How a Parking Lot Fight Explains America's Housing Shortage

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0:41In the meantime, this week we're bringing you a special series on one of the biggest financial challenges facing Americans today. Housing. The American dream of owning a home has become more elusive with rising prices, limited supply, and high mortgage rates. So what are local lawmakers and federal politicians doing to fix it? Today, we're looking at the NIMBY, not-in-my-backyard politics, that has been a long-standing hurdle in the push for new housing. That's giving way to a YIMBY, yes-in-my-backyard groundswell. What's News host Luke Vargas takes us to one neighborhood where a fight over parking lots has become a test case in America's housing debate.

1:20That's after the break.

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1:47California has said yes to building more homes. Several estimates put its housing shortfall at or above 2.5 million units, and state lawmakers have passed bills to help get projects approved, especially if they're near public transit. But not far from Menlo Park Station, where express trains whisk commuters to San Francisco in just 40 minutes, it's clear that the state's YIMBY movement still has plenty of work to do. For years, this leafy suburb home to Meta has been trying to build 345 housing units for what are deemed very low-income households. For a family of four, that's an annual salary of between$60 ,000 and$93 ,000 a year.

2:33And where they'd be built is over three downtown parking lots. It's stunning, isn't it? You imagine. I met up with Leora Tanwatko-Ross, the California director of YIMBY Action, Menlo Park's Lot 3. It's sort of a back alleyway, right? You can see those lines of trash bins, right? This kind of like the service entrance to all of these places. And it's really just ripe for new buildings and places to live. I mean, if you look up, we could go up. Absolutely, we could. Proposals from three developers envision replacing Lot 3 with a multi-story car park with apartments at the top. But many local businesses aren't buying it.

3:18We are very, very dependent, of course, as a grocer, on parking. Third-generation grocer Richard Drager supports affordable housing at alternate sites, saying that shoppers put off by years of construction and parking disruptions would take their business elsewhere. What I see is that every single parking space represents a certain percentage of your sales. When you take away 50%, now try to make ends meet. If you look at this downtown and you compare this downtown with most downtowns, you don't have the Fortune 500 group of retailers. So what happens, unfortunately, is as these small independent businesses get pressured, who takes over that aspect of the market?

4:09It's another big chain operation. Outside his supermarket and in shop windows around Menlo's distinctively old school downtown are signs to save downtown Menlo, backing a November ballot measure aimed at stopping any repurposing of the parking lots without a public vote. Should it pass, Tenwatko Ross predicts a lengthy fight with YIMBY groups suing if development plans are delayed again, wasting time and money as the housing shortage remains unaddressed. Housing really dies a death by a thousand cuts. If you say, like, you know, this housing proposal needs to fix every problem, It needs to provide housing, but it also needs to make sure it fixes all the traffic problems in our town.

4:53Then builders will just simply pull out. Well, to help us unpack zoning's role in the U.S. housing shortage, I'm joined now by Journal Residential Rental Market and Housing Policy reporter Rebecca Pachoto. Rebecca, what is the outlook around getting housing built at the local level? Some big cities obviously have been trying to tackle their longstanding barriers to new construction. Obviously, California there. I came across plenty of groups that have YIMBY in their name. It's a moniker that's kind of in vogue now. New York's mayor proudly embraces it. And yet, I also heard from campaigners that there are basically more avenues than there have ever been for people to object to new housing as well.

5:34So lots of local jurisdictions are experimenting more with building housing, much more than they did a generation ago. As you saw in Menlo Park, lots of these local areas are trying to figure out how to balance incentives versus regulations, carrots versus sticks. You know, what works best to get developers building? For instance, in Minneapolis, Minnesota, we've seen that city successfully usher in a huge wave of new apartment construction with the passage of its Minneapolis 2040 plan. This is basically a 20-year housing plan to ease a host of different zoning restrictions, eliminate single-family zoning and parking minimums, and make it easier to build near transit.

6:16We've seen similar success in New York City with the city of Yes rezoning, which is widely considered one of the most comprehensive overhauls of the city's zoning program in decades. So you're seeing success, especially when it comes to, you know, relaxing some of these age old zoning laws and making it easier to build kind of unbottleneck some of those bureaucratic bottlenecks. But, you know, you're also seeing some of these experiments have unintended consequences in Portland, Maine. Developers have actually slowed down their building and they credit that at least partly because of the city's, quote, inclusionary zoning requirements.

6:57basically that means that a certain number of apartments must be designated as affordable in buildings of a certain size and as interest rates and construction costs rise developers are now saying that you know these affordability requirements have become financially untenable and part of the requirements is if you don't abide by them there's a there's a fee so a lot of these developers are basically hitting pause. And Portland is now looking at, you know, reviewing those affordability requirements. Rebecca, it's a great example that Portland want a reminder that unless cities are actually the ones building the housing themselves, they're reliant on developers who need to see it to be financially worth their while to be putting in proposals.

7:40Just staying with the factors maybe favoring more development, what kinds of policies are more immediately actionable if a city or town is trying to get more projects built? Yeah, I mean, one of the most common routes we've seen so far has been this approach of lighter touch density, you know, allowing for more duplex construction or allowing for more accessory dwelling units on properties, adding to the housing stock without fully transforming what a neighborhood looks like. ADU is kind of the same thing, right? Someone's living out back, but, you know, at least from the street, kind of looks like the same neighborhood it's always been.

8:15Yeah, absolutely. And California has made a huge push to ease restrictions to build those ADUs. It's something that kind of allows you to circumvent this aesthetic pushback that you might get if you're trying to build an apartment building. This lighter touch density approach works best and most effectively in places like Wichita, Kansas, where you have large stretches of land that people are able to build on because this allows developers to manage the increase in their construction costs, build two homes on one lot, get two streams of revenue where they would have previously only had one. On the NIMBY side of the ledger, is it the same old arguments you're hearing against new construction?

8:59Or, I don't know, is some rethinking of how things are built leading to a rethinking of lines of argumentation to try and stop those proposals? There are many reasons. Many of these reasons are the ones we've heard for decades. It's the aesthetic pushback. It's the traffic constraints. It's the feeling that a city doesn't have the infrastructure to support new population that a housing boom might bring in. You're also seeing many developers experiment more with factory-built housing because it's easier, cheaper, faster to build, and the technology has really advanced. But these are not always architectural masterpieces, these modular apartment buildings and modular homes.

9:36And so you tend to see some resistance to that aesthetic disruption. The cookie cutter blocks of new apartments. Exactly, exactly. But at the end of the day, it does get the housing built more quickly. And I think the technology is advancing in a way to try to make them a little prettier, but it's a work in progress. Finally, Rebecca, in our closing seconds here, just handicap for us the fight to come. Do you see a factor here on the NIMBY side, on the NIMBY side gaining in importance, likely to tip the scales in this housing battle going forward? Yeah, I think, you know, as we head into the early voting season for the midterms, affordability is at the top of every elected official's mind.

10:16And as a result, every politician who is campaigning for office this November, you know, wants to show that they have a victory on housing. We are seeing this congressional housing bill, you know, gain much more momentum. Lawmakers are sending a strong message to local leaders that, you know, the federal government wants to make it easier to build housing. This is now a political priority for many lawmakers in Washington. And driving the affordability conversation is a sense that, you know, high housing costs are now reshaping the life milestones of the average American. People are renting for longer.

10:54People are seeing homeownership as a potentially something that may never happen for them. And that reshapes what the family looks like. It reshapes, you know, what someone's job opportunities might look like. And so as a result, I think elected officials feel much more pressure from voters to get this house in order. Reporter Rebecca Pachotto covers the residential rental market and housing policy for us at The Journal. Rebecca, thank you so much. Thank you so much for having me. And that's it for this special episode of Your Money Briefing. This episode was produced by Hattie Moyer with sound design by Michael LaValle, our supervising producer with Sandra Killhoff, and I'm Luke Vargas.

11:37Tune in tomorrow as we look at how labor availability and affordability concerns are pushing a rethink of what homes look like and how they're built. That'll be in your feed same time tomorrow.

11:52Access to affordable credit helps me pay my employees, but I don't really need it. Infliction is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they? Tell Congress, stop the Durban Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.