On April 11, 1968—50 years ago today—Lyndon Johnson signed the federal Fair Housing Act, which outlawed racial discrimination in the sale and rental of housing units. The act, passed in the wake of Dr. Martin Luther King Jr.’s assassination, represented a major advance for human freedom and racial justice. While discrimination in housing remains a problem, the act enabled many middle-class African Americans to move out of segregated high-poverty neighborhoods. The black/white residential dissimilarity index (where zero is perfect integration and 100 is apartheid) declined from 79 in 1970 to 59 in 2010.
The bad news, however, is that local governments have frustrated the Fair Housing Act by adopting “exclusionary zoning” laws that discriminate based on income—and disproportionately affect people of color. These ordinances limit housing to single-family homes and ban apartment buildings or other multifamily dwellings from entire neighborhoods. As a direct result of these policies, researchers find, income segregation is rising, ushering in what Harvard political scientist Robert Putnam calls “a kind of incipient class apartheid.” Income segregation reinforces racial segregation and is devastating for families of modest means, because where you live profoundly affects your opportunities in life, including access to good jobs, transportation, and strong schools.
Encouragingly, 50 years after the passage of the Fair Housing Act, a younger set of activists in states like California, Massachusetts, and Washington are trying to breathe new life into the act by launching a concerted attack on exclusionary zoning. These advocates are concerned about segregation, but they are leading with a different, and more politically salable, argument that appears to motivate them even more: Exclusionary zoning makes housing unaffordable.
Take, for example, California’s Senate Bill 827 to curtail exclusionary zoning in the country’s largest state. A headline in literature from leading activists suggests: “The Rent is Too Damn High and Homes are Too Expensive. SB 827 will end the shortage and create millions of homes.”
The logic is straightforward and supported by economists of all political persuasions. By artificially limiting the supply of housing units, exclusionary zoning not only segregates people by race and income, it also makes housing less affordable. Limiting the number of units of housing a builder can erect on a given plot of land limits, by government fiat, the supply of housing, making each unit, under the basic law of supply and demand, less affordable. Government-sponsored increases in housing prices are a deeply troubling phenomenon in a nation that is suffering what the Urban Institute has called “the worst affordable housing crisis in decades.”
For 80 years, since passage of the United States National Housing Act of 1937, public policy has suggested that families should spend no more than 30 percent of their pre-tax income on housing. Yet, according to a 2017 report of Harvard’s Joint Center for Housing Studies, 33 percent of American renters and homeowners pay more than that. Renters are particularly stretched. Nearly half of all renters (21 million Americans) spend more than 30 percent on housing. In fact, about a quarter of renters in the United States (about 11 million families) spend more than half of their incomes on housing needs. Overall, home prices have been rising twice as fast as wages. U.S. homeownership in late 2017 was near a 50-year low at just 63.9 percent.
When considering how to respond to affordability issues, many Americans naturally think about increasing government support to subsidize public housing. That impulse is basically right: Government-supported public housing will always be critically needed. But it is also important to dismantle hidden government policies, such as exclusionary zoning, which are themselves a major source of the affordability crisis in the first instance.
In California, Governor Jerry Brown signed 15 pieces of legislation in 2017 designed to speed construction and drive down housing prices. Currently, the legislature is considering SB 827 to override local zoning restrictions in order to allow taller buildings near mass transportation stops. In Massachusetts, Republican Governor Charlie Baker has proposed incentives for cities to relax exclusionary zoning rules, and the legislature is debating an effort to outlaw exclusionary zoning altogether. In Seattle in recent years, former Mayor Edward Murray backed an aggressive Housing Affordability and Living Agenda that would challenge the prevalence of exclusionary zoning in the city. The effort suffered a setback after the mayor was embroiled in a personal scandal and resigned from office, but activists are hoping to keep the discussions alive.
As I outline in a new report for the Century Foundation, affordability issues have been central in each of these campaigns, which represents an important shift. Historically, efforts to curtail exclusionary zoning have emphasized that such policies foster racial and economic segregation. In litigation in New Jersey, for example, the NAACP was the lead plaintiff in challenging the town of Mount Laurel to open up its borders to low-income and minority residents who were shut out by zoning policies. In all three new campaigns against exclusionary zoning, the moral arguments about civil rights, segregation, and inclusion remain important considerations, but new arguments about affordability and environmental concerns have moved to the forefront. In this way, the effort to curtail exclusionary zoning is gaining new political allies and giving new life to the possibility of completing the unfinished business of the 1968 Fair Housing Act.
California is the epicenter of this new movement. As a liberal state, California would appear ripe for an attack on exclusionary zoning, but what has really brought the issue to the forefront is a major affordability crisis. The median home price in the state is more than $500,000, double the national average. In San Francisco, two-thirds of homes are now valued at more than $1 million. Of the ten most expensive real-estate markets in the country, seven are in California. Census figures show that one-third of California’s renters pay more than half their monthly income on rent. In San Francisco, “we’re on our way to becoming the nation’s first exclusionary city,” says Brian Hanlon, executive director of California’s Yes in My Backyard movement (CAYIMBY), a nonprofit group that fights exclusionary zoning.
These high prices are entirely predictable. California cities are in high demand and are fenced in from expansion on one side by the Pacific Ocean. But beyond that, California has extensive exclusionary zoning. In more than half the land in both the Bay Area and the Los Angeles metropolitan region, single-family homes constitute 90 percent of housing.
For years, political forces allied in favor of exclusionary zoning were considered unbeatable in California and across the country. Civil rights groups and affordable housing advocates might complain about exclusionary zoning, but property owners held considerable sway among politicians and could never be crossed. Equitable development of housing might be advocated in principle, but the reigning ethos was Not in My Back Yard (NIMBY).
But the housing affordability crisis in California and other states may be reshuffling political priorities and creating new political allies to oppose exclusionary zoning. In parts of California, the housing crisis is hitting an enormous portion of the population. Among upper-middle-class millennials, Hanlon says, the question is: “I went to a good school and can’t afford rent? WTF?” These people, says Hanlon, are the backbone of his group, YIMBY.
Allied with these millennials are employers in the tech industry who are having trouble recruiting and retaining employees given astronomical housing prices. YIMBY is backed financially by many leaders in the tech industry. More than 100 CEOs of technology companies have written in support of legislation to reduce exclusionary zoning, arguing, “The lack of homebuilding in California imperils our ability to hire employees and grow our companies,” in part because “the housing shortage places a huge burden on workers, many of whom face punishingly long commutes and pay over half of their income on rent.”
Many (though not all) environmentalists are also supportive of reforms that reduce exclusionary zoning and increase density. Suburban sprawl means longer commutes, more cars on the road, and more greenhouse gas emissions. Moreover, as a general rule, apartments are easier to heat and cool and are more energy-efficient than single-family homes.
Developers are also generally supportive of efforts to reduce exclusionary zoning, Hanlon says, though less emphatically than one might expect. The biggest developers are those who flourish under the existing rules where “political access is your competitive advantage,” he notes. Reducing exclusionary barriers will mean more projects for all developers, but the biggest boon may not accrue to some of the current developers who make their money because they know how to navigate the system.
Traditional liberal groups are also generally supportive of efforts to reduce exclusionary zoning. Labor unions have an interest in speeding development to create jobs in construction. Affordable housing advocates generally recognize that reducing barriers to construction and increasing supply will contain price increases. And civil rights groups have long seen the ways in which exclusionary zoning has increased segregation.
Last year, these various groups came together and achieved some modest successes. In September 2017, Governor Brown signed a package of bills to speed housing development and therefore curb housing costs. One such bill was SB 167, backed by YIMBY, which makes it easier to sue cities that drag their feet on development. Small steps forward—like easing restrictions on “granny flats” (small living units adjacent to larger homes)—resulted in a twenty-fold increase in applications to build such units in Los Angeles.
The newest, and most far-reaching, attack on exclusionary zoning is SB 827, authored by Democratic State Senator Scott Wiener of San Francisco. As originally drafted, the bill would have eliminated zoning restrictions for developers who wish to build apartments up to 85 feet tall (about eight stories) within a half-mile of train stations and a quarter-mile of high-frequency bus stops. According to the McKinsey Institute, if local governments rezoned areas within half a mile of transit stops, there would be room for California to build almost three million new housing units by 2025.
By focusing on development near transit, Wiener is seeking to merge the affordability and environmental concerns so pressing for many Californians. The bill has received extravagant praise from some quarters. For example, Boston Globe columnist Dante Ramos said SB 827 “may be the biggest environmental boon, the best job creator, and the greatest strike against inequality that anyone’s proposed in the United States in decades.”
In California, not everyone, including some on the left, are as supportive. Some social activists are understandably concerned that new development alongside transit stops could accelerate gentrification and displacement—a legitimate concern that Wiener pledged to address as the bill moved forward. Likewise, in a particularly surprising move, the Sierra Club has raised concerns that the requirement for development near transit stops could backfire and spur a backlash against public transit. Hanlon says the bill is opening a generational split between older environmentalists, who want population limits and preservation of the status quo, and younger environmentalists whose primary concern is climate change.
The biggest opponents of SB 827, says Hanlon, are conservative advocates of local control, and wealthy communities which now exercise exclusionary policies. The bill suffered a serious setback when Los Angeles Mayor Eric Garcetti and the Los Angeles City Council recently came out in unanimous opposition to the original version of the legislation, arguing that many of the city’s neighborhoods of single-family homes would lose their character if the bill is enacted.
But Hanlon says there is also potential new support from an unlikely source—legislators in exurban areas who represent constituents sick of long commutes. These legislators, he says, would like nothing more than to stick it to wealthy white liberals on the coast who drive Teslas and say they are concerned about the environment and inequality but are unwilling to make room in their own neighborhoods for apartments.
Action on the bill is expected by the fall of 2018. Local governments along the coast have been firmly opposed, but for Hanlon, having a major debate over curtailing exclusionary zoning is itself a big step forward—something that “would have been unthinkable” just a few years ago.
In a new development, Wiener announced yesterday a few amendments to accommodate some of the concerns raised by the bill’s opponents. In response to objections from city officials, the amended legislation would allow cities to restrict buildings near rail and ferry transit stops to four or five stories—not the eight stories of the earlier bill. Near heavily trafficked bus stops, height increases will not apply at all, though other density requirements will remain. And to accommodate activists worried about gentrification and displacement, the bill will require all new projects larger than ten units to set aside some housing for low-income residents.
The California experience demonstrates the ways in which advocates for fairness, inclusion, and affordability are navigating the politics around exclusionary zoning. The enduring arguments about the need to address discrimination and segregation—the motivation for passage of the 1968 Fair Housing Act—remain with us. But as millennials grow as a proportion of the population, a new set of arguments around affordability appears to be increasing in salience. When large swaths of the American public—not just the poor and disadvantaged—are finding housing unaffordable, political leaders will have to revisit exclusionary policies that are at once a familiar part of the background of American life and also deeply discriminatory and destructive.
Meanwhile, at the federal level, there is new evidence that homeowners may have loosened their iron grip on public policy decisions, even with conservatives in charge of all three branches of government. In the recent federal tax legislation that passed both houses of Congress and was signed by President Donald Trump, homeowners took two major hits. The cap on the mortgage interest deduction was lowered from $1 million to $750,000 mortgages, and the ability to deduct property taxes, previously unlimited, was capped at $10,0000. Although Republicans were motivated in part by a desire to punish residents in high-tax, blue states, the move to negatively impact wealthy interests was nevertheless surprising. These longtime subsidies for upper-middle-class homeowners, The Washington Post noted, were “once thought untouchable.”
If the politics of blue-state housing has changed among conservatives at the federal level, it seems at least possible that in liberal states, a new coalition of interests could effectively question exclusionary housing policies, particularly in regions where rent has skyrocketed and efforts to restrict housing supply are unsustainable. Advocates in California, Massachusetts, and Washington may be paving a new path that will allow, at long last, policymakers to finish the work begun by the architects of the Fair Housing Act a half-century ago.
This article is adapted from a Century Foundation report, “Updating the Fair Housing Act to Make Housing Affordable.”