ARTICLE
Last week we discussed the plight of the homeless population in our community and the ever growing concern about the health and safety of our downtown. Now, one encampment has moved from the post office to another location — the bench lands on the River. Make no mistake, the housing supply — demand imbalance in California, the rising costs of housing, and rental increases are causing a ripple effect throughout the West Coast. In a recent article by Gillian Flauccus and Geoff Mulvihill of the Associated Press they cite statistics on the growing problem - “A homeless crisis of unprecedented proportions is rocking the West Coast, and its victims are being left behind by the very things that mark the region's success: soaring housing costs, rock-bottom vacancy rates and a roaring economy that waits for no one. All along the coast, elected officials are scrambling for solutions.” Read more here. From Seattle to San Diego and coastal cities along the way, the homeless populations are exploding. Ravana Park in Seattle is one of 400 such encampments that have popped up in Seattle's parks, under bridges, on freeway medians and along busy sidewalks. There is virtually nowhere to house these folks declared Seattle City Council member Mike O’Brien. The story is similar in San Diego where City officials have recently turned their attention to the homeless encampments along the San Diego River in combating the ongoing hepatitis A outbreak that has killed 20 people and afflicted 536. Read the story here. In the eastern San Diego County, the city council in El Cajon have taken stronger steps to address their homelessness population. Their Mayor is placing blame at the feet of our California State Legislature. An emerging group of local entrepreneurs is taking up arms against the sky-high cost of living in the Bay Area, hoping to end once and for all the housing crisis crippling the region. These founders, intent on disrupting the housing market and bringing down costs, are stepping in as government officials and nonprofits struggle with the enormity of the problem. Some are launching startups focused on creating new housing units, while others are working to help people buy or rent. The San Jose Mercury News story is here. One glaring example is the debate on inclusionary zoning and the fear that the free market won’t address the affordability factor, yet here we are digging the same hole deeper that got us where we are today. Several months ago, Economist Christopher Thronberg was in town last spring to provide an economic update. He noted that California isn’t having an affordability housing problem, it’s having a supply problem. In a July opinion piece in the Los Angele Daily News, Thornberg states “High housing costs continue to be at the center of policy debates in Los Angeles - and across much of the state. This intensifying focus is warranted now more than ever given how the crisis has moved from simply eating up the disposable income of residents to slowing overall employment growth in coastal economies — something driven by a lack of available workers, which in turn is driven by the housing shortage. He believes that some of the offered solutions don’t result in addressing the problem stating, “Take the City of Los Angeles’s proposed linkage fee, a fee to be paid by developers of market-rate properties to fund more affordable housing - and something that has been endorsed by many prominent voices in the community in recent weeks. That support has been motivated in part by the results of a recent homeless count done in Los Angeles County, which suggested that there was a 20% increase in the County’s homeless population over the last year. This is a total red herring when it comes to addressing the lack of new housing supply.” Does this sound familiar to what is happening in Santa Cruz County? The linkage fee and similar policy proposals being rolled out at the city and county level reveal a deeper problem: Many localities and policymakers simply believe that the free market is not willing or able to create an adequate supply of housing in the region so they pursue corrective measures to make up for these perceived inadequacies. The lack of housing in Santa Cruz and throughout California is not due to the market’s failure but rather to the actions and choices of our region’s citizens and our policymakers who have systematically intervened over many years to slow new development. The market should not be blamed for problems created by public policies that have constrained them. Addressing these critical policy issues is the place to start. The recent legislative fixes by the State Legislature and signed by the Governor make small changes. Sacramento has looked more towards punishing local jurisdictions for not allowing housing, rather than attempting to deal with the true root causes. Everyone is treating the symptoms, not the disease. Take for example inclusionary housing, the buzz word in Santa Cruz and other communities. Past studies conducted by neutral researchers have shown that these policies have very little overall impact on housing affordability in a community. This is because the gains enjoyed by the lucky few families who receive inclusionary housing subsidies are offset by the higher cost of housing for the rest of the population. And ultimately such efforts are minimal compared to the scale of the problem. We need innovative sollutions not more regulations. The past few years have seen an increase in housing-related starups, as founders rush to take advantage of a prime opportunity, said Tom Cole, managing partner of Palo Alto-based Hone Capital, which has funded at least five real estate tech startups since 2015. "Real estate is an example of the type of thing that Hone Capital loves to find," he said, "which is a huge, huge, huge industry that is rife with inefficiencies." The key to these star-ups' is outside the box thinking and using creative and innovating ways to address California's housing crisis. HomeSlice, a Berkely-based startup makes it easier for groups of people to buy a home together. HomeSlice helps potential buyers draft a co-ownership agreement, and connects them with real estate agents and lenders. The company plans to launch a beta test of the platform in mid-November. To learn more visit home-slice.io. Landed, launched in 2015 by two recent Stanford Business School grads, helps Bay Area teachers afford a home in their school district. The startup connects a teacher with investors who contribute to their down payment and in return receive equity in the home. To learn more visit landed.com. Roofstock, an Oakland based company, runs an online platform where landlords can buy and sell properties in which tenants are already living. The unique business model prevents renters from getting displaced when building changes hands. So far the startup has sold about 1,000 homes in the Bay Area, and is operating in more than a dozen other markets around the country. To learn more visit roofstock.com. Starcity is tackling the Bay Area's housing shortage by creating new rental units. The startup, launched about a year ago, buys vacant hotels, commercial buildings and other unused spaces, renovates them and converts them into communal housing. Renters have their own bedrooms, but share kitchens and other common areas. Starcity runs two buildings in San Francisco, and is developing another siz. To learn mroe visit joinstarcity.com. Haven Connect, a Berkeley-based startup which launched its first pilot program in June 2016, streamlines the process of applying for affordable housing. People can apply online, quickly filling out paperwork for multiple properties at once. To learn mroe visit havenconnect.com. Affordable Equity, an Oakland-based company, is pioneering a new type of landlord-tenant relationship. The startup, which is gearing up to buy single-family or small multi-unit, low-income buildings, will offer its renters equity in its properties. To learn more, or donate to help fund the project, visit chuffed.org/project/afforable-equity. Santa Cruz County innovators, our public policy decision makers, housing advocates and the greater Santa Cruz County business community all need to come together and create innovative ways to address our housing issues, and more directly our homeless population and people of limited means. We have so many well respected public and non-profit organizations and city and county personnel dedicated to housing. All have a deep sense of commitment to help but in typical Santa Cruz County style we seem to operate independently instead of collaboratively, which limits our ability to find the solutions to a systemic problem. That needs to change.
Last week we discussed the plight of the homeless population in our community and the ever growing concern about the health and safety of our downtown. Now, one encampment has moved from the post office to another location — the bench lands on the River. Make no mistake, the housing supply — demand imbalance in California, the rising costs of housing, and rental increases are causing a ripple effect throughout the West Coast.
In a recent article by Gillian Flauccus and Geoff Mulvihill of the Associated Press they cite statistics on the growing problem - “A homeless crisis of unprecedented proportions is rocking the West Coast, and its victims are being left behind by the very things that mark the region's success: soaring housing costs, rock-bottom vacancy rates and a roaring economy that waits for no one. All along the coast, elected officials are scrambling for solutions.” Read more here.
From Seattle to San Diego and coastal cities along the way, the homeless populations are exploding. Ravana Park in Seattle is one of 400 such encampments that have popped up in Seattle's parks, under bridges, on freeway medians and along busy sidewalks. There is virtually nowhere to house these folks declared Seattle City Council member Mike O’Brien.
The story is similar in San Diego where City officials have recently turned their attention to the homeless encampments along the San Diego River in combating the ongoing hepatitis A outbreak that has killed 20 people and afflicted 536. Read the story here.
In the eastern San Diego County, the city council in El Cajon have taken stronger steps to address their homelessness population. Their Mayor is placing blame at the feet of our California State Legislature. An emerging group of local entrepreneurs is taking up arms against the sky-high cost of living in the Bay Area, hoping to end once and for all the housing crisis crippling the region. These founders, intent on disrupting the housing market and bringing down costs, are stepping in as government officials and nonprofits struggle with the enormity of the problem. Some are launching startups focused on creating new housing units, while others are working to help people buy or rent. The San Jose Mercury News story is here.
One glaring example is the debate on inclusionary zoning and the fear that the free market won’t address the affordability factor, yet here we are digging the same hole deeper that got us where we are today. Several months ago, Economist Christopher Thronberg was in town last spring to provide an economic update. He noted that California isn’t having an affordability housing problem, it’s having a supply problem.
In a July opinion piece in the Los Angele Daily News, Thornberg states “High housing costs continue to be at the center of policy debates in Los Angeles - and across much of the state. This intensifying focus is warranted now more than ever given how the crisis has moved from simply eating up the disposable income of residents to slowing overall employment growth in coastal economies — something driven by a lack of available workers, which in turn is driven by the housing shortage. He believes that some of the offered solutions don’t result in addressing the problem stating, “Take the City of Los Angeles’s proposed linkage fee, a fee to be paid by developers of market-rate properties to fund more affordable housing - and something that has been endorsed by many prominent voices in the community in recent weeks. That support has been motivated in part by the results of a recent homeless count done in Los Angeles County, which suggested that there was a 20% increase in the County’s homeless population over the last year. This is a total red herring when it comes to addressing the lack of new housing supply.”
Does this sound familiar to what is happening in Santa Cruz County? The linkage fee and similar policy proposals being rolled out at the city and county level reveal a deeper problem: Many localities and policymakers simply believe that the free market is not willing or able to create an adequate supply of housing in the region so they pursue corrective measures to make up for these perceived inadequacies. The lack of housing in Santa Cruz and throughout California is not due to the market’s failure but rather to the actions and choices of our region’s citizens and our policymakers who have systematically intervened over many years to slow new development.
The market should not be blamed for problems created by public policies that have constrained them. Addressing these critical policy issues is the place to start. The recent legislative fixes by the State Legislature and signed by the Governor make small changes. Sacramento has looked more towards punishing local jurisdictions for not allowing housing, rather than attempting to deal with the true root causes. Everyone is treating the symptoms, not the disease.
Take for example inclusionary housing, the buzz word in Santa Cruz and other communities. Past studies conducted by neutral researchers have shown that these policies have very little overall impact on housing affordability in a community. This is because the gains enjoyed by the lucky few families who receive inclusionary housing subsidies are offset by the higher cost of housing for the rest of the population. And ultimately such efforts are minimal compared to the scale of the problem. We need innovative sollutions not more regulations. The past few years have seen an increase in housing-related starups, as founders rush to take advantage of a prime opportunity, said Tom Cole, managing partner of Palo Alto-based Hone Capital, which has funded at least five real estate tech startups since 2015. "Real estate is an example of the type of thing that Hone Capital loves to find," he said, "which is a huge, huge, huge industry that is rife with inefficiencies." The key to these star-ups' is outside the box thinking and using creative and innovating ways to address California's housing crisis. HomeSlice, a Berkely-based startup makes it easier for groups of people to buy a home together. HomeSlice helps potential buyers draft a co-ownership agreement, and connects them with real estate agents and lenders. The company plans to launch a beta test of the platform in mid-November. To learn more visit home-slice.io. Landed, launched in 2015 by two recent Stanford Business School grads, helps Bay Area teachers afford a home in their school district. The startup connects a teacher with investors who contribute to their down payment and in return receive equity in the home. To learn more visit landed.com. Roofstock, an Oakland based company, runs an online platform where landlords can buy and sell properties in which tenants are already living. The unique business model prevents renters from getting displaced when building changes hands. So far the startup has sold about 1,000 homes in the Bay Area, and is operating in more than a dozen other markets around the country. To learn more visit roofstock.com. Starcity is tackling the Bay Area's housing shortage by creating new rental units. The startup, launched about a year ago, buys vacant hotels, commercial buildings and other unused spaces, renovates them and converts them into communal housing. Renters have their own bedrooms, but share kitchens and other common areas. Starcity runs two buildings in San Francisco, and is developing another siz. To learn mroe visit joinstarcity.com. Haven Connect, a Berkeley-based startup which launched its first pilot program in June 2016, streamlines the process of applying for affordable housing. People can apply online, quickly filling out paperwork for multiple properties at once. To learn mroe visit havenconnect.com. Affordable Equity, an Oakland-based company, is pioneering a new type of landlord-tenant relationship. The startup, which is gearing up to buy single-family or small multi-unit, low-income buildings, will offer its renters equity in its properties. To learn more, or donate to help fund the project, visit chuffed.org/project/afforable-equity. Santa Cruz County innovators, our public policy decision makers, housing advocates and the greater Santa Cruz County business community all need to come together and create innovative ways to address our housing issues, and more directly our homeless population and people of limited means. We have so many well respected public and non-profit organizations and city and county personnel dedicated to housing. All have a deep sense of commitment to help but in typical Santa Cruz County style we seem to operate independently instead of collaboratively, which limits our ability to find the solutions to a systemic problem. That needs to change.