Submitted by Peter MacDonald
In the May 10, 2024 Pleasanton Weekly, Councilmember Julie Testa cheered a recent lower court decision holding it was unconstitutional for the state to mandate that cities rezone for higher-density housing.
According to that judge and Ms. Testa, housing cannot be considered affordable unless inclusionary rent controls keep the units affordable. (That bizarre opinion will almost certainly be overturned by the California Supreme Court.)
Both Ms. Testa and the judge cannot conceive of market-rate housing that is affordable without rent controls. And yet, most of the country has housing that is affordable to most of its population without rent controls. In 1970, California housing was more affordable than housing nationally.
What changed was that, starting in the 1970s in California, laws like the California Environmental Quality Act and judicial support for growth controls gave California local governments unfettered control over housing supply. Gradually, unfettered local control over housing supply led to California having the most expensive housing in the nation (and much lower living standards than should be for the next generation).
Finally, between 2016 and today, the State Legislature gave up on local control and mandated local governments to rezone lands for housing and especially for higher density housing.
Inclusionary rent controls are the problem, not the solution to housing affordability. Ms. Testa and the wayward judge confuse affordable housing with subsidized housing. When inclusionary rent controls require lower rents on portions of new housing construction, that is subsidized housing, with the subsidies coming directly from higher rents on the remaining units.
Housing production then stops until rent levels rise enough to cover those subsidies, creating tremendous negative leverage. According to a study I did in the year 2000, market-rate housing consumers pay $13 in higher housing costs for every $1 dollar of rent subsidy created by inclusionary rent controls.
New construction is always more expensive than existing buildings, but typically higher quality. The extra cost burden of the inclusionary rent controls make most new housing uncompetitive with existing housing, destroying housing supply. Pleasanton’s anti-housing council policies drove new housing production down to 18 housing units total in 2023, a growth rate of 0.06 of 1%; somewhat less than our fair share of the regional housing needs.
Perhaps to keep the runaway growth under better control, Ms. Testa and the rent control majority on the Pleasanton City Council recently voted to increase the inclusionary rent control requirement on new housing from 15% to 20% of new units.
To really make Pleasanton housing more affordable to the next generation, our children, we need to build smaller housing units in quantity, without rent controls. Pleasanton forces developers to build 3,500-square-foot McMansions when what we need is a surplus of new 1,500-square-foot, three-bedroom units.
A mandate to make 25% of new apartments 650 square feet or less, creating an oversupply of basic one-bedroom apartments, would not cost the developer a penny in rent subsidy, but all rents would get pushed downward. Control unit sizes rather than housing prices to unleash housing supply that is affordable by design.
Our children can have affordable market rate housing. Unit-size zoning can be implemented locally consistent with the state housing mandates. For enlightened housing policies that Pleasanton could implement, please read “The 2014-2022 RHNA Cycle: A Catastrophic California Housing Policy Failure” by me online at www.macdonaldlaw.net.
Editor’s note: Peter MacDonald is a retired land use attorney from Pleasanton. He has a B.A. in economics, an M.S. in urban planning and J.D. in law. He was city attorney of Pleasanton from 1982 to 1988 and is a past president of the Pleasanton Chamber of Commerce.
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