From HUD: MIZ Produces Few Units, More Study of Costs Needed
This was originally a follow up e-mail to the Housing Affordability Response Team (HART) I posted yesterday.
PS I wanted to share this article, Producing Affordable Housing in Rising Markets: What Works? for what it’s worth.
Along with a critique of Inclusionary zoning it also calls for more study of costs and production, especially of government supported programs.
A better understanding is needed of why existing state and local programs have produced only modest amounts of affordable housing and whether these programs could be redesigned to be more productive. Better data on output are therefore essential. State governments, affordable housing advocacy and research organizations could be useful allies in collecting and disseminating data. Not only do they have more resources than many local governments, they could play a valuable role in standardizing data reporting. Prior research has focused mostly on how program design impacts output. Equally important is an understanding of the political dynamics of both local and state programs.
Not long ago, at a collaborative meeting on reducing infrastructure costs associated with water, we heard from an architect who designs for non-profit housing developers and found out that his frustration with infrastructure requirements is similar to our own. The costs that are being imposed throughout the economy are often well intended, but also frequently redundant. For us, that means raising prices, for non-profits it means fewer units.
We can trace the “modest amounts” cited in this article to regulatory overreach. The architect noted that the City of Seattle’s Office of Housing issues the grant of funds, while another City Department demands funds for redundant infrastructure in the six figure range. For example, a non profit agency is successful in getting a grant from the Office of Housing, those funds are paid out to a project, then the funds end up paid back to another Department, Seattle Public Utilities, in the form of new and expensive water mains or combined sewer overflow for wider public benefit. Challenging this makes no sense for the project managers, especially when the City is the source of funds. “Why would we make trouble with our funder,” the architect said.
This is common throughout our system of funding non-profit housing and there has been zero effort by the City or the Washington State Finance Commission to at least surface this as a serious problem nor to address these kinds of costs as aggressively they have in seeking more money. So far, we’ve been alone in asking to reduce housing costs and choke points for production. Further study of these costs and eliminating them would help all housing production, everywhere and address many of the issues the HART is grappling with. And as the article points out, state level government is uniquely positioned to do this through studies like the one we’ve proposed in the Senate budget.
Tax payers are wearing out, and so are consumers of housing. Smart Growth Seattle simply can’t allow the costs of these gross inefficiencies to be transferred to the private sector and ultimately to home buyers and renters. That will lead to higher prices and more regulation and higher prices. Notwithstanding the politics and personalities we should — we must — work together to account for these costs and eliminate them across the housing economy.