How to Create a Housing Shortage: A guide for policy makers who like their rents high

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Imagine, it’s 1975 and you’re the mayor of a growing city that is attracting newcomers to good, well-paying jobs. That’s frustrating and you’re sick of it! For your city – something like Palo Bajo, Santa Marta, New Yonkers, or Oxford – change is bad and it’s time to stop all those pesky new homes that are getting built in your neighborhood. How can you go about it, if you can’t just flatly ban all new construction?

This is a guide for the enterprising leader who dreams of a city frozen in amber. 

Step 1. Stop those big bad buildings!

New apartments and condos have been going up around town, at a terrifying scale reaching three or even four stories. That’s not acceptable. It’s ruining the character of the neighborhood – which is primarily single family bungalows and aging car washes. Downzoning is the answer.

To stop those unsightly apartments, place a 1 unit maximum on most parcels in the city so the only thing possible to build is a single family house. We’ll call it R1 zoning. There are some neighborhoods that already have apartments, but they’re mostly 2 stories. Let’s put in a limit of 2 stories and 4-6 units. We’ll call it R2 zoning. That way, we can keep things the same forever and preserve precious on-street free parking!

Step 2. It’s got to be affordable!

In the neighborhood where a few apartments are still allowed, developers have kept on building. They found some parcels with single houses or duplexes, tore them down and put up 5-6 units despite the fact that you capped height at 2 stories. 

You’re very concerned about who these units are for, and tired of those newcomers who work downtown, so you decide that the apartments need to be affordable. However, once again you can’t just ban apartments that aren’t income-restricted. Instead you can require that in any new building 30% of homes must be “affordable” with rents that are capped by law. Nevermind applying that logic to single family homes.

Let’s call this our Affordable Housing Production Program, also known as Inclusionary Zoning. Now developers won’t be able to make any money building those 5 unit buildings when they have to lose money on 2 units, and your neighborhood will stay the same! 

Step 3. The neighbors get a say!

If someone is still going to try to build, even within the constraints of your R2 zoning and affordable housing production program, the community should get to weigh in. There needs to be a process! 

First, the developer should have to organize meetings and notify all the neighbors that they want to build apartments. They better be careful too – the notice of when the meeting is should be hand delivered to each door within a mile, and there should be at least a couple opportunities to elevate the community’s voice! This way, they’ll know how awful these new apartments are, and let the mayor know they don’t want them. 

Second, the project needs the experts to weigh in – and by experts we mean our volunteer Architectural Review Board and Planning Commission. The developer should have to pay consultants to show up at a series of meetings, take feedback, make changes, and desperately pray that the commissions say yes. 

Finally, the developer should have to ask permission from you and the city council! And the council can do whatever they want – it’s their discretion, right? They run the city. This is a good opportunity to ask for other things too. Maybe the developer should have to renovate the park down the street in order to get approval for their hulking 2 story building. 

A discretionary approval process with several layers of community input will make sure nothing moves too fast.

There are plenty of other ideas for how to keep out those new homes. Perhaps you should declare your entire town a mountain lion sanctuary, or create a historic zone that takes up two-thirds of the city. Maybe you should declare some old city buildings that are falling apart landmarks, so that they can’t be redeveloped. But for now, these three steps of downzoning, affordability requirements, and discretionary approvals will do.

Together, few new homes can be built due to strict limits on heights and density, and even fewer will be built because of the cost to provide affordable units and proceed through the years-long approval process. Job well done – you’ve created a housing shortage.

50 years later, you look back. The population of your city has grown only 5% – looks like your plan worked! The average rent is $3,000. None of the local teachers live in the city – with their pay they can’t even afford a studio. Families were priced out too, and the school age population has dropped

Congratulations, you created a housing shortage. 

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