-averse banks to bite in the future.
It’s a gamble that holds a lot of promise. Plenty of young families will still opt for the suburbs’ greener pastures, but many parents would be happy to stay put in their beloved dense cities and raise their kids. To make that a viable option, though, they need somewhere they can actually live.
In most US communities, renters have very little assurance of staying in their homes long term if they’d like to. Landlords can hike rents, evict tenants through court with little difficulty, or simply choose to not renew their lease. Nearly 5 million Americans lose their homes through eviction and foreclosure every year, and millions more deal with threats of housing loss.
In July 2021, local lawmakers in Albany approved New York’s first “good cause” eviction law — a city ordinance affirming tenants’ right to renew their leases, defining what could lead to eviction, and protectingthem against “unconscionable” rent hikes exceeding 5 percent. Within a few months, four more upstate New York cities — Kingston, Newburgh, Poughkeepsie, and Beacon — followed suit.
But tenant advocates didn’t have long to celebrate. Landlords challenged the measures in court,arguing the local lawsviolated their stateproperty rights. In three separate rulings over the last sixmonths, the courts agreed, and “good cause” laws in Newburgh, Albany, and Poughkeepsie werestruck down. Kingston lawmakers preemptively repealed their own measure two weeks ago.
Landlord groups argue “good cause” eviction rules will upend the housing market during an already volatile period, and slow down much-needed new construction. Supporters of the protections say this is just real estate industryfear-mongering, noting that in states that have already passed “good cause” eviction laws, construction has continued apace.
No state has had a “good cause” ordinance longer than New Jersey, which passed its own version in 1974.
“There’s a thriving rental market in New Jersey, it has not collapsed by any stretch of the imagination,” said Peter Hepburn, a sociologist at Rutgers University-Newark and an analyst at Princeton’s Eviction Lab.
Julia Salazar, the New York senator leading the push in her state legislature for “good cause” eviction, said opposition is led largely by those “who want to exploit the need people have to be housed.” She argued there’s been a lot of misinformation about her bill.
“No one is saying we have enough housing stock or we don’t need to build, and I believe we urgently need to build more housing,” she told Vox. “If ‘good cause’ were in fact any impediment to that then I would certainly be concerned, but the reality that we’ve seen in states like New Jersey and Oregon is it’s just not.”
However, whether these laws will provide the kind of protection advocates yearn to see is not clear, since many common reasons for eviction — like being a nuisance or damaging property — are listed as “good causes” in the statutes. One hope, though, is that they could provide more regulation over the myriad informal evictions that typically take place outside of court. To date, there’s been littleresearch on the effectiveness of the laws in the states that have recently passed them, partly because they’re so new and partly because it’s challenging to disentangle the effect of “good cause” from all the other Covid-19 tenant protections.
In New Jersey, advocates concede, “good cause” has not been a strong deterrentagainst evictions, partly because its language barring “unconscionable” rent increases lacks a specific threshold (like 5 percent, for example), making enforcement difficult.
“The note of caution I would sound is that every ‘good cause’ statute permits eviction for nonpayment of rent,” said Hepburn. “And nonpayment of rent is far and away the most common cause that evictions are filed.”
How “good cause” eviction laws work
Laws requiring “good cause” for eviction (sometimes called “just cause” or simply eviction “for cause”) are tenant protections meant to give renters a greater sense of housing security and empower them to hold landlords accountable for poor conditions without fear of retaliation.
The laws vary from place to place but they always include specific reasons a landlord could choose to legally evict a tenant or opt not to renew their lease. A tenant can then challenge an eviction in court if they feel it was ordered without legitimate cause.
The National Low Income Housing Coalition lists three core components of “good cause” legislation. Beyond defining the legal grounds for an eviction, advocates say most place limits on rent increases (some of these limits are vaguer than others), and most laws also include enhanced requirements for written eviction notices, so tenants have enough time to gather any documentation they need to challenge it. In Oregon, for example, landlords have to provide a tenant they want to evict with 90 days notice.
While there has not been much research to date on the impact of “good cause” eviction laws, some evidence suggests they make a difference. One study found local “good cause” ordinances in four California cities lowered eviction rates between 2000 and 2016. The researcher concluded the measures “have a significant and noticeable effect on eviction and eviction filing rates” and provide a low-cost policy solution for other states and cities. Other advocates note that traditional eviction data — which relies on court filings — generally fails to capture the 72 percent of forced displacement that occur outside the court system.
Ned Resnikoff, the policy director for California YIMBY, said he doesn’t believe there’s any reliable data yet on California’s statewide “good cause” measure that took effect in 2020, partly because some eviction moratoriums remain in effect. “But the Terner Center has found that the rent stabilization piece of [the law] isn’t being adequately enforced, so I think it’s reasonable to surmise that we might face a similar issue with just cause protections,” he told Vox.
Progressives are throwing their weight behind the fight in New York
Progressive activists have named “good cause” eviction a top priority for this year, and powerful congressional Democrats including Reps. Alexandria Ocasio-Cortez, Jerry Nadler, and House Minority Leader Hakeem Jeffries have also come out in support.
The bill would bar rent increases that exceed 3 percent of the previous rental amount, or 1.5 percent of the Consumer Price Index, whichever is higher. This could provide significant protection: Even among New York City’s 1 million rent-stabilized apartments, tenants are looking at rent increases for next year that could range between 5 and 16 percent.
New York’s bill would go further in protecting tenants than the “good cause” laws that passed on the West Coast, as New York’s proposed limits on rent increases would apply not only to old units, but also to new and future housing.
The Community Service Society of New York, a progressive advocacy group, estimates that 1.6 million New York households would be protected from eviction based on unreasonable rent increases under Salazar’s bill.
Landlords are fighting back, arguing the eviction moratorium from the pandemic already put them under severe financial strain, will lead to more backlogged court cases, and will leave them financially vulnerable in an inflationary period. The right-leaning New York Post blasted the proposed law for potentially discouraging new housing and driving existing landlords out of business.
Tim Foley, the CEO of the Building and Realty Institute, which represents Westchester and mid-Hudson region real estate professionals, told Vox his members worry it will hurt their ability to get financing to complete their projects. He pointed out that banks, including the recently collapsed Signature Bank, paused or stopped lending following the passage of New York’s 2019 state tenant protections. His organization also found repairs and maintenance in rent-stabilized units decreased after the 2019 law,suggesting there could be “unintended consequences” to the tenant rights law.
Ann Korchak, the board president of Small Property Owners of New York, a landlord advocacy group with roughly 600 members, told Vox she believes her state “already has incredibly strong tenant protections” and disagrees with advocates who say otherwise.
Salazar told Vox she sees Democratic Gov. Kathy Hochul as their biggest political obstacle, and previously indicated she’s open to making modifications to her bill. Lawmakers tried and failed to pass a similar bill in 2019, but Salazar thinks there are more elected officials now who embrace a “housing justice” platform.
Hochul, who introduced her own housing agenda earlier this year, has thus far signaled disinterest in the proposed “good cause” eviction bill, though her proposals have failed to gain traction and pressure remains for lawmakers to do something on the affordability crisis.
Evictions are life-altering and preventable
Despite research showing harms related to eviction,it wasn’t until the pandemic that the government stepped up to help families avoid this traumatic experience. One of the most significant Covid-19social policy developments was the creation of the federal Emergency Rental Assistance Program, which authorized $46.5 billion to help people stay housed. Morethan half of states passed their own eviction prevention measures as well.
But now emergency rental aid has mostly tapped out, state and local eviction moratoriums have mostly expired, and a federal bill to establish a permanent eviction prevention fund died in Congress.
Advocates say “good cause” measures, especially since they can be passed at little cost to governments, represent a meaningfulinterim step lawmakers can take now as they continue fighting for more rental assistance, source-of-income discrimination bans, and right to counsel. To make “good cause” ordinances more effective, tenant advocates say local courts and legislators must also develop stronger enforcement mechanisms, including better ways to track and analyze eviction filings and judgments. The National Low Income Housing Coalition also emphasizes the need to pass “equitable marketing strategies” that can help tenants learn how to exercise their rights.
Hepburn, of Rutgers and the Eviction Lab, said “good cause” eviction measures are worthy ideas, especially in a place like New York, which has the highest share of renters among all 50 states. Yet he noted the unfortunate reality that gaps in housing security between blue and red states continue to widen.
“These laws should happen, but it should be noted that where they’re passing are in places that have tenant protections already,” he said. “These bills are not coming up in places like South Carolina, like Virginia, like Georgia. How do we do something like this in Indiana?”
Originally published in Voxon December 2, 2022. —-
Institutional housing investors — largely, the commercial banks, private equity, and other financial entitles that flip homes or rent them out — have been the subject of conflicting media messages.
On the one hand, we’re told investors are buying up more housing than ever. In 2021, they bought nearly one in seven homes sold in the 40 largest US metropolitan areas, the most in at least two decades, according to Redfin data analyzed by the Washington Post. In the first quarter of 2022, investors comprised between one-quarter and one-thirdof home sales in Atlanta, Jacksonville, Charlotte, Phoenix, and Miami. The US House Financial Services Committee reported in June that corporate ownership of single-family rental homes has grown 3 percent annually since 2010, “with the third quarter of 2021 posting the fastest year over year increase in 16 years.”
On the other hand, housing owned by large corporate investors makes up a much smaller percentage of the nation’s overallhousing stock than is often suggested by headlines. Institutional investors, referring to entities that purchase 100 or more properties, accounted for under 3 percent of home sales in 2021 and 2022, according to Freddie Mac. So-called “mom-and-pop” investors,who own fewer properties, are growing at faster rates, and according to the National Rental Home Council, only 1.16 percent of single-family rental homes were owned by rental companies. Americans for Financial Reform estimated that as of June 2022, private equity firms owned about 3.6 percent of apartments and 1.6 percent of rental homes.
Defenders of the sector point to research showing that most people moving into single-family rentals are poorer, younger, have worse credit, have larger families, and are more likely to be single parents than their home-owning counterparts. One study published last year estimated that 85 percent of single-family rental residents would not qualify for a mortgage. Taking away these rental options, advocates warn, would just take away more spacious living arrangements for younger families who can’t yet afford to own, or might not want to even if they could.
Others say the focus on Wall Street investors is largely a scapegoat to avoid wrestling with the real culprit of the housing crisis: the dearth of available units. Sam Khater, the chief economist of Freddie Mac, cited labor shortages, land use regulations, zoning restrictions, political opposition to new housing, lack of developers and lack of land as root causes of the housing shortage. And economic research published this summer found that remote work has also increased US aggregate home prices by 15.1 percent since late 2019.
Still, with damning press and congressional investigations into corporate housing abuses, political pressure has mounted on lawmakers to step in. In August, senators heard testimony from people like Laura Brunner, the president and CEO of the Port of Greater Cincinnati Development Authority. Brunner detailed how institutional investors have upended their local housing market, and dramatically hiked rents in the process. “We’ve been told by institutional investors that they only own about 1 percent of single-family homes; however … this could mean 50 percent of the houses on a single street,” she testified. “When the geographical impact is so concentrated, it has a game-changing effect on what it means to live in that neighborhood.”
In late October, three Democratic House members from California — Reps. Ro Khanna, Katie Porter, and Mark Takano — introduced a new bill, the Stop Wall Street Landlords Act, to address these growing concerns. Senators have also been getting involved, holding listening sessions with renters and housing policy experts. A spokesperson for Sen. Sherrod Brown told me that Brown is focused on “predatory investors and landlords — particularly deep-pocketed investors taking advantage of new technologies” that price out families from homes and leave tenants with unsafe living conditions. Brown is currently working on “legislative steps to protect families and address these predatory practices,” the spokesperson said.
Khanna said he doesn’t see his new bill as a comprehensive housing solution, and stresses that lawmakers need to stay focused on fighting barriers to new housing construction, increasing housing supply, and expandingdown-payment assistance. “But we don’t need to be subsidizing institutional investors to go buy up housing in working-class neighborhoods and holding them for appreciation and turning them into Airbnbs,” he told me. “You could make an argument that it was necessary to subsidize Wall Street investors after the 2008 financial crisis when the market collapsed, but that certainly now has run its course.”
The Stop Wall Street Landlords Act, explained
The stated goal of the new House bill is to deter future institutional investments into single-family homes. It would try to do this in a few ways, including by barring corporate investors from claiming certain tax breaks like the mortgage interest deduction,and imposing a transfer tax on the sale value of new single-family home purchases.
The legislation also would bar the government-sponsored mortgage companies — Fannie Mae, Freddie Mac, and Ginnie Mae — from assisting certain large investors in financing, and would establish a new tax credit to help affordable housing developers build and rehab homes in low-income areas.
Groups representing institutional investors, unsurprisingly, have come out strongly against the bill. A spokesperson for the American Investment Council, which represents private equity companies, told Vox that “this politically motivated legislation completely misses the mark and won’t help address the real challenges in today’s housing market.”
David Howard, executive director of the National Rental Home Council, told the Mercury News he believes the bill “will only reduce the availability of single-family rental housing while making it more expensive — ultimately hurting the very people for whom access to affordably priced rental housing is so essential.”
Kristin Siglin, vice president at the National Community Stabilization Trust, a nonprofit that transfers foreclosed and abandoned properties to local housing groups, praised the bill’s inclusion of the neighborhood homes tax credit, which was also included in the Build Back Better bill the House approved last year.
Siglin told me the coalition she leads to promote the tax credit was “really pleased” to see the measure included, and commended the Stop Wall Street Landlords Act for not only including sticks in the form of ending tax preferences for corporate investors, but also carrots, like the tax credit, to increase the supply of homes to sell to owner-occupants. Right now, large corporate investors are often the only entities available with the financing capabilities to make repairs on homes. The neighborhood homes tax credit, Siglin says, can help to fill this gap, and keep more properties out of Wall Street hands.
Khanna’s office said they worked with experts including the Urban Institute to develop their bill. The Urban Institute’s government affairs manager, Victoria Van de Vate, told me she hasn’t read the Stop Wall Street Landlords Act and said her think tank does not suggest bill language or take official positions on legislation. “A team of housing researchers and I met earlier [in November] with Rep. Khanna and his team to discuss policy alternatives to increase rates of black homeownership and the role of institutional investors in the housing market,” she said. “It was a good conversation, and we always welcome the opportunity to share our research, answer questions, and provide evidence-based recommendations about policy.”
Laurie Goodman, the founder of the Housing Finance Policy Center at the Urban Institute, told me separately that she sees Khanna’s legislation as a very “punitive bill” that would deter institutional investors from buying properties in a way that would be unhelpful. The single-family rental industry does a lot of good things, she added, “all of which are ignored by the critics.” Goodman was not familiar with the neighborhood homes tax credit but argued that institutional investors play an important role in financing repairs that prospective homeowners can’t afford.
Dan Immergluck, a professor of urban studies at Georgia State University who has researched the history of institutional investors on housing markets, told me that while he hasn’t had time to closely read the bill, he does not support allowing Fannie Mae and Freddie Mac to help finance large-scale single-family rental operations unless there were “serious strings” attached, like affordability requirements. Immergluck said he’s less convinced simply making it more expensive for single-family rental operators to do business through measures like excise taxes will be effective, “because in places where they already have market power, they could pass those costs onto tenants.”
Where the corporate housing sector is likely going
What about inflation and the much-discussed housing construction slowdown sparked by rising interest rates? Increased building costs have already led to a slowdown in investor homebuying — a decline of 30 percent in the third quarter of 2022, the Wall Street Journal recently reported. Redfin also just closed its own home-flipping business, following Opendoor Technologies, another online house flipper, which just posted record losses.
Khanna told me he thinks his bill would help stabilize some of the rising rents by decreasing demand from institutional investors, which still accounted for 17.5 percent of all home sales in the third quarter of 2022. Even if institutional investors only buy up a small percentage of total housing, their presence in the bidding wars can still lead to higher costs for all buyers. And even though investor sales growth has slowed, experts expect their share of purchases to rise again soon, as builders with unsold homes look to sell to rental landlords. Plus a widely expected recession could raise unemployment and make it even harder for traditional buyers to compete with corporate bidders.
The Stop Wall Street Landlords Act will not tackle the housing shortage, Khanna acknowledged, but maintained it’s a necessary part of the legislative puzzle. “We need to massively increase housing supply, we need to figure out creative programs for first-time homeowners, and we need my new bill, which will stop the financialization of housing.”
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Rachel M. Cohen 