From: "Stroshane, Timothy" <TStroshane at ci.berkeley.ca.us> Date: Thu, 8 Jun 2000 17:33:41 -0700
>Brad De Long wrote:
>
>>Powerful land use restrictions limiting higher density development?
>
>Won't work in Manhattan.
>
>Doug
Brad De Long brings up an excellent point about land use controls in shaping housing markets. There are numerous studies of how zoning and land use planning help to shape housing markets, not only from the standpoint of price, but in terms of what effect price has on WHO gets to live there. See Rolf Pendall's excellent preliminary study of this phenomenon in the latest Journal of the American Planning Association.
I am a housing planner in Berkeley. I'm just finishing our Housing Element. I circulated the Krugman article to a number of people around the City, including the director of the rent stabilization program here.
>From 1980 to 1995, Berkeley had a "strong" form of rent control, in which
controls were maintained on vacant as well as occupied units. But before
that, what was the impetus for rent control in the first place?
Skyrocketing rents of course. Whenever rent control is instituted, there's
usually a prior condition leading up to it. I realize, of course, that for
economists this can be a difficult thing to grasp.
Nonetheless, in Berkeley there had been a huge apartment boom in the 1950s and 1960s. The city's neighborhoods, particularly those surrounding the university, had been zoned for densities much higher than had originally been developed at the turn of the century. With the university expanding, some property owners began tearing down lovely Victorians and craftsman-style houses (most of which had already been subdivided internally into multi-unit buildings) and redeveloping their lots with 20, 30 or even 50 unit buildings in some cases. By the late 1960s (around the same time as People's Park, etc.) many people in Berkeley were fed up with the destruction of Berkeley's architectural heritage, and they revolted. In 1970, an ordinance was passed that effectively banned demolition of residential property and set off a move to downzone (that is, reduce the allowable densities on residential lots) great swaths of Berkeley.
The consequence? from a peak of over a thousand new units a year in the 1960s, Berkeley's housing unit production virtually fell off a cliff: a handful of new units each year on average throughout the 1970s. Small wonder then that rent control was passed by the voters in 1979 or 1980.
So Krugman's article is easily found annoying and wrong by virtue of being ahistorical. High rents are usually a pre-existing condition for rent control.
Incidentally, since 1990, Berkeley rents took a serious hit. In 1990 we had over 10,000 units that had rent ceilings at or below $400 a month. But after a pro-landlord majority loosened the program's regulations and increased rent ceiling adjustments, by 1996, there were less than 1,000 units with rent ceilings under $400. Then in 1995, the state legislature pre-empted vacancy controls to itself (preventing municipalities to control rents on vacant units without state consent), and rents on vacant units have jumped, beginning in 1999. And now the world is hearing about San Francisco's (and Oakland's and Berkeley's) housing crises.
And, as economist/planner David Dowall of UC Berkeley has shown in a 1984 book on the Bay Area, land use controls restricting residential densities REGIONALLY compound the housing shortage here as well as exacerbate our legendary traffic commutes. The commutes ruin our air quality (which is still lovely, but the Bay Area has been a nonattainment area under the Clean Air Act since 1998 -- during the recession in the early 1990s, our region actually became an attainment area, but lost it when the boom took off). And on and on.
In sum, the way land use controls shape markets for land can have profound effects over time on the cost of housing, including the cost of developing housing.
Doug's discussion of rent control weirdnesses happens here too. Basically, controls on occupied units constitute a large part of Berkeley's "affordable" housing programs. Despite having a couple of million to provide developers to build new housing here, we can't build it fast enough to make a dent in rents.
Tim Stroshane Associate Planner City of Berkeley Housing Department <tstroshane at ci.berkeley.ca.us>