By John Mirisch.
A new Wall Street “product.” Another investment hard-sell for global capital. A timeshare sales strategy.
Behind all the talk of solving California’s housing challenges and providing more homes, at the end of the day that’s all Senate Bill 50, the “bold” plan by Sacramento politicians to eliminate single-family zoning, really is.
So when former Los Angeles County supervisor Zev Yaroslavsky described a predecessor bill as WIMBY, short for “Wall Street in my backyard,” he may have had no idea just how prescient his words were.
Despite being tabled for the moment, SB 50 is far from dead. Like so many other zombie bills in Sacramento, SB 50 will be back, gorier than ever, maybe even this year as a gut-and-amend zombie special.
Using a flawed Reaganomics trickle-down theory of market economics, the bill’s supporters claim that blanket upzoning, leading to the construction of luxury and market-rate housing, will actually create more affordable housing, and in the process also will magically solve California’s homelessness crisis.
As if all we need to do is let the unfettered market solve the problem of housing affordability and homelessness. As if an unfettered market would also make healthcare more affordable. As if building more Porsches will bring down the price of Priuses.
In reality, SB 50 represents a full-court press to use the state’s housing affordability challenges to make California the testbed for this new product, designed to be particularly attractive to global capital.
If communities and single-family housing and individual choice need to be sacrificed on the altar of Wall Street profits, so be it. If cities need to be hypocritically scapegoated, and single-family housing needs to be demonized as inherently racist and immoral, so be it.
The reality is that single-family housing may stand in the way of Wall Street’s ability to successfully create and market its new product.
It’s the latest version of collateralized debt obligations, CDO. This time around, they’re calling the product NBO’s, short for “never been occupied.” They’re packaging these new investments like derivatives, junk bonds and other assorted “products,” which Wall Street creates and then markets the heck out of.
It’s just a new way to slice, dice and sell real estate, using the non-sequitur of homelessness as an excuse for the war on single-family housing and on the ability of communities to choose for themselves.
And it’s not difficult to see why Wall Street loves SB 50 so much.
As community activist and lawyer Hydee Feldstein told me in an email:
The legislation minimizes or eliminates distinctions among parcels of residential real estate (such as removing use restrictions), and thereby commoditizes and standardizes the underlying real estate making it much easier to securitize and attract global investment.
The standardization lowers risk, diligence, and costs and facilitates meeting investor expectations and disclosure requirements. By leaving the selection of what to build as a cafeteria style set of options, the developer is free to select whatever product is most in demand, salable and financeable in the global capital markets at any given time.
In other words, global capital wants to dispense with such trivialities as livability, diverse neighborhoods, housing choice and dynamic, unique communities. Diverse communities inhibit profits.
Against this background, it was extremely perceptive when Yaroslavsky remarked that the predecessor bill was a “real estate bill, not a housing bill.”
Wall Street is notorious for not caring about the path of destruction it leaves in its wake in search of ever-greater profits. It’s not particularly surprising that Sacramento politicians do a much better job of responding to corporate overlords and oligarch patrons than to the varied communities they are supposed to represent.
Scores of housing bills circulate in Sacramento, one worse than the next. Collectively, they threaten to destroy our unique and dynamic communities to various degrees, many in the service of Wall Street and other special interest groups.
There would be plenty of money to subsidize affordable housing, which is the best and perhaps only meaningful way to address the affordability problem, if only Sacramento politicians addressed real crises. Instead, they twist the housing situation into a war on single-family housing and an assault on communities.
But affordability and homelessness never were more than a pretext to set up the next feeding frenzy for global capital.
John Mirisch is mayor of Beverly Hills, email@example.com. He wrote this commentary for CALmatters