California Would Have Low-Cost Housing If Government Allowed It: The Mortenson Experiment

Chris Mortenson, a San Diego developer, hired an architect to find out what type of SRO (single-room-occupancy) building he could develop for very low-income people, many of them homeless, if unnecessary state and local regulations were ignored. SROs are basically apartment buildings that typically have rooms without kitchens and shared bathrooms at the end of hallways. SRO units are no-frills, but they are safer and cleaner than the streets.

Here’s what the architect came back with:

  • A four-story building
  • 10-by-12-foot units (about half the size required by the existing building code)
  • Microwave in each unit
  • Sink in each unit
  • Toilet in each unit (partitioned, but not separated)
  • Communal showers at the end of each hall

Remarkably, San Diego waived its building code, and the building was built for less than $15,000 per unit, allowing people to rent each room for $50 per week. The building was immediately filled with grateful occupants.

Mortenson conducted his experiment in the late-1980s. Today, the inflation-adjusted costs would be about $34,000 per unit to build and $110 per week to rent ($440 per month), still a bargain. The cost to build one apartment unit to code in San Diego County ranges from $192,000 to $375,000, according to an analysis by Xpera Group. The average monthly rent in San Diego for a one-bedroom apartment is $1,808, according to RentJungle.com.

Mortenson showed that it is possible to build affordable, yet profitable, SROs if the government gets out of the way. Government is the root cause of unaffordable housing in California, and government impediments have dramatically increased since the late-1980s (for more on government barriers to housing development in addition to building codes, such as impact fees, permits, environmental reviews, zoning, and other land-use restrictions, see How to Restore the California Dream: Removing Obstacles to Fast and Affordable Housing Development).

The San Diego experiment was discussed in the book The Death of Common Sense: How Law is Suffocating America by Philip K. Howard, who wrote that building codes “dictate minimum room dimensions, require that bathrooms and kitchens be separate from rooms for every other use, and mandate hundreds of other details. Good ideas and technological advances fill every page of the code book. Who can object to any of this? No one, provided society can afford it.” Low-income people, however, cannot afford it, resulting in more homelessness as building codes make it impossible to build inexpensive housing in California.

Building codes have eradicated low-cost housing for decades. Sold by politicians as “getting rid of substandard housing” and “improving the lives of poor people,” William Tucker explains in Housing America: Building Out of a Crisis, “buildings are condemned as ‘firetraps,’ for not having adequate ventilation, not providing kitchen or bathroom facilities, and for not offering people ‘a decent place to live.’” Too often, the streets become the next home for people forced out of low-cost housing by burdensome, idealized codes.

Politicians and bureaucrats argue that “it’s in the best interests of poor people” to have their apartments “upgraded to code” lest they live in “crowded unsanitary substandard deathtraps.” The problem, of course, is that every so-called “improvement” will price many people out of a home, pushing some to the street. Howard notes that “the virtual extinction of single-room-occupancy buildings illustrates the side effects of this drive toward mandated perfection.”

In addition to building codes, some cities have eliminated SROs using density limits, occupancy restrictions, or “urban renewal” projects that raze entire neighborhoods, often targeting minority communities. (Walter Thompson wrote an excellent historical series on the disgraceful Fillmore project in San Francisco: How Urban Renewal Destroyed the Fillmore in Order to Save It” and “How Urban Renewal Tried to Rebuild the Fillmore.”)

Philip K. Howard reminds us that,

Real people tend to have their own way of doing things—a little borrowed, a little invented, and so forth. Law, trying to make sure nothing ever goes wrong, doesn’t respect the idiosyncrasy of human accomplishment. It sets forth the approved methods, in black and white, and that’s that. When law notices people doing it differently, its giant heel reflexively comes down.

Inexpensive housing would be built in California if government allowed it. Instead, streets teem with 151,000 homeless people, a human and moral tragedy caused, in part, by government barriers to housing development in California.

Lawrence J. McQuillan is a Senior Fellow and Director of the Center on Entrepreneurial Innovation at the Independent Institute. He is the author of the Independent book California Dreaming.
Posts by Lawrence J. McQuillan | Full Biography and Publications
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