Dear Commissioners

My understanding is that 10% mandatory subsidized housing is proceeding forward.

 

Once again, I urge you not to do so and for the most practical of reasons: It won’t work.

                Oh, you will get some compliance but what can’t be seen is the projects that don’t go forward, the tax base that doesn’t get created, the jobs that don’t come forth, the housing that does not get built.

 

                The very fact that you have to make it mandatory (instead of relying on free market incentives) makes it clear that it is a money loser for developers and thus increases the cost of housing & will result in less development.

 

                This is bad for two reasons:

1. the only real long run solution to high prices is more competition, more housing supply. This will reduce the amount of housing built thus driving rents up. Since it comes in the form lost opportunities, it is hard to measure & easy to ignore but still true.
2. because it increases the cost of housing, it will drive rents up for renters, forcing the renting class (v. the significantly more affluent home owning class) to bear the cost of this program.

 

 

And as I’ve said before, much of the time developers buy ‘by the door’ not  by the acre so the benefit of any density bonus tends to go to the original landowner not the developer so it doesn’t lower the developer’s cost so no benefit to offset cost of subsidy.

 

However, if you are bound and determined to do this thing, set your cut off at 100 apartments developments & you will avoid catching the small mom & pop operators and only burden the larger professionals. To those immersed in government, it is easy to underestimate how intimidating, confusing and frustrating compliance with governmental regulations can be.

 

Also, over time compliance & enforcement could become an ongoing complicated enforcement issue (remember, you are asking folk to something against their daily economic best interests).  If you restrict it to 100+ developments you will significantly reduce the enforcement challenge while being much, much more efficient (it takes the same amount of City staff time & energy to file against a 10 apt owner as against a 100)