Virginia’s Unaffordable Approach to Affordable Housing

The Creighton Court public housing project in Richmond.

If the public policy debate over affordable dwellings is as impoverished as that described in The Virginia Mercury this morning, poor Virginians are doomed to lives of housing misery. Here’s how reporter Ned Oliver sums up the controversy: “Is affordable housing something for the state to tackle, or should it be left to cities and counties to address with local money?”

Embedded in this formulation are two assumptions: (1) The paucity of affordable housing might be remedied by more grants and low-interest loans; and (2) it is the responsibility of government, either state or local, to find the money for those grants and loans. In other words, the solution to the affordability crisis is more government, not less. Yet in the same article, Oliver notes that it costs $200,000 per unit to build new apartment complexes!

None of the experts quoted in the Virginia Mercury article give so much as a hint that lawmakers should be asking why that price is so high and what can be done to drive it down. Perhaps that’s because asking the question might yield the conclusion that other government programs and policies are responsible for housing being unaffordable in the first place.

The affordable housing issue is gaining urgency as Northern Virginia localities discuss the impact of 25,000 new Amazon jobs on the regional housing market. Local activists fear, not unreasonably, that highly paid Amazon employees will inflate the demand for housing, drive up prices, and displace poor residents. Indeed, if the demand for more housing is not met by an commensurate increase in the supply, that is exactly what will happen.

Arlington County and the City of Alexandria have pledged to invest $150 million in affordable housing over the next 10 years. Meanwhile, the state is dedicating $5 million more this year to its affordable-housing revolving loan fund. The Northam administration asked for more during budget negotiations, but Republican legislators turned them down. Whether the sum is $5 million or $20 million, the number is pathetically inadequate as long as the task is defined as reducing financing costs rather than reducing the cost of acquiring land and building the dwellings.

In that regard, it is instructive to read the Daily Progress’s account today of an affordable housing session in Charlottesville. A panel of local real estate developers, reports the newspaper, “said the approval process for development is arduous and hinders construction of developments.” Also a representative of the manufactured housing industry asked why modular housing, the quality of which has improved significantly over the years, isn’t being considered as part of the solution.

As I noted in a recent post about converting freight containers into homes, it should be possible to create millions of housing units for roughly $50,000 each. Add another $50,000 for utility hookups, land acquisition, financing costs, and profit, and it should be possible to build 320-square-foot dwellings at half the cost of what housing authorities say it costs to build apartment projects. But no one in local government or the affordable housing-industrial complex is asking how to close the gap between $200,000 and $100,000.

Every Virginian shares the goal of ensuring that every family, no matter how poor, has a safe, decent place to live. But taxpayers are totally justified to question an approach that takes $200,000-per-dwelling costs for granted and assumes that taxpayers should be dunned to make up the difference. Until we can reframe the issue as one of excessive cost rather than insufficient tax dollars, housing policy will remain morally, politically and fiscally bankrupt.

Update: A timely article on this topic from the Strong Towns blog… “A Permit Process Should Never Take a Year. Here’s a Different Way.” Chuck Marohn describes how the permitting process works in Minnesota. “Here’s why the months and years of permitting experienced in other places will not happen in Minnesota: it’s literally against the law. State statutes prohibit it (here is the text).” Failure to deny a request within 60 days means the request is approved.

First, the 60-day time limit means we must have codes and processes that are reasonably coherent; otherwise we’ll struggle to meet the time limit. There is no forwarding things to thirty different departments for their comment whenever they get to it. It won’t work that way, so we don’t allow it to. If we don’t want to be run over, we must put practices in place to be competent at what we do.

The process also forces us to make decisions that are reasonably defensible. The act of having to write down why a decision has been made—and reference the exact code in doing so—forces a discipline on the entire process that reduces arbitrary decisions. None of this is to suggest that Minnesota cities never make a bad call—of course they do—but simply that there are good mechanisms in place to correct them and to encourage learning from mistakes.

Finally, this process is how we show respect to each other. If we want people to invest in our communities, we must be clear about what we want and have a discernible and reliable process to accomplish that. If we want people to have faith in our local government, we must be transparent in our actions and predictable in our outcomes. To me, anything else seems like a failure.

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