Want More Affordable Housing? Make Fewer Rules
It is axiomatic for many progressives that solving social problems starts with collection of data, public conversation, and the development of task forces and committees to make recommendations based on these exercises. And it is inevitable that the recommendations will include new initiatives, rules, regulations, and often fees and taxes. But does it have to be that way? Can a progressive solution to a social issue like lack of housing include fewer rules and regulations and less public say over the outcome? A recent report on housing costs from California seems to point in that direction.
The study was commissioned by an array of agencies that fund and subsidize housing for people who earn below 60 percent of Area Median Income (AMI), a subsidy limit set by the Department of Housing and Urban Development (HUD). The study is the first large scale housing development cost study intended to measure the factors that influence the cost of building affordable rental housing in over a decade. What are the factors that drive up housing costs?
It isnt surprising to hear these concerns from for-profit developers. For years, builders of market rate housing have complained that too much process, too many rules, and too many parking spaces drive up costs and therefore, rents. But it turns out that both non-profit and for-profit projects are made more expensive by these too much process and too many rules.
Neighborhood fussing over design, height, bulk, and scale drives up prices. In the case of private development the additional costs are absorbed by higher rents, while in the non-profit sector the costs are absorbed by more subsidies being consumed (since rents cant go beyond the HUD limits).For market rate projects those higher rents mean that average working people are paying their hard earned money to ameliorate the aesthetic concerns of local neighbors; in the case of subsidized housing, taxpayers are picking up the tab.
In either case, elected officials who fret about the crisis of affordable housing would do well to consider reducing these costs with less process and fewer rules, not more; but often the solution is taxes for new housing? San Diego has passed and Seattle is considering a linkage fee, really an added tax to new housing to, ironically, pay for more housing.
As I pointed out in a previous post, linkage taxes simply add to housing cost, which raise rents and reduce supply, a recipe for higher housing prices long term. The report from California was written from the perspective not of protecting profits of private developers, but out of a genuine concern about how to stretch subsidies further to build more housing. The study reveals that across the board, the compassionate and progressive thing to do is reduce the barriers to building more new housing.
Originally posted here:
Want More Affordable Housing? Make Fewer Rules