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 onth after month, the media has been filled with reports
of the rising fortunes of California real estate investors. "Home
prices soar ever higher." "Housing prices out of control."
"California home buyers pushed existing-home sales to a
record pace."
 But
the return of the housing market does not come without much legitimate
hand-wringing about those being priced out of decent shelter.
What can we do about those who cannot afford housing in such
a "runaway market"?
The obligatory
building industry line is that, by reducing their developer impact
fees, we will get more affordable housing. Costs are undoubtedly
high for anything new. But has anyone ever seen prices come down
just as result of building fees being reduced?
Market prices
for houses are rising by the thousands because new wealth from
the economic boom is bidding what they have to for the existing
supply. Housing prices aren't so high at this point because of
the costs; they are so high because the wealthy tier can afford
to finance them.
Furthermore,
builders are protected by a state law requiring that all fees
must have direct connection to the project. If the fees do not,
or are excessive, builders move politically - and legally to
adjust them. They did so at the County under the leadership of
Ron Roberts who brought in auditors in response to complaints
from builders.
Builders'
fees should match the cost of the infrastructure required for
the public systems we all need. By law, builders cannot be overcharged.
But when they are too low, the taxpayers - and the environment
takes it in the chin. The city then ends up with insufficient
or poorly designed infrastructure that off-loads costs and impacts
into the public realm, and especially into the environment. Just
to name two such costs: polluted runoff and traffic congestion
are byproducts of allowing growth to happen without sufficient
infrastructure planning and funding. What contributes to polluted
runoff in San Diego? Aside from leaking sewer systems and other
personal habits that contribute to runoff-borne pollution into
our streams and bays projects are not yet really required to
be designed to minimize and treat polluted runoff on-site. Cost-benefit
analysis of the use, performance, and return-on-investment of
such "pollution prevention" designs and systems show
a significant reduction in public costs over time.
Why so much
traffic? Builders are allowed to build without sufficient systems
going in to deal with traffic - or community designs to reduce
traffic.
Another area
where building choices can raise long term public and household
costs: energy. If incentives and requirements were matched, so
that builders were encouraged to install the most efficient lighting
and appliances, it would reduce both the monthly costs to power
the home and the need to build expensive new plants or burn excessive
amounts of polluting fuels.
Improvements
to building standards may indeed increase costs to new buyers,
but can significantly reduce costs and impacts to both the owner
and the taxpayer in the long term. [See related
story]
One "win-win"
example of this is the low-flow toilet standard. Builders are
required to install water-saving toilets in both new units and
in old ones at the time of sale. This successful program has
saved millions, for both individuals and rate-payers who don't
have to finance additional infrastructure because we used incentives
to support smart, prevention-oriented design.
We need to
face the fact that poor and middle-income people cannot successfully
compete in the market that for-profit builders have every right
to pursue. There are a lot of reasons industry doesn't build
housing designed to be "affordable." High costs are
a factor in any project. But another is a fundamental market-based
reality: you can't make as much money selling stuff to poorer
people - especially not with thousands of hi-tech single and
dual-income families bidding against them. The minute you move
to make a house "affordable," the profits decrease,
if they are possible at all.
Unless you
want to put a cap on high bids or introduce some form of overall
market price controls - which I'm quite sure the industry is
not suggesting the issue is not so much the euphemistic term
"affordable housing." It's really the less politically-correct
issue of how to build "below-market-rate" housing,
and what are the standards. You can design nifty lower-priced
homes. Siting them can be pure torture. Nonprofit builders willing
to dedicate themselves to building below-market-rate housing
faced overwhelming odds, even during the last recession. Most
existing residents do not want growth near them and certainly
not "poor growth."
Overcoming
prejudices about who needs more affordable housing may become
easier when people realize that it includes most teachers, police,
fire-fighters; waste management, transportation, recreation,
entertainment, food service and government (civilian and enlisted)
workers; artists, students, retirees and all manner of service
employees. We must discover ways to provide housing for the middle
and lower ends of the market. When the markets fail, people still
need shelter.
But increasing
the housing supply should not be approached by reducing infrastructure,
environmental or quality-of-life standards. All the current indicators
are showing that we need to increase those standards in the face
of runaway growth.
Beware of
political-speak. When industry lobbyists say "reduce costs
to make housing more affordable," the taxpayers should hear:
"reduce standards so we can make more money." Our answer
should be, "no thanks."
Unfortunately,
past practices have left us with a huge deficit in both money
and thinking going into dealing with these problems. But we can
make progress by shifting our thinking and funding to a prevention-oriented
design approach. Investments in prevention design will reap rewards
for both the taxpayer and the environment.
Too often,
at City Hall the agenda is dominated by what's best for builders.
It's no surprise that their answer is just about anything that
reduces their costs. What we need are designs and measures that
reduce system costs and allocate necessary costs fairly.
Until San
Diego gets honest about what infrastructure is needed and how
it will be paid for, the battles over growth will only worsen.
Both our quality of life and the public tax burden are at stake.
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