A Quick Thought on Zoning & Affordable Housing

I’ve been having an interesting Twitter discussion with Fall River Herald editorial page editor Aaron Frechette, and it’s reached the point of needing more than 140 characters at a pop.  Here’s his latest tweet, as of now (scroll up on the link to start at the beginning; the following is translated into English):

Relaxing town zoning to incentivize affordable housing development could help correct an artificial market/social imbalance.

The gist of my responses has been that, one way or another, whether there are direct tax incentives or relaxed zoning or expedited permitting, or whatever, somebody is subsidizing the incentive that’s being provided in the name of affordable housing.  My response to the specific point above is:  How is it “artificial”?

The rhetorical question might be better put: How do you know what’s artificial?  Even at the small-town local level, nobody is competent to figure out all of the factors that play into one area’s being more expensive, or less expensive, than another.  Equally tricky is figuring out who would benefit and who would suffer by distorting the information that market prices are conveying.

Look at Little Compton.  The geography makes it an attractive place to live, if you’ve certain tastes and assets, but the relative inaccessibility of large-scale work environments makes it not a very practical place for many people with lower income.  So (hypothetically) the state applies some pressure and both the state and town create “incentives” for developers to put in low-income housing.

Let’s put aside the complex maze of schemes that developers can exploit in order to make it profitable to build what the market doesn’t really want built and just look at some of the incentives and subsidies.

On the subsidy side, as I pointed out last week, reducing the tax revenue derived from certain properties inevitably increases it on others.  And not everybody even in wealthy towns is wealthy.  Some are just hanging on, and subsidies to newcomers are the last thing they need.  Keep a representative such family in the back of your mind for a moment.

Imagine you live in a relatively well-to-do, relatively hard-to-get-to area of the state.  Not only do you pay a premium for the property, but you have to make up the difference in convenience.  That’s both time (the half-hour extra it takes you to get to work or a department store) and money (the gas it takes you to get there) — never mind the times you forget to get gas and have to call your friend to drive across town to pick you up and drive you to a station (assuming you’ve got a gas can handy to fill).

At a certain threshold, it’s worth it to you and your neighbors to pay the prices necessary in order to allow somebody to open a general store.  Maybe it’s that family mentioned two paragraphs ago.  Taking into account both their preferred lifestyle (including work preferences) and financial needs, you, your neighbors, and Mr. and Mrs. Storeclerk settle on the appropriate premium for milk and light bulbs to suit everybody’s needs.

Now drop a subsidized housing development in the middle of town.  Suddenly, in addition to a significant increase in the necessary town services (necessarily subsidized for the low-income newcomers), thus driving up the tax rate, you’ve got a population of people who wouldn’t otherwise have picked this community, based on their financial circumstances, looking for low-skilled work locally.

So, when Mr. and Mrs. Storeclerk get to where they’re interested in hiring some help, they don’t hire Joe down the road, who’s struggling with his unsubsidized homestead, but rather Jane from the development.  And in order to capture some of the new market and increase the flow of business, they lower their prices.

It is now poor Joe subsidizing Jane’s housing and you and your richy rich neighbors’ shopping needs through his lost opportunity.

Or maybe what happens is Mr. Franchiser, who lives across the state, finds that the numbers now make sense to open up a QuickyMart with the subsidized labor, and Mr. and Mrs. Storeclerk have to close up shop altogether.  (On the day of their going-out-of-business sale, be sure to stop by and commiserate over the death of Mom and Pop’s Main Street stores where people get their premium’s worth in good conversation.)

Now you’ve got the Storeclerks and Joe subsidizing you and your richy rich friends plus Mr. Franchiser.  But that’s not the end of the mischief.

You’ve also now got Jane and the two-dozen families in her development living in an area that doesn’t suit their needs.  To the extent they can’t find jobs locally, catering to the rich folks, they face the same premium for work that the original inhabitants were willing and able to shoulder.

The problem is, career advancement tends to be a spectrum, not a gappy leap.  Jane isn’t likely to go from cashier to work-from-home computer engineer.  Instead, she’ll need some night courses (now that much farther away) and a decade’s worth of in-between jobs, working onsite tech support, followed by some kind of middle management, and so on.  In effect, she’s subsidizing her own lower-cost housing with lost career opportunities that don’t quite make sense at the margins, anymore, or with the young family that she puts under strain or just forgoes growing in the first place.

Obviously, the scenario will differ in the face of geographic reality, from place to place.  The point is, though, that prices are nothing but information, even when they’re big prices, as with housing.

And contrary to the apparent assumptions of do-gooders, artificial animus is not likely to be at the top of the list of reasons.  Where zoning and other deliberately exclusionary factors are in play, a whole ‘nother set of imaginings would be necessary to see that (1) the subsidies and pain will not necessarily, or even likely, be applied to those most at fault, (2) the consequences of forcing things too rapidly can easily outweigh the benefits for everybody else, and (3) the space that the zoning has carved out may have been a net benefit to the region for intricate reasons.

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