The Poodle Spies: Five Fall Guys in California’s Housing Crisis

THUS SPAKE SPADE:  “We’ve got to have a fall guy,” insisted Sam Spade, the hard-boiled private dick played with cynical élan by Humphrey Bogart  in The Maltese Falcon, the proto-crypto film noir classic. In so stating, Spade accidentally articulated the first commandment of modern American politics.

When it comes to California’s genuinely desperate housing crisis, the “fall guys” we all are expected to fall for are the environmental activists who allegedly fly the flag of no growth, slow growth, or other variants of NIMBYism, and the local governments in their thrall. In today’s brave new urbanist fantasy of “build, baby, build,” such lofty notions of “living within our resource constraints” are not merely quaintly antiquated but are now considered racist, elitist smokescreens for those who’ve already got from those who never can. 

It’s a catchy tune and one that San Francisco’s State Senator Scott Wiener — not coincidentally the single largest recipient of developer dollars — has been whistling quite effectively in his campaign to strip local governments of all their land-use controls limiting the pedal-to-the-metal development he insists will solve the housing crisis. 

I’m not arguing the housing crisis is not desperate. When minimum-wage earners in Santa Barbara have to work more than 80 hours a week to afford an average one-bedroom apartment, Houston, we have a serious problem. Santa Barbara County rents are the fifth most out of reach for low-income wage earners in the nation. But the solution is not to build more market-rate housing. It’s to build more affordable housing. Unless you believe in the Tooth Fairy, it’s not remotely the same thing. 

A perfect example is Santa Barbara’s years-long campaign to juice rental housing production by giving developers multimillion-dollar concessions on densities and parking. Lots of housing got produced; precious little has been affordable. Worse, this effort triggered a gold rush of speculative investing that’s sent land values through the roof, effectively pricing out developers of genuinely affordable housing.

Let me suggest a few truly deserving Fall Guys instead: 

Number One: Ronald Reagan. Until Reagan — a part-time resident of Santa Barbara County — was president, the United States invested massively in the construction of housing that was genuinely affordable to low-income earners. After Reagan occupied the White House, affordable housing funding plummeted by 77 percent in five years. Do the math; you don’t get what you don’t pay for. We’re still paying the price. 

Fall Guy Number Two: Prop. 13. Back in 1978, state voters approved Prop. 13, which radically limited the rate at which property values could be reassessed and taxed. Property taxes were going crazy, and old people were losing their homes. It was another fake solution to a real crisis. Reaping that multibillion-dollar windfall were owners of commercial real estate. (And no photogenically tragic “old people” were saved in the making of this boondoggle.) 

Suddenly cut off from the property tax revenues on which communities relied, local governments had to reassess development priorities. Car dealerships, hotels, and shopping malls — which generate massive sales taxes and bed taxes — got the green light. New housing — which costs local governments way more in required services than the property taxes paid for — got the yellow light. Or the red light. 

It was strictly a dollars-and-cents thing — living within your budget — and had nothing to do with environmental values of living within your resource constraints. 

Fall Guy Number Three: Governor Jerry Brown and the California legislature. In the midst of a budget crisis, in 2012, Brown decapitated redevelopment agencies statewide, which at the time collectively generated $1 billion a year for the construction of genuinely affordable new housing. For the City of Santa Barbara, that was roughly $5 million a year. In the past 10 years, we’ve lost $50 million. According to the Santa Barbara Housing Authority, it has been able to leverage redevelopment dollars by a factor of 10-1, masking a loss of nearly $500 million for affordable housing.

Fall Guy Number Four: Hotels, Motels, and the Hospitality Industry. Rob Fredericks at the city Housing Authority hired pollsters to explore the level of popular support for a 2-3 percent increase on bed taxes charged by city’s hotel and motel owners. A 2 percent hike would generate $4.6 million in revenues. Assuming the 10-1 multiplier effect is not fiction, that’s $460 million a year in affordable housing funds. 

Fredericks met with industry representatives a few weeks ago who assured him they’d go to the mattresses should he try something so foolhardy. 

Such an increase — which would be the first since 1987 — would chase away customers, they contended. Their logic makes sense, but I’m not so sure about their facts. When last year’s average room rate was $342, I’m not sure how many of their guests would balk at a $9 a night addition to their bill. 

Fall Guy Number Five: Vacation Rentals. State Senator Monique Limón tried to create an affordable housing trust fund — maybe $150 million — by imposing a 15 percent tax on vacation rentals. That industry cried foul, suggesting perhaps hotels and motels would be a better target, and Limón pulled her bill from consideration until next year. 

As for living within one’s resources being a racist, elitist smokescreen, it’s worth noting that State Farm, Allstate, and Farmers Insurance have all stopped issuing new homeowners insurance policies in California, citing high fire risks. And of course there’s no reason to worry about water; we had rain this year, didn’t we? It’s worth noting that residents of the gated estates of Rolling Hills — in a county south of here — have just been forced to evacuate because of landslides.

My favorite fall guy? Anyone stupid enough to buy in a place stupid enough to be called Rolling Hills and not expect the hills to roll them.