On Wednesday April 17th, a majority of the City Council sitting as the Land
Use and Housing Committee voted to raise the cost of all housing in San Diego.
The committee is recommending to the full City Council that it mandate 10% of
all newly constructed housing be affordable to people with no money. (The
committee might just as well mandate that water must run uphill).
The way the real world works outside of city hall, is when you increase the
price of new homes by adding an "affordability tax," over time, you increase the
price of all housing in the same market. Older housing is a reasonable
substitute for newer housing and older homes increase almost dollar for dollar
along with new homes, according to a report by the Federal Home Loan Bank in San
Francisco. This is why older homes in North Park that sold for $15,000 in the
early 1970s increased to $50,000, and then $100,000 and these same homes are now
selling for over $250,000. Each year, without exception, as the median price of
a brand new home has risen, the price of 30 and 40 and 50-year old homes have
risen. The committee's recommendation, if adopted, is virtually guaranteed to
harm thousands of more low-income people than it can possibly help.
New construction in the city is running about 5,000 units per year so
theoretically at the optimum the 10% mandate will yield up to 500 affordable
units a year in a region with approximately 1,000,000 homes and apartments. The
triviality is absurd. Even so, some people will say 500 units is a start. The
San Diego Housing Commission estimates that 180,000 families in the city have an
affordability problem. If we take this number seriously and calculate the median
priced home of $304,000 times 180,000 families, we're talking about families
needing subsidies living in $55 billion worth of housing. Cut the figure in half
and we're still talking about people living in new apartments worth $27.5
billion. Give each of them a $75,000 Silent 2nd Trust Deed, as is being
done downtown (CCDC), and it comes to $13,500,000,000. These are huge
numbers we're playing with to even make a dent in the supply problem.
The Land Use & Housing Committee voted a "Gulf of Tonkin Resolution in-lieu fee"
of $2.50 per square foot. This seemingly insignificant fee is $2,500 on a
1,000-foot home or apartment. Over 12 to 24 months the $2,500 impact will be
capitalized into the price of all housing in the City of San Diego adding
collectively, $1.187 Billion to the price of nearly all 475,000 homes and
apartments in the city.
Another solution proffered for the affordability problem is so-called,
"Smart Growth." This is the latest in a series of fads relating to land use
planning. Smart growth simply means that some housing, which would have been
built in a free market -- shall not be built. The result is perpetual shortages,
i.e., a reduction in the total supply of housing relative to demand, which
concomitantly leads to higher prices. Under Smart Growth housing is constructed
not where buyers want it, but where politicians want it with higher densities.
Smart growth, bottom line, is the belief that if new construction is directed
where those smarter than the rest of us determine new buyers should live,
then new home buyers and renters will have no other choice, like it or lump it.
The dark side is people may rent a place they don't like, but it's extremely
unlikely they'll buy a place they don't like.
Inclusionary Zoning is a land planner's name for what the Land Use and
Housing Committee is recommending. In reality it is just a form of exclusionary
zoning. Both Exclusionary and Inclusionary zoning raise the
cost of housing and thereby reduce the potential number of units and the total
number of buyers. Silly as it sounds, the only solution for a shortage of
housing is more housing. It's not making some buyers pay part of the housing
cost of others. One developer several years ago was forced to set aside 20% of
his units in Del Mar at substantial discount for low-income buyers. College
students bought many of the low-income units. The students qualified because of
little or no income, and their parents paid cash for the condos. A perfect
example of the unintended consequences of the Coastal Commission's good
intentions.
Fred Schnaubelt, City Councilman 1977-81, 2728 Adams Ave., S.D. 92116 (619)
280-2082
To Part III
