by James C. Sherlock
My colleague Dick Hall-Sizemore posted a column here on housing for the poor. He titled it “Little Guys Lose Again.” His opening:
A recent article on this blog about the high cost of housing generated a considerable amount of discussion. Much of the discussion centered around the role of government in contributing to the affordable housing shortage.
I offer another reason: good old-fashioned capitalism.
Interesting perspective, but I disagree.
I offer a question directly on point: why have federal antipoverty housing programs failed in their missions? Why is there not enough low cost housing for the poor?
We will pursue the answer. Hint — the problem isn’t capitalism. Not even a little bit.
Redevelopment and Housing Authorities. The redevelopment and housing authorities (RHAs) in virtually every city are the public agencies that Americans have set up to make sure that the poor have advocates and action agencies in the cause of providing housing.
They administer federal Section 8 Housing Choice Voucher (HCV), Public Housing, Rental Assistance Demonstration (RAD), Homeownership, and HOME Investment Partnerships Program (HOME) programs. Public housing has proven a disaster for poor people all over the country, so it is being phased out.
Those programs represent national liberalism’s programmatic best foot forward. I greatly wish they worked better.
Let’s take the redevelopment and housing programs separately.
RHAs manage redevelopment programs — think East Beach in Norfolk — that often purposely take poor areas and convert them to upper middle class enclaves. No problem getting the zoning for such projects.
On the housing side, they have been changing over from building, owning and managing projects to house the poor to providing vouchers for housing in an attempt to ensure the poor are not forced to live in unsafe, socially debilitating environments and have choices of locations and, crucially, schools.
Section 8 builders try to fill the need by rehabbing older residences to Section 8 standards where zoning permits and leasing them to Section 8 clients while trying to make a profit that justifies the investment. The landlords get the Section 8 payments directly. That is capitalism.
To quote Wiki, “Of the 5.2 million American households that received rental assistance in 2018, approximately 2.2 million of those households received a Section 8 Housing Choice Voucher.” I expect the percentage is now higher. The program also allows individuals to apply their monthly voucher towards the purchase of a home.
I have a friend, a contractor, who participates locally in the Section 8 program. The problems he faces are primarily zoning and regularly changing building codes. Creating housing under those conditions for which he can make a profit at Section 8 reimbursement rates is increasingly challenging.
Zoning. He finds that the opportunities to invest to support that program are further and further away from the core cities because of zoning restrictions. Contractors will tell you that the more progressive the cities and counties, the tighter the zoning restrictions.
State Building Codes. My friend of course also finds that the state building codes, themselves based on nationally-accepted model codes and standards, are more and more expensive to comply with — as do homebuilders at any level of the market.
We absolutely need building codes, but it is a fact that they create additional costs every time they are revised.
The Virginia Uniform Statewide Building Code (USBC)
…contains the building regulations that must be complied with when constructing a new building, structure, or an addition to an existing building.
They must also be used when maintaining or repairing an existing building or renovating or changing the use of a building or structure. The USBC is comprised of three parts: Virginia Construction Code, Virginia Existing Building Code and Virginia Maintenance Code.
Enforcement of the USBC is the responsibility of the local government’s building inspections department. The local governing body may charge fees to defray the costs of enforcement and appeals arising from the application of the code.
The USBC contains enforcement procedures that must be used by the enforcing agency. An administrative appeals system exists to resolve disagreements that may occur between the enforcing agency and an aggrieved party before the State Building Code Technical Review Board.
So, it is not a useful idea for a builder to challenge the building codes, which are updated at additional expense to contractors, and thus to buyers and renters, every three years or so.
National Liberals vs. Local Liberals. Some of the RHA’s across the nation and in Virginia have proven incompetent, others corrupt, and some both. But most try to help the clients they are paid to help and are proud of the work they do.
But the city councils in cities that are home to some of Virginia’s poorest citizens, also dominated by liberals but more focused on their own back yards and campaign coffers, seemingly do everything they can to frustrate the goals of the federal antipoverty housing programs with zoning and other regulations.
Increasing the tax base is the usual reason given.
Thus national liberal programs meet local liberal city councils in an epic battle. Local politicians, in control of zoning, win.
Yet Dick characterizes the results as capitalism contributing to the affordable housing shortage. In doing so, he does not adequately consider the roles of local governments and state regulations in those shortages.
In the case of housing, capitalism is so constrained by government that it cannot operate without local permission — zoning — and even with permission it operates under changing and increasingly expensive state government rules — the USBC — it does not control.
Progressives can’t have it both ways.
When housing supply is not produced in sufficient volume to meet demand by the poor at government Section 8 reimbursement rates under those tight constraints, it is a government problem in every particular, not a capitalism problem.
Socialism — pubic housing — having failed, capitalism is part of the solution if it will be permitted to work.