December 12, 2007
It is concerning as to why the County Commission is repeatedly attempting to ratify its proposed deed-restricted plan for affordable housing in the face of vast public opposition, as well as the wealth of historic data proving the concept to be economically disastrous to the community as a whole. The history of affordable housing in the U.S. has shown that, where this type of approach has failed, other alternatives continue to prove successful. It is not the concept of affordable housing, per se, (a healthy economy/society requires workers from all economic levels) but the county’s proposed methodologies that threaten the future of the community.
The proposed deed-restriction plan limits the resale value of a property to the growth of local median income which would allow residents to enjoy affordable housing for years to come (55 years under the Summit County plan). Would this solve the issue of affordable housing? Initially the answer appears to be yes. However, as time progresses, these owners are excluded from the appreciation of the remaining market, making increasingly less likely that they can afford a free-market home in the future. According to the Snyderville Moderate Income Housing Needs Assessment, Summit County housing costs increased by 175% compared to an income increase of 77% for the decade of the 1990s. Meanwhile, as these residents are unable to afford to move, more affordable units are required for the next generation of owners. Additionally, without any hope of return on their investment, owners of these units cannot fund capital improvement and maintenance of these properties without further jeopardizing future financial independence, as it is clearly more fiscally responsible to invest their money elsewhere.
This is not conjecture but historic fact. Textbooks cite self-perpetuating decline and ultimate failure of regulated-cost housing of the last century. Boston’s Columbia Point, Chicago’s Robert Taylor Homes, and Atlanta’s Techwood Housing are but a few examples of the decades of decline, blight and eventual demolition of affordable housing that ultimately befall programs which exclude residents from the gains of the market.
Though history shows the universal failure of programs on the cost/value side of the housing-market equation, programs providing financial incentives to buyers have generally proven successful. The Federal Home Loan Bank System, initiated in the 1930s in response to the Great Depression, established government incentives to create a market for long-term mortgages, and is credited as starting the first major shift from predominately rental housing to today’s all-time high of owner occupied rate near 66%. The home-mortgage deduction on income taxes is another widely used and successful government program to make housing more affordable. Government employees and military personnel receive housing allowances in addition to their pay to offset costs specific to their area of residence and work.
An example of another alternative can be found in the area of Durango, Colorado. Citing the pitfalls of deed-restrictions, the La Plata County Regional Housing Alliance has implemented a shared-equity approach to provide down payment assistance or principal reduction for qualified buyers. As housing costs increase, this plan allows an equity increase for both the homeowner and the Housing Alliance (which can use the funds for additional housing assistance). Additionally, this type of plan has the potential benefit of insulating the most vulnerable from the high foreclosure rate currently affecting today’s distressed sub-prime housing market.
Some will argue, invalidly, that opposition to deed restrictions is an argument against affordable housing in general. Many of the best minds of the last century developed variety of affordable housing options and the data from decades of experience are readily available; the concept is no longer academic. That the County Commission would choose a plan of demonstrated failure over many proven successes defies rational explanation.