From the 1930s to the early 1970s the Democratic Party stood for two policies that successfully addressed the country’s chronic housing crisis: public housing and the minimum wage.
Public and publicly subsidized housing policies gradually began ending with the Nixon administration in the early 1970s and in California with the dissolution of redevelopment agencies in 2011. These shifts were possible because the adoption of neoliberal (trickle-down) housing policies was totally bipartisan.
The Democratic Party had regularly championed minimum wage increases, beginning with 25 cents an hour in 1938 and reaching $7.25 an hour in 2009. The minimum wage has been stuck there for 12 years.
If the 2009 minimum wage law had been indexed to inflation or gains in productivity, it would now be $25 per hour.
At one time, the Democratic Party stood for policies that successfully addressed the country’s chronic housing crisis. What changed, and why?
If it had tracked compensation to corporate CEOs, it would be $44 per hour now, and if it had been indexed to the cost of housing in California, the minimum wage would be $37 an hour for someone renting an average two-bedroom residence in Los Angeles.
If you look closely, however, you can find evidence of the cozy relationship between real estate investors and the Democratic Party’s housing policies as far back as the 1950s. Since then the Democrats have been the political party of choice for the urban growth machine, a complex set of mutually reinforcing real estate interests first identified by Harvey Molotch, former University of California, Santa Barbara sociologist. This pulled the party to the right on housing issues. But even in the Truman, Kennedy, and Johnson administrations, the seeds for these policy shifts were present in urban redevelopment agencies (i.e., urban renewal). With support from the federal government, local municipalities used eminent domain to acquire parcels in older neighborhoods, relocate residents, reassemble small lots into larger ones, transfer these enlarged parcels to corporate real estate developers, and then reinvest the increased tax increment income in additional urban renewal projects.
In California this game ended in 2011 when Gov. Jerry Brown and the state legislature dissolved 400 local redevelopment agencies. Since then, however, the real estate reinvestment process has continued, albeit at a smaller scale. These new municipal policies allowed mansionization, the building of the largest possible spec home on a residentially zoned lot, and unplanned upzoning programs, facilitated by local, state, and now federal programs to increase permitted densities, essentially providing financial gifts to property owners and real estate developers. In LA these programs go by many names, including Community Plan Updates, Measure JJJ/TOC Guidelines, SB 1818, Ellis Act evictions, Cash for Keys, Small Lot Subdivisions, Transit Priority Areas, Community Plan Implementation ordinances, and community benefits agreements, with more upzoning programs in the wings.
Regardless of the name, the goal is always the same: top-down intervention to increase property values and the profitability of real estate investments through privatization and deregulation. In this way Democrats at the municipal level, including LA’s recent mayors and city councilmembers, have become the midwives of the neo-liberal urban growth machine. Despite this awkward term, local governments now assist private developers in acquiring highly profitable redevelopment sites, in effect repackaging previous urban renewal programs at the parcel level.
From the national level to the local level, the Democratic Party’s housing policies have turned to the privatization of low-cost housing in lieu of the U.S. Department of Housing and Urban Development’s public housing program and the deregulation of zoning laws instead of comprehensive planning. This approach was previously called Reaganomics, but it is now bipartisan. Applied to housing, it relies on private developers, not housing authorities, to build low-cost housing in exchange for lucrative increases in zoning and tax breaks. It is peddled through the (mistaken) story that these policies increase the production of private sector housing, including a small number of low-cost housing units. Some analysts consider these updated versions of Reaganomics to be responsible for the current housing crisis.
The results of these housing policies are painfully visible. Assisted by city hall, real estate speculation is widespread and highly profitable. Meanwhile, the assorted justifications for these giveaways survive on faith, devoid of evidence. Transit ridership and the supply of low-priced housing continues to decline, while inequality and homelessness continue to grow. In cities like LA, this is the shameful legacy of Democratic mayors Tom Bradley to Eric Garcetti, even though city hall’s current trickle-down approach to housing originated with the Nixon and Reagan administrations.
In LA the city’s Democratic officials have pursued trickle-down housing policies for nearly three decades. They wholeheartedly support privatization and deregulation but won’t take credit for the resulting havoc. If they did, they would monitor their trickle-down policies, even though they made LA’s housing, transit, and climate crises worse. Plan monitoring, in fact, is clearly called out in LA’s general plan, but the results would so undermine their trickle-down housing policies that city hall ignores its own adopted General Plan monitoring policy requirement.
“General Plan Framework Chapter Two – Growth Monitoring Policy: After the Framework Element is adopted, the City will establish a growth monitoring program that will provide important information regarding the accuracy of future growth estimates and the distribution of that new development by community plan area. This monitoring program will annually document what has actually happened to the City’s population levels, housing construction, employment levels, and the availability of public infrastructure and public services. Information on environmental conditions will also be monitored on a yearly basis to maintain and update an environmental database, which will be used to facilitate but not replace, environmental review for subsequent programs and projects. …”
This slide into trickle-down housing programs has percolated to the construction unions, environmental groups, churches, nonprofit housing organizations, some left-liberal political groups, and well-funded advocacy groups that make up the base of the local Democratic Party. This was apparent in their opposition to Measure S, the Neighborhood Protection Measure, in 2016, when these groups fronted for the large real estate corporations, especially Crescent Heights and Westfield, that funded the No on S campaign in Los Angeles.
We also need to keep an eye on the many housing policies that the Democratic trickle-downers avoid, even though these policies would alleviate the worsening housing, transit, and climate crises:
- Raising wages to reduce economic inequality and poverty, one of the major drivers of homelessness.
- Restoring HUD and redevelopment agency public and subsidized housing programs to fill the low-priced housing gap.
- Stopping density bonus programs and other forms of upzoning since they are responsible for the declining supply of affordable housing in Los Angeles.
- Strengthening the state’s and LA’s Rent Stabilization Ordinance. The cutoff date could be moved up from 1978 to 1995 or even 2006. This could save many existing lower-priced housing units from the developers’ bulldozers.
- Restricting investment groups that drive up the cost of housing by buying homes and apartments as investments and then keeping them off the market.
- Requiring LA’s Department of Housing and Community Investment (HCID) to create reliable, accessible public registries of density bonus housing and vetted low-income renters.
- Requiring HCID to physically inspect pledged density bonus housing, to certify that it exists and is rented to certified low-income tenants.
- Adopting tougher anti-mansionization ordinances to prevent the demolition of older, lower-priced housing and its replacement with expensive, resource-intensive McMansions.
- Reforming California’s Ellis Act to prevent the eviction of low-income tenants so real estate developers can create infill building pads for expensive apartment buildings.
How long can this game continue before local officials and the active public realize they have been subjected to a host of real estate scams? That is the open question.