Exploring the Effectiveness of Tenant Protections in Silicon Valley
Using the Silicon Valley region as a case study, this policy brief explores the impacts of tenant protections, specifically rent regulation and just cause for evictions protections, on residential displacement. The brief builds on key findings from a recent working paper by UDP partners Jackelyn Hwang (Stanford University) and Bina Shrimali (Federal Reserve Bank of San Francisco) to discuss implications for future anti-displacement policy-making focused on tenant protection.
Key implications include:
- Tenant protections are helpful in mitigating displacement; for vulnerable populations, tenant protections might be essential to their housing stability. In East Palo Alto, as compared to similar cities without protections, out-migration rates decreased following amendments to rent control and just cause for eviction policies that expanded the coverage of these protections. Additionally, average low-credit-score renters moving from blocks with tenant protections were more likely to move to areas with higher socioeconomic status, which may suggest a higher probability of planned moves as opposed to involuntary displacement.
- Policy design matters. For example, even though San Jose has had some rent regulation in place since 1979, their out-migration patterns were similar to cities of similar demographics without tenant protections. In 2016, the policy was amended to lower an 8 percent cap to a 5 percent cap, and in 2017 the policy was amended to include just cause for eviction protections. However, the effects of this amendment were likely not captured in this analysis because the data did not extend beyond 2018 at the time of the analysis. The out-migration rates observed may be due to elements of the pre-amendment policy, including the high 8 percent rent control cap, rent control not being paired with just cause for evictions protections, or both.
- Relatedly, while statewide anti-gouging is a first step, more stringent tenant protections at the jurisdiction level may be necessary to truly promote greater housing affordability and stability. While anti-gouging will be a critical stopgap measure in individual cases, policies that look more like anti-gouging in terms of their rent caps, like San Jose’s pre-2016 8 percent cap policy, might not have a stabilizing impact at the neighborhood level.
SB 50 in the Bay Area
In this policy brief, we analyze the potential impact of SB 50 on financially-feasible housing production capacity in the Bay Area for both market-rate and inclusionary affordable units, focusing on the impacts of modifications made to the bill since SB 827. Specifically, we examine how changes to the inclusionary housing provision, and the addition of the sensitive communities and high-opportunity/commute-reducing geographies, impact the distribution of additional housing capacity across different types of neighborhoods. Notably, the policy lacks a clear definition of “job-rich” areas, so we consider the high-opportunity and commute-reducing geography created by UC-Berkeley's Haas Institute for a Fair and Inclusive Society, Terner Center for Housing Innovation, and the Urban Displacement Project, as well as California Housing Partnership. Note: All findings are based on March 11, 2019 bill language.
In examining SB 50’s impacts on new housing capacity, we found potential benefits:
- SB 50 could quadruple overall market-feasible capacity in the affected geography.
- SB 50 could quintuple capacity for on-site inclusionary affordable units, including in higher resource areas. However, given that the bill language provides the option to pay in-lieu fees instead of build affordable units on-site, further clarification is needed to ensure that off-site inclusionary units get built nearby.
- The incorporation of a high-opportunity and commute-reducing geography in SB 50, which expands the policy geography beyond SB 827’s transit-oriented upzoning, could help target market-feasible capacity to higher resource areas, and could shift the share of added capacity under SB 50 away from low-resource neighborhoods and toward higher resource neighborhoods.
We also found that the bill still had room for improvement:
- While the provision for delayed implementation in “sensitive communities” would primarily apply to communities that are at risk of or undergoing gentrification, this geography could be better targeted since many gentrifying and at-risk neighborhoods are not covered by the current definition of sensitive communities. It is important to clarify the goal of this provision and ensure that neighborhoods with displacement pressures have time to plan for and implement anti-displacement strategies.
- Our analysis considered a definition of a high-opportunity and commute-reducing geography that effectively targets higher resource areas, shifting the proportions of overall added capacity under SB 50 away from lower resource areas. In order to ensure the bill delivers on its fair housing goals, a definition like this one should be adopted in bill language.
- Under the current bill language, developers may opt for in-lieu fees even where on-site affordable units are financially-feasible, potentially resulting in reduced inclusionary development in higher resource neighborhoods. If fair housing and increasing the number of affordable units in high-resource neighborhoods is a policy goal of the bill, further clarification is needed to ensure that off-site inclusionary units get built nearby.
- Overall, policy details matter, and a key point of improvement for the bill will be to more clearly outline how redevelopment restrictions will be enforced given the lack of a rent registry. Without clarity on implementation of this provision, it will be difficult to actually prevent upzoning-related demolition of rental properties.
- Additionally, while the current bill would theoretically protect renters from direct displacement from demolition, indirect displacement pressures resulting from potential increases in land and housing prices could still pose significant risk to existing and future low-income residents. These risks should be addressed by passing stronger statewide tenant protections, and exploring other strategies to prevent indirect displacement.
Safeguarding against Displacement: Stabilizing Transit Neighborhoods
"Safeguarding against Displacement: Stabilizing Transit Neighborhoods," by Miriam Zuk, Anastasia Loukaitou-Sideris, and Karen Chapple, is the final chapter in Chapple & Loukaitou-Sideris's recent book, "Transit-Oriented Displacement or Community Dividends? Understanding the Effects of Smarter Growth on Communities."
The chapter reviews the practice literature on anti-displacement policy strategies, and highlights that little research on the effectiveness of different policies exists. The chapter then groups the range of anti-displacement strategies into four overarching categories— (1) production of affordable housing, (2) preservation of affordable housing, (3) neighborhood stabilization, and (4) prevention of commercial displacement— and summarizes a suite of policy options within each, focusing on examples where these strategies have been tied to transit investments or targeted to TODs.
Read the chapter here.
Download the full book here.
In the lead up to the Proposition 10 vote in California, we asked: what is the demand for rent control in the Bay Area? And what does the actual coverage of rent control in the Bay Area look like today? How could it have expanded on November 7th, if voters approved Proposition 10 on the November 6th ballot? While Proposition 10 did not pass, the findings of this brief, and the conclusion that Proposition 10 would have made sense for the Bay Area are still relevant to ongoing policy conversations. Many more tenants could have been protected from rent hikes if Proposition 10 had passed. Renter protections are a key component to any suite of solutions to address the displacement crisis inflicting the region, which has resulted in further segregation and exclusion for the region’s most vulnerable residents. It is imperative for policymakers, however, to prevent the unintended consequences of rent control (i.e., deferred maintenance and landlords removing units from the rental market) with creative policies that ensure an inclusive future for the region.
Download the policy brief.
- Today, around three quarters of all renter households – approximately 885,000 - in the Bay Area are not protected from rent hikes, and most of these households are also unprotected from no-cause evictions. Around 41% of the households not protected by rent control are families with children.
- Proposition 10 could result in a significant expansion of rent control to cover tens of thousands more tenants in cities that have already passed these policies, especially for tenants in single-family rentals. Over the last ten years cities like Oakland, Richmond, Mountain View, and San Jose have seen a large uptick in the share of single-family homes being used as rentals.
- In terms of covering “newly constructed units” in some form of rolling inclusion such as that proposed in Berkeley’s Measure Q, we find the potential impact of extending rent control to single-family rentals would have a larger impact than modest changes to the new construction cut-off year, possibly due to low production rates in the last half of the 1990s. However, instituting rolling cut-offs could provide significant coverage into the future, especially as cities have begun to increase multi-family housing production and hopefully will continue to do so.
- It is challenging to estimate both the exact number of rent-controlled units, and the prevalence and magnitude of extreme rent hikes due to severe data limitations. Both of these facts point to the need to establish better data collection systems, which would allow jurisdictions to better assess the problems and tailor policies to address them, while increasing transparency along with other potential benefits.
Senate Bill 827 (SB 827), introduced by Senator Scott Weiner in early 2018, aimed to rezone areas near high-frequency transit across the state to make it easier to build more densely. We partnered with our colleagues at MapCraft.io to better understand the potential implications of SB 827. Using Mapcraft.io’s development feasibility calculators for the Bay Area, we focused on trying to understand what kinds of neighborhoods would have been affected by SB 827, how much new housing capacity would have been added in different types of neighborhoods, and where communities might have expected demolitions pressures on existing units. We looked at neighborhood type in two ways – our UDP typology for gentrification and displacement, and the Fair Housing Task Force typology for neighborhood resource level.
- Nearly half of the developable land in the Bay Area that would have been subject to SB 827 was in areas experiencing gentrification and displacement pressures or that were at risk of gentrification, while only 11% of the total acres covered under SB 827 were in areas considered more affluent or exclusive enclaves.
- Looking at financially-feasible development capacity (not just physical capacity allowed under zoning), the added capacity under SB 827 roughly mirrors the same geographic distribution of the capacity under current conditions: about 60% of the net new financially-feasible unit capacity would have been located in low-income and gentrifying areas.
- Our closest measure of potential direct displacement is based on places where construction of financially-feasible development capacity would require demolition of existing non-rent-controlled units. Over 65% of potential residential demolitions would have occurred in low-income or gentrifying neighborhoods.
- When compared to development potential under today’s policies, SB 827 would have produced a six-fold increase in financially-feasible market-rate housing capacity and a seven-fold increase in financially-feasible inclusionary unit capacity - affordable units that would be required under the bill’s inclusionary housing stipulations.
- Looking at neighborhood resource levels, SB 827 would have increased financially-feasible development potential for market-rate units six-fold in the high and highest resourced areas of the region (from 130,000 units to about 820,000 units).
- SB 827 could have significantly increased capacity for inclusionary affordable units in the high and highest resourced areas (from 24,000 to 163,000 units). The greatest increase in capacity for inclusionary units would have been in moderate resource neighborhoods – from 20,000 to 139,000 units.
In many built-out neighborhoods experiencing gentrification pressures, there may be little room for new developments. Therefore, strategies for preserving naturally occurring affordable rental units are needed to counteract displacement forces in these communities. Rent control is perhaps the most well-known strategy used to control the price of non-subsidized rental units.
- As of February 2016, only six cities in the Bay Area had some form of rent control or stabilization in place, and no jurisdiction had passed a rent control policy (that was not repealed) since 1985. This low number has since increased with the recent passage of rent control programs in Richmond and Mountain View.
- The cities that have this policy in place have less turnover in their renter populations, indicating that rent control can be a contributor to greater residential stability.
- State law, primarily through the vacancy decontrol provision, limits the effectiveness of rent control policies. Rent control is most effective when paired with other tenant protections, like just cause evictions policies.
Note: This policy brief is up-to-date as of February 2016.
Inclusionary housing policies aim to increase the stock of affordable housing at a minimal cost to the city, concurrent with development, and in the same neighborhoods as market-rate housing. Inclusionary housing usually takes the form of a zoning requirement placed on developers of new market-rate housing. In this policy brief we discuss the basics of inclusionary housing policies, including their prevalence in the Bay Area, California, and nationally, and analyze their effectiveness.
- Inclusionary housing policies are widespread in the Bay Area, California, and nationally.
- The policies produce many units, but these supply only a small fraction of the total need for affordable housing.
Note: This policy brief is up-to-date as of February 2016.
When multifamily rental housing is converted into condominiums, the reduced rental housing stock may mean the loss of units that were affordable to low-income households. For this reason, many cities have implemented controls on such conversions. This policy brief gives an overview of these policies.
- Condominium conversions were popular in the 1970s and briefly in the 1980s, but experts say they are not as much of an issue now.
- Policies to limit conversions may focus on helping tenants as a building converts (procedural ordinances) or on limiting how many conversions may occur (substantive ordinances).
- Loopholes in conversion ordinances limit their effectiveness.
Note: This policy brief is up-to-date as of February 2016.
Upzoning Under SB 50
This brief presents an explanation of the local factors that will influence the implementation of upzoning policies in California. Upzoning occurs when the zoning code that governs a parcel of land is relaxed to allow for greater building height or density: this can increase housing supply by making it possible for developers to build more units on a piece of land than they were previously allowed. Taking Senator Weiner's SB 50 as a focal point, this brief provides stakeholders with a more nuanced look at how SB 50 could impact the development calculus faced by real estate developers in certain types of neighborhoods. This brief is also accompanied by an interactive map that classifies clusters of neighborhoods based on their current characteristics and potential impact that SB 50 and other upzoning legislation would have on them.
- SB 50 will unlock development potential around high-quality transit sites, and that there is signifiant promise to converting vacant and/or underutilized parcels into housing.
- SB 50 on its own does not remove all the constraints to development on a parcel, and there needs to be other limitations on setbacks or daylight planes to ensure that if a parcel does attract new development, it maximizes new supply.
- The likelihood of new developments "penciling out" varies significantly across neighborhoods and their unique housing market conditions.
Defining Sensitive Communities Under SB 50
In the March 2019 version of Senator Weiner's SB 50 legislation, the bill proposes a delay to implementation of upzoning provisions in "sensitive communities" for five years to allow these places to opt-in to a community-led planning process. This measure was intended to address inequities that have resulted from previous urban policies that have created higher-poverty, racially segregated neighborhoods. This brief analyzes the geographic coverage of communities that fit the March 2019 SB 50 "sensitive communities" language and presents analyses of two alternative metrics as comparison points of geographic coverage (SB 535's "Disadvantaged Communities" and US Department of Housing and Urban Development's "Racially/Ethnically Concentrated Areas of Poverty"). This brief is accompanied by an interactive map, which allows stakeholders to see how the different definitions play out in their own communities.
- Identifying sensitive communities is difficult, and any potential empirical definition of "sensitive communities" under SB 50 will come with tradeoffs.
- Regional definitions of sensitive communities may be better suited to capturing local conditions but would add administrative complexity.
- Clarifying the goal of the "sensitive communities" provision is important and beyond definitions, policymakers should articulate implementation goals that build the capacity of places to develop local plans.
- Policymakers should also explore other ways to balance the goals of tenant protections and adding new housing supply.