“AS a state and a region where all housing has been under-produced for decades, we must stop pitting the needs of one income group against another.”

Regional Action Plan

At the same time, some people will simply never be able to afford market rate housing in the Bay Area without significant changes in income. You may argue that not everyone has the right to live in the most expensive place in the country. But a large number of current Bay Area residents are being displaced from their homes by rising costs no matter how hard they work. These are typically low-wage workers, many in essential jobs that we rely on, who are not being paid enough to afford their basic needs. And our neighborhoods are more dynamic, diverse and supportive when the teachers, health aides, and artists who service and beautify our community, not to mention senior citizens, actually live in them.  

To ensure these people can live in our communities and to prevent additional homelessness, affordable housing is key. But the pace of its development is currently inadequate. From 2007-2014, the Bay Area permitted only 29% of its very low-income housing unit target, a shortfall of 61,000 units. In the current time period (2015-2022) we are not doing any better with only 24.6% permitted with only one year left in this period.

Source: California Department of Housing and Community Development Dashboard 

Where to build?

It’s clear that the Bay Area needs more housing, both affordable and market rate. But where should it go?  Available space for development is fairly limited.  Areas that are prone to wildfire or at high risk of sea level rise are considered hazardous and not appropriate for development, particularly as the impact of climate change accelerates.  Open space, protected land and agriculture — so important to the Bay Area’s economy and quality of life — make up 72% of the region.   

Increasing the density of housing in remaining areas, including existing residential areas, is key to achieving housing goals. Denser housing is also good for the environment, as it produces fewer greenhouse gas emissions and reduces energy use, compared to less dense housing, while preserving open space.

Here too there is a barrier to production: zoning. Of Bay Area land zoned as residential, 82% is restricted to single family homes, a policy that has historically been used to prevent people of color from entering certain communities and which has led to racial segregation. California SB9, passed into law in September 2021, opens up areas designated as single-family for owners to develop up to four housing units. But opposition is coalescing around a possible ballot measure to revoke SB9.

Bottom line: our region needs climate smart housing development with priority in transportation and job hubs, while expanding housing availability in communities that have quality resources (like good schools and open space) but have historically prevented communities of color and low-income households from living there. This broad plan is the focus of Plan Bay Area 2050, a long-range plan charting the course for the future of our region which was recently adopted by the Metropolitan Transportation Commission and the Association of Bay Area Governments. 

Why is it so hard to get housing built in the Bay Area?

The next logical question would be, well, what’s the hold up? Why is it so hard to get housing built in the Bay Area?

It’s expensive. The cost of building housing is more expensive in California. This starts with the price of land. Residential land in an average U.S. metro area was valued at around $20,000 per acre (in 2015), compared with over $150,000 in California’s coastal areas and as high as $400,000 in San Francisco. Normally developers would increase density to spread the cost of expensive land across more units, but as noted earlier, much of the Bay Area is zoned for single family homes. Construction costs are also higher in California.  Finally, development and impact fees (costs that cities can charge new housing projects) are on average three times higher in California than nationally.  

The same issues that increase costs for market-rate housing affect affordable housing as well. But affordable housing typically faces additional local scrutiny and community opposition. These two factors together can add about 12% to the costs of building. In the Bay Area, the average development cost for a unit of affordable housing ranges from $550,000 to $700,000, 15% higher than New York City. Since the cost cannot be recouped by rents (as tenants pay below market rate rents), there has to be a subsidy for building affordable housing. This subsidy comes from a complex “layer cake” of financing. In California, accessing this funding is fragmented, with five state agencies dealing with affordable housing financing. Additionally, these funds dropped off between 2013 and 2018. Since then, funding has increased primarily through SB2, the 2018 Building Homes and Jobs Act.

Source: California Housing Partnership

Resistance from Cities and Citizens. In California, cities and counties decide for the most part when, where, and to what extent housing development occurs in their community. As such, local citizen resistance to new development can significantly delay or even stop housing production. And California’s coastal communities, like the Bay Area, resist development more than other places. 

It is understandable that existing residents may be concerned about development: will the value of my home go down; will the character of our neighborhood change; will community resources be strained; will traffic increase?  But without producing more housing, we are closing the door for others, like Maria and her girls, to enjoy the very benefits that we hold so dear. 

The truth is, a lot of people in the Bay Area were lucky enough to buy homes when costs were lower, and they’ve been able to thrive. Young families and the next generation deserve a decent place to live, and we should create opportunities for more of us to be “lucky.” 

Funding new housing developments is a pricey matter and requires a layer cake of financing from the federal, state and local level. Fortunately, state funds are increasing to support affordable housing development. While there are certainly instances where philanthropy can fill a gap in financing to take a project from blueprint to building, for the most part Battery Powered’s funding will be best used in other ways. We are interested in funding the following:

Advocacy for and implementation of housing policy that advances housing development at all levels of income, with an emphasis on policy that supports affordable housing. For example, we can support advocacy to streamline processes to reduce time and costs to permit and build new developments, or measures that make it easier to raise bond money for affordable housing. There are also ways to support local municipalities to implement good housing policies already on the books, such as a fellows program launched by the Partnership for the Bay’s Future. 

Supporting community developers. As infill development has become possible through SB9, there is opportunity to support community- and BIPOC-led developers to access the training, resources and financing they need to capitalize on opportunities to develop their property. While wealthier home owners may have the capital to take advantage of these new policies that can build future value, historically disadvantaged communities lack ready access to resources needed to add a duplex or accessory dwelling unit. A number of programs are beginning to support such community developers to build infill housing, and philanthropy can play a role here.