California Dreamin’ of Affordable Housing

Architecturist

Just A Dream for Many

Yesterday, I blogged about the affordable housing crisis in New York City. Today, I look at a report from the Center on Budget and Policy Priorities, How Housing Vouchers Can Help Address California’s Rental Crisis. It opens,

California’s severe shortage of affordable housing has hit low-income renters particularly hard. Nearly 1.6 million low-income California renter households paid more than half of their income for housing in 2013, and this number has risen 28 percent since 2007. While the shortage is most severe on California’s coast, many families throughout California struggle to pay the rent. A multifaceted approach with roles for local, state, and federal governments is needed to address the severe affordable housing shortage, but the federal Housing Choice Voucher program can play an outsized role.

California’s high housing costs stretch struggling families’ budgets, deepening poverty and hardship and exacerbating a host of other problems. For example, 23 percent of Californians are poor, according to Census measures that take housing costs into account, well above the poverty rate of 16 percent under the official poverty measure. California has 14 percent of the nation’s renter households but nearly 30 percent of the overcrowded renters. And California has one-fifth of the nation’s homeless people, more than any other state. A large body of research shows that poverty, overcrowding, housing instability, and homelessness can impair children’s health and development and undermine their chances of success in school and later in the workforce.

Housing vouchers help some 300,000 low-income California families afford the rent, more than all other state and federal rental assistance programs combined. Vouchers reduce poverty, homelessness, and housing instability. They can also help low-income families — particularly African American and Hispanic families — raise their children in safer, lower-poverty communities and avoid neighborhoods of concentrated poverty. Moreover, so-called “project-based” vouchers can help finance the construction of affordable rental housing in areas with severe shortages.

Yet the number of vouchers in use has fallen in recent years, even as California’s housing affordability problems have worsened. Due to across-the-board federal budget cuts enacted in 2013 (called sequestration), 14,620 fewer California families used vouchers in December 2014 than in December 2012. By restoring funding for these vouchers, Congress can enable thousands more California families to afford safe, stable housing. (1, reference omitted)

Really, the analysis here is not California-specific. The authors are arguing that low-income families benefit greatly from rental subsidies and that Congress should restore funding for housing vouchers because they provide targeted, effective assistance to their users. While California has a high concentration of voucher users, all low-income renter households would benefit from an increase in the number of housing vouchers. No argument there.

I am disappointed that the report does not address an issue that I highlighted yesterday — attractive places like NYC and California continue to draw a range of people from global elites to low-income strivers. Policymakers cannot think of the affordable housing problems in such places as one that can be “fixed.” Rather, it must be seen as, to a large extent, a symptom of success.

So long as more and more people want to live in such places, housing costs will pose a challenge. Housing costs can be mitigated to some extent in hot destinations, but they are hard to solve. And if they are to be solved, those destinations must be willing to increase density to build enough units to house all the people who want to live there.

Reiss on the Right to Complain

Crane in NYC

Super Lawyers quoted me in Development’s Back, Baby!  But Do Neighborhoods Rights Extend Beyond the Right to Complain? It reads, in part,

The list of what can go wrong during construction is longer than Long Island, and some of the items on it are very bad indeed. Reading Chapter 33 of the New York City Construction Code, “Safeguards during Construction or Demolition,” is like Googling skin diseases: You encounter possibilities that, in your previous blissful ignorance, you’d never worried about.

*     *     *

So how can citizens stand up for their rights?

“City residents do not have tons of rights regarding construction,” says Brooklyn Law School professor David Reiss, who focuses on real estate finance and community development. But, he adds, “They do have some. Technically, many of them are not rights. Rather, citizens have a right to complain.”

According to Reiss, the Department of Buildings is the agency to call about excessive debris, problems with fences, safety netting, scaffolding or cranes; or work being done without a permit. (The DOB’s phone number is New York’s general information and non-emergency kvetching number: 311.)

To complain about after-hours construction-before 7 a.m. or after 6 p.m. Monday to Friday, or anytime on Saturday or Sunday, unless the contractor has a permit stating otherwise-Reiss recommends contacting the DOB or the Department of Environmental Protection. The latter’s number is also 311.

“It never hurts to start by talking with the contractor and/or owner directly, “ says Reiss, who also recommends talking to your community board and city councilmember. As with most things, there’s strength in numbers. “The more people that complain, the more likely it is to get on the radar of officials,” he says.

He also recommends collecting all the evidence you can, whether to show officials or, if worse comes to worst, to use in court. “Create a paper trail. Pictures, of course, are worth a thousand words, particularly if they are time- and date-stamped and you annotate them as appropriate.”

Inclusionary Housing and Equitable Communities

Lincoln_Institute_of_Land_Policy_-_Cambridge,_MA_-_DSC00178

The Lincoln Institute of Land Policy has released a policy focus report, Inclusionary Housing: Creating and Maintaining Equitable Communities. The Executive Summary opens,

After decades of disinvestment, American cities are rebounding, but new development is often driving housing costs higher and displacing lower-income residents. For cities struggling to maintain economic integration, inclusionary housing is one of the most promising strategies available to ensure that the benefits of development are shared widely. More than 500 communities have developed inclusionary housing policies, which require developers of new market-rate real estate to provide affordable units as well. Economically diverse communities not only benefit low-income households; they enhance the lives of neighbors in market-rate housing as well. To realize the full benefit of this approach, however, policies must be designed with care. (3)

The report uses the term inclusionary zoning to refer to

a range of local policies that tap the economic gains from rising real estate values to create affordable housing—tying the creation of homes for low- or moderate-income households to the construction of market-rate residential or commercial development. In its simplest form, an inclusionary housing program might require developers to sell or rent 10 to 30 percent of new residential units to lower-income residents. Inclusionary housing policies are sometimes referred to as “inclusionary zoning” because this type of requirement might be implemented through an area’s zoning code; however, many programs impose similar requirements outside the zoning code. (7)

The report notes that

Policy makers are understandably concerned that affordable housing requirements will stand in the way of development. But a review of the literature on the economics of inclusionary housing suggests that well-designed programs can generate significant affordable housing resources without overburdening developers or landowners or negatively impacting the pace of development. (4)

The report is obviously addressing two of the most important issues facing us today — the housing affordability challenge that many households face as well as the increasing stratification of communities by income and wealth.

There is a lot of value in the survey of the academic literature on inclusionary housing policies that is provided by this report. At the same time, there is some fuzzy thinking in it too. For instance, the report states that, “As the basic notion of supply and demand suggests, the addition of new units in a given market will inevitably put some downward pressure on the cost of existing units. But the larger effect tends to be upward pressure on housing costs because new homes are primarily built for higher-income residents.” (12)

This analysis ignores the well-accepted concept of filtering in urban economics. Filtering describes the process by which occupants of housing units go from higher-income to lower-income as the unit ages, becomes outdated and is subject to wear and tear. If higher-income households move to the newest housing, then other another household, typically of lower-income, can move into the vacant unit. If the number of households remains constant, then housing prices should decrease as housing development increases.

Because the real world does not look like an economic model, many people think that new housing causes increased housing prices. But the cause of the increased housing prices is often the same thing that is causing new housing construction:  increased demand.

Take NYC for instance. In recent years, it issues permits for 10,000-20,000 or so new units of housing a year, but its population has grown by about 60,000 people a year. Combine this with the fact that new housing construction is both a sign and result of gentrification in a particular neighborhood, it is no wonder people think that housing construction pushes prices higher. While this is an understandable line of thought for the man or woman in the street, it is less so for the Lincoln Institute.

My bottom line: this is worth a read, but read with care.

 

Monday’s Adjudication Roundup

Friday’s Government Reports Roundup

Wednesday’s Academic Roundup

Rebirthing NYC Neighborhoods

One can imagine Mayor de Blasio thinking about his ambitious housing plan with one voice saying “Density!” over one shoulder and another voice saying “Preservation!” over the other.  But which voice is the angel’s and which is the devil’s?

Peter Byrne has posted a short essay, The Rebirth of the Neighborhood, to SSRN. The essay represents the voice of Preservation and engages with Edward Glaeser, a voice of Density. Byrne argues that

new urban residents primarily seek a type of community properly called a neighborhood. “Neighborhood” refers to a legible, pedestrian-scale area that has an identity apart from the corporate and bureaucratic structures that dominate the larger society. Such a neighborhood fosters repeated, casual contacts with neighbors and merchants, such as while one pursues Saturday errands or takes children to activities. Dealing with independent local merchants and artisans face-to-face provides a sense of liberation from large power structures, where most such residents work. Having easy access to places of sociability like coffee shops and bars permits spontaneous “meet-ups,” contrasting with the discipline of professional life. Such a neighborhood conveys an indigenous identity created by the efforts of diverse people over time, rather than marketing an image deliberatively contrived to control the perceptions of customers. At its best, a neighborhood provides a refuge from the ennui of the workplace and the idiocy of consumer culture, substituting for churches (or synagogues), labor unions, and ethnic clubs that structured earlier urban social life. (1596-97)

Byrne argues that the “three chief legal tools for neighborhoods have been zoning for urban form, historic district preservation, and environmental protection.” (1597) In criticizing Glaeser and his ilk, Byrne writes that they often complain “such “laws destroy or take private property.” (1603) Byrne replies that “historic district regulations enhance property values by protecting the setting within which any urban property sits and from whence it derives most of its value.” (1603)

I am not going to resolve this debate in a blog post, but I will make a few points. First, a lot of these assertions are not self-evidently true and should be empirically tested, if possible. Second, the perspective of the Essay is that of the “new urban residents” who actually make up a small proportion of the total residents of a city.  Those “old urban residents” are more likely focused on the affordability of their own homes, the quality of their children’s schools and the safety of their streets. Third, it is possible that Preservation and Density can work together intelligently as we rework the urban fabric.

As Mayor de Blasio struggles with the implementation of his housing plan, it is worth remembering that Preservation and Density can each be an angel, can each be a devil. It is the Mayor’s job to make both of them listen to their better natures.