City council members in Denver recently became the latest legislative body to demonstrate that a basic knowledge of economics is not necessary to hold an elected office. The council is considering a proposal to require that all new housing developments include below market-rate units in the project. The proposal would also increase the “affordable housing fee” from the current range of $0.44 to $1.86 per square foot to $4 to $8 per square foot. These costs will be passed on to renters and home buyers in the form of higher housing prices. Yet, council members believe that somehow this measure will make housing more affordable.
Last week, California’s Attorney General, Rob Bonta, announced a task force that will pressure local governments to build more housing. The state’s Department of Housing and Community Developments sets the number of new housing units each region is projected to need for all income levels, and many regions aren’t coming close to meeting these needs. Sadly, Bonta is following the same framework that created the housing crisis in California. The state’s restrictive land-use and environmental regulations drive up the cost of housing. Those strong-arm restrict the actions of individuals for the “common good.” Bonta wants to use strong-arm measures to force jurisdictions to build more housing. Whether he means it literally or not, he is framing the issue in an incorrect manner. Instead of forcing municipalities to build more housing, he should be defending the freedom of housing producers to build more housing.
A bill has been introduced to the Massachusetts legislature that will “allow communities to slow displacement and gentrification by removing some homes from the for-profit, speculative market.” The Tenant Opportunity to Purchase Act would give the tenants of multi-family housing the opportunity to purchase their home when the owner wants to sell. The measure would also allow tenants to assign this “right” to the municipality or a non-profit. If only a portion of the tenants exercise one of these options, the owner is going to own only a part of the building. This will make it extremely difficult to sell the other units and force the owner into a partnership with his former tenants.