The Sustainable City Podcast: Where the Suburbs End
Welcome to The Sustainable City Podcast. In our inaugural episode, we examine California’s audacious state-wide effort to deconstruct single-family zoning to allow for more diverse housing options, promote affordability, and reduce greenhouse gas emissions from long commutes. Cutting-edge or calamity? Our guest is Conor Dougherty, economics reporter at The New York Times and the author of “Golden Gates: Fighting for Housing in America.”
William Shutkin: For today’s show, we examine California’s effort to deconstruct single-family zoning to allow for more diverse housing options, promote affordability and equity, and reduce greenhouse gas emissions from long commutes. As usual, California is the pacesetter in progressive social policy, this time with a one-two punch: build more affordable housing for more people in denser cities closer to job centers, while targeting reductions in carbon pollution from automobiles. Our guest is Conor Dougherty. Conor is an economics reporter at The New York Times and author of “Golden Gates: Fighting for Housing in America.” His work focuses on the West Coast, real estate, and wage stagnation among U.S. workers.
Mr. Dougherty has covered economics and real estate on-and-off for a decade, at both the Times and the Wall Street Journal. Before that, he worked at the San Diego Union Tribune and the Los Angeles Business Journal. He lives in Oakland, California, and is a Bay Area native. Conor, welcome.
Conor Dougherty: Thanks for having me.
William Shutkin: Great to have you. So Conor, as you know, I’m a huge fan of your work going back at least five years. I think you’ve been one of the most important chroniclers not only of the housing crisis that has grown in cities like the Bay Area, or metro regions like the Bay Area. Places like Boulder where Andy and I are based, and so many other very desirable cities across the country. But you’ve also connected up the housing crisis to issues like climate change and economic development, jobs. You wrote a book a couple of years ago outlining some of these larger trends and themes. Before we get into some of the details about what California is doing right now, do you want to give us a little tour of your book “Golden Gates” and what you were arguing in that book just a couple of years ago, and bring us up to the present day?
Conor Dougherty: Yeah, thanks for having me. I think there’s so much in the book, and I tried to make it a narrative book, looking at different sides of a housing issue and taking you into people’s lives and how they’re sort of essentially trying to solve a problem. So, one of the main characters is Sonja Trauss who is this activist sort of helping to create the YIMBY movement which, as everyone listening probably knows, stands for “Yes, In My Back Yard” and is fundamentally about trying to get people towards a denser future and being less suspicious of development all the time, and trying to make housing more plentiful on the logic that this will make it more affordable. Another character is a 15-year-old girl who’s being evicted or threat of being evicted because her rent went up $800. Her mom is low income, cleans houses. They’re immigrants from Mexico and —
William Shutkin: Which of course, is a big headline issue just today.
Conor Dougherty: Yes, exactly. But she’s 15, becomes an activist basically overnight, not because she has some… It’s not a career for her, it’s keeping her family from becoming homeless. Then there’s a developer trying to do modular housing looking at can you actually make the actual house cost less. And then there’s a bureaucrat who runs a suburb. He’s the city manager of a suburb and is sort of trying to push the community along — ultimately loses his job in the process — and is trying to get them to embrace more density. But it’s a very stereotypically exclusionary community. He’s trying to make it just add a little, teeny bit less exclusionary and even then gets steamrolled. And I think that looking through all those different narratives in that approach helps you understand I think the issue in a way that’s much better than a sort of top-down policy prescription kind of way.
So I think if there’s a message to the book, an overall theme, it’s that somewhere around the late 1970s, all of America started becoming a lot less affordable. I mean, and this is not just a Bay Area thing. There was a Time Magazine cover story about in 1977, and the headline was “Sky High Housing.” The gist of it was housing is too expensive and this is leading to fewer people becoming owners, people to delay families, all these things that people do when the housing cost too much. And that theme has really not changed for 40 years. And one of the things that I think ultimately is really at the center of it and sort of where we are today and where we were then, is at some point — so, for most of U.S. history we’ve not really innovated housing, we’ve innovated transportation. So, you find a way to get people further and further to housing to —
William Shutkin: Drive to equality.
Conor Dougherty: Yes, well or it’s like bust till you qualify, train till you qualify, then ultimately drive till you qualify. There were different ways of getting there and the last way was pretty much the car. And that we essentially have run out of — not only have we run out, I think we’ve started to question whether or not that was the smartest way to develop.
Andy Bush: We started to learn the cost of infrastructure associated with that and —
Conor Dougherty: Yes. And just also I mean, a lot and interestingly enough, the original backlashes to housing were really backlashes to infrastructure. If you read the “Power Broker” which is sort of the seminal book about —
William Shutkin: Robert Moses.
Conor Dougherty: Freeway plans and demolishing cities, ultimately the biggest backlash is, and this is true in the Bay Area and Boulder, were to freeways, they were against the public sector. And then that kind of morphed into being against new housing and here we are. So, I guess the book is sort of trying to sort of, it takes you back in time looks at that evolution of all that. And then it sort of brings you to today and has all these people fighting for more housing today or fighting to deal with affordability problems and sort of the political dilemma. And ultimately, it’s a story about these people and their journeys to make housing more affordable. I think that that approach is the most important thing for me because there’s a lot of different ways you could go as a culture, as a country, as a community, and how you’re going to live have a lot to do with your social structure.
I mean, when we talk about housing, when we talk about how we build houses, we’re essentially talking about civilization. You know what I mean? You were talking about like, the biggest possible things you could do. And so I think sometimes that focusing on people’s stories and the sociology and the group dynamics and all that stuff is just as important, perhaps more important, than all the policy stuff. I’ll give you an example. I always hear from people who say, oh, why can’t we be like Singapore where more than half the people live in what is effectively public housing. And I’m like, there’s no physical reason why we can’t do that but we’re probably not going to do that, just because we have a different culture in America, and it’s a different economic system.
There’s nothing that says we can’t do that, but that would require just completely massive social changes before anyone would buy in to that. And so, I think that when you really look at things more in a personal way, you get a sense of what’s feasible from a practical perspective.
William Shutkin: Well, it’s so interesting Conor, as you’re talking I’m thinking two things. One, I think you had that wonderful Kenneth Jackson quote in your recent piece about where the suburbs and something to the effect that the house you live in is sort of a window, a door, window, and a roof into your soul, into the soul of a community. But interestingly Conor, and the reason we’re here today is —
Conor Dougherty: The quote is “No society can be fully understood apart from the residences of its members.”
William Shutkin: Nice. Love that. I mean, the literal, physical —
Conor Dougherty: That’s the second sentence of “Crabgrass Frontier” which is the sort of seminal history of suburbs.
William Shutkin: Love it. So here, the book focuses on these individual stories which I love. And we’re talking today because arguably, a lot of those individual stories led the governor of California recently to top-down sign into state law some really important pieces of legislation that it is hoped will directly and immediately affect what happens in local communities when it comes to housing development. Can you connect up those stories and how perhaps they in fact percolated up finally to the governor’s office, the state legislature which of course, for years has been working on these matters. And now as of a few weeks ago, we have a host of bills that are trying essentially to wrest power away from local communities who keep saying no to more development and in fact, attempting to make it much easier.
Conor Dougherty: So let’s just begin by saying that as much as I think California leads the country on a lot of things, and by virtue of its heft ends up kind of setting the pace for a lot of the country. Obviously, we can essentially regulate the nation’s emissions through… Because it’s impractical to build… Car manufacturers can’t build a second market for California so California effectively regulates the nation’s cars. Similar thing with housing, I mean, even though we don’t build enough housing, we still build about 10 percent of the nation’s housing every year. And anyway, so around the country — I’ll get to SB-9 in just a second — but around the country, we have seen all sorts of cities. Cities and states, but Minneapolis essentially ended single-family zoning.
William Shutkin: Yeah, I know.
Conor Dougherty: They’re allowing up to triplexes on single-family lots. There are all sorts of cities have done accessory dwelling units or ADUs as they are called which are backyard cottages and a house. All these different cities have through two basic ways tried to lightly densify single-family neighborhoods. And they are either allowing you to build detached ADUs with minimal regulation so you can put a unit in your backyard and build a small one or two bedroom in the backyard. Varying sizes of that of course, I’ve seen ADUs that are 1,200 square feet. Some cities they’re only 400 or 500 square feet, whatever it is right? And then allowing people to sort of split homes and sort of make duplexes. And if you’re to reduce all of these approaches to a sort of general philosophy, a sort of place that our country is pretty consistently going.
It’s we’re going to try to make it much easier for homeowners and landlords, property owners to build in the backyard. And we’re going to make it much easier for them to subdivide homes so long as it looks kind of like what’s already there. So, Minneapolis for instance, they do have some design restrictions that try to make these triplexes look vaguely like a single-family home. And I think around the country that general approach is a new national approach. And if you think about it, it’s similar to the suburbs, right? I mean, even if California is slightly different than Cleveland, the sort of way we build sprawl is pretty consistently — for all our talk about how each city is unique — they look pretty consistently similar: the downtown’s a little denser and then you have your first ring suburbs where there’s apartments and homes kind of mixed together and then you have kind of modern sprawl.
Every city looks kind of like that and now every city is kind of trying to undo it in the same general way, and that has continued to happen in California. But California in the past year just passed two new laws. The most important of which is called SB-9 which basically allows you to do duplexes. So you can build two units on any lot now. Perhaps more importantly, it allows you to split lots, they have to be sort of larger lots, right? And you can then, so you can build up to four units, right? So by splitting a lot you could build the second house basically on the property and then both of those houses. Well, no. Both of those houses could have an accessory dwelling unit. They max at four, right? So, and a lot of what I think… it’s funny, for all the talk about how big of a deal this law was, I did think it was big — I thought the lot split was the much bigger issue.
And the reason is, you’ve been able to build accessory dwelling units, these backyard cottages, in California pretty much by right for five years. And the state has passed probably a half dozen little addendum laws that make it almost impossible to stop them. They don’t have parking requirements for instance, the city cannot impose a parking requirement on someone who’s building an ADU. Unlike SB-9, the city cannot currently impose an owner-occupant restriction on someone who builds ADUs, right? So for all the talk about how big of a deal SB-9 was, a lot of the density aspects of SB-9 already happened minus the lot split thing. And I think the reason, for what it’s worth, that SB-9 was so vociferously opposed by neighborhood groups and cities is that when these accessory dwelling unit laws were passed, nobody really got it. You know what I mean?
Anyway, and it’s funny because you hear all these people have all these dire prognostications about SB-9 that essentially don’t apply. But they do apply to the laws that passed five years ago.
Andy Bush: Well, tell me when you think about, for me it’s gotten a little frustrating and it’s become a debate about affordability on one side and on the other side it’s we need to increase supply. It’s really both, right? And what’s your take on kind of affordability and supply? Are they both parts of the solution?
Conor Dougherty: Yeah, I mean, I think, yes, the answer is yes. Well, I think that this is what happens when you get yourself into such a deep crisis. We have a lot of trouble with affordability today and some of this has to do with housing, and some of this has to do with the nature of how the economy has changed. Forty years ago, we had a more middle-class economy, manufacturing was a much bigger piece of every city’s job base. And as has been chronicled by many, many, many books, we’ve kind of bifurcated into this more knowledge-based economy such that one group of people tends to work with computer and they have higher salaries, and another group of people works in the service industry and they have hourly wages and much more precarious lives. But because the service class, if you will, is essentially waiting on the knowledge class, they have to live next to each other.
They have to live in pretty close proximity to each other which essentially was not true with manufacturing. There’s all these towns throughout Michigan and the Midwest or Wisconsin, which you are from. What’s the place? not a particularly —
William Shutkin: Janesville, did you say?
Conor Dougherty: Yes. That there was an old book called “Janesville.”
William Shutkin: Yeah, I remember.
Conor Dougherty: In essence that book is chronicling, it’s through one factory so there’s an event, but they’re really chronicling — anyway, what I’m saying is that this is the sort of structure of economy and have gotten. So how do you find affordable rents for people who don’t make very much money? That’s probably the affordable side, I don’t really see how you could do that without some sort of subsidy program or like a $25 minimum wage. There’s an equation there how much money you make, how much housing costs, you have to solve it from one side or the other. And then there’s this larger question of how do we create more housing so that we just have more housing stock? Obviously throughout history, affordable housing has traditionally been older housing and if we’re not ever building new housing, we have less old housing.
Anyway, so yes, I agree with what you’re saying. I mean, when you think about the Bay Area, why don’t we have enough affordable housing? Well, it’s all the housing we didn’t build from like 1980 to 1990. And when you see and I grew up in a Victorian in Noe Valley in San Francisco, and directly next to me is an apartment complex that’s kind of nasty, I’ll admit it’s not the most beautiful design and whatever. But it’s by far the most affordable housing on that block. You can just tell from the rents. And it was like the kind of project that they tried to stop because uglythings like that started getting built in the 60s. And again, I think for without going off track, I think that impulse was the right impulse because it is kind of ugly but the sort of let’s just stop everything I believe played a large role in the crisis we currently find ourselves in.
So anyway, so this SB-9 and SB-10 is a slightly, without getting into it, it’s like a process law that allows you to… But what’s more important is, there’s a million little things that have happened throughout California. For instance, there’s this whole process which there’s no way to bore you with this. But there’s this whole process by which the state essentially tells communities how much housing they should plan for and that process has been basically toothless for decades. And they’ve given it a lot of teeth. Now, those bills were passed two or three years ago and they were their little tiny processes —
William Shutkin: That’s SB-35, right?
Conor Dougherty: No, you missed this one. There was a lot of little bills that essentially have said that — and if you put them all together, right? They’ve built this thing where the ways in which a city can, cities start to lose their discretion. The further they fall behind in their housing targets, the more discretion they lose over future housing decisions. So a lot of these bills SB-10, and whatever are, the irony of SB-10 is that it is a local control bill. Now it is being opposed by people as a sort of top-down thing and it’s kind of funny — so SB-9 is a top-down thing, it rewrites zoning for all the cities. SB-10 is not — there’s a law that says cities can sidestep the environmental process when they want to rezone up to ten units. So there was a whole environmental process you have to go through when you want to rezone. They can just skip that, but they don’t have to if they don’t want to.
So it is squarely a local control bill in the sense that it’s saying to cities, if you want this option, you can have it but you don’t have to have it, you don’t have to take it. But what of course is unspoken in that is, as all these other forces are pushing down on them and saying you’re going to start losing planning power, they’re giving cities tools to, it’s not that it will make it much easier for them but it’s a tool they kind of have to take. Not this year, not next year, but in like eight years. As time goes on, it’s going to, you’re going to have to start using things like this. And anyway, so I think what’s interesting to me though as we were sort of saying before we pressed record on this podcast. You can as I just sort of chronicled in my last story, you can go to neighborhoods of San Diego, LA, it’s a little less in the Bay Area though you can find them. I mean, there are three of these on my block right now.
William Shutkin: Where are you, Conor? Let me know.
Conor Dougherty: I’m in Oakland. So there’s three of these on my block all in the past year. They’re big. I mean, they could definitely have a renter in them. That is if they try to build a triplex on my block, all hell would have broken loose. And I’ve never heard anybody say anything about, so the irony is next door to me — I wish I could — somebody is building like a mega-house. They literally raised the house 10 feet, and then they’re building a story on the bottom.
William Shutkin: Nobody is saying nothing.
Conor Dougherty: Nobody. Well, it’s loud. In fact, people are saying a lot about the disruption about it. But nobody’s saying anything about like, oh —
William Shutkin: There goes the neighborhood.
Conor Dougherty: There goes the neighbor — they’re like, oh, thank God, that’s that 1200 square foot house is now going to be 3000. But there have been all these of use sprinkled throughout there. So you can go now, I was just in San Diego for the story. You can drive down parts of San Diego where it’s like every other house seemingly has some sort of accessory unit. Now, some of them are extensive where they’re building them behind the house. Others are just a garage conversion. But one way or the other there is significant — and throughout California the number of permits for accessory units has shot up by like tenfold —
William Shutkin: And at the chronicle it’s sort of a new industry, right? The ADU manufacturing industry, yeah.
Conor Dougherty: And venture capital is getting into it.
William Shutkin: Yeah.
Conor Dougherty: And now let me ask you Andy, I want to ask this question here to get a sense or. I have —
William Shutkin: On record, Conor?
Conor Dougherty: Yes, I have heard from a couple developers that they are the larger multifamily developers. And they’re like sort of anti-it. Not really but they’ll say to me things like, oh, this is going to just really fire up the single-family home neighborhoods and it’s going to lead to this broader backlash. What we should really be doing is large multifamily along transit corridors. Some guy was saying to me, oh, a lot of these homes are going to be out in suburbs that are… What does it really help us if we have one ADU? But I have to say, I’m sort of like, it sort of seems like I don’t know, it feels like a little bit of NIMBYism ([“Not In My Back Yard”]) from them. I’m like, wow, the guys who’ve spent their whole career decrying NIMBYism are now complaining about this. And I feel like, it’s that these projects are too small scale for them to benefit from them. And so they’re just like whatever, I don’t care about anything that’s not going to make me richer. And I don’t know, that’s what it feels like. And I’m curious —
Andy Bush: I think it’s probably largely true. I mean, I happen to live in a neighborhood here in Boulder called Whittier that is a neighborhood that probably has more ADUs than any other neighborhood in Boulder. And it started when the city for a very short period of time allowed lots to be split in this neighborhood and everyone built alley houses. And before Boulder’s ADU law, and now there’s a lot of ADUs in the neighborhood. And it’s I think made it a richer neighborhood than almost any of the other older neighborhoods in Boulder. And so I’m both completely for it and a participant in it in a live way. But my sense is, I think it’d be an interesting master’s thesis how much of the supply can be addressed through ADUs and alley houses, and how much can be infill on old lumber yards like we’ve done or strip malls that don’t make any sense anymore.
And I think for me it’s the combination of all those things. And we’ll still probably be short 50 percent of what we need in terms of supply. So, it’s one of those questions where it’s not an either-or it’s a both-or —
Conor Dougherty: Oh, I’m with you on that.
Andy Bush: But I am surprised at how many people who are involved in the development industry seem somewhat skeptical or opposed to it.
Conor Dougherty: Yeah, I got an email from a guy the other day and he was like giving me the whole, the backyard is greenspace and it will lead to some — and also, I think that the thing —
Andy Bush: What most people ask for is the water, the sewer, the streets and most of the parking are there. So that’s part of what I love about it.
Conor Dougherty: Yes, and also —
William Shutkin: It’s true infill.
Andy Bush: It’s true infill, the infrastructure is there and mostly paid for. The streets get repaved every so many years anyway, the water and sewer are there. You’re almost crazy not to.
William Shutkin: But Andy and Conor, it seems to me here’s the rub, though. And this goes again to the public perception or at least the headlines and the pronouncements. I’m not sure your headline so much but others. So many of these strategies are really aiming not just at the affordability and housing supply issue. And part of the theory, right, is that more supply will reduce cost, that itself is a contested idea but it sounds good. But in California’s case, Conor, it’s not just we need more housing, but we also need more housing in job centers next to transit so we can start to reduce the number of super commuters, and we can start to reduce greenhouse gas emissions so we can really make a dent in California’s climate problem, et cetera.
So these laws are actually trying to attack multiple social policy challenges. And what we’re really talking about here are kind of these guerrilla solutions, right? Little ADUs, little units that are not in fact large scale. But are very tactical and in many cases kind of micro, right? Micro units and —
Conor Dougherty: Well, no. So people filed permits for 13,000 ADUs last year, so that’s like about a 12 percent of the new housing stock in California, right? From essentially zero, five years ago, right? And then on top of that, the thing that I think people rarely stop to think about but it’s crucially important, is how much of this is already there. How many, little guessing game we’ll play here, how many illegal — and when I say illegal I do not mean some dungeon apartment, I mean like, a nicely built backyard unit — how many illegal or unpermitted units do you think there are in Los Angeles County?
William Shutkin: Well, as someone who has one in Boulder and was recently issued a cease and desist letter literally 45 days ago, I can tell you I imagine it’s a lot.
Conor Dougherty: Okay. So LA County according to UCLA study which is pretty good.
William Shutkin: Andy, what did you say, half a million?
Andy Bush: I said half a million.
Conor Dougherty: No, it’s less than that. So it’s 200,000 in LA County, 300,000 in LA Metro and LA Metro includes parts of Orange County, so 300,000. So that’s three quarters of all the housing stock in San Francisco proper which is a city of about a million people. So and then also this —
William Shutkin: So that’s essential.
Conor Dougherty: Well, they are building that’s tens of thousands of new units illegally every year. And you go to a block or as I did in this story, you go to a block of Claremont which is a kind of classic, postwar suburb which is now centrally located neighborhood of San Diego. And you walk down a block, anyone on the block will tell you, there’s like three people who live down there, that person’s got their kid in the backyard, that one converted their garage, there’s like an aunt living with the kid. There are way more multi-generational households. So what I’m saying is that we are already building our single-family neighborhoods this way. It’s just not particularly visible, or it is visible and people just don’t acknowledge it. So this is already happening. This is a way that people are coping with the housing problem. I am not saying — let me just be loud and clear — I am not saying that small ADUs and things like that are the panacea or whatever, right?
William Shutkin: Yeah.
Conor Dougherty: But I mean, think about it. The home equity in California is like on the scale of trillions, right? Development, large multifamily development. I mean, for all the talk about how big capital, I mean, they’re not in that league, you know what I mean? Like they’re in the billions to tens of billions, right? So, there is a shitload of money if we can use that word on this podcast.
Andy Bush: [laughing] We can.
Conor Dougherty: That can be unleashed. And all that money right now is just dirt, right? And as I sort of talked about in the story, when you go look at, we talk a lot about the postwar suburbs in America and that’s our model. Our Levittown model, or whatever the analogs are in every particular city. But there’s a pre-war suburb, this concept has existed for quite some time.
William Shutkin: Streetcar suburb. Newton, Massachusetts.
Conor Dougherty: Yeah, but if you go look at the pre-war suburbs, they did have apartments mixed in with. But also people built their own homes. Now, I’m not saying we’re going back to that, right? But there were little small-scale farms that people did use for their own. I mean, not like GT today but like really did, it was part of the food budget for the typical family was significantly higher back then so it really did help people. And people had these little boarding houses, they would rent things out to people. And people were very conscious at that time of having a revenue source from their property. It wasn’t, oh, my property is going to appreciate and I’ll retire off of it. No, but it was like, I want a monthly outlay from this property. I want this property to be a job that generates monthly income.
And I think that we’re kind of going back to, or forcing people to go back to, thinking about their property in that way a little bit. Like, okay, if I want to buy this home, I need to have a way that the home is going to return some of the money that I need to pay off the mortgage because my own job will not cover the full cost of that mortgage. I met a woman —
William Shutkin: Does it get to the affordability challenge Conor, given that —
Andy Bush: I also feel like there’s a part of it that, I grew up in a Homes for Heroes home, right? So people used to be really happy with 900 and some square foot two bedroom home that they raised three children in.
Conor Dougherty: Well, so Levittown was—
William Shutkin: Yeah, I’m saying Levittown, 900, yeah.
Andy Bush: Mine was 920 or something like that. And three of us grew up there and then they did a small addition that added one more bedroom. But it was 1100 on a windy day.
Conor Dougherty: I’m not trying to like — I’m wary of preaching everyone should just be happy with less because that’s how it used to be, because that just doesn’t sell. But I do think that if you open people up to these options they will start to embrace them since they are already. I mean, I met a woman when I was doing the story in San Diego, I wished I would have put her in the story but she was in LA and I liked how the story just kind of focused on one neighborhood. There’s a woman who works — she’s like a mid-level bank employee, made like 75 grand a year. Her husband did heavy equipment leasing. So, when people lease bulldozers and stuff like that, they would go to this company. And both of them made their household income together, I know neither of them made six figures, was in the realm of like 150 grand.
And they were in LA and they wanted to get home ownership. They bought a duplex in South LA and then put a pair of ADUs in the back. And the woman just methodically explained to me, she’s like, “Okay, if you want to buy a fourplex, it’s like in the neighborhood of a million dollars.” she’s like, “But I can buy this duplex for 550.” Build the ADU for 150. She’s like, “So I now have a fourplex for 700.” And she’s like, “And if I want to take time off work, some of this income will help us.” And it’s also like a buffer against job loss which was how people in the 30s, people in those pre-war suburbs thought about things. And if you just listen to this woman talk, she is describing what we sort of call the American dream. I want to own a home, I want to have some ability to take time off work so I can help raise my kid.
Conor Dougherty: And she has seen the revenue from that property. Now, if you ask her in her heart of hearts, would she rather have a nice garden back there? Would she rather not be dealing with tenants? Which I mean probably, you know what I mean, like people with unlimited money do not have apartments in the back of their homes. I mean, they do have pool houses where they allow family members to stay but you know what I mean and —
Andy Bush: So she asked people whether they’d rather not have a job and not have to go to work.
Conor Dougherty: Precisely, so what I’m saying is this woman is looking for a dream of affluence and security and some amount of wiggle room in a way to kind of produce a nest egg. And she is seeing this solution as her route there.
Andy Bush: That’s very smart.
Conor Dougherty: Yeah, you know what I’m saying?
William Shutkin: Super smart. Yeah, no question and 150 between a couple is of course, in most California metros, basically moderate income.
Conor Dougherty: Yeah, like, definitely. And there are construction workers who make 80 grand, tons of them.
William Shutkin: Yeah, so that’s pretty, I like that story. And I do think as you suggest Conor, that this sort of guerrilla ADU, the stuff that’s yet unregulated. And by the way, the parking issue depending on what community you’re in could really be a big one and potentially a deal breaker. Because now with regulated ADUs, there are parking requirements which makes the ADU process a little more daunting or difficult for certain homeowners who don’t want to sacrifice one of their two bays or their on-street parking. But putting that aside, do you have a point of view given all of your reporting over the years and what’s just transpired in California about the environmental side of this equation? Do you think that this kind of infill that’s tactical and real is going to actually make a dent on things like carbon emissions from long commutes? Or is that just sort of a whole another —
Conor Dougherty: I think it’s possible. I’m not an expert in carbon emissions and all this. And I read an article today about how all these plant-based food companies actually emit a lot more carbon than people think they do. I’ve read a lot of things about how you could argue Tesla is a bigger polluter than a fossil fuel company right now because they are essentially using coal to power until they get to the solar —
William Shutkin: Yeah, lithium in the batteries, et cetera.
Conor Dougherty: Exactly. So there’s a lot of things we think are one-to-one that aren’t. And that is like an accounting that your listeners will be much better at than me. But I will say this. When we talk about environmentalism as a social movement, I believe we are largely, not exclusively talking about effectively NIMBYism. And here’s why I think that. There was this thing that of course, goes back 100 more years called conservation. And that thing was basically, let’s keep the wild open, you know what I mean? And keep it healthy. And as over time that movement grew, it was factory farming, extractive industries, but basically are trying to keep waterways and land and all these things less polluted. And that was a smaller, more exclusive social movement because the kinds of people who are really out engaging in nature in a kind of recreational way was, and to some extent remains, a more affluent group of people.
I’m not saying that was bad, I’m just saying that’s what it was. Environmentalism, this newer thing is or at least the mass movement it represents. Probably the most successful mass movement we’ve had in many decades, is really pretty inextricably tied to the rise of home ownership and the rise of suburbanization. The Sierra Club was not a large organization before the 60s. I mean, it’s obviously an old organization but it was not a large organization until home ownership really became tied up with this notion of wild spaces. And what we consider wild started to get a little sketchy, you know what I mean? Like a dog park or whatever. All these kinds of things started to become like protect that, right?
William Shutkin: Yeah.
Conor Dougherty: But let’s just without being cynical for a moment and this is going to tie back to your question. There was probably a lot of good that came from that certainly things on pesticides.
William Shutkin: Rachel Carson, absolutely.
Conor Dougherty: Things on air pollution, getting rid of leaded fuel, all these like really truly important things, waste disposal. All sorts of really genuine strides happened in a mass way, a bipartisan way, a sort of cultural way. Because people found it to be financially and sort of lifestyle wise very beneficial to being environmentalists. Like I’m going to get this park and my house is going to be worth more money. And so, on the one hand it’s easy to sort of cynically point to that, on the other you’re like, okay, well that worked. Okay. And if that worked, maybe we should like learn from what works.
Andy Bush: That’s what I was going to say, what’s the next movement that people from a climate change perspective or sustainability say, this is what we need —
Conor Dougherty: Tesla, I mean, it’s a status symbol, it’s telling people you can have more and be a good person rather than you have to live with less, right? And so, I guess what I’m saying is that these ADUs at least in the case of a lot of people, it’s sort of like though it is a trade-off. It’s a trade-off that’s like, hey, would you like to have a thousand more dollars per month? Or would you like to have extra space in your house and your equity already accrued, we’ll just pay for it? So I think in a sense, they are opening the door for density in a way that is going to make people kind of want it. I mean —-
William Shutkin: Because it does ultimately accrue potentially, to their bottom line, to their —
Conor Dougherty: Exactly, people get something out of it. And I think that that piece of it is really important to me when you talk to people.
William Shutkin: That’s an interesting way to look at it Andy, think of it as the sort of flip side of living next to Chautauqua or living next to Golden Gate Park, which we know adds value to nearby properties. It’s just like living on a street with mature street trees, can add 20, 30 percent to the value of your property. This is sort of the inverse, right? The idea that by smartly densifying with an ADU or small unit in the back, you’re adding cashflow, a kind of coupon or annuity to your portfolio, to your assets.
Andy Bush: I think you’re also looking at a lifestyle opportunity too in that I think that there are people who will do it in a way that, at some point, that they may rent it for a period of years and at some point it may be their future office when they decide to work from home. And that will change commuting patterns and some of the things that happen in the world or — I’ve got three children. I’m wondering if we shouldn’t build an ADU because one of them might end up having to live in it over the next year.
Conor Dougherty: Yeah. Totally. In fact, when you look at surveys of ADU rents, they are weirdly low, right? And so a bunch of people have done these surveys to try to figure out why are they weirdly low. And what they find is that they’re weirdly low because eithe they are free to family or heavily discounted to friends and family. And the other is, even when they’re not, even when it really is a homeowner with someone back there, they still are renting it for often less than they probably could because essentially they’re buying if you will, a tenant they really like. They will lower the rent to find like the person is going to be on your property. Like making sure they don’t make your life miserable, is most important.
William Shutkin: There is like a social capital dimension to it which is kind of —
Conor Dougherty: Yes. Now, I will say when you look at the ones that are built by developers which there are plenty like that, right? They’re much more straight market rate. And the true market rate is kind of what those are. But I guess what I’m saying is, you can see this kind of social capital thing happening like you said, these family things happening. And I will also point out, the new home market already has a lot of this, right? So, if you look at what Toll Brothers and all them are building, there’s all sorts of flexible housing built. They have like ways you can seal off part of the house. When people go build new homes, this is what people are wanting. So it’s not terribly surprising that you would see the existing family home market kind of catch up to that.
Andy Bush: And I also think that we’re at a point where you forget how quickly people’s perceptions can change in a decade. Once you live in a neighborhood like I have that has a number of alley houses and ADUs and you realize it’s kind of a richer, more diverse neighborhood in our case, more young kids. It kind of sneaks up on the neighborhood I think or on people, but a decade later it’s socially acceptable and it’s just fine. And it’s kind of what you would expect it seems like.
Conor Dougherty: Yes. And I think that now there are lots of risks with this, right? People who have a significant amount of home equity, which is people who are already wealthy in Amer — people who already have most of the wealth even if they don’t consider themselves wealthy, they are going to benefit the most, right? Because you either need to have 100 grand, you can just write a check for which is not most people, or you need 100 to 200 grand or really, they can get pretty expensive. You can get the $300,000, $400,000 or $500,000 ADU if you want it. But let’s say you want these modular ones you could do it for 100 grand. So that you either need to have 100 grand in equity which is a much larger group of people but still a small group of people. So, there are some fears that this will just kind of compound some of the patterns we’ve already seen in wealth inequality, whatever.
And that said, I still think it’s adding supply. I think it’s adding supply that allows people to have like a certain like life step. When you look at old school and when we were building nothing but single-family homes in the 50s, maybe that was like kind of where a lot of the housing stock should have been. Women in general on average had 3.5 children at that time, now it’s about half that. And people get married later, whatever. Now it’s not to say you do not as a guy with two kids in a single-family home. It’s not to say you don’t want that in your life eventually. But I didn’t buy a home till I was 39 because I didn’t need it, like I didn’t have to — I lived in an apartment, I saved money. So what I’m saying is that in addition to just needing more housing, there are like life steps that we don’t build housing for, at least not enough.
And whether it’s people living with family and stuff like that or being the tenant for someone else, I think those are all just like viable steps now. And then another thing which again we talked about but it’s worth pointing out. The neighborhood I profiled in my recent stories, Claremont. So this was a classic, postwar suburb that’s a little bit north of downtown San Diego but a little south of La Jolla if you know. But that neighborhood is like the middle of San Diego now. You read the old brochures which I go into in the story and it’s like, oh, come out here, right? But now it’s like, oh, 10 minutes downtown. And I think that most of the ADUs — I tend to be a market-oriented person — it’s not to say that the market is always right but it is to say that when a lot of people start doing something they sort of start to move towards an outcome like, there’s a message that they’re giving you.
And when I look at where these ADUs are being developed, they’re being developed particularly when I just looked at San Diego, in neighborhoods that kind of want density, right? So like, Claremont, which is based on lane values and proximity of a neighborhood that could use density meaning — it’s already in the middle of the city now, right? And then out by San Diego state which is much further out there. But because the student population wants higher density. And so I think that very naturally most of the development will start to accrue towards neighborhoods like that because that’s where the greatest opportunity is. And this fear that people are going to be building giant ADUs in really far out suburbs. First off, most of those new homes are being built like that anyway.
Andy Bush: Some people out in the suburbs made certain choices that are different than people who bought in urban areas and that’s likely to play out in their kind of acceptance and desirability of ADUs.
Conor Dougherty: Yeah, exactly. Anyway, I’m just saying I think that the neighborhoods where this is going to be most intense are going to be neighborhoods that are already getting pushed in a more transit-oriented direction anyway.
William Shutkin: Well, and San Diego I mean, ironically perhaps given its sort of Orange County proximity and politics that historically have been a bit different from LA and the Bay Area. San Diego as we know — and Andy and I have studied the area pretty extensively as we look to development opportunities — is sort of leading the charge on SB-375. On the sustainable communities sort of policy map. We have a lot of TOD, a lot of commitment on the part of political leadership to filling in and to growing in a way that’s smarter and greener and more inclusive going forward. We’re sort of seeing the data.
Conor Dougherty: Well, I will leave you guys with this. Which, people listening to a podcast called Sustainable City, you’re going to hate. But I feel like the… The question I always get asked when I’m at events is like, is there a city doing it right? Is there a place doing it right? And I always feel like the cities that never get mentioned in these discussions is the cities where people are actually moving. You never hear anybody say, oh, Phoenix is doing it right. You never hear anybody say, well, how about Houston? How about Dallas? How about Atlanta, right? The predominant social movement in America in terms of mobility over the past 25 years or whatever has been people pouring out of the coast and the Midwest, expensive cities and then declining kind of rust belt cities, to these massively growing sunbelt cities. That is our future, that is where we’re going. It’s not to say that LA won’t still be a big important place or New York won’t still be a big important place.
But it is to say that the leading edge of where we’re going is where college kids go, where they raise their lives, where they start. That’s those places, right? And I think that, as you guys know, if you go to Phoenix there are all sorts of lovely, walkable, amazing neighborhoods there. There’s also a lot of trash like sort of, oh my god, I’m in the worst example of sprawl I’ve ever seen. But that’s also true in Colorado, and there are vast stretches of the Bay Area that are horrible, right? And so I guess what I’m saying is, what I feel like I’ve seen is that the kind of neighborhoods of the future that really are more transit-oriented are probably going to be built in places where they kind of just allow you to build anything. And I think sprawl and density will kind of coexist in a way and this idea that you can just sort of regulate a perfectly dense city, I just don’t think it’ll happen.
William Shutkin: That’s such a great argument Conor, I love finishing on that. And of course, I’m just remembering you were the one who introduced me to the Cul-de-sac folks, remember?
Conor Dougherty: Yes.
William Shutkin: So I mean, the first car-free community in none other than Tempe.
Conor Dougherty: But I thought about that and I thought to myself. So when I went out there to do that story I just was like, the general permissiveness has allowed both kinds of developments.
William Shutkin: Very experimenting, sustainable and old school understanding.
Andy Bush: And for me, I don’t think that’s a terrible thing for Sustainable City podcast in the sense that —
Conor Dougherty: I’m just kidding.
Andy Bush: I mean, but for me what it suggests is, it takes experimentation to get things right or to find a good solution. And we don’t do that much experimentation in this country anymore because of trying to regulate the perfect city. I think a little more experimentation we might find some more good examples that will then be —
William Shutkin: Yeah. Which of course, is what the form-based code was supposed to be about, right?
Conor Dougherty: Well, there are other things, we haven’t gotten into any of this. But remember that like, there’s how mortgage finance works and stuff. There are all sorts of things in the background that prevent things from [inaudible]. In fact, one of the problems of ADUs is that they are harder for mortgage lenders to figure out. But they say that the lot split for SB-9 one of the most significant things is, once you have two houses the financing troubles essentially just go away because each company can just be like that’s a house, that’s a house. They understand that — anyway, but I do think that we don’t — maybe that’s a future podcast — I don’t think we talk enough about the Phoenixes of the world because that’s where we’re building housing.
William Shutkin: And it’s going to be super hot. So, it’s how to figure out how to live at night when the sun is down because it’s cool enough to actually move around, or a lot of indoor time or a lot of super sophisticated shading to keep it reasonable. And what do we know? We know that the biggest killer is not the hurricane but it’s the heatwave that follows.
Conor Dougherty: Well, you know what’s fascinating to me? My wife is from Minneapolis but her parents moved to Phoenix. And if you go to either of those cities, Minneapolis in the winter and Phoenix in the summer and you just watch how people live life, it’s identical. Like, just watch how someone goes from a car to a building. They just like bam, like run out, you know what I mean? And it’s like —
Andy Bush: [laughing] You stay inside a lot more, three or four months of the year, right?
Conor Dougherty: Yeah. You look at smokers, I always think smokers are interesting because like in Minneapolis you see them outside and they’re like pulling their hand in their sleeve. And then you see them in Phoenix and they’re like hiding under a shade. It’s just sort of like how the cities functionally operate identically during their kind of bad weather seasons.
William Shutkin: We’ll finish with Robert Frost, some say the world will end in fire, some say ice. Hey, Conor, it’s so fun having you and I feel like we’re at the tip of the iceberg, speaking of ice.
Andy Bush: I feel like we just got started but on a really good topic.
William Shutkin: There’s a lot more down there but you clearly have a lot of knowledge to drop. And I think the work you’re doing, the reporting is so cool and important. And I do love this sort of contrarian idea of the sustainable city is perhaps the city you are least likely to pay attention to or focus on in a podcast like this. So I would love to have you back Conor, soon. I know you’re super busy, but maybe we can do a part two talking about places like Phoenix.
Conor Dougherty: Yes, no, that sounds great. And by the way, just to be clear, I’m not trying to be contrarian for contrarian’s sake. As a reporter I’m always asking the question, what’s actually happening? And when I asked myself, where are people moving in America? Where are people building housing? Where are people building their lives? You cannot ignore the amazing growth of these Southwestern cities. So, I’m more just saying that’s what’s happening now.
William Shutkin: That’s where the cookies are.
Conor Dougherty: I mean, my personal preference, I mean, I’m a Northern California guy, right? There are all sorts of things I don’t like about Phoenix, but I’m not so snobby as to say it doesn’t exist, right?
William Shutkin: You have to pay attention.
Conor Dougherty: And that’s where the movement is.
William Shutkin: Phoenix has been doing a ton of infill, they’ve been doing so many things right. The real question, I think is heat and water. But that applies to so many places, including Colorado.
Conor Dougherty: Well, yeah. Not to delay with this anymore but people are like, does California have enough water? And I’m like, It’s a good question. That said, sending people to Phoenix doesn’t seem like a great way to solve the water problem, but nevertheless…
William Shutkin: Yeah, you’re sending lots of people, lots of places. Boise to Phoenix and every place in between. But Conor, thank you again for joining us. Your book is awesome. I read it probably a week after it was published however many years ago — “Golden Gates” — and highly recommend it to all. And I’m thinking your next book is Golden ADUs or something like that.
Andy Bush: [laughing]
Conor Dougherty: No, I think I’m done with that for a little bit but we’ll see.
William Shutkin: All right. Conor, thanks again for joining. Andy great to hang with you. And we’ll see you soon.
Next time join us for a discussion with green building guru Josh Radoff on zero carbon cities. Thanks so much for tuning in to this episode of the Sustainable City show. And a special thanks to our producer, Matt Waina. If you have any topics you’d like to hear about, or guests you’d like to hear from, or just have questions, please contact us at email@example.com.