Wednesday, June 14, 2017

This is not the housing policy you're looking for

It's probably some sort of progress that we're even having a discussion about the effectiveness of these tax giveaways to developers in the first place. But the context is still an assumption that tax giveaways to developers are the best way to do housing policy.
Mayor Mitch Landrieu plans to unveil a new economic incentive policy in about five months and won't support property tax breaks for new residential real estate projects that don't include reduced-rate units in the meantime, the administration's head of economic development said Tuesday (June 13).

The mayor's office is working with consultants HR&A Advisors on a study of real estate development tax breaks and a wide range of other economic incentives, ahead of a new policy being released later this year, said Rebecca Conwell, Landrieu's senior adviser for economic development.
Love to hire private consultants to weigh in on policy for us. This firm, in particular, always has a sweet gig somewhere. 
HR&A Advisors previously worked with the city developing a resilience strategy in 2015 and also studied the state's film production tax credits at the request of the movie industry, amid debate among state lawmakers over rolling back the credits.

I'm not a news media professional but my first question about the consultant would be, do their clients also include private development companies and other organizations looking to "unlock value in underutilized assets"? Because that's what their website says.

HR&A provides a full suite of real estate development services.

We provide critical thinking for development projects, advice to public, private, not-for-profit, and institutional clients—including municipal governments, counties, quasi-public agencies, BIDs, large medical centers, universities, foundations, public development authorities, private owners, building portfolio managers, national developers, performing arts centers, and museums—to unlock potential and transform assets and places.

HR&A creates coordinated real estate strategies to unlock value in underutilized assets.

We help clients identify short, medium,  and long term actions that support organizational missions while creating value from their real estate portfolios. We recommend solutions that are flexible enough to respond to changing market conditions and evolution of our clients’ long term strategies.

I'm guessing they collect a fee from everybody no matter what the policy outcome eventually is so it's probably fine, right? Anyway it's a strange time for the city to hire a consultant to look into housing tax credits when all they really have to do is watch this Frontline report on the faltering federal Low Income Housing Tax Credit.

In a joint investigation, NPR — together with the PBS series Frontline — found that with little federal oversight, LIHTC has produced fewer units than it did 20 years ago, even though it's costing taxpayers 66 percent more in tax credits.

In 1997, the program produced more than 70,000 housing units. But in 2014, fewer than 59,000 units were built, according to data provided by the National Council of State Housing Agencies.
Or they pay attention to the ways in which "inclusionary zoning" and affordable set aside policies in other cities are not making much of a dent in the housing crisis but are definitely causing nice things for rich people to be built. Or they could remember the last time one of these trickle-down "incentive" programs backfired in New Orleans.

Actually, according to the article, they are at least indirectly acknowledging that last one.
While the study is ongoing, the administration won't support property tax reductions for any projects that fail to include a "permanent affordability" component -- typically considered at least 50 years -- or affordable housing for low-income and middle-income renters.
Still, all of this tells us we've still got a long way to go before we can say decision makers in New Orleans understand that housing policy is a human service instead of a private partnering opportunity or even something to be described with loaded business analogies like this. 
After the meeting, Conwell said there's an opportunity for the city to align the use of economic incentives with the city's various strategic plans for housing, equity, resilience and other areas. Part of that will be to scrutinize how the city benefits from incentives.

"The city is making an investment," Conwell said. "If we give up the taxes, if we forgo taxes, it's like making an investment. It's not unlike a bank making an investment ... you want some certainty in return on investment."
Like we said at the top, it's probably good that we're at least subjecting some of these incentive programs to greater scrutiny. Anything that produces a less egregiously corrupt conduit for public money to enriched developers is better than nothing.   But we're still not anywhere near to developing an effective housing policy. Not sure when that starts happening.

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