What Is It About "Affordable Housing"?
/An article from the Manhattan Institute's City Journal a couple of days ago illustrates the difficulty of being a Republican candidate for mayor in New York City. A church in East New York (a low income neighborhood in northeast Brooklyn) held a mayoral debate dedicated to housing policy. Six candidates for mayor showed up -- Democrats Quinn, Liu, Thompson and de Blasio, and Republicans Lhota and Allon. The Democrats are either current or former city officeholders (respectively current Speaker of City Counsel, current Comptroller, former Comptroller, and current Public Advocate). Lhota is a former Giuliani deputy and recent MTA head, and thought to have an actual shot at the office. Allon is a private citizen in the publishing business. As reported by Nicole Gelinas of the Manhattan Institute:
The hosts and the questioners accepted as fact that New York faces an affordable-housing crisis and that it’s the city’s job to fix it. Everyone who spoke wanted the city to build or “preserve” city-controlled housing—whether private, rent-regulated buildings or public units.
How about Lhota? Well, it seems that he just kept his mouth shut.
Lhota showed that he is not politically naive. Politicians must pick their battles. Falling on his sword over public housing inside a church surrounded by public housing would have disqualified him on grounds of political incompetence.
The virtues of subsidized housing are such an accepted part of the local orthodoxy that you can't even question them in polite company. At least the article by Ms. Gelinas shows that I am not completely alone in New York pointing out the insanity of spending public money on subsidized housing; there are at least two of us. (Howard Husock would be a third. That leaves only 7,999,997 on the other side!) This just seems to be one of those issues on which rational thought is impossible.
Even if you completely accept the idea that it is the government's job to cure all inequality by taxing and spending, public housing has to be the most expensive possible way to help the smallest number of people. Indeed, even the word "help" is dubious here, because subsidized housing functions as a poverty trap for the people who manage to get in. No one ever leaves -- the turnover rate in New York low income public housing is barely over 3% per year, for an average stay of over 30 years. By contrast, the national turnover rate in all rental housing is about 35%, or an average stay in one place of only about three years. Because you are subsidized, you have a powerful incentive to stay; it's a whole different way of life from the private housing world. And because nobody ever leaves, very few people can get in. Despite decades of massive building in New York (about 170,000 low income apartments) we have ended up with a small class of the permanently dependent and waiting lists stretching beyond a decade for everyone else. Does anyone remember the old Soviet Union, where 70 years of socialized efforts to build nearly "free" housing ended with 25 year waiting lists for tiny apartments? It's the same thing. Meanwhile, the accounting hides the extent of the huge subsidies to a small number of people -- nobody accounts for the lost property taxes, or the opportunity cost of subsidized financing, or the deferred maintenance that will have to be made up some day. And finally, the residents come under powerful incentives to minimize their income, or at least to minimize any income that the overseers can observe, because if you have substantial reported income they'll increase your rent or even throw you out. If you are a rational actor, probably your best option is to become a drug dealer; second best option is to put together a package of non-cash government handouts (food stamps, Medicaid, school lunches, etc.) In short, there is no more destructive public policy than public housing. So of course, it has near universal support here in the trendy precincts of Manhattan.
Well, actually there is something even crazier than subsidized low income housing, and that is subsidized "affordable" middle income housing. In a world of limited resources, how can it possibly make sense to hand out subsidies to those who aren't even poor, even while the poor persist? Of course, subsidized "affordable" middle income housing suffers from essentially all the same problems as the low income housing, starting with the fact that nobody leaves, and therefore only a tiny number of people get in on the boondoggle and have to be subsidized for their entire lives even though by definition they are not poor.
A basic key to the enterprise is to make the subsidies totally opaque so that no one can possibly figure out how much this is costing per beneficiary. The latest game is the so-called 80/20 program, whereby a developer agrees to make 20% of the units in his development "affordable" and return he gets to use tax-exempt bonds to finance his project. Try to figure out who's paying how much for that one! Of course, it's exactly this kind of diversion of supply that makes the remaining private housing in Manhattan so scarce and expensive, but it's difficult to perceive and impossible to quantify.
And thus we have the phenomenon of the City Council Zoning and Franchise Committee meeting on Tuesday to vote on a developer's proposal to build one of these 80/20 buildings on West 57th Street, and the local city councilperson, Gail Brewer, opposing it on the ground of not enough "affordable" units and also she wants the "affordable" units to be permanent as opposed to the affordability having an expiration date. Crain's New York Business has the story.
"The issue is real affordable housing," Jesse Bodine, a spokesman for Ms. Brewer said. . . . "They always say no, no, no, no, no to permanent affordability to the end, and the community won't stand for it."
So that's it: It is absolutely imperative for a small number of not poor people to get a lifetime entitlement to subsidies while at least an equal number of unknown and unseen people by definition get priced out of the neighborhood. Anything else, and the community won't stand for it! Well, this is the West Side of Manhattan.