2/13/20 | Cle Elum | Central Washington Sentinel | by Bruce Coe~~
Recently we’ve heard the usual campaign trail accusations about, well, just about everything.
But a couple of them caught our eye, and both of the comments are typical of the kind of polarized demonization that occurs when the unenlightened meet the uninformed. Two of our favorites:
Bernie Sanders has blamed the lack of affordable rents and housing on “corrupt real estate developers” who are gentrifying neighborhoods and replacing affordable homes with “…fancy condominiums and hotels that only the very rich can afford.”
And Elizabeth Warren says “…developers can usually turn bigger profits by building fancier new units targeted at higher-income families rather than units targeted at lower-income families.”
We’ll bet that neither Mr. Sanders or Ms. Warren have spent a whole lot of time in the construction industry, and it is an even better bet that neither of them has risked any money other than yours on a construction project designed to, at a minimum, return something tangible in the way of a return on investment.
Be that as it may, it’s worth it to take a look at what is becoming a hot topic – the additional cost of regulation they are likely to favor and the burden those policies place on just about anything, especially shelter.
To builders, regulation, taxes, and fees are just another cost to be passed on to the consumer. They don’t particularly like it. Much of it is counterproductive and gets in the way, but sooner or later it becomes a cost of doing business.
Since regulation on production affects all producers across the board, it is not a competitive or negotiable cost. Every developer includes the cost of regulation in their base pricing and competes with amenities and quality. Or lobbyists, but that is another story.
It is not unreasonable to believe that the cost of permitting adds at least something to the cost of a building, as well as upping the cost of the land on which a building is placed. The question is how much.
That assumption leads to considering whether or not those additional costs affect the affordability of housing. As recently as 2018 a HUD study conducted by HUD’s Office of Policy Development and Research stated that “Environmental requirements and other regulations, including those that respect and preserve historical and cultural tradition, are necessary. Significant regulatory trends over the past 10 years, however, have exacerbated an already serious affordability problem.”
Further, they found that “A growing number of communities have introduced poorly conceived growth management and growth containment strategies without also implementing policies to ensure a stable supply of land to accommodate community growth.”
They concluded, “Between 2000 and 2030, the United States will develop approximately 213 billion square feet of homes, offices, and other commercial and industrial buildings — two-thirds the amount built as of 2000. Adopting a path that favors more compact forms of development can lead to greater environmental quality and social equity as well as create more housing choices for American families.”
Remember, this is the US Department of Housing and Urban Development!
In recent years discussions on affordable housing in Kittitas County have not attempted to address the regulatory impacts on housing costs, and the seemingly fee-greedy permitting departments are designed to cover their departmental costs through fees and assessments.
It is entirely reasonable to find that since a building department performs basic public health and safety duties that benefit the entire county, those departments should be funded from the general fund. The result – minimum permitting costs. But the chance of that happening is less than zero.
The bottom line is this: You can not build truly affordable housing – defined as a housing cost that does not exceed 30% of your monthly income – in the state of Washington, much less in Kittitas County. There is a reason why the issue persists. It’s because the problem has not gone away. If it could have been done it would have been done.
The most popular solution seems to be to offset the additional cost of regulation with federal, state or local subsidies, an additional burden to taxpayers across the board. It may be an affordable housing tax like the one recently adopted by the City of Ellensburg, or a state program that allows publicly owned land to be available at an artificially low price for low-income projects. And it might be a straight out federal housing project. You know, like the really successful human storage units that emerged in the ’50s and ’60s. The relocation and redevelopment programs that have been so successful in the past.
Subsidized housing carries with it the stigma that most people associate with the failure of public projects in the past. Cities don’t want them, city residents regard them as crime-ridden and poverty-laden infestations that poison their communities, a moral and visual blight on their otherwise perfect neighborhoods. It’s the super bowl of misguided intentions, The Central Planners v. the Big City NIMBYS.
There are, however, a few lights on the horizon. Both of them depend somewhat heavily on government subsidization as well as private donations, and both seem to be succeeding.
Home and Hope
Home and Hope is a subsidiary program of Enterprise Community Partners and their associates. They are a private business with net financial assets of around $780,000,000 and they center their efforts on the belief that everyone should be able to afford shelter. They are big, glossy, and apparently very effective at what they do, having created to date nearly 585,000 homes, with a sum investment of $43.6 billion and programs that have touched millions of lives. Their projects to date are exclusively located in the Northeast US, but they seem to be expanding into the Northwest with projects in the Seattle area either planned or ongoing.
ForTerra, the land conservation organization formerly known as the Cascade Land Conservancy, has recently moved into the affordable housing arena. They are both big and growing, and their work encompasses everything from our Teanaway Community Forest to urban redevelopment programs in Tukwila along with all manner of land conservation and habitat preservation projects in between.
Using a combination of private/public funding sources and innovative construction techniques both entities have developed a style of affordable housing that, presumably, will be the focus of their strategies in the future. It is interesting that they provide a subsidized purchase price (with safeguards against speculation and multiple purchases) along with private ownership of the unit.
The fact that we need subsidization to provide shelter is proof enough that regulation is part of its high cost. It has taken 50 years for the affordable housing wallahs to begin to entertain the concept that the government apparently does not know much about providing shelter for people and that the private sector might provide a better approach.
That’s 50 years of segregation, ruined lives and thrashed hopes and several generations of human beings who feel trapped in a system with no hope of escape. And the people who the programs were meant to serve have been taught by the likes of Warren and Sanders to hate the people who provide them shelter, not the government that has failed them. What a shame.
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