It’s called ‘distorting the market’
If you think housing is expensive now, wait until the City makes it “affordable.”
Remember Madison’s “inclusionary zoning” fiasco of a few years ago? Ald. Brenda Konkel concocted a city ordinance mandating that developers set rents on a portion of their new construction at below-market rates. Yes, even on lakefront high rises. A gullible council of social justice warriors fell for a scheme more complex than Rubik’s Cube.
Having produced a mere handful of affordable units, inclusionary zoning collapsed of its own weight nine years ago but, to this day, the Venezuela wing of the liberal-progressive-socialist project blames the actors, not the Act.
Given that hard lesson, it is difficult to believe that 886 communities in these United States have these affordable housing ordinances on the books until, thanks to the Wall Street Journal, one learns that nine of every 10 are located in Bernie-blue California, Massachusetts, and New Jersey. Three liberal states that lead the nation in unaffordable housing.
“Like many progressive promises, this is a fool’s errand,” concludes the authors of “The high cost of ‘affordable housing’ mandates.”
These laws will reduce the cost of housing for targeted political groups if they increase the cost of housing for everyone else. … While the intent of these laws is to increase the supply of affordable housing, history shows they increase the cost of housing and limit the supply of new affordable units.
The law doesn’t change the cost of building. It merely changes the price the developer can legally charge for some of its new housing units.
“Do the math”
Those housing costs are passed on to everyone else. As usual, consumers who find themselves just above the government’s threshold for eligibility are the ones who take it in the shorts.
Housing costs are also bid up by Madison’s pecksniffian neighborhood associations. (They resemble the noisesome soviets portrayed in Doctor Zhivago, squatters who expropriated Tonya and Alexander’s house to determine who got what no matter how unearned.
How many times have neighborhood nannies (Madame Brenda included) caviled that this or that housing proposal “destroys the character of the neighborhood” because the structure would stand three stories tall instead of two. (Looking at you, Dudgeon-Monroe Street Neighbors.) That, my friends, is called “in-fill.” In-fill reduces something called “sprawl.” It’s a basic law of economics called “Economy of Scale.”
An insightful piece by Capital Times reporter Lisa Speckhard Pasque quotes my developer friend Terence Wall. “Do the math,” T Wall dares.
If plans call for 100 units over four floors, losing one floor means the developer is down to 75 units. Fixed costs like land, foundation and landscape architecture services are spread out across 75 units, instead of 100.
One hand washes another
Thus are housing costs made more expensive, not less. But what alder dare vote against his/her own neighborhood? And what council member dare vote against his/her colleague lest the tables be turned tomorrow?
Madison city government has fallen back on direct taxpayer subsidies. Spreads the pain throughout the city, buried deep within multi-million dollar budgets. Business as usual.
The WI State Journal reported in October that the City committed $7.8 million to help create 109 affordable units in a new venture and recommit to an additional 177 low-cost units in the others as part of a city initiative aimed at creating 1,000 affordable units over five years. Do the math: at that rate, that’s $27.2 million worth of affordability.
For Further Study: “Yep, rent control does more harm than good.” Which introduces us to still more basic economics: Supply and Demand.
According to the basic theory of supply and demand, rent control causes housing shortages that reduce the number of low-income people who can live in a city. Even worse, rent control will tend to raise demand for housing — and therefore, rents — in other areas.
Blaska’s Bottom Line: One sure way to control housing costs: keep property taxes low.