HomeMy WebLinkAboutITEM 3 SUPPLEMENTAL INFO. FROM T. SHAW VW1 FR
PACIFIC WEST ASSCCIATION OF REALTORS'
Februar-*1v 13, 2018
Chairman Smith
300 Centennial Way
Tustin, CA 9278o
Re: Rent Contn-)l al'id 111(-Itlsioll�11-\- zol-IM11
Dear Chairman Smith:
'1110 J)L1iq-)()se of this letter is to inform YOU ffi/,I-it the Pacific West Association of
R L,ALTO RS,�J�,! opposes reiA control a jid ii�i�tndatory lnclusionar�.,-Zoning (1Z). We
respeetfull\� request th-(-ItTtistill 11(A "'Idopt elther idea.
California is fa(l ing a severe lack of housing to meet curreiit (ami future demand. The
state Housing and Community Development Department rely ors i8o,000 new homes
should be built anntial]N- to 1�;eep tip with denianci., but on a),-eri--tae 80,000 are
being built. This Lick of hotsitig has made the di-(1�1111 (Alioiiie ownei,ship unattainable
for much of Orange Counh-'s ivot,k-fiuce and votill'U(IT, 1)opti141 t1(-)n. Our pissociatIMA
believes neNN, hotislng shoild generally be supported as a means of addressing this
shortage, 6th ffie added 1)cneflt that such construction activity,ixill create jobs and
associated ecoi-ioinic activItY.
Housing unafforder bflit-v is iii-ipacting people of all .1 es and e levels
so We
understcatid the desire of city go�-ernments to enact policies that ---idduess this crisis.
NNIould geiiertally recommend cities zone for added liousing, as w(-11 as sire amlim-) t1le
housing approval process. Poli cies that disc-ur.-i<Uo the supplv Of 1x)11,Z;11-1g such as i-ciit
control and 1Z r be well intentlotied, blit they (-I(,) inow than good.
A study of the 1Z policies in tho San Francisco area concluded that it generated little
affordable hoti�k-iu itexceedingly costiv, it placed significant burdens, on the
market-rate h o ii-lelti):'o r , it 1)t,evented t1i c -i c i i m i i I I'L,ition of eq uitN,-, and it dimin is]i e d
government revenues.
We look fon -ard to worl:tng N\Ith vou on add i-essUin 1i housing needs of our region.
Please do not hesaale -[-() cmimCt Lis if we ni,,1Y Ix'- 4 se;,viee.
Sincerely,
Tim Shaw
Government Affairs Director
(714) 245-5500 —www.pwt-.net— FAX (71 4) 245-5599
1601 E.Orangewood Avenue—Anaheim,CA 92805
3750 Kilroy AirportWay,Suite 120 — Long Be-Lich,CA 90806
2 1,13 201 The High Cost of'Affordable Housing'Mandates-VVSJ
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COMMENTARY
The High Cost of 'Alffordable flousing,
Zn
Mandates
Inclusionary zoning'laws creati----a vicious circle of higher prices and red,,,ced domand.
PHOTO,ISTOICX/GrETTY IMAGES
By Paul Kupiec and Edward Pinto
Feb.12,2018 6:45 p.m.ET
As housing prices recover from the Great Recession,municipf-fli It jc-
are
considering law,that will raise the cost of horneuwnerslap.1111f,
that cities like Philadelphia,Detroit and Atlanta are neqttirir!," dk1-,v.,1t)p.,rs to set aside smne
portion of their newunits to sell or rent atbelow-n,,,ii-k-, 11 �w.�,u-incorne households.Like
many progn-!s,,-�-iv-o promises,this is a fool's errand. i-oduce`he cost of housing
for targetud poilt 1cal groups if they increase the cos t 4111t, se.
rhe concept,called has been irnplen,,en?ed'Oy )MIP ties,nearly
90%of which are in California,Massachits-Ltts and New Jersey.While the intent of these laws is
to increase the supply of affordable housin'o.,lil-,t-ory shows they increase the cost of housing
and limit the supply of new affordable unfts.
Consider a project plan to produce 100 identical new housing units with development outlays
forland,materials,zoning site preparation and other costs of$23.75 million.Including a 54o
return for the developer,the protect costs$25 million.Without government involvement,the
03
inarket price for each housing unit will be$250,000.1"he successful sale of 100 units at this
price would cover all out-of-pocket development costs and earn the developer a competitive
profit.
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2/13/2018 The High Cost of'Affordable Housing'Mand ates-VVSJ
a
lrat happens il"the municipality requires the developer to sell 10%of these new units at
below-market prices?Laws are rarely so specific,hitt,as urne that the municipality caps the
price on affordable units at$125,000.The law doesn't change the cost of building.It merely
changes the price the developer can legally charge for some of its new housing units."rhe total
cast of million 111Lr t now be spr t,;i 1 over 10 units,each,with a maximum legal price of
$1,25,000)a11d 90 c111its priced to c.ovcr the remaining cost.Each of the 9 "market price"units
rnust,sell for$263,889 for the clevvlclper to quer costs.
Policy makers may view inclusionary zoning as a free lunch.but requiring developers to sell or
rent 1 G of their-housing units at below-market pries to"qualified households"means
charging above-market prices to everyone else.The affordable-housing requirement increases
the median house price in the development by 5.5%..
The impact on nonsubsidized home prices can be even more c witerproductive.lnclwi icrrria�r--Y
zoning laws impose significant cc;sts on developers,which ar c,forced to ftr A buyers 1-,J�O k itis,
necessary qualifications ar,d Li 11�inc to piir-diasrI the subsiciixed try°nits.Itthe potential pot)I o
iion ubsidized clualiijeci liorr.e bii�-ers falls 7, rk ti hen nc,.v Li: its -rye
$2,63,889,the devc}lc_)�Er,r-won't it 11der-t.ake t11e 1)r [r: is C .'A1.0 srr1)11)7,y* iLJLi.,'FS
will be smaller as new cleve.opnienIr c 4iElt1?.k,1, -'',�'' '-Litt r, I(hi jl)ri<i1 pr'essul'o "'i Loot.° Yl L11 eS
of existing hoii,lc-s.
The exainplc is simplistic,but,.he historical record burrs out its c �imiioti-�o!:'e prpdir-,ions.
2004 study by the Rea.son Fouad .ion.found that inclusion r,v,()mng laws led
housing in the San Francisco Bay area.The total production of new lousing U1111S deCiir eLi dill
the production of'new affordable-ho usiii units declined 1)r cipjtnr,r,,Jl.--The di-op i21 new home
cmistruction also coincided with sir rrittcanL price increases fol,r el)i ►.7° I I I d rje,�%r` price"
units.
Studies b,-v both the Cato Institu-Le rlr'lLl il,e Brookings Institut`lon show tli r:n-,l}°:-,i.L is more
affcrdablc°yvhc%n:,t1-; ,ar°e fewer Iat,ki u,e rc_,7�r-ic:t.iclns.If zoning,busl(li7; codes,lees a nd
inchisanr)ary. oniitifrlawsraise Jk_°.:e1o')mentcost s,housingwill eex1)ejisive.i-.i,nyzoning
codes place l��ttr��l��-.°:l"7 on�nlL Li�SiY aj L� 1m),11'king capacity,the size o &v°.,='k1:n ';1111,..7,
Iariclsw api!ig and counuess other factors t E.,rt d r ive Lrn building casts 7:nd pride i7rCi-1i
l Louseholds out of the market.
Rather than promise the impossible—making aking housing affordable by decree.--municipal
,go ernrnenis shouldembrace practical solutions.They should adopt land-Use aild building
code regulations that reduce development costs.They should expedite approval processes,
lower impact fees and taxes,and reduce other unnecessary regulations.Only lel►adopting
rneasures that trim development costs can municipal government.,s stimulate the production of
new hou si ng that is more affordable for ever-yarn
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ofAEFs Ce,i? r on ousrr?gMarkets and Hous iiig Aisle.
Appear F h?-!i ry13,C, .J�) �7i� .`f4�z,t't''
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