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Tag affordable housing

Affordable Housing for the Rich and the Failure of Zoning Bonuses

In the past I have not been kind to affordable housing programs. I have a lot of deeper problems with them that I’ll get to in a minute, but I think the extraordinarily high upper income limits on some of the projects are indicative of the broader problem of the essentially arbitrary and random (literally – they’re usually decided by lottery!) nature in which they’re doled out. In a way, even when the beneficiaries are blatantly undeserving, everybody wins – politicians get votes, and affordable housing advocates get paid. Everybody, that is, except market-rate renters, but when’s the last time they ever voted somebody out of power for sabotaging their interests? Anyway, your latest affordable housing outrage story comes from New York City (where else?) – specifically 138th Street in Harlem, where the 73 units at Beacon Towers are almost all under contract, and Curbed claims that most of the remaining units are income-restricted “up to $192,000”!!! Oh yeah, and they can’t even find enough people who qualify. Which brings me to another point: the Beacon Towers are not towers, and are certainly not any kind of beacon. They’re eight stories tall, and considering we’re talking about new construction in Manhattan, I’m going to take a wild guess and say they built right up to the zoning envelope. The immediate neighborhood is a mix of turn-of-the-century five- and six-story walkups (but little in the way of even cornice lines), some post-war towers-in-a-park-style buildings that reach up to 15 (!!) stories, along with a smattering of parking lots and other woefully underused lots. As Robert Fogelson wrote in Downtown, the New Yorkers of 1900 fully expected that by 2000, the whole island of Manhattan would be a river-to-river block of commercial skyscrapers. Perhaps that was unrealistic even if there had been no zoning code, […]

When “affordable housing” is just a random middle class housing subsidy

Affordable housing and inclusionary zoning are complicated subjects and it’s hard to sum up all my thoughts and objections to the schemes in one post, so I’m going to take the death-by-a-thousand-cuts approach. Today’s installment: income eligibility levels. Now, the stated intent of affordable housing set-asides has always been a bit unclear to me. The cynic in me thinks it’s just a way for politicians to buy votes with public money by essentially randomly redistributing from the many (market-rate renters and buyers) to the few (the lucky handful to win the lotteries for coveted subsidized units). The stated motivation, though, seems to range anywhere from a combination of helping the poor find housing to having a little bit of housing diversity, even if that “diversity” means upper-middle class alongside upper class. In my experience, though, the programs end up overwhelmingly fulfilling the latter goal. The latest example I’ve come upon, which doesn’t seem too out of the ordinary, is from a project called Tivoli Square in the Columbia Heights neighborhood of  DC, which looks like it’s associated with the big development corporation-driven DCUSA project (As an aside, DCUSA was basically a huge urban mall in what was an obviously gentrifying neighborhood. The city ended up spending a large amount of money on a parking garage that now mostly sits empty, and they’ve been having trouble renting the retail spaces set aside for local businesses. It’s also architecturally pretty ugly, and houses way more national chains than the rest of the neighborhood. Politicians hail it as a success, but in my opinion it’s the worst thing to happen to Columbia Heights since urban renewal.) Anyway, the zipcode’s median household income in 2009 was $57,393, and the project had a 20% set-aside for some combination of low- and medium-income. The upper limit for “low income” ranges from $50,000 for […]

A question for the blogosphere: How much affordable housing is enough?

Reading about a new ultra-luxury Far West Side rental project going up where over 40% of the apartments are going to have controlled rents (“affordable housing”), I’d like to pose a question to supporters of affordable housing mandates in the planning blogosphere (which includes pretty much the whole planning blogosphere): How high is too high? I’d also be interested to know why exactly the developers included so much affordable housing. I’m pretty sure there’s no program that requires that much affordable housing (the 80/20 state program obviously only requires 20%), but I think commenter Alon Levy is probably right when he suggests that various subjective review processes pressure developers into including more subsidized units than the government officially asks for. Tom Duane, a State Senator, has some testimony up on his website about the project that gives us a look into the mind of what seems to be a typical (at least for New York City) affordable housing-type NIMBY. Back in 2009, when he gave the testimony, the plan was for 50% of the 1,200 units to be kept at below-market rents “permanently,” but even that wasn’t enough for Duane. He was upset that “only” 40% of those units will have two or more bedrooms, and also wanted the amount of commercial space scaled back from two floors (i.e., an FAR of 2.0) to just one (1.0 FAR). Oh yeah, and he doesn’t like the 31-story tower and he wants the developer to really promise not to transfer the unused development rights elsewhere. Obviously, I oppose setting aside this much of new developments for affordable housing. People tend to think of different segments of the real estate market as distinct – how on earth could limiting the number of rich people on Far West Side make prices rise in Bed-Stuy? […]

What favelas can teach us about America

Anthony Ling, an excellent Brazilian blogger who also happens to be an avowed market urbanism, gives us an interesting look at the politics and economics of low-income housing in Brazil: In Brazil there is a vast regulation defining what are the minimum requirements to have a building approved by local authorities. The most common example is probably the Building Codes set by each city, but specific details imposed by planning, environmental and building departments of each city are added to the equation. The recently created Performance Standard also follows this same path, being enforced nationally. The explanation given to establish this regulation is the legal guarantee that every citizen will have a minimum quality of living. However, those who study public policy understand that the passing of a law does not miraculously create high standard buildings accessible to all and, like many other laws, produces effects opposite to those desired. The lower standard building prohibition does just that: tough regulation prevents entrepreneurs from building accessible housing for the poor. This results in government spreading the idea that entrepreneurs think only about attending the high class, and transforms itself as the hero that will build millions of popular houses, as [Brazilian Pres. Dilma Rousseff] did with the Minha Casa, Minha Vida [My House, My Life] program. I think this has a very close parallel in modern American cities with inclusionary zoning and affordable housing mandates. In Brazil, the government creates a housing shortage by having unrealistical building safety standards (which ironically, as Anthony explains, encourage slums that are completely unregulated) and then swoops in and acts plays the savior with its own housing projects. In America, the government creates the shortage through sprawl-forcing zoning codes. But unlike Brazil’s public housing, our politicians instead use rent control (rebranded as “inclusionary zoning” or […]

If it moves, tax it; if it keeps moving, regulate it; if it dies…

I apologize for the lack of posts for the last few days – I just moved to DC (a few blocks north of H Street, right by Gallaudet, if anyone’s curious), and I have yet to begin another rewarding relationship with Comcast. But, I’m here at work (I started interning at Reason magazine today), and I’ve got some free time, so I wanted to post this excerpt from Fogelson’s Downtown (I’m almost done!) that illustrates perfectly the shift from the second to last phase of Reagan’s joke about government, as applied to housing policy: If neither public authority nor private enterprise could overcome the obstacles to urban redevelopment on its own, perhaps they could overcome them by working together. Or so the downtown business interests and their allies hoped. The trouble was that public authority and private enterprise were not used to working together. Through the mid nineteenth century public authority had routinely joined forces with private enterprise to stimulate economic development. But later this practice gave way to what might be called, for lack of a better term, an adversarial arrangement. Under this arrangement, public authorities granted private companies a franchise to build and operate the street railways, gas systems, and other public utilities other than the waterworks. They also regulated these companies. Under the watchful eyes of the courts and state legislatures, public authorities regulated the building industry as well. They established fire zones, drafted building codes, imposed height limits, and formulated zoning regulations. They also granted building permits – and, at least in theory, inspected everything from elevators to fire escapes. This adversarial arrangement was the subject of a nationwide debate in the early twentieth century. Some Americans attacked it as one of the principal sources of corruption in cities. Others defended it as the most efficient […]

New Years link list

Behold, your first link list of 2011! 1. The automobile may officially in decline (very good article!). 2. Interesting parallels between China and its HSR intellectual property disputes and post-WWII Japan and Korea. More here. 3. Fred Barnes writes a stupid article for the Weekly Standard (“The road to hell is paved with bike baths”), and Jarrett Walker responds with a treatise on “coercion” (“We are the libertarians!”). 4. I forget that although rent control has been thoroughly discredited in the real world, NYC developers are still grappling with it. Vornado and another developer had to shell out tens of millions to break the rent control grip on a Central Park South building they bought, with 15 rent controlled tenants receiving payouts of around $1.5 million each. 5. Vancouver is loosening its grip on the street food market, while Stephen Goldberg is trying to create a one-stop shop for getting NYC restaurant permits/licenses/certificates/inspections. 6. The market-defying schemes that liberals come up with would be amusing if they weren’t so horrifying. Read here as they puzzle over why excess luxury condos built in NYC during the boom couldn’t easily be used as affordable housing (Vancouver redux), and watch out for the part on the third page where an organization called “Right to the City” advocates “using eminent domain to seize vacant residential buildings and turn them into affordable housing.” 7. Niagara Falls’ decades-long megaproject failures. The article ends on a positive note, citing federal money for a new train station and grants for a wine bar and a concert hall, but I wonder if anyone in Niagara Falls ever bothered trying to loosen up the parking restrictions and maybe upzone a few blocks.

Why I don’t like Inclusionary Zoning

Inclusionary zoning is a hot item among urban planners today, and is often seen as a solution to residential segregation and high housing costs. Exact implementations vary, but the general idea is that developers of multi-unit housing projects are encouraged to set aside a certain percentage of their units, generally ranging from 10-30%, but sometimes even more, as “affordable housing” units. In other words, some proportion of the units are under rent controls to the point where they must be rented (or sold) at a loss by the developer. Sometimes the schemes are voluntary and give developers density bonuses, sometimes developers can pay a fee instead of setting aside units. The exact proportion of units that must be set aside and loss developers take on each unit also varies. As you can imagine, I’m not in favor of this system, but it’s a complicated issue, so this is going to be a long article. Inclusionary zoning is a relatively new concept, first implemented in the 1970s, to combat the growing problem of residential segregation of classes and races, whose origins are interesting and, I think, germane to the conversation. I generally see two explanations given by proponents of IZ for why segregation and unaffordability arose in the first place: market forces and zoning (or, as they call it, exclusionary zoning). Quoteth a law review article: Affordable housing has always been a problem in the United States. Cities and towns originally engaged in forms of discrimination through exclusionary zoning to exclude low-income residents. Of course, this is only true if your history begins in 1930. But from the mid-18th century to the turn of the century, America underwent a tremendous urban population boom fueled by railed transit and a massive immigration wave from Europe, and the housing stock adjusted just fine […]

Vancouver shows how seeking community amenities from developers can go horribly wrong

A lot of time I hear liberal urbanists claiming that trading development rights for community amenities (I’d definitely include affordable housing mandates here) is a win-win situation, but there’s a real danger of killing the goose that laid the golden egg, as appears to be happening in Vancouver: Development of the Cambie corridor is being “paralyzed” because the City of Vancouver is taking too much of the profits resulting from property rezonings, the Urban Development Institute says. Paul Sullivan, chair of the UDI taxation committee, said at least three potential developments along the new Canada Line have fallen apart because the city is being too aggressive in seeking community amenity contributions when rezonings take place. The city uses the money — an average of 75 per cent of the profits resulting from rezonings — for community amenities like parks and seniors’ centres. It’s interesting that the city openly admits to taking the vast majority of the upshot from the rezonings. One could interpret this as a marginal tax rate on dense development of 75% – I’m not sure that you could find a single politician or economist who would support a such a tax bracket on income, but I guess developers are viewed as less productive and more easy to leech off of than even the ultra-rich. Another odd aspect of the story is that the rules are in fact not even formalized: Sullivan, a real estate appraiser by trade, said the city could solve the problem by establishing a set amount for CACs that developers can factor into their purchase prices. “What we need is certainty in the policy, not just in the density but in the lift so that land can get priced fairly,” he said. “If you don’t have that it makes it very hard to get a […]

Downtown Brooklyn’s $2 million affordable apartments (correction)

Inclusionary zoning is a bad enough idea, but at least it doesn’t cost taxpayers anything directly. But New York State’s Housing Finance Agency is taking the worst of both worlds – affordable housing mandates and public subsidies – and plopping them down in new luxury construction in the heart of Downtown Brooklyn. Behold, some of the most expensive “affordable housing” in all five boroughs (at least, let’s hope it’s the most expensive!): • 388 Bridge Street Apartments, between Willoughby and Fulton streets in Downtown Brooklyn, a 234-unit, brand new 49-story multifamily rental apartment building controlled by the estate of Stanley Stahl, which received $94.6 million in financing. Forty-seven of the units will be set aside for tenants with household incomes up to $39,600 for a family of four. • 25 Washington St., between Plymouth and Water streets in DUMBO, a 106-unit, eight-story multifamily rental apartment being converted by Two Trees Management Co., which received $22.2 million in financing. Twenty-one of the units will be set aside for tenants with household incomes up to $39,600 for a family of four. • 29 Flatbush Ave., at Nevins Street in Downtown Brooklyn, a 333-unit, brand new 44-story multifamily apartment building controlled by The Dermot Company, which received $99 million in financing. Sixty-seven of the units will be set aside for tenants with household incomes up to $39,600 for a family of four. That comes out to a little over $2 million per subsidized apartment in the first tower, $1 million in the second, and almost $1.5 million in the third. And that’s not even counting the rent that the future impoverished (because, let’s face it, if you earn less than $40k for a family of four in NYC, you’re impoverished) tenants will have to pay. That’s $215 million spent (see correction) so that […]

Redistribution (a follow up)

I threw up Friday’s Redistribution post somewhat hastily during my break, but there isn’t much more that I haven’t said before.  As a follow-up, I’d like to tie it in with some other interesting reads. Ryan Avent at The Bellows agreed with Yglesias’ post and added: Anyway, I saw in Google reader that libertarian intellectual Will Wilkinson had shared Matt’s post, presumably because he agreed with it. And indeed, this is one of those times when libertarians and liberals can find common cause. On the other hand, most of Cato’s planner types vigorously defend suburban sprawl and highway construction, and vigorously oppose smart growth and transit construction, despite the obvious point that it takes an immense web of regulations and subsidies to support rapid suburban and exurban growth. Over here! Ryan, Will! We’re over here!… Definitely check out The Bellows post. Will Wilkinson stopped in to comment, too. I think the “common cause” concept was conveyed well in Ed Glaeser’s recent NY Times piece, called The Case for Small-Government Egalitarianism. Harvard’s Glaeser reaches out for “common cause” between libertarians and progressives – kinda like the links between Free-Markets and Urbanism: Libertarian progressivism distrusts big increases in government spending because that spending is likely to favor the privileged. Was the Interstate Highway System such a boon for the urban poor? Has rebuilding New Orleans done much for the displaced and disadvantaged of that city? Small-government egalitarianism suggests that direct transfers of federal money to the less fortunate offer a surer path toward a fairer America. and Many of my favorite causes, like fighting land use regulations that make it hard to build affordable housing, aid the poor by reducing the size of government. In the wake of Hurricane Katrina, I also argued that it would be far better to give generous […]

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