We will never solve the country’s persistent affordable housing problem unless fiscal and land-use policies change dramatically, and unless views and attitudes of American voters and their elected representatives also change.
Fundamental sources of the housing problem are plainly visible.
We who are better off accept and enjoy the economic benefits of employing low-income Americans willing to take jobs and work for wages insufficient to enable them to afford market-rate housing. Millions of low-income households must spend half their total income just to cover housing costs, leaving them significantly less than necessary for life’s many other necessities.
Given today’s costs for developing and owning real estate, and housing in particular, it is increasingly difficult for minimum-wage households, and even moderate-income households, to find and afford decent housing.
Essentially it boils down to a problem of money. Because of scant concern on the part of haves for housing affordability challenges faced by have-nots, relatively little political support exists for taxation needed to effectively address and solve affordable housing problems.
In a Sept. 4 Metro section story , Washington Post staff writer Robert McCartney cited the well-documented needs and ambitious goals for providing affordable housing throughout the Washington region. The District, surrounding Virginia and Maryland counties, local businesses, professional and trade organizations, and many civic interest groups admirably share a desire to undertake concerted action.
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But McCartney’s article identified explicitly and implicitly the diverse obstacles to meeting regional goals: regional funding inadequacy given the amount of money needed to support and subsidize real estate acquisition, construction and rents; limited availability of usable real estate and always-rising costs of land and development; and overly restrictive land-use laws, in particular zoning regulations that constrain residential density or restrict alternative affordable housing types, such as accessory dwelling units or multiunit homes within single-family zones.
Another obstacle is persistent NIMBY (Not In My Backyard) opposition to affordable housing projects, typically voiced by concerned residents of neighborhoods where below-market-rate housing development is proposed. Opponents generally fear that such housing, presumably occupied by a lower socioeconomic class of residents, will reduce property values and adversely affect neighborhood stability and safety.
Although NIMBY-ism reflects local financial concerns, dealing with it is less about money and more about the importance of working directly with citizens and citizen organizations. Gaining public acceptance of affordable housing projects requires transforming attitudes and beliefs based on facts to enhance understanding of project purposes and real impacts. This is especially critical when undertaking economically and socially impactful projects, as opposition arises no matter how ultimately beneficial a project investment might be for a community and region.
Yet even when government embraces a policy and fiscal initiative to help solve affordable housing problems, things still can go wrong if the initiative is implemented unsuccessfully.
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A prime example is “the Opportunity Zones” investment provision of the 2017 tax-cut legislation. According to a New York Times report , this recently enacted tax policy initiative is being exploited in ways contrary to the basic intent of the law and is ultimately failing to achieve its goals.
The provision enables capital gains tax avoidance if such gains are invested in projects and enterprises within designated, economically disadvantaged opportunity zones delineated by state and local governments. Presumably, a high-priority aspiration of the law is incentivizing subsidized construction of affordable housing by using tax savings as the subsidy source.
But reportedly many designated opportunity zones are economically and socially advantaged rather than disadvantaged. Certainly it’s no surprise that advantaged zones are where real estate investors and developers prefer investing. Not-so-poor neighborhoods are deemed safer and more profitable places for investment. And likewise unsurprising, investors and developers are erecting upscale projects: luxury apartment towers and hotels, office buildings, market-rate retail and recreational facilities.
Despite laudable financial objectives, the federal tax law appears to be seriously deficient. It evidently fails to set forth sufficiently specific criteria defining key attributes of disadvantaged opportunity zones delineated by local governments. And it seems to inadequately prescribe and limit the types and purposes of projects eligible for tax-avoiding capital gain investment. Perhaps a wiser, more caring Congress and administration in the future will remedy these deficiencies.
Until the haves sincerely care about the nation’s low- and moderate-income workers and the housing challenges they face, and until the haves are willing to foot the bill to address these challenges by paying higher taxes, little progress will be made in solving the problem.
Roger K. Lewis is a retired practicing architect, a University of Maryland professor emeritus of architecture and a guest commentator on WAMU’s “The Kojo Nnamdi Show.”
LINK ORIGINAL: Washington Post