As a lifelong resident of Gilroy (since 1964!) whose family comes from farming throughout Santa Clara County, I’ve lived through the change of our once prevalent orchards to today’s Silicon Valley. As Silicon Valley developed and job opportunities soared, so did the cry for housing.
Understandably, people protective of their existing neighborhoods as housing demand grew encouraged their elected representatives to go against market demand and deny housing developments. I saw first-hand that Gilroy was no exception, having served on the Planning Commission from 1992-1999. Sadly, however, such action caused what basic economic principles have taught us all along, that limiting supply in the face of demand serves only to increase the value of what’s in demand.
The process of the State’s certification of each city’s Housing Element every eight years (an element within each city’s General Plan) has become the mechanism by which local jurisdictions are measured for compliance with the State’s housing goals, a step that aims to increase housing production and presumably to correct cities at fault for setting contrived growth limits regardless of housing demand. The certification process, however, sets its own housing limitations by placing artificial numerical targets on housing mandated to sell or rent by category of household earnings as a percentage of each County’s Area Median Income (AMI).
Furthermore, these artificial targets in the name of solving a statewide housing affordability problem ignore the primary roadblock to making housing affordable in California, which is the State’s inaction to reduce building costs. Building housing at market costs but with below-market “affordable” ceilings on sale/rent prices causes a feasibility problem for construction, which also leads to limited supply.
Housing of all types will always be more affordable the farther away from job centers and viable transportation services. Gilroy is the most affordable place to live in Santa Clara County for that reason. Unfortunately, we have not shared in the employment surge of Silicon Valley, and our residents don’t have access to public transportation viable for commuting. In our case, adding housing through mandates does less for the welfare of our own residents and more to entice those looking to move to Gilroy to get more for their housing dollar. In turn, this causes Gilroy to become a bedroom community that burdens our city services without the means to fund a larger workforce, and also exacerbates traffic congestion by adding more commuters where viable public transit services don’t yet exist and job centers are out of the area.
The State’s forced housing numbers by type cause local jurisdictions to have too much of one type and not enough of another. Due to Federal tax credits for low-income housing, Gilroy has met over 400% of our housing allocation in the category of Low Income in this last 8-year cycle. However, we’ve met only 66% in the category of Very Low Income because we’ve received so few applications to build due to lack of economic feasibility.
If our state is serious about housing production that meets demand, then remove forced housing targets and let market demand drive the numbers of apartments, condominiums, townhomes, duplexes, triplexes, four-plexes, single-family homes and accessory dwelling units. If our state is serious about reducing housing prices, then lessen the roadblocks to economic feasibility caused by state legislation. Leave authority with local jurisdictions who are the best equipped to balance housing, jobs and transportation within their communities.
Limit state intervention to minimum land zoning standards for all housing types and densities within each jurisdiction, and to ensuring that all jurisdictions plan for future neighborhoods that avoid segregation by including a mix of housing that considers necessary amenities for complete neighborhoods. State mandates seeking to reduce or eliminate single-family zoning in hopes of replacing it with high density housing will instead bring skyrocketing prices for single-family homes and foster a more segregated society.
Rest assured that continued efforts to artificially limit supply will raise the price of what’s being limited, creating in this case a benefit to those who already own a single-family home (and their heirs) at the expense of those who never will. We’ve come so far with attitudes that strive to reduce segregation and disparity; it’s disheartening when legislation meant to provide opportunity for all comes with consequences that put opportunity for some further out of reach.
As of June 30, 212 jurisdictions in California (about 40%) are still being told that their Housing Element does not yet comply with State Housing Element Law. With 40% of California jurisdictions still in “non-compliance” since first submitting their Housing Elements by Oct. 31, 2022, one has to question the State’s “one-size-fits-all” solution to increasing housing production, which brings a multitude of unintended consequences to local jurisdictions trying to balance the needs of their communities.
Marie Blankley, CPA is the mayor of Gilroy. This article contains excerpts from Blankley’s July 31 interview with Opportunity Now.
