19 June 2006

Affordable Housing As A Wedge Issue

A wedge issue is one which divides on political party's coalition, while leaving another's unified. Affordable housing wedges Democrats, and is an issue where, as a result, Democrats should tread lightly.

While there are lots of ways to achieve affordable housing, the Republican solution is to encourage sprawl, substantially curtail zoning and building regulation, oppose impact fees, oppose habitability requirements for rental housing, fight environmenal species protections in new developments, and permit predatory lending practices that allow marginally eligible people to qualify for loans. New, low end subdivisions in Adams County and all points North have essentially followed this recipe.

This approach, of course, has multiple downsides and imposes significant externalities on the public. Leaving urban school real estate empty, while using tax dollars from old residents to build new schools is wasteful. Sprawl drives new government expenditures for road and highway construction, increasing vehicle miles traveled adding to gasoline consumption (and in turn to pollution) and to congestion on roads, and eliminates habitats, air purification from plants, and flood buffers from the environment. Crappy houses are vulnerable in disasters and can harm residents. Marginal lending practices lead to foreclosures and predictable personal financial tragedies.

On the other hand, pure opposition to growth that the economy is driving has its own problems. Portland, Oregon, with its urban growth boundary may be compact, remarkably undependent upon automobiles, and in many other ways desirable, but the limits on growth have also produced a dramatic rise in housing prices which has hurt the poor and working class residents of the area of the most.

There are solutions. For example, while zoning codes have their place, removing the provisions that serve as the greatest barriers to infill development can prevent regulatory burdens from forcing developers interested in infill development, a lynch pin of Denver's approach for some time, from being forced elsewhere. Likewise, building code provisions that require upgrades to current codes when old buildings are renovated which are so daunting that renovations don't happen at all, may prevent at least modest gains from being achieved. If the choice is between upgrading a non-ADA accessable building to add fire sprinklers, but not elevators, and doing nothing, allowing an upgrade may make sense Aesthetic considerations in building codes, like brick fascade requirements, can also be a barrier to affordable housing. Impact fees, like one stretched out over ten years being considered by Aurora, can level the playing field, particularly in exurban areas where infrastructure must be created from scratch from whole cloth.

One also has to look at secondary incentives. Why isn't much land zoned for multi-family housing, which permits higher population densities and less sprawl in an often affordable fashion? One reason is NIMBY politics, but equally powerful is the financial incentives placed on existing municipal governments by the Gallagher Amendment and heavy use of sales taxes to finance municipal government. Apartment buildings and condominiums generate no sales taxes and produce property taxes far below the actual cost of providing services to residents because residential property is deliberately undervalued, while commercial property is deliberately overvalued. A mall generates a great deal of tax revenue compared to service costs, and so is something almost every municipality tries to encourage, to the point of being counterproductive. Apartment buildings generate little tax revenue, so they are discouraged outside unincorporated territory (where even a credible threat to form a developer controlled municipality can secure county compliance with zoning objectives of property owners).

And, one also has to look at the ultimate objective. No one really wants "cheap housing", they want "affordable housing" which can be secured by increasing ability to pay, as well as by building inexpensive housing stock. For example, most ski resorts have a shortage of housing that workers can afford. But, increasing pay for ski resort workers can solve the affordable housing problem there just as well, indeed better, than building cheap housing far from the resorts.

The bottom line, however, is that it is a complex issue, and that crude solutions, like Initiative 76 (currently on the Colorado Supreme Court docket), the affordable housing and growth limitation initative, are poor solutions that have the potential to divide Democrats, instead of bringing them together to solve a complex problem with widespread input that takes into account all affected interests.

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