Opinion

Opinion: Affordable Housing Has Strings Attached

Opinion: Affordable Housing Has Strings Attached

We thank Will Carless for the thoroughness with which he approached his investigation into the cost of affordable housing. His article exposes a critical piece of information that has been clear to those in the affordable housing development community for some time.

Developers of affordable housing are ultimately at the mercy of those agencies that provide the subsidies necessary to ensure that appropriate housing can be delivered to a market that has a significant mismatch between the cost of housing and the wages of those that live here.

Unfortunately, the strings that are attached to the funding often unintentionally drive up the cost. The San Diego Housing Federation and its members share the concern that rising costs are unsustainable, particularly in the current economic climate where funding sources for affordable home production are rapidly shrinking. We are actively working to identify and modify the factors contributing to the rising costs.

As coincidence would have it, at the very time that Will’s article was released, a group of approximately 30 Federation members were meeting with Bill Pavão, the executive of California Tax Credit Allocation Committee referred to in the story, to appeal to him to recognize the factors intrinsic in his program that are driving up the cost of producing affordable homes.

As alluded to in the article, these factors were well intended when they were established, but experience has now shown that the benefits do not necessary outpace the downside of some of the goals that TCAC sought to achieve.

Will’s article points to a number of these factors, other public policy objectives, that have found a vehicle through the provision of affordable housing. Prevailing wages, energy efficiency and sustainable design, and resident education and job training facilities are all in and of themselves laudable public policy goals.

However, in order to make a true assessment of the cost of making housing affordable to our workforce, we must separate out the costs associated with achieving these objectives. To compare the cost of a market rate development that is not required to provide these amenities to an affordable housing development that does, is not comparing apples to apples.

Similarly, under redevelopment, new affordable housing often bears the cost of cleaning up environmentally contaminated sites, utilizing vacant and irregularly configured sites that can become home to illegal activities, and bears the cost of replacing outdated and ill-maintained infrastructure. These are the direct costs of reinvesting in older urban areas.

Ultimately, the entire community wins when these efforts are undertaken. The construction or rehabilitation of affordable housing often achieves long-term benefits for communities by removing blight and catalyzing the market. The result of this investment is lower crime and a higher property tax base. These benefits are difficult to quantify in the short term, but the successes shown in the communities like the San Diego neighborhood of North Park are a clear indication that this approach works. Like many older neighborhoods with years of disinvestment, affordable housing was one of the first big investments in the community in many years. Attractive new affordable housing catalyzed the market and minimized risk, leading to self-supported development that has transformed the neighborhood in a short period of time. These benefits come with a high price tag, however.

Affordable housing has been tasked with achieving a wide variety of public policy goals, many of which, as Will noted, substantially add to the cost of affordable housing production. The question, of course, is whether housing is the appropriate vehicle for carrying out these efforts. There may not be a simple answer to this question. However, the affordable housing community agrees that it is a valuable exercise to undertake and will continue its efforts to find solutions.

Susan Riggs Tinsky is the executive director of the San Diego Housing Federation.

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2 comments
Allen Hemphill
Allen Hemphill subscribermember

All these subsidies do is to distort the market, then everyone gets all upset when market distortions cause disruptions!

Akamai
Akamai

All these subsidies do is to distort the market, then everyone gets all upset when market distortions cause disruptions!