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Housing Shortage Dominates West Coast Real Estate Development Spotlight

San Francisco’s housing shortage was a recurring theme at the recent Global Leaders in Real Estate Summit West. Hosted by EisnerAmper and iGlobal Forum, the conference addressed the hot-button topic in several sessions, including the West Coast Real Estate Development Spotlight. Miles Imwalle of Morrison Foerster led the discussion with California State Senator Scott Wiener, Jim Wunderman of the Bay Area Council, and Laura Foote Clark of YIMBY ACTION.

There is currently a housing shortage of more than 7.3 million homes in the U.S., 50% of which are in California. Panelists expressed that the conflict between local and regional control hinders housing development. Citizens are sometimes resistant to changes in zoning to accommodate more housing. Constituents in more affluent areas sometimes resist building train stations or providing low-income housing in their neighborhood for fear of blight.

Jim Wunderman of the Bay Area Council discussed the need for finding a better balance for what is important for the region versus what is important to the community. Cities oppose bills that take control out of their hands, which can delay important regional development.

Greater density in the center of a region propels growth and opportunity. Panelists agreed that future development should be transit oriented, and more regional measures are need to invest in transit infrastructure. Los Angeles, for example, recently passed two sales tax measures to raise billions in funds for transit infrastructure projects. However, the point was made that transit does not make sense unless there is a certain level of population density.

In this climate of extreme shortages, legislative solutions have been created to jumpstart development. Each city in the Bay Area has a mandate set by state housing law to meet housing goals. Senator Wiener drafted SB 35, a law which streamlines the permit-approval process for cities that do not meet their housing goals. The proposed legislation has been signed by Governor Jerry Brown.

The panel all agreed—and while it remains controversial—measures should be taken to increase funding for regional transportation projects and place limits on local control over development in order for the housing shortage to improve in the future.

Kathryn Jereza is a Tax Senior Accountant with experience in individual, corporate and partnership income tax returns and tax compliance and planning services to high net worth individuals, closely held entities, LLCs, and C and S corporations.

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