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January 24, 2022

Building Affordable Housing is NOT a Good Way to Get More Affordable Housing

We don’t build used cars.

Was you first car a new one? Not unless you were very lucky. Mine was a ‘55 Chevvy bought in ’64 to get to my summer job. Its headlights were held on by duct tape. Did you leave your parent’s home for a brand-new house or freshly built apartment? Probably not. I moved into an aging “efficiency” with a hot plate for a stove; but it was better than living with my parents and close to my job.

In 1955 my car was new and someone bought it who could afford it. They or some successor sold it me as they stepped up into a new, new car. My dreary efficiency apartment was carved out of a larger apartment in a building which must once have been new. Somebody moved out of it and that made room for me to move in.

Vermont has two housing problems:

1) a homeless population, some of whom can’t afford to live anywhere (and some suffering from other problems which make them unable to care for themselves);

2) a lack of housing which health and day care workers, construction, and trade people – the people we depend on – can afford to live in.

There is a flood of federal money (debt we’ll have to pay some day as federal taxpayers). Both Governor Scott and the legislature want to spend a lot of that money on our housing problems. As much as homelessness is an acute problem and a misery for too many people, building low-income housing will not solve either housing problem. However, we can use relatively little money and a lot of flexibility to both create housing for the workers we want to attract and retain and to provide affordable housing for some of those now on the street.

New housing is not affordable to the homeless any more than a new car was affordable to me when I began to work. A work-around has been to subsidize either the cost of building the housing and/or to provide subsidies to low-income tenants in new buildings. Either way, we can only provide low-income housing until the subsides run out. Moreover, there is almost always local resistance to low-income housing from those who fear that its proximity will drive down the value of their own houses and perhaps make their neighborhood less safe as well. The low-income housing either doesn’t get built or is even more expensive requiring larger subsidies because of the long delay.

Suppose that we make it possible for more “market-rate” housing to be built, housing which people can afford to rent or buy without subsidy. Some of that housing will go to newcomers to Vermont (whom we need); the rest will go to working Vermonters who will move up from where they used to live and leave vacancies behind. In a phenomenon called “chaining”, other people will move up into the older housing which is now vacant and someone else with less money or less needs will move up to fill those vacancies. Eventually (two or three years according to some studies) the least expensive houses and apartments which were left behind become affordable to those who currently can’t afford any place at all. These vacancies – the used cars of the housing market – are in existing neighborhoods, not clustered in subsidized ghettos. No local opposition can stop them from being built because they are already there. It’s in the interest of neighborhoods NOT to have vacancies.

If we enable market-rate housing to be built with private money, the increase in available low-income housing is no longer tied to the subsidies available to build or rent it. Since there is high demand for housing in Vermont, housing will get build with private dollars in Vermont and that new housing will benefit both working Vermonters and the homeless.

So why isn’t private housing – other than McMansions – being built to meet the demand? The simple answers are exclusionary zoning and over-regulation. Many Vermont towns require large lots – 10 or even 25 acres – per house. (I live in such a zone in Stowe). Act 250 makes it much more expensive regulatorily to build a cluster of homes than to build a few very expensive houses on large lots. We subsidize leaving unproductive land in farming rather than let any of it spoil the view by having houses on it. Vermont villages often forbid buildings more than two stories high downtown. Other areas are zoned single family, no sharing allowed. The rich protect their view without the inconvenience of buying adjoining property and working families aren’t allowed to build. We are pro-housing in theory but anti-development in practice. New middle-income housing has nowhere to go.

As described in VT Digger, Fairlee, VT is making innovative changes to its zoning both to provide for growth and to preserve open spaces. Buildings in downtown will be allowed to grow to three stories, which makes an enormous difference in rental economics – two stories above the shops and restaurants instead of one. Holders of large woodlots will be able sell development rights to those with smaller lots. Income from those sales makes it more economical to keep the trees growing while the purchasers of the development rights will be able to build more densely on small lots.

Burlington is also looking at how to make more space available for housing development. According to VT Digger:

“Some of those zoning changes would put a large swath of the South End under mixed-use zoning guidelines, meaning it could be developed for apartments and houses. As part of Thursday’s announcement, the city released an agreement with neighborhood stakeholders endorsing the concept of an ‘Enterprise-Innovation District’ that would transform empty spaces and parking lots into housing.”

Even though we have a tsunami of federal dollars available, we won’t solve Vermont’s two housing problems by building subsidized housing. We don’t want to build used cars. We do want to allow (not subsidize) the building of market-rate residences in order to make housing available up and down the income spectrum. We can’t be both pro-housing and anti-development.

See also:  Failing Dairy Farms Are an Opportunity to Grow Back Better

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