Study finds state housing targets for S.D. are too high

Several San Diego cities have complained over the past year that state-mandated housing targets are unreasonably high.

New research may bolster their argument.

The Embarcadero Institute has conducted a handful of studies that raise questions about policies in the Legislature to boost market-rate housing and the data used to justify them.

The small, Palo Altobased think tank’s latest report released this month contends a 2018 law that established the housingneeds formula used an incorrect vacancy rate and inadvertently doublecounted data that skewed the projected demand upward.

As a result, the report says the state’s calculations overestimate the housing need in California’s four most populous regions — including San Diego County — by more than 900,000 housing units over the next decade.

According to the institute’s calculations, San Diego County would need 112,000 homes by 2030 instead of the nearly 172,000 in the state’s updated Regional Housing Needs Assessment, commonly referred to as RHNA.

The state says the Bay Area, Sacramento region, San Diego County, and the remainder of Southern California including Los Angeles, need 2.11 million more homes during that period. The institute’s number crunching says it should be 1.17 million.

That’s a pretty explosive conclusion in the intense world of housing policy, which in recent years has been driven by the notion that loosening zoning restrictions will increase density, boost supply and, ultimately, moderate California’s sky-high housing prices.

While the institute points to what it says is the state’s big math problem, the researchers expressed concern that it not overshadow the affordability issue in those four regions.

“Inaccuracies on this scale mask the fact that cities and counties are surpassing the state’s mar

ket-rate housing targets, but falling far short in meeting affordable housing targets,” the report says. “The inaccuracies obscure the real problem and the associated solution to the housing crisis — the funding of affordable housing.”

As in an earlier study, the Embarcadero Institute notes state financing for low-cost housing has fallen dramatically over the last 10 years.

UCLA professors Paavo Monkkonen, Michael Manville and Spike Friedman said in a paper published last year that RHNA lacked enforcement mechanisms to make sure affordable housing is built, according to a January article by Gustavo Solis of The San Diego Union-tribune.

“RHNA only requires that cities demonstrate, in their plans, that they have space that can potentially hold the needed incomerestricted houses,” the report states. “But nothing in the law ensures that any income-restricted housing will actually be built, nor

that these potential sites of income-restricted housing must actually be reserved for that purpose.”

The result of that policy, according to the paper’s co-authors, is that many cities didn’t build low-income housing and those that did end up carrying a disproportionate share of affordable housing, which exacerbates inequality.

Local jurisdictions now face the increasing prospect of fines and lawsuits for not meeting housing goals.

Solis wrote that cities including Coronado, Lemon Grove, Imperial Beach, National City and Solana Beach unsuccessfully pushed for what they considered to be a more equitable apportionment of the nearly 172,000 units.

“The state’s approach to determining the housing need must be defensible and reproducible if cities are to be held accountable,” the Embarcadero study says.

The report says Senate Bill 828 by state Sen. Scott Wiener, D-san Francisco, which was approved in 2018, created a housing-need formula that was flawed in several ways.

A big one, according to

the study, is the legislation used a 5 percent vacancy rate as a “healthy” standard. The report said that is correct for rental housing but not owner-occupied housing, which has hovered around 1.5 percent in the United States since the 1970s, according to U.S. Census figures.

Only briefly did homeowner vacancy rise to 3 percent during the Great Recession.

“However, 5% is well outside any healthy norm,” according to the report.

The institute also said legislation wrongly assumed the state Department of Finance housing projections did not include housing overcrowding and cost burden, which is when a household spends more than 30 percent of its income on housing. So, those were added to SB 828.

“Unfortunately, SB 828 has caused the state to double count these important numbers,” the report says.

RHNA is updated every five to eight years, and the current housing targets are a substantial increase over the previous round.

Last year, Gov. Gavin

Newsom said California actually needed 3.5 million homes by 2025, yet the state Department of Housing and Community Development had the figure at 1.1 million. The Embarcadero Institute pointed out that inconsistency and, according to its own research, said the number was closer to 1.5 million.

Nobody disputes there’s a housing-affordability crisis in California and that

it’s multifaceted. A Los Angeles Times analysis found that the average cost of a government-subsidized unit for low-income residents is about $500,000 — a price tag that has grown 26 percent over the last decade after adjusting for inflation.

The cost of land, construction materials and labor play a big part in that, but so do layers of bureaucracy and regulations.

All of that needs to be

addressed, along with whether zoning changes, density bonuses and/or increased government funding will improve things — or make matters worse.

The housing targets developed by state officials have huge implications for local government. They might want to double-check those numbers.

michael.smolens@ sduniontribune.com