Why the way we are trying to fix this isn’t working:
Adding fees to residential development for affordable housing. Does anyone think you can make housing more affordable by making it more expensive to build? It makes more sense to put affordable housing fees on new commercial development, since the roots of new housing demand are new jobs. Jobs are good, houses are not? And why is affordable housing only the responsibility of new housing? Why is it not the responsibility of all?
Inclusionary Zoning. Generally, the market rate units sell for a bit more than they would have (because there are less available) while a few affordable units do get built. But this approach does not mean ANY additional units get built that would not have been built otherwise. So, the supply and demand imbalance are not impacted at all. Density bonuses for inclusionary units are at least a step in the right direction if not tied to too many other conditions.
Trying to help people pay more. Our response to the affordable housing crisis is often to find ways to help buyers pay more or qualify for bigger loans. How does helping people pay more bring down the cost of housing? We need to stop treating ever-rising housing costs as a given that we can help a few people with, and start focusing on why it’s expensive in the first place.
Rent Control. Restricting what a landlord can charge does help those already in units and who never have to move. It clearly discourages more building which exacerbates the problem for all the rest.
Treating symptoms, not causes. When growth creates problems – more traffic, crowded schools and other legitimate concerns, our first instinct is to stop building. Municipalities and state governments are quick to approve housing moratoriums and growth limits, while at the same time encouraging companies to relocate to their area and create new jobs. This is ludicrous.
None of these ideas are new. All have been tried for years in expensive coastal markets and are now being tried in other MSAs. No MSA where it has been tried has seen an improvement in their housing situation. You can’t argue it’s worked to keep or make a market affordable, because it hasn’t.
What would an “ideal” system look like to achieve affordable housing?
Land use decisions would be made at a regional level. When decisions are made in small local jurisdictions, it’s too easy for them to consider affordable housing as someone else’s problem. But it’s not someone else’s problem and it is ineffective to try and make it so. Look at the I-15 corridor in San Diego as an example. Communities along it have fought tooth and nail against new developments, usually successfully. And what happened? People were forced to move to Temecula and Murrieta north of the County and commute on I-15 to work. There isn’t any less traffic on the roads or congestion. Just more fossil fuels burned by commuters. By allowing local jurisdictions to approve land use, there is no mechanism for those people who don’t already live there to have a say in housing policy.
Infrastructure would be financed by the community, not individual projects. Growth benefits everyone in a community – not just those in a new house or apartment. When infrastructure is paid out of a general fund, property taxes or other community-wide tools, everyone pays their fair share. When it’s financed by local special tax districts or impact fees, then previous infrastructure is paid for by everyone (including those buying or renting the new units), but that needed for a new project is paid for by only those using it. If you want to burden new projects with paying for 100% of their impacts, wouldn’t logic tell you they should be exempt from paying for the existing infrastructure upkeep and maintenance - paying less base property tax?
Property taxes on residential property would be high enough that governments did not feel that residential development won’t pay for itself and is a burden (which apparently should be borne by someone else). Texas has high property taxes on residential property - but much more affordable housing. Municipalities there are not afraid for fiscal reasons to approve housing.
Putting in place design standards would always be held to high standard. The high standard would be, is the required feature so important as to justify that some people will not be able to afford to live here that could otherwise? Require our elected to officials to show a calculation of the increased cost to a home of every increase in standards. And calculate how many people will be incrementally priced out because of it.
Protecting habitat would be done at a macro (not micro) level. Instead of making each project fight through years of agency review and litigation over impacts to the environment, agencies and municipalities would have to identify critical land for the environment (and deal with the “takings” issues, etc.), and at the same time identify those areas where they will support new housing 100%.
Each municipality would proactively search their community for locations appropriate for housing where it does not exist (whether parking lots, vacant land, underperforming commercial buildings, etc.) and find out why housing is not being built there. Do the zoning or other restrictions prevent it? Do the economics not work? If not, why not? Is there some portion of the entitlement process that is keeping a logical project from being built?
Specific Steps:
· Create by-right duplex/triplex zoning in existing single-family neighborhoods. Move from density limitations to FAR approaches. If you can tear down a cottage on a large lot and build a 4500 sq.-foot home, why can’t you build 3 – 1500 SF THs? If it fits within height and setback limits, why not?
· Create by-right zoning with significant density near high capacity transit. It’s crazy to spend billions on infrastructure and then have it only benefit a small number of users.
· Densities must increase for suburban/greenfield development. We will never have enough infill building to meet all the demand for housing. When we do build in greenfield areas, logic says higher MF and SF densities are the most efficient, cost effective and environmentally sound use of the land.
· Withhold state tax dollars from municipalities who do not approve sufficient housing to support their proportionate share of regional growth. Plans and pledges are nice, but without a stick, nothing will change.
· The most radical solution would be to allow people the option of whether to vote where they live or vote where they work. That way if a community welcomes retail and office use, they can be held to account for not allowing housing.
· Most importantly, talk with your teammates, friends, relatives. Spread the word. You’d be surprised how many of the young people in our companies don’t know why housing is so expensive. I’ve found in discussions with friends in the business they often not talked with their children about it – they just assumed they’d have to help them buy a home someday to get started. Our arguments about jobs multipliers from construction and other similar approaches has not, and I think will not, work. We have to make clear why this happening and make it an appeal for social equity.
Conclusion:
The original title of this paper included the phrase “an inconvenient truth”. There are actually four:
1. You can’t have affordable housing without building plenty of housing. Homeowners in quality neighborhoods think density and new projects will change their character, which is unacceptable. We can’t build in struggling areas because it might lead to gentrification. Environmentalists believe greenfield development is “dumb” growth. Where then? Is there nowhere in America that it is appropriate to build housing? The fact is, the character of neighborhoods will change over time, sometimes building new projects will raise prices in an existing community and lead to someone being priced out, and we are not going to be able to house every new household in an infill project.
2. We will not be able to build enough housing unless we embrace higher densities, which will in some cases have to be near existing lower-density neighborhoods and suburban development.
3. Neither the left nor the right has the moral high ground here. Progressive Liberals who should be for “affordable housing for all”, and Conservatives who say they believe in “free markets” (just not next door), both vote against projects in and near their neighborhoods.
4. You can’t expect politicians to vote FOR projects unless you vote FOR them afterwards.
