Tuesday, September 08, 2015

Worst practices

You might have missed this over the Labor Day holiday but Latoya Cantrell says she might have figured out how to fix the affordable housing crisis.  This is a dubious claim. 
The New Orleans City Council has signed off on a proposal to allow developers to build denser developments than would otherwise be allowed, so long as their projects include units of affordable housing.

The measure comes as council members and residents have become increasingly concerned about a shortage of affordable housing as real estate prices have spiked in some areas of the city.

The ordinance, sponsored by Councilwoman LaToya Cantrell, was approved Thursday by a 6-0 vote, with Councilwoman Susan Guidry absent.

This is a step in the long journey we have to affordable housing in the city,” Cantrell said.

Zoning rules limit the density of developments by specifying the maximum number of units that can be put on lots of a given size and how large those units must be. Those requirements vary depending on the zoning of the properties.
Hey look more density.  It's been a while since we've seen anyone advocating for more density.  Up until now the trend has been "decentralization" in order to avoid "clustering" people.... oh wait.. apparently it's only bad when poor people live in "clusters."
Despite the loss of thousands of public housing units, the new mixed-income communities appear to have accomplished the goals of decentralizing poverty, at least on the footprints of the old developments.

However, they serve just 9 percent of HANO households. What about the remaining 91 percent who are using Section 8 vouchers, including thousands of former public housing residents?
Recent studies indicate the voucher program -- which is supposed to give people greater choice where they live, allowing them to choose better neighborhoods and ideally provide safer environments for their children – has fallen short.

A large percentage of Section 8 families are clustered in low-income, largely black neighborhoods, many in eastern New Orleans, according to a Data Center report. This creates a particular problem for people who depend on public transportation and work in the service industry in the French Quarter. A report by Ride New Orleans found that only 35 percent of the city's bus service has returned in the past decade.

"We know they are being pushed out into the suburban areas, far away from the places they called home for generations, the neighborhoods that in some cases they helped build," said Cashauna Hill, executive director of the Greater New Orleans Fair Housing Action Center. "They're commuting for well over an hour every day to get to work. Is that the life we want for the people that support and sustain our service-based economy and the people that contribute to our reputation as a cultural mecca?"
Okay so one more revision, I guess. It's only bad when poor people live in "clusters" on real estate that might be attractive to developers. But now that we've re-clustered that problem out in the burbs, it's time to re-densify the city.. but with class this time.  That's funny enough as it is.  But what if we also told you we were doing all of this in the name of creating "affordable housing."
Under the new rules, a complex that commits to set aside 5 percent of its units for households that make no more than 30 percent of the area’s median income would be allowed to build 15 percent more units than otherwise allowed.

A 10 percent increase in those regulations would be allowed for projects that set aside 5 percent of their units for households that make less than half the area median income, and a 5 percent increase would be available for projects that set aside 5 percent of their units for households making up to 80 percent of the area median income.

Those bonuses would be stackable, meaning a development could get a total increase in units and density of 30 percent.

The affordable units would have to be comparable to the market-rate units and spread throughout the development.
Thank God they thought to throw in that bit about making sure the 5 percent affordable units were "spread throughout" the development.  Can't have those one and a half below median income families clustering up and ruining our 30 unit luxury condo development.

More importantly, though, 5 percent is absurdly low.  In New York, they're arguing over a 25-30 percent requirement. But even when we raise the set aside percentage, this sort of inclusionary zoning program is problematic
Inclusionary zoning is a fatally flawed program. It’s not just that it doesn’t produce enough units, or that the apartments it creates aren’t affordable, though both observations are undeniably true. The real problem with inclusionary zoning is that it marshals a multitude of rich people into places that are already experiencing gentrification. The result is a few new cheap apartments in neighborhoods that are suddenly and completely transformed.
In other words, you can't gentrify your way out of gentrification. If you just build more supply of high rent development with only a token level of "affordable" set aside all you end up doing is repeating its pattern.

Also, as other cities are finding out, building greater density of luxury housing even with greater percentages of affordable set-asides, isn't solving the housing crisis. Why?  In short, because building "luxury" supply first, means building primarily for people who don't actually live in your city. 
This isn't the "gentrification" of sociologist Ruth Glass (PDF). I'm not convinced that this is the "gentrification" of geographer Neil Smith. The "decoupling of housing from local labour market participation" is about a decade old. The diffusion to urban core neighborhoods in the Rust Belt from immigrant gateway cities is even younger. Most distressing is the real estate development aimed at investors looking not for shelter, but a place to park cash. Greater density for whom, Russian oligarchs?

Different political geographies be damned, housing affordability is a national crisis. Seattle builds way more than San Francisco. Both markets suffer from about the same rise in rents, fastest rate increases in the entire country. Income change is flat. Rents keep rising. Ironic gentrification
There's a lot of link density in that paragraph.  The takeaway, though, is it's absurd to expect "market forces" to fix your housing problem for you. Market forces are driven by too much money that doesn't actually live here. In "destination cities" like New Orleans that happens, at least in part, via the booming short-term rental market.

The following is from a data analysis by Andru Okun and Breonne DeDecker and Darin Acosta released last week.
Long term residents are competing with tourists over a limited supply of affordable housing stock.
The unchecked conversion of residential housing into what is essentially commercial space impacts the housing market by constricting supply and increasing demand. Less supply and more demand means higher rent for long term residents in one of the worst U.S. cities for renters.

In other words: short term rentals reduce the amount of available housing for long term residents while making the housing that is still available more expensive.

New Orleans has a serious affordable housing problem. We don’t believe short term rentals created this problem. However, they have made it worse. Over the past decade, wages have remained stagnant while the cost of living has increased. These factors have coincided with a demographic shift in the city of New Orleans towards a wealthier, whiter population. Residents being forced to keep pace with out-of-town dollars for basic amenities like housing exacerbates this ongoing conflict.

The average listing advertised as “entire home/apartment” on Airbnb goes for $251.00 per night. The fair market rent for a one bedroom is $767.00 per month, which on average is equal to $26.00 per night. This disparity in pricing incentivises the prioritization of transients over long term residents. Hosts renting to tourists are able to earn far more than a long term renter would be willing or able to pay for the same space.

The population of New Orleans in 2014 was an estimated 384,320. The number of tourists who visited in the same year was 9.52 million. The spread of short term rentals has resulted in an influx of these visitors staying within the city's residential neighborhoods. With the limited availability of quality housing stock and weak protections extended towards renters, New Orleans’ current housing crisis has the potential to grow even worse.
How are we planning to tackle this issue?  Well, right now, we have no plan because Stacy Head thinks people caring about things that affect their lives is "vitriol."  That's probably for the best anyway since, as we explained back in June, the plan Stacy was working on was pretty much just legalize STRs under the pretense of "blight remediation" but stipulate that some day in the far future we might come back and revisit that decision.
“There are so many blighted properties that if all of our efforts to get them into commerce were successful, it’s possible there would be a place for non-owner-occupied short-term rentals,” she said.
In other words, let's make sure we build the nice things for rich people now and say we're planning for more affordable housing as sort of a side-effect.  Inclusionary zoning, but for Airbnb.

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