Which way to housing justice for Austin?

By Andrew Dobbs

Austin Chronicle Photo — John Anderson

Over the last two years the Austin, Texas chapter of Democratic Socialists of America (DSA) has become one of the organization’s more influential chapters and one of Austin’s largest political organizations — a big deal in one of the South’s most progressive metropolises. All of a sudden, what Austin socialists think matters.

One topic they’ve waded into of late: the city’s comprehensive rewrite of its land development code. Normally the sort of eye-glazing bureaucratic task that only the most committed policy wonks care about, Austin’s status as one of the country’s most segregated and aggressively gentrifying cities has made this effort — known as Code NEXT — the hottest topic in local politics. Some members of Austin DSA organized a Housing Committee in response, and they have proposed a set of demands for the new code to be adopted by the chapter soon.

The demands, however, are sure to disappoint anyone hoping that local socialists might bring an outside perspective to well-worn local debates. The Housing Committee was organized by established activists in Austin’s local urbanist movement — one side of the defining political struggle here between those seeking greater residential density and urban development and those fighting to preserve traditional communities. Despite some lip service to socialism the document simply repeats the demands of their side.

How instead should socialists orient to the topics at hand in Austin or other gentrifying cities? Austin DSA risks missing the opportunity to lay out such a vision, but understanding how and why the Code NEXT proposals are wrong can help us to see the possibilities for a socialist local housing policy and justice for the displaced and dispossessed.

I am not a DSA member, and I have a very different sense of the tasks at hand for the revolutionary project right now. Still, as an Austin resident who struggles to pay his rent from time to time I am fearful that these well-intentioned progressives will put forward policies that make things worse for working families, not better. It is to these honest, earnest socialists I am writing today, and despite our very real differences I hope this message reaches them in the comradely spirit in which it is written.

The Sides of the Struggle

The key error of the Housing Committee’s policy is that it fails to see beyond the local terms of the debate to the deeper class struggles at their root. “There is a heated debate between pro- and anti-density advocates about CodeNEXT’s proposed changes, with both claiming their opponents will increase gentrification and unaffordability,” the document says. “Both sides’ solutions are at best inadequate and at worst counterproductive.”

These pro- and anti-density advocates are two factions of the propertied classes struggling over ways to preserve and extend their rents — used here in the economic sense of a premium charged by a property owner for access to a limited good or service they control. The Committee never breaks with this framework, and picks the “pro-density” side — going so far as to literally copy and paste the program of an unabashed urbanist advocacy organization, the Friends of Austin Neighborhoods (FAN).

FAN is part of a network of local political organizations — most notably AURA and the #atxurbanists Facebook group — that comprise the local urbanist movement. They all hotly oppose the city’s established neighborhood associations and support essentially every proposed development in the urban core that promises to increase residential density or eliminate the distinction between residential and commercial zones.

Recently their chief organisations have formed a coalition with the city’s corporate and developer lobbies and a handful of environmental and liberal advocacy groups known as Evolve Austin to push through Code NEXT while pressing it to allow more intense land use for the city’s property owners.

Austin DSA would do well to reject both this “pro-density” ideology and it’s “anti-density” alternative and listen instead to the most advanced local socialist movement in the United States, the Malcolm X Grassroots Movement in Jackson, Mississippi which calls for “reconstructing the ‘Commons’ in the city and region by decommodifying shelter and other basic human needs.” Instead, they presume that the market is almost a force of nature and capitulate to it without a fight.

Supply, Demand, Displacement and Colonialism

The Housing Committee, however, dismisses this imperative. “We cannot pretend the private market doesn’t exist,” they say before going on to detail only “market-based” solutions to Austin’s housing crisis. The urbanist activists controlling the Committee believe that Austin has a crisis of “affordability” because local housing supply does not meet demand. Their solutions involve increasing housing supply without incurring the environmental harms of urban sprawl, i.e. intensifying land use in the city’s core.

This framework is problematic in at least three ways. First, it reflects liberal thinking and not socialist analysis. Austin’s housing occupancy rate has fluctuated little for many years now — it is about 94%. This is excessive, but it is only a “shortage” of housing because the units are being distributed through the market and such low vacancy strengthens the bargaining position of landlords. There are thousands of more units of housing than there are families seeking it, and pointing out the failure of market-based housing could win over new support for decomodifying shelter and other basic human needs. Instead, they presume that the market is almost a force of nature and capitulate to it without a fight.

The second problem is that “supply and demand” logic confuses “affordability” with the struggle against displacement. Austin was founded by Edward Burleson — a land speculator and death squad commander responsible for murdering hundreds of Native people — as a means to encourage westward Anglo expansion and the displacement of the Comanche people.

In 1928 the city ordered the displacement of all African American and Latino neighborhoods west of East Avenue (now IH-35), and when the Black enclave of Clarksville refused they were denied sewage service and paved roads as late as the 1970s. Dozens of families there were involuntarily displaced when MoPac was built through their neighborhoods, and when services were finally delivered rapid gentrification displaced almost all remaining African American families — the neighborhood is almost all white today.

Since 2000 gentrification in East Austin has meant the displacement of thousands of families, and Austin is the only major US city with overall population growth to experience an absolute loss in the number of African American families. “African Americans did not choose to leave Austin so much as they were compelled to leave by several structural forces — historical, economic, and governmental — that continued to create inequalities in their lives,” writes Eric Tang, the UT professor that has documented this phenomenon.

There is no way to be a progressive in this city — let alone a socialist — without demanding an immediate and absolute reversal of this historic process. Austin’s urbanists try to sidestep the issue, and their preferred policies perpetuate it instead.

Most displaced Austin families today are forced out by a sharp increase in housing expenses, but lowering or slowing these costs is no guarantee for preventing displacement any more than ending the forcible methods of the past solved the problem. Urbanists’ supply side solution in particular proposes displacing traditional communities, building new “dense” developments, and then returning some fraction of that community back to the area.

Even if this worked — and it will not — this amounts to building a reservation system in East Austin instead of simply defending threatened communities.. Community preservation is rational, but it isn’t profitable. As long as the logic of the market frames your thinking profit, not human need, will always determine outcomes. Socialists are supposed to call this out and resist the imposition of market relations on our families and communities.

The alternative — which urbanists and their allies on the Housing Committee have fallen into — is the error of economism, the artificial reduction of all political struggles to simple economics. Austin is a product of settler colonialism and African slavery, and the liberation struggle of colonized people of color is not reducible to average rents. An authentic socialist housing policy must bring the anti-colonial struggle into the discussion, and push back against simplistic “affordability” policies that fail to allow exploited people to dictate their own futures.

Who is Demanding Austin’s Housing Supply?

The third failure of urbanist theory is its failure to ever assess the true nature of local demand. They presume that the demand is coming from a huge influx of new population, but that influx is actually of secondary importance. Since 2010 Austin’s population has grown by 17.8% while average rents have grown by 32%. Bourgeois investors and speculators buying housing for its exchange value is primary, driving this accelerated demand with their persistent “flipping” of homes and aggressive pursuit of “upzoning” — intensified land use — for their properties.

A socialist housing policy must fight to end speculation in housing. In Austin we must specifically resist the settlement of high income earners employed in the local tech industry which sustains the capitalist demand for housing investments — for now. The specific shape of such resistance is an open question radicals will need to investigate and experiment to answer.

Whatever we land on, the tech industry in particular is subsidized by the state and federal governments, especially through the University of Texas, the military industrial complex, and US imperialism. We can attack first local subsidies to private industry, but we must also contest the tech industry and “startup” culture themselves, the University, and US imperialism. Loyalty to any of them on the part of self-described socialists is misplaced, and there is no solution to our crisis where these institutions retain their present power.

We need to leave no ambiguity here: there is no meaningful mitigation of the present crisis without adopting demand-side solutions. There are far fewer clear options on this front, and they present a much deeper confrontation with the logic of capital, but a document prepared by visionaries and radicals should not shy away from this. The Housing Committee never takes them on at all.

Marx’s Theory of Ground Rents

All the phenomena described so far are at least city-wide, if not national or even global in character. So how is it that communities of color are getting it worse than others?

The Austin DSA Housing Committee suggests that community leaders in these areas have been duped by their “landowner allies in center city Austin” into supporting policies that “will only exacerbate Austin’s existing housing shortage, decrease affordability, and further displacement.” Resisting the commercialization of land use in wealthy neighborhoods, urbanists argue, drives development into areas with less political influence, resulting in gentrification.

This is incorrect, and socialists need to stop relying upon received conventional wisdom. A better starting place would be Marx’s work on the issue of ground rent. Marx theorized that all value is created by labor, but what happens when the same amount of socially necessary labor time is used on two different pieces of land with very different qualities of soil? Two different values are produced, and Marx designated the surplus derived from the more fertile piece of land as a “differential ground rent.”

In cities today different properties have different “entitlements” — allowed land uses — giving their owners access to different levels of “fertility” and ground rents. Allowing a greater number of rent-capitalizing facilities on a single property increases its productivity and ground rent, as does shifting from a use-value-oriented residential usage to an exchange-value-oriented, revenue-generating commercial usage. Urbanists especially love land use changes that do both — ”mixed use” developments.

If a piece of land, on the contrary, had no entitlements whatsoever and no investments in it — no existing or currently allowed uses — you would still have to pay rent on it in Austin. In other cities demand is low enough that some land has been abandoned, but not so here. This price to lease even an empty lot with no entitlements is what Marx would call the “absolute ground rent.” This absolute ground rent arises when all real estate property in an area is owned by a small number of landlords who form a monopoly as a class, and through this monopoly can charge a base rent for access to the land.

These monopolies once focused their investments in industrial centers that thrived when US capital was concentrated in primary production — big steel mills in Cleveland or Buffalo, etc. There was a time when rent was climbing there too. Capital shifted these processes to the Third World, however, and US capitalism developed instead a focus on advanced production and the technological processes necessary to sustain it. Real estate investment abandoned those cities, collapsing their absolute ground rents and inviting urban decay. Investors turned instead to areas with investment opportunities in the tech and advanced production sectors, cities like Austin.

This is why demand-side solutions contesting these industries’ political hegemony are indispensable for solving Austin’s crisis. Beyond that we must also break the monopoly power of the landlord class by moving properties out of speculation, out of commercial investment, and ultimately out of the market. We must also reverse their political power represented by the Downtown Austin Alliance, Real Estate Council of Austin, Austin Board of Realtors, and the Chamber of Commerce, among others. They have created the policy conditions for increased demand for centrally-located properties, a limited supply they control and for which they can then demand ever greater absolute rents.

The Housing Committee instead swallowed the FAN program whole despite the fact that FAN is in a concerted political alliance with every one of these landlord monopoly fronts. They pretend demand-side solutions do not exist and call for focusing the politically constructed demand we face on an artificially limited area controlled by the wealthiest, most powerful landlords. Urbanism is a capitalist strategy for maximizing rent extraction.

The Rent Gap

But this strategy, remember, also seeks to maximize differential ground rent on top of this absolute rent. Such extraction can happen through changes in zoning or through emerging demands for new uses that had always been allowed but not anticipated — urban farms, for one example.This is where the late radical geographer Neil Smith’s idea of the “rent gap” comes in.

“The rent gap is the disparity between the potential ground rent level and the actual ground rent capitalized under the present land use,” he wrote in the Journal of the American Planning Association in 1979. “Gentrification occurs when the gap is wide enough that developers can purchase shells cheaply, can pay the builders’ costs and profit for rehabilitation, can pay interest on mortgage and construction loans, and can then sell the end product for a sale price that leaves a satisfactory return to the developer.”

Gentrification happens when the potential ground rent — absolute and differential — of a property would sufficiently exceed the present rent being capitalized on that property if the land use were changed. High income neighborhoods don’t gentrify because their present rents are already high, and areas not in demand don’t gentrify because there’s no potential for increased ground rents with changed land use. Even if Central Austin neighborhoods had no power, East Austin would still have gentrified because the rent gaps there were much larger and more attractive to developers.

The very solution urbanists propose to their false problem — slashing residential land use restrictions — guarantees amplified rent gaps and gentrification. It’s like trying to reduce the price of a new vehicle by adding more options — it doesn’t make any sense. This is why working class communities oppose upzoning; it is harder to dupe them than the urbanists might think.

How Some Socialists Fell for Urbanism

In fact, it’s Austin DSA that is at risk of being tricked. Lobbyists for the landlord monopoly promote urbanist ideas because they increase their potential rents, and if Austin DSA adopts the Housing Committee policy as it stands they will have effectively the same position on Code NEXT as the Chamber of Commerce et al. Assuming that capitalists and socialists have opposed interests we would have to assume that one side has made a terrible mistake, and history suggests capitalists are not often fooled about what benefits them and what doesn’t.

DSA’s Housing Committee errs by maintaining a narrow focus on the homeowning fraction of the propertied class and their rent-protection strategy, restricting residential property supply. This is an effective long-term strategy for owners expecting to hold their properties for many years, as larger supply will erode their absolute ground rents over time.

Austin DSA’s Housing Committee instead endorses the commercial property-owner strategy of aggressive upzoning to maximize immediate differential rents, appropriate for capitalists that expect to flip their property in the shorter term. Their “supply and demand” narrative facilitates this strategy and frames their supply increases as the solution to rising housing costs while deflecting political attention away from demand solutions. The Housing Committee has adopted this narrative as their own.

This is the logic of liberalism, and it reflects the class interests of young, educated left liberals. Their relative privilege gives them access to higher than average incomes and likely some capital, but neoliberal austerity locks them out of the housing property market. They have a class interest in accessing smaller units of property such as condos and tiny houses, and the fact that these “dense” land uses displace communities of color doesn’t really bother them. It’s just a little more Manifest Destiny, the base for the US middle class from the beginning.

Real Solutions for Displacement and Affordability

Socialists can avoid this trap by standing outside of these intra-class spats and using our unique analysis to identify opportunities to resist market-based housing, colonialism, and state support for capitalist industry, in particular US imperialism. Forcing current tenants to abandon their homes is the basic precondition for gentrification. Policies that can block the immediate act of displacement are therefore the starting point for local socialist housing policies.

The easiest way to displace people is to refuse to renew their lease. “Just Cause” eviction ordinances require landlords to renew leases unless they have some specific cause for eviction. Texas does not allow cities to pass such laws and there is no chance that the landowner-dominated legislature will change this any time soon.

Landlords elsewhere, however, compelled to renew leases may resort to spiking rents to force out tenants. Rent control prohibits this, which is why Texas has outlawed it. In other states it must be the cornerstone of socialist housing policy.

If a landlord can’t evict you or jack up your rent, they may try to force you out by letting the property fall apart. This also saves them investments in maintenance that would otherwise eat into their profit from gentrifying the property. Strong building codes and their strict enforcement discourages gentrification.

This is legal in Texas, though landlords are likely to raise rents after making improvements. In rent controlled areas the incentives may be such that property owners just accrue unpaid fines or abandon the property — landlord advocates cite this phenomenon to discredit rent control. Developers snap up the impaired properties on the cheap and gentrify them. Land banks are municipal non-profits or governmental entities that seize these properties instead, remediate them, and then develop them for social, not profit-seeking, purposes. In Texas their use is so restricted that they are functionally outlawed, and they are of limited use in conditions of high absolute ground rent.

A city with strict rent control, just cause eviction protections, strong code enforcement, and ambitious land banking could slow gentrification and undermine capitalist demand in these properties, constraining rent gaps and reducing the threat even further. Socialists in cities allowed to enact such policies should be demanding them and building the mass base to sustain them.

Austin-Specific Solutions

In the meantime there are at least four major policies Austin DSA could back that would make a difference. First would be to support a major bond for public housing. Talk of bonds in the $85 million range reflects the low priority of public housing — the city passed $720 million for modest (if valuable) mobility improvements in 2016. Socialists should be demanding hundreds of millions more than what’s being offered — a billion dollars seems like a nice round number, and it would have a big impact.

Second, Austin socialists should advance their advocacy for community land trusts (CLTs) — nonprofits that own land on which homeowners own structures. Rising residential land values mean spikes in property taxes and families forced out of the community. A strong CLT program can mitigate this risk while also undermining both the homeowner and developer rent protection schemes by giving non-profit or CLT owned lots many more entitlements for housing. This would increase residential property supply (eroding absolute rents) without amplifying speculative rent gaps because no profit will be extracted from them.

Third, the Housing Committee neglects the concept of inclusionary zoning (IZ) in their policy document. IZ uses zoning to mandate affordable housing, and in Texas cities can use IZ in specialized areas known as homestead preservation districts. Austin has some of these districts and may have more areas eligible for them — local socialists should support expanding IZ in these areas, aggressively.

For the rest of town Austin could approximate IZ with density bonuses, a policy tactic the Committee generally favors. These programs trade increased development entitlements for either affordable housing set-asides or fees-in-lieu paid into public housing funds. Austin’s definition of “affordability” and our fee and set-aside requirements have been pitiful, so in more than 13 years they generated only a tiny fraction of housing.

Using these bonuses correctly would mean turning Code NEXT on its head. The policy designates certain “corridors” and “activity centers” around the city for intensified land use; an effective density bonus strategy would instead downzone these areas. They would then each have a density bonus program allowing the uses developers desire in return for substantial affordability investments. An aggressive program of this sort could eat away at profits, discourage speculation, and erode potential rents — a real material blow to gentrification and the class that benefits from it.

Fourth and finally, Austin DSA and other socialists must uphold the struggle for self-determination. This means backing grassroots demands to put Code NEXT on the ballot for a public vote, and it means fighting to preserve neighborhood development plans won by past activism. Urbanists hate both of these ideas, but if Austin voters and residents are smart enough to understand their interests and Code NEXT reflects these interests, we have nothing to fear from the people’s policy inputs or votes. Such fear of the masses is unfit for anybody calling themselves a socialist.

Conclusion

After all that it may sound silly to say this, but we need to remember that there are no ultimate policy solutions to the problem of displacement in a settler colonialist, capitalist society. So long as our entire social order is the one constructed by the heroes of these oppressive systems there will be fundamental barriers to justice and persistent oppression and harm to the vulnerable.

What we can do, however, is reduce these harms. We can begin building the communities we will need to destroy the present order. But even these gains will be rolled back unless we have a popular power that stands outside “policy” and builds itself as a threat to the rulers that perpetuate the system at hand.

Real socialism meets these tasks at hand with the leadership the masses need. Austin DSA claims the mantle of socialism — let’s see them do this now by taking up a new vision, one that can save our city. Otherwise their recent relevance will be tragic and short-lived.