Construction at Front and Laurel Streets in downtown Santa Cruz
Construction at Front and Laurel Streets in downtown Santa Cruz.
(Kevin Painchaud / Lookout Santa Cruz)
Opinion from Community Voices

Anti-density stances are bad for Santa Cruz — so are ballot initiatives on building heights

Economist Richard McGahey responds to Housing for People activist Susan Monheit’s Sept. 15 Lookout piece. The two have been engaged in a lively public debate about changes to downtown Santa Cruz and the usefulness of a ballot initiative on tall buildings Housing for People is trying to get on the March ballot. McGahey, whose 2023 book on inequitable cities was nominated for a National Book Award, is against the initiative. “Not only do we voters not know enough, but such voting actually is anti-democratic, favoring wealthier people and homeowners,” he says.

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I appreciate housing advocate Susan Monheit’s concerns about building taller buildings in Santa Cruz, but history and research show the ballot measure she advocates will worsen Santa Cruz’s housing crisis.

Monheit is a member of Housing for People, an organization advocating a March ballot measure allowing voters to vote down taller buildings. In her Lookout piece on Sept. 15, she restates classic anti-housing density arguments in responding to my recent pro-housing Lookout article.

I’m a progressive economist. I was Sen. Edward M. Kennedy’s (D-Massachusetts) economic advisor, Democratic staff director for the Congressional Joint Economic Committee, and a Ford Foundation program officer in equitable economic development. My recently published Columbia University Press book on America’s anti-urban economic and racial biases, “Unequal Cities,” was nominated for the National Book Award.

Progressives and liberals make a mistake when they oppose development. More housing supply can be progressive and helps unlock housing access for nonwhites and lower- and middle-income people.

I own a second home (a mobile home) in Santa Cruz and support the empty homes tax. We rent our mobile home out to new university employees. I support repealing Proposition 13, which has enriched homeowners while starving cities of revenue. I think progressives should aggressively push for accessory dwelling units (ADUs) and other, more dense housing wherever they can.

Monheit and I disagree on two issues. First, does more housing increase affordability?


And second, is allowing voters to decide on specific housing projects more democratic? No.

I argue the ballot measure would, in fact, empower wealthier (and often whiter) voters over the broader needs of the community.

The first issue is crystal clear: Adding housing supply — even higher priced housing — lowers overall prices and rents. A large and growing body of research supports the link between more housing and lower housing prices and rents. Just this week, John Burn-Murdoch in the Financial Times summed it up: “Repeat after me: Building any new homes reduces housing costs for all.”

Monheit and other housing opponents, typical of many left-NIMBYs (Not In My Back Yard), say economics don’t apply because Santa Cruz is unique. But they’re wrong.

Monheit writes “increased supply will never outstrip the unlimited demand” and “building mostly market-rate housing does not solve California’s housing crisis.” NIMBYs in New York, Seattle, Los Angeles, Denver, Boston and many other cities produce the same “but we are unique” reasoning to deny basic housing economics.

The net effect? Less housing and higher prices. Research shows if buyers can’t find housing in their desired neighborhood, they cascade down to cheaper ones and push up prices in once-affordable neighborhoods.

Monheit and I do agree more affordable housing is a priority for Santa Cruz. That means — like most housing — private developers will build it.

“Developers” often are emotionally invoked as the enemy by anti-housing activists. But did you build our own house? Almost all of our homes were built by a “developer.” (A few people in self-constructed yurts aside.) The issue isn’t “developers,” but using binding laws and regulations to leverage market forces to generate more affordable housing.

Monheit’s article restates erroneous ideas about housing, density, and development in supporting her vision of Santa Cruz as “an iconic beach town, branded for sun and fun.” Like many anti-housing activists, she writes, “Housing for People does not oppose increased housing density,” while arguing against more density in the Laurel Street project and elsewhere.

Anti-housing advocates often claim to support housing while simultaneously advocating policies that make housing very difficult and more expensive to build. They call for uneconomical percentages of affordable housing, rules on height and density, parking requirements, idiosyncratic building design that fits vague ideas of “neighborhood character,” or unaffordable levels of public subsidy.

But we either build up, or we build out.

The area of Santa Cruz along Laurel and Front streets near the San Lorenzo River are undergoing a drastic overhaul.
(Kevin Painchaud / Lookout Santa Cruz)

Denying denser, higher buildings in Santa Cruz pushes housing to the perimeter. That takes out farmland, increases traffic and congestion and adds to pollution. The Laurel Street project is near the bus terminal, and people could live there without being so car-dependent.

City planning director Lee Butler noted earlier this year that most people in Santa Cruz think “we should not be growing out into our open space areas” like DeLaveaga Park, Pogonip or agricultural land. That means “since growing out into our greenbelt is not an option, growing up is what we must do.”

Governments should aggressively fight for affordable housing in any new multifamily development, as the planning department, mayor and city council do.

OK, that’s point one — housing supply increases affordability, and we need housing density downtown near transit, while assuring there’s significant affordability. Now to the second issue — should voters in elections vote “yes” or “no” regarding individual housing projects, as Monheit and others desire?

No. Neither Monheit, nor I, nor any voter, knows enough about dynamic housing markets to vote abstractly on individual projects. Those result from complex interactions among state and local laws and regulations, market conditions and negotiations between professional staff and developers, and are subject to elected officials’ oversight.

Our professional planners work hard on projects, and we can vote for representatives who fight for affordable housing while significantly increasing housing overall and negotiating hard with developers. If they don’t produce, vote them out.

We’ve already seen political action on finding a solution for the Laurel Street project. The mayor and city council pushed back against the planning department’s recommendation, seeking to lower the building heights to 12 stories while getting 20% affordability in the project.

But we also need to listen to our professional planners.

When the mayor and council advocated lower buildings, city planning director Butler warned that “the question is really whether the projects will be viable at that affordability level.” In real estate lingo, do they “pencil out?”

Affordable housing, by definition, is lower priced than market rate, although construction and operating costs are similar. That means it’s subsidized, and the subsidy has to come from somewhere. Since we lack the huge public funding needed, in part due to the revenue restrictions from Proposition 13, leveraging profit-making projects to include affordable housing is our best option.

But shouldn’t voters be allowed to vote on specific tall projects? Again, no.

Not only do we voters not know enough, but such voting actually is anti-democratic, favoring wealthier people and homeowners.

Richard McGahey is an economist who lives between New York City and Santa Cruz.
Richard McGahey is an economist who lives between New York City and Santa Cruz.
(Via Richard McGahey)

Research shows ballot measures, especially on housing and zoning, disproportionately draw in wealthier homeowners. This means lower-income people and renters are not heard equally, so such balloting is illusory democracy that in fact empowers wealthier residents. (The same results occur withexcessive “community” meetings and local control processes.)

Anti-density advocates are in effect anti-housing, and Monheit’s anti-housing tone comes through in several places. She contrasts “densely packed housing” with “livability.” Allowing denser housing in taller buildings will “have a dramatic and irrevocable effect on the timbre of our town.” Higher buildings along Laurel Street will feed a “dramatic departure from the iconic beach town, branded for sun and fun, that makes Santa Cruz renowned.”

Santa Cruz, indeed, is renowned nationally — for being the nation’s most expensive rental market relative to income. It’s worse than Boston, Seattle, San Francisco or New York. That’s the ever-growing reality of Santa Cruz’s housing, and that’s what the anti-housing proposals offered by Housing for People would foster and continue.

Economist Richard McGahey studies cities and inequality at The New School in New York City. His 2023 book, “Unequal Cities” (Columbia University Press), was nominated for the National Book Award. He was executive director of the Congressional Joint Economic Committee, assistant secretary for policy at the U.S. Department of Labor, and economic advisor to Senator Edward M. Kennedy (D-Massachusetts). McGahey also was director of impact assessment at the Ford Foundation. He blogs regularly for Forbes, and divides his time between New York and Santa Cruz. His previous piece for Lookout was also about anti-density in response to the Housing for People ballot initiative.