Mitigating Displacement Of Low-Income Renters From New Transit-Oriented Housing

In my excitement over SB 827, the new bill that would dramatically boost badly-needed new housing in job- and transit-rich areas in California, I overlooked one potentially important source of opposition: low-income renters near transit. As I described, the bill would limit local restrictions on height, density and parking near transit. I assumed that these changes would mostly affect relatively affluent single-family home neighborhoods near transit, whose residents and allied elected officials often prevent new housing for reasons ranging from the deplorable (racism) to the understandable (fear of more traffic and related hassles).

But for renters and their advocates in existing low-income neighborhoods near major transit stops, the SB 827 approach raises different fears: eviction through displacement and gentrification. They fear the relaxed local government rules under SB 827 will prompt developers to gobble up their existing low-income buildings, evict the tenants, tear down the structures, and then build market-rate housing for people with much higher-income levels. In short, they see SB 827 putting displacement and gentrification in these transit-rich, low-income communities on steroids.

The fear is legitimate, though I believe potentially overstated, depending on the neighborhood. And it’s also something that can be mitigated, with the right policy approach. First, it’s probably overstated because development in low-income communities is not necessarily held back only by strict local zoning. For example, as UCLA scholars Anastasia Loukaitou-Sideris and Tridib Banerjee described in a report examining neighborhoods around the Blue Line light rail from Downtown Los Angeles to Long Beach, low-income areas near the station stops have received virtually no investment in real estate despite sometimes very relaxed local zoning.

The problem in many of these neighborhoods is that demand is not sufficient to attract developers and capital needed to build multistory buildings. These relatively expensive structures must net high rents to justify the higher construction costs. Compounding matters, many low-income neighborhoods often require significant infrastructure upgrades to accompany any new buildings. All of these factors deter developers from investing — not the local zoning codes. Ultimately, capital will flow to the areas that promise the highest return: which means relatively affluent neighborhoods near transit will see the most construction under the SB 827 approach.

Still, those economic dynamics probably won’t by themselves allay the fears of low-income renters and their advocates. Many of the neighborhoods they care about are at risk of gentrification, which means rents could increase, higher-income residents would move in with new construction, and low-income renters forced out.

So what can be done in these situations? There’s a rich literature on the subject, but one of the best ways to mitigate these impacts is to ensure a percentage of the new homes built are available exclusively to people with low incomes. Furthermore, local residents who have been displaced or are at risk of displacement should have priority access to these new homes.

The state already has policies on the books to encourage this type of affordable housing construction, from a now-stricter regional housing needs process (which requires locals to plan and zone for affordable housing in their jurisdiction) to density bonuses for projects that incorporate more affordable units. Local governments are also free to enact their own additional policies to boost affordable housing.

These and other policies may not help all tenants facing displacement, but they would go a long way toward helping many of them — and providing access to better homes for many of them in the process. And overall, new housing near transit will benefit residents of all income levels, including low-income. It will stabilize home prices to allow more residents to live near jobs and save on transportation costs from avoiding long commutes. It will improve public health by reducing regional driving miles. It will provide high-wage construction jobs. It will reduce economic inequality and lack of access to good jobs. And it will unlock the housing that future generations will need to be able to remain in their home communities.

Ultimately, we know we need new housing in California — and lots of it to make up for decades of shortfalls. We should have policies in place to ensure low-income renters gain from this construction. But if we don’t build these homes near our transit- and job-rich areas, then where are we going to build them? SB 827 provides the clearest solution to this decades-long problem in the making. But policy makers should take care to address the concerns of low-income renters who might otherwise stand to lose under this otherwise badly needed legislation.