Image by Charles W. Bailey Jr
A recent Merc article observes that some developers are invoking the “builder’s remedy” to downsize or downzone SJ projects, while the provision was intended to encourage and expand affordable housing options in NIMBY jurisdictions. Yet, YIMBY Law’s executive director Sonja Trauss is all in favor of (what she frames as) developers bypassing minimum density restrictions to pursue fiscally feasible projects. An Opp Now exclusive.
In San Jose, some developers are using the builder’s remedy to build smaller projects than what are otherwise zoned. However, I wouldn’t extrapolate that these situations are the norm. This type of thing isn’t what’s mostly happening. YIMBY Law has about 40 builder’s remedy projects in our database (just the ones we know about; there are likely many more), and the San Jose developers are the only ones invoking it to get around their jurisdiction’s minimum density.
Now, many cities pass minimum densities; anyone can pass them. But having those laws on the books doesn’t make a high-density project worth it. For a developer, it’s very cheap to build relatively low-density housing (I’m thinking of 3-story wood-and-sticks townhouses—“rowhouses,” as they’re known outside of California). But it’s only worth it to build 5-story apartment buildings in very high-demand places. Once you get to 4–5 stories, you face additional requirements like putting in an elevator and adding space for staircases; and for 8–20 stories, you can’t build it using wood anymore. The whole project can become quite expensive.
So I don’t think that, absent the builder’s remedy, these San Jose developers would have built higher density housing; I think they would have built nothing. I’m not concerned about the builder’s remedy being used in this way, to help developers pursue projects that otherwise wouldn’t have been possible financially.
Something else to note: A devious strategy many cities use is to require a minimum density where (by looking at the selling prices of nearby homes) they know the minimum density they put in isn’t economically feasible. It’s a great strategy for jurisdictions that don’t really want to build; they can say, “Look, we zoned for so much housing!” And let’s say in a certain location, it would be profitable to build 30 units, and a city is requiring 50—so the public gets zero. I don’t know enough about San Jose as a particular site, so I can’t ascribe reasoning to their minimum density requirements (and perhaps, it was once realistic but became weaker as the business cycle changed); but this is a sly tactic cities use.
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