Poodle | More Santa Barbara Housing Units Sit Vacant than Get Built

AN IMMODEST PROPOSAL:  Back when I was way more enterprising, I crashed a bankers’ convention by disguising myself as a janitor. I was of the belief that bankers ruled the world and wanted to hear how they spoke when they thought no one was listening.

I would later come to believe it was really the insurance industry that ruled the world. More recently, I stumbled onto the even more scary truth: No one does. 

But at this gathering of bankers, one speaker stood out. He spoke in shrewd, folksy aphorisms, stylistically unified by their horsey motifs. I still remember two of them.

The first was, “Feed the horse to feed the sparrows,” which to date is still the best summation of trickle-down economics this side of John Maynard Keynes. The other, “If wishes were dreams, horses would ride,” took me a while to decode. But eventually I got there.

Both popped to mind when contemplating the acronym-rich debate between feuding factions of the Santa Barbara City Council over rival housing policies. Both approaches involve giving private developers all kinds of incentives, including massive density allowances and eliminating restrictions on building heights and parking requirements.

In exchange, developers will charge moderately below-market rents for a tiny fraction of the units they build. Older, more established types — people who fought the good fight against greedy developers — balk at this. If City Hall wants to “give away the store,” they insist, the sparrows here should get some truly affordable housing out of the deal and a whole lot more of it.

Naturally, both are right.

Therein lies the rub.

In some ways, trickle-down housing-nomics has worked spectacularly well. In the past decade, the City of Santa Barbara saw the addition of 388 new units of housing built, much of it rental. Admittedly, precious little of this was remotely affordable. But still, by Santa Barbara standards, that was unprecedented. 

Here’s the bad news. In that same period, the City of Santa Barbara saw the number of housing units sitting “vacant” — at least as defined by the U.S. Census — increase from 2,371 to 2,825. I’ll do the math for you. We had 454 more vacant homes in 2020 than we did in 2010. * 

Even worse, the number of new housing units we built in the past 10 years was actually exceeded by the number of housing units that we lost because they went vacant. 

That also took me a while to decode, too. But eventually I got there. That’s a net loss of 66 housing units.

This calls to mind another one of those shrewd, folksy aphorisms: When you find yourself in a hole, stop digging.

Obviously, the largely illegal vacation rental market is driving Santa Barbara’s Empty House Syndrome. The Census defines vacation rental units as “vacant.” Increasingly, cities across the United States are thinking seriously about passing vacancy taxes on such properties. Oakland already has. 

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The Canadian city of Vancouver jumped into the vacancy tax business in 2017. It now charges owners — largely out-of-town, institutional investor types — the equivalent of 3 percent for the vacant property’s assessed value. The number of vacancies has dropped by about 10 percent. 

This may not sound like a lot, but Toronto — a big Canadian city without such a tax — has reported a 40 percent increase in the number of vacant units. Beyond that, Vancouver is on pace to generate $63 million in revenues from such taxes this year. That’s real money, maybe enough to get some genuinely affordable housing built. 

Santa Barbara should take a long, hard squint at the idea, too. Banging the drum loudly for this is Sharon Byrne, perennial community activist, agitator, and wearer of more hats than I can keep track of.

I don’t pretend to know what the revenue potential would be here. In Oakland, they charge $3,000 a unit. Given our ridiculous property values, we’d get more using Vancouver’s approach.

Here’s my crackpot scheme. Use the revenue stream generated by such taxes to float a bond. These bond revenues would then be used to provide low-cost financing for the construction of new granny flats, backyard add-ons otherwise known in the strangled vernacular of city planners as “ADUs,” which is short for Accessory Dwelling Units. Although I’ve come to truly despise acronyms, that one at least sounds a little like what it is. The other two now in vogue, AUDs and FARs, stand for wonk talk—Average Unit-Size Density and Floor Area Ratio—that sets the gold standard for mind-numbing opacity.

Here’s why I like granny flats as a housing solution. Unlike the mega, faux-futuristic trickle-down housing proposals — either FAR or AUD — granny flats do not threaten to obliterate the skyline while providing only a handful of “affordable” units that will be of assistance to only a few lucky sparrows. By contrast, granny flats can be sprinkled in backyards throughout all neighborhoods — except those in high fire zones — without causing a massive NIMBY backlash.

Right now, we’re producing about 140 granny flat units a year. With the low-cost construction loans I magically envision — using the vacancy taxes as the basis — we could do even more. Naturally, I’d require any granny flats built with this funding be renter occupied and that subsequent rent increases be strategically limited.

This might put some check on the violent market impact of institutional speculators now gobbling up rental units and charging extortionate rates. 

I’m not a real economist. But I know what doesn’t work. Maybe that makes me looking for wishes to ride. If so, Whoa, Nellie!

* MR. OTIS SENDS HIS REGRETS: Sometimes, even when you’re right, you’re wrong. Highlighting this point for me this week was former mayor and current city planning commissioner Sheila Lodge.

In this case, I accurately reported the numbers divined by the U.S. Census Bureau for the number of new housing units built within Santa Barbara city limits and the number of housing units allowed to sit vacant. They were as reported in this week’s column, which I reported with all appropriate goggle-eyed dismay. It turns out, according to Lodge, the Census Bureau got its facts wrong.

According to statistics provided by the City of Santa Barbara, a total of 719 new housing units have been built within city limits since 2013. Of those, 310 were what I prefer to call “granny flats,” but what planners call “ADUs,” which is short for Accessory Dwelling Units. In addition, no fewer than 409 AUDs — Average Unit-Size Density units — have been built as of September 2021. Another 132 have been permitted, Lodge noted, but not all will be built for a host of reasons. That brings us to a total of 719 new units built.

This statistical exegesis is relevant because I claimed in this week’s column that the number was only 388. This number came courtesy of the 2020 Census report. This number stood in stark contrast to the fact that in the past 10 years, 454 more residential units went “vacant,” as defined by the Census. All this was to underscore the point that we’re losing more housing than we’re creating. Based on the info provided by Lodge, that point can no longer be made.

But what we can still say is that we’re losing far too many units and far too many are going “vacant.” Typically, what that means is that they’re used as vacation rentals or something otherwise short term. That point still stands. Right now — at least according to the Census (and maybe they didn’t get this right either) — there are 2,825 residential housing units in the city designated as “vacant.”

Clearly, I should have checked my math or, in this case, the math of the U.S. Census Bureau. Like many people, I regard Census data as the first and last word on any subject. As I should have learned a long time ago, there is no first or last word on anything.

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