Can we do a "Race to the Top" funding rule for housing, like Obama did for education?
You'd condition state access to federal funding: to get the money, the state has to issue at least 10 housing unit permits per 1000 existing houses each year, in those municipalities that have both rising rents and restrictive zoning.
(Why 10 per 1000 per year? Because the charts suggest that's usually enough new housing to stop rent increases. Why only in municipalities with rising rents? Because Detroit has a good reason for not many housing starts. Why only if there's "restrictive" zoning (by some regulatory standard)? To give an out for states that have genuinely fixed their rules, but haven't got enough permits just yet.)
More housing is good for states even when it's inconvenient for neighborhoods. You'd think a decent pot of federal money would be all the excuse states need to cooperate with a federal upzoning/pro-housing plan.
Of course, some states haven't expanded Medicaid yet. So things wouldn't be that simple. Still seems worth a try.
Seems like a good idea - but which funding stream should be tied to this? Or if it's a new funding stream, is it unrestricted, or is it granted for a particular purpose?
As a baseline proposal, that’s a nonstarter, but it’s also pretty easy to finagle into a workable carrot-and-stick compromise that just might be able to pass Secret Congress.
The problem here is that in many cases school districts are entirely separate governments from municipalities, and often the school district boundaries cross over multiple municipality boundaries.
Seems to me that there are three main issues: (i) construction financing, (ii) defect litigation and (iii) purchaser financing.
A result, at least in my neighborhood which has been upzoned, is that when SFH owners decide to make an investment in their land, it's usually by splitting the parcel into two SFHs rather than use the new zoning to create ~6 condo units. (I have no data behind this.) Individual owners often aren't prepared to deal with the financing and litigation issues mentioned in that article, nor are they able to handle delayed purchasing of units. They want to invest, construct and get out.
>when SFH owners decide to make an investment in their land, it's usually by splitting the parcel into two SFHs rather than use the new zoning to create ~6 condo units
I have repeatedly attempted to explain to YIMBYs why this is/why upzoning SFH neighborhoods in general is not going to do very much. Background, I have actually worked in the commercial real estate industry. It generally doesn't make financial sense for developers to try to stuff a multi-unit building on what was previously an SFH lot. Yes, they could maybe eek out a small profit, but developers are busy and there are so many projects, so they'd generally rather focus their time on something more profitable. If you want to retort 'but in some neighborhoods I've seen 4+ unit buildings on lots that are SFH-size in my neighborhood'- yes, they were probably built 80+ years ago.
I've linked a Bay Area newspaper article here a couple of times where the reporter tried to answer your question, by interviewing actual Bay Area developers. (Have you ever noticed how few people work in the actual industry are part of the YIMBY movement? No lack of economists and software engineers who do lots of theorizing though!) I'm too lazy to find it now, but basically all of the developers and architects interviewed said 'there's too little/no profit to building a weird narrow 4 unit on an previous SFH lot. I have more profitable projects to work on'
This is so true, at least in California. Real estate developers are, for all intents and purposes, invisible in the YIMBY coalition. It appears that the movement doesn't welcome (or at least doesn't seek out) the views of those that would actually build the housing the YIMBYs claim to desire. SB6/AB 2011 are a consequence of this - well intended but destined to be minimally effective.
You may be underestimating the difficulty of getting anything passed in California. Legislators frequently have to make undesirable compromises. What in particular do you think are the fatal problems with AB 2011?
AB 2011 is less of an issue with respect to market rate housing because of its express focus on affordable housing. Nonetheless, a couple points:
For the 100% affordable projects enabled by AB 2011, all the economic constraints inherent in affordable housing development remain. Adding prevailing wage requirements only increases the economic burden. While AB 2011 may increase the viability of these projects at the margin, I doubt it will result in a construction boom.
For the mixed income projects enabled by AB 2011, the affordable housing element increases the cost of development. Adding prevailing wage requirements on top of that (plus requiring health benefits for projects of 50 units or more) increases the economic burden further. Because of these cost burdens, AB 2011’s mixed income housing provisions will result in an immaterial amount of market rate housing construction, contrary to the victory laps taken by YIMBY activists.
It remains to be seen how much AB 2011 will juice housing, but do not overlook the cash value of ministerial approval. Time is money, and money saved by not having endlessly pay architects for yet another redesign and endlessly pay men in well-tailored suits to defend your project in endless meetings is also money. Not having to pay for CEQA analysis, and not having to face endless bad faith CEQA lawsuits, is an enormous savings. Yes, the developer has to pay their workers more, but they save a huge amount with the speed and certainty provided by AB 2011. And a lot of these projects don't have to provide parking, though I suspect that in the expensive areas where AB 2011 makes sense, some parking will be built anyway.
This is where YIMBYs can benefit from input from market rate housing developers and, dare to dream, welcoming them as coalition partners. I am well aware and in no way am overlooking the benefits of by-rights development. Nonetheless, my prediction is that very little market rate housing will be built using AB 2011. The combination of requiring an affordable housing element plus prevailing wage requirements (and health benefits for large projects) will make projects cost-prohibitive except in very high rent areas. In Los Angeles specifically, I expect almost no AB 2011 construction because it will be cheaper and easier to rely on LA's TOD regime.
This is the point. Most land that is viable for adding housing units is owned by SFH owners, not developers/architects. If you're serious about increasing housing supply, I'd think you'd want to make the path easier for SFH owners who are interested.
- Federal loan program specifically for SFH > condo conversions.
- Change FHA rules to eliminate requirements for owner occupancy, max percent FHA financing per building, ownership concentration limits, and no-litigation condition.
- Federal loan program specifically for condo purchasers w/r/t new construction.
- Some kind of federally financed defect mitigation "insurance" pool for new condo construction that benefits GCs that meet certain criteria. Could have a pay-in structure which increases each time the GC needs to access the pool, incentivizing GCs to do good work.
Posted this as a stand alone comment, but there is also the tax treatment of of developer owned condo units:
Reform the IRS's treatment of presold condominium units by expanding the definition of "Home Construction Contract" in IRC §460 to include any and all real property intended for residential use. This would limit developer income tax liability for under construction and undelivered condos and make condo development more competitive with apartment development. Congress could also considered creating a property tax revenue replacement program to incentivize states/municipalities to create property tax exemptions for unoccupied new construction residential real estate inventory.
This feels a lot like something the dimwit on the midwit meme might think of, but could we just authorize some federal agency to build a limited number of gigantic housing towers in a limited number of very large, very expensive cities (basically just targeting NY, LA, SF)? But this wouldn't be "public housing" as we normally think of it - the agency would just build the buildings and then be authorized to auction them off to private companies. The federal government isn't subject to local zoning, so it can build whatever it wants wherever it wants. Maybe you could get conservatives on board with this because (1) the spending on the project would be offset by the revenues from selling the buildings, (2) none of their constituents would be affected as you'd only be quote-unquote "screwing over" the hated limousine libs in NY, LA, and SF.
>>The federal government isn't subject to local zoning, so it can build whatever it wants wherever it wants.
WELL WELL WELL... Before I said something stupid, I googled, and learned something new about the Supremacy Clause today.
One big problem would be 10A and the Enumerated Powers. Public housing in the US was never actually built by the federal government; it was always state and local, funded and enabled by federal agencies like HUD whenever needed. This got "Public Housing" around the 10A/EP problem, since the government was never building them.
The EPs *do* allow for building Post Offices, so theoretically a particularly insane Congress could (1) rebuild every current Post Office into a massive housing tower, then (2) sell them, and (3) buy new sites to wash-rinse-repeat. If SCOTUS objected, Congress could pretextually insist that the housing towers were for postal workers, and why is SCOTUS objecting anyways since Congress is making money for the taxpayers on the deal? At the end of the day, Congress could always go nuclear and strip SCOTUS's jurisdiction over the construction of "Post Offices".
But that's pretty fanciful.
Also, I don't think the Faux News crowd would see it as "screwing over the hated limousine libs"; they'd see it as gov't spending billions to build housing for poor people and uppity PMC Millennials in shitty Democrap-Run Cities, all so the limousine libs wouldn't have to have their mansions upzoned to oblivion out in the suburbs Where All Real Americans Actually Want To Live. Offsetting revenue would never enter our poisoned discourse.
I wasn't going to bother with getting detailed with this, but since you started it for me, I do agree that any plan here is going to have to deal with a SCOTUS that may be skeptical at best on some of these plans.
However, if I put my radical constitutional law hat on, I can think of two arguments where a constitutional right to building housing could be found--one from the right wing (Takings Clause) and one from the left wing (Due Process Clause).
The Takings Clause argument would be that denying landowners the ability to build the highest and best use on their property would constitute a taking that demands just compensation if the government won't let them develop. I think a softer version of this could be used on historic preservation regulations that could get Penn Central v. NYC overturned, especially with this SCOTUS.
And the Due Process Clause would be that there's a fundamental right to shelter in order to secure "life" in the clause, and that denying landowners the ability to build such shelter infringes upon that right. If I put my Yglesias Impersonation Hat on, I've been kind of waiting for a tweet in response to the 9th Circuit's current insanity along the lines of "We can't make it illegal to sleep in public without building sufficient housing, but we can make it illegal to build sufficient housing.".
I don't necessarily agree with these arguments, and I can see the extreme ones go to bad places, but that's what my creativity with the Constitution is leading me.
At least the Takings Clause argument was explicitly rejected in City of Euclid, which is the case that gave us modern zoning at all. I doubt that gets overturned facially
Oh all of this is highly unlikely, although I do think that this SCOTUS will broaden the scope of the Takings Clause in some manner that I can't precisely foresee yet. Kelo v. New London in particular I think will be in the near term crosshairs.
Yeah... just to play Stereotypical Hack FedSoc Clerk for a minute, here's what I'd say to that.
RE Due Process, zoning / setback / lot regulations don't say you can't build *anything* on your land, especially not "housing" in a broad sense; they just say you can't build *that* on your land, for whatever value of "that" they prohibit. Local governments have the right to prohibit whatever value of "that" they want; even if "that" is too prohibitive of most construction, they're not prohibiting construction outright, it's not targeted to deprive any one person or protected class of *a house*, and no one has a right to buy any particular house in any particular place. If they don't like that, they should go somewhere ELSE that WILL build housing; and if ALL "elses" decide to be prohibitive of housing construction, they're still each exercising an individual right to have prohibitively high construction costs.
RE Takings, even if there IS a government taking, 5A only entitles landowners to *due process*. And almost every municipality, planning, and zoning entity in the country PROVIDES such processes. The only question therefore is whether any particular zoning regulation has (1) no compelling government interest behind it, AND (2) a calculable harm -- BOTH must be true in order for a regulation to be impermissible, because a harm with an interest is OK ("keep polluters from playgrounds"), as is any interest with no harm ("mailboxes must be on THIS side of the driveway"), or a harmless lack of interest (dunno).
RE #1, zoning codes have long been established as a legitimately compelling gov't interest (for at least a century stretching back to the original zoning discrimination cases) as a general concept, and I'm sure I can get at least 5 of the court's 6 conservatives to hackishly/reflexively agree with me that the general legitimacy exempts MOST classes of particular zoning regs from any kind of scrutiny unless they're "really bad, like racist or something... a racism we will blindly ignore anyways".
RE #2, how in the hell do you calculate the potential harm, HUH? Any old Boise landowner can claim he's been deprived of billions of dollars from not being allowed to build a Manhattan skyscraper, even if he's never lined up an investor for it. Calculating harm based on the local market is OK for damages when there's a real damage, but gets us too far into hypotheticals when we're extrapolating a harm caused by some impermissible regulation vs any permissible one. Take lot sizes - we know that for any given locality, there's SOME relationship between the allowed lot size and construction cost. But where's the break-even point where it starts to inhibit construction "too much"? Even if we CAN logically conclude that the landowner is in some vague way harmed by the restriction's putative taking, if we can't establish an inherently permissible lot size, then we can't determine the amount of harm caused by impermissibly overregulating it - the value that was never captured by the landowner. And all that goes for 10x, 100x, 1000x - a million times, even - for any other aspect of zoning regulation. The clear solution is for the Court to leave well enough alone and let the market take care of it, rather than get bogged down in decades of zoning minutiae that could entrench dozens of horrifically over-precise precedents into federal law.
Anyways... not saying I believe any of that, just that if I were a complete but not incompetent legal hack, that's what I'd be arguing.
I think Stereotypical Hack FedSoc Clerk would be eager to try to expand the scope of the Takings Clause. Other than that, very much expected and reasonable counterarguments.
I like where you're going with this. SCOTUS expanding the Takings Clause seems to be a plausible path towards nationwide YIMBYdom. I'm trying to game out how the federal government could get them to re-consider Penn Central v NYC. Maybe pass a federal law that requires state and local governments to compensate people who have their right to build inhibited? Or that requires them to stop collecting property taxes on the property if they deny a permit to build the profit-maximizing use of their land?
I think if you found a really favorable plaintiff, such as poor homeowners in a historic district whose only wealth is in their house, and kept the damages in a small amount, like the differences in cost and energy efficiency of windows, that could be a starting path forward.
If I were Stereotypical Hack FedSoc Clerk's Earnest Liberal Hack Counterpart, I'd probably start with something like this...
"Although the 'Boise Landowner's Imaginary Manhattan Skyscraper' problem is real, there absolutely IS a real and reasonable way to calculate the alleged gov't 'taking' here. The base assumption is that the homeowner is losing out on the Next Increment Of Development (NIOD) being restricted in any given case. If a zoning code restricts a homeowner from building a duplex in their single-family home, then the 'taking' is the difference between their current home's value and the local market value of a duplex, less the market cost of the project, and amortized over the period which such a project could be completed."
"This gives us two important limiting principles. One, the homeowner's putative lawsuit can only target existing restrictions that are preventing them from realizing their NIOD. If their locality's height restrictions wouldn't prohibit their NIOD, then they can't sue for that taking. Two, the homeowner cannot claim any taking more than the NIOD. This is grounded in economic reality - no one would build a Manhattan-style skyscraper on the outskirts of Boise, but much of the economic history of development is a simple story of people taking a building and improving it to the next increment."
I think you're right that the right would see this as a hand out for the left instead of hurting the left. Everyone very conveniently flips on whether more housing is good or bad depending on who's proposing it.
Eh, 10th Amendment, whatever. I think you can make a pretty clear Interstate Commerce case for NYC at least. Maybe harder in California, sure.
Like all Secret Congress legislation, the idea would be that you'd float it to the other side to see if they'll go for it, with whatever modifications they want to make, and then you pass it on a bipartisan basis if they agree, or you don't introduce it at all if they don't. This isn't the type of issue you'd have a big public partisan fight over. Those fights only happen when both parties want them for their own internal political reasons.
The other issues seem easy to avoid. Just say in the legislation that there will be no rent subsidies or income restrictions for any buildings built under the program.
I don’t see how this one passes Secret Congress in any form resembling one that actually builds *towers*. It’s not permitting reform or some other low-enough profile issue, it’s literally spending billions of dollars to build hundreds if not thousands of towers across the country.
People will notice that shit, if not at the very least by actually seeing the towers themselves.
Also, mail would be disrupted. No matter how optimally the plan was sequenced, you’re still talking moving the physical space where every single parcel of snail mail gets sorted and shipped. *Eventually*, after a decade or so, the USPS would get accustomed to rapidly setting up and shifting its physical operations, and probably even come to excel at it. But it’s not something people just don’t notice.
Just build a few big towers in a few select cities. I never said anything about building hundreds of towers across the country. And forget the post office part.
My point was, you CAN’T “just build towers”. Our government only builds buildings for specific purposes - housing a tax authority, housing a post office, military bases, intelligence agencies, regulatory agencies, etc.
It can’t just build towers because there’s a general housing shortage and wouldn’t that be nice. Housing people is not an enumerated power, nor is it remotely construable as necessary or proper for some other enumerated power.
The plan either has to be big enough to require we drive a monster truck through the Post Office Loophole or some other loophole, OR it doesn’t meaningfully solve the housing crisis.
Nah. Interstate commerce is an enumerated power. How could the housing market not be part of interstate commerce? In 1787 maybe it wasn't, sure, but the effects on interstate commerce today are kind of obvious. The main reason Congress hasn't done anything like this thus far is that we've never had a generalized housing crisis before.
The FHA has a lot to do with both (1) incentivizing the use of housing as a store of wealth, and (2) disincentivizing the underwriting of mortgages for all property types that *aren’t* SFH.
Wall Street has become super dependent on the streamlining and standardization of these mortgages, which has trickled down into banks just not knowing how to write mortgages for the Missing Middle and/or condos.
We should focus on reforming FHA standards in the short to mid term, and getting the FHA out of the market’s way in the long term.
Good question! I'm so enamored of getting rid of the mortgage deduction that I reflexively citied this idea even though, as you hint, there's no obvious way it would increase the supply of housing. My bad. But let's try.
Clearly, getting rid of the interest rate deduction would lower housing prices in ownership areas, because the owners would no longer be able to lower their effective cost by deducting their mortgage.
Also, getting rid of the interest deduction would make make renting more appealing versus buying that it is now, because the owner wouldn't be able to deduct part of their cost. And then once we've got a mass of middle-class renters, when those renters become empty nesters or retirees, or when their life changes in some way, they'll be more interested in continuing to rent rather than buying, because they have less financial attachment to their homes.
These middle-class renters would have political power. So when they got to the life stage where they preferred a more dense alternative to a single family home, there would be political pressure to allow those more dense alternatives, in the same areas where they live now. This, combined with the political power of existing renters, would mean a bigger constituency for loosening local regulations that now don't allow housing to be built, particularly in single family areas. And at the same time, single family homes would become cheaper for developers to buy and turn into multifamily homes.
So then when an existing homeowner in a single family home sold their house, it would be more likely to be snapped up by a developer and turned into, say, a fourplex.
Why is it good to encourage more renting? Current tax law allows owners of rental property to deduct interest expense. Why shouldn't owner-occupants enjoy the same benefit?
As to why it is good to encourage more renting, I didn't say it was good. I said that if the mortgage interest deduction were eliminated, it would encourage more renting. That's a positive statement, not a normative statement.
It's not the same. Landlords are running a business, with business deductions *and business revenue*. Landlords can deduct their interest expense, but the rental income counts as income.
If owners wanted to pretend they were renting to themselves, they could deduct their mortgage, but then they would also have to count the imputed rent to themselves as income.
Take advantage of negative polarization to do some good. Create a scheme called the “President Trump American Community Award” that gives high marks for cities with restrictive zoning. Then put up billboards in the “winning” cities congratulating them for making life tough for immigrants.
A 10:30 PM PST post?! Matt should make this the normal posting time so us west coast people have a chance to comment...
Here is a wild idea: The government should launch a massive ad campaign (or pay someone else to run the adds). promoting normal condo ownership. Most people believe multi-unit housing is apartments that are rented out to occupants, not owned by occupants. But most American's want to own their home, not rent, and that is where condos can be useful, but there doesn't seem to be a lot of positivity toward condos amongst the general public. Promoting condos positively may help.
Condos are perfectly popular when they are built, and people buy them. The issue is (as described in the next post by Therethere2000) there are financial reasons why builders don't want to build them. The biggest is construction defect litigation: builders have to plan to be sued down the road whenever they build condos, but the same problem doesn't occur if they build otherwise identical apartments.
Doesn't seem like any of these categories relate to expanding the pool of trade workers which is a big problem in some (many) markets.
Building code reform could be a blue ribbon commission opportunity? Most other countries' building codes are legislated or run out of quasi-public agencies, where as the ICC is a private industry trade group, and the "international" in the building code applies to the US, and a couple latin american and persian gulf countries. Canada doesn't have it's own baseball league, but even they have their own building code.
Honestly, it seems Trumps idea of building new cities works the best it works around the inherent political problem of resident resisting new housing, that seems to be intractable. Use tax breaks for remote workers and corporation to lure citizens to these new high density cities, and even offer digital nomad visas to foreigners. As the cities gain their own inhertia, take tax breaks away slowly. You can even allow for forgotten cities lie Baltimore, Detroit and Milwaukee to apply for these tax benefits if they, give their zoning authority to the federal government.
Where is this idea described? I haven't heard of Trump proposing new cities, but it could be interesting. I'm skeptical about finding locations for truly new cities, but perhaps it's about taking existing small towns and turning them into cities?
Yeah, part of the problem is that most of the places where one might put a city, one is already there and taking up all the resources one would use to build a city with.
The southwest is a perfect example of this. You can't just plop a city a hundred miles north of Las Vegas, because Vegas and Phoenix and Albuquerque and LA are already sucking the Colorado River dry!
I know this is impossible , but I think the answer is to strengthen property rights instead of further weaken them with federal laws.
The owner of a property should be allowed to do anything they choose with their property according to law. Allowing non-owners to veto owners' choices is the root of the problem.
Homeowners associations, voluntarily accepted when moving to the neighborhood, take care of most cases, and self-interest handles most others.
I think empowering the government to further restrict individual choice is unlikely to succeed.
The "according to law" is doing a lot of work here: zoning and other forms of regulation that narrow the types of land use are very much "according to law".
And HOAs can very much apply the long arm of the law and government to their own regulations too, they should not be ignored in this mess.
Anyone should be able to opt out of their HOA. They would still have to pay for common improvements and maintenance governed by the HOA, and they would still retain voting rights over any plan regarding such issues, but could not be bound by any other regulation or voluntary expenditure.
HOAs should also be subject to re-ratification requirements. If an HOA fails to be re-ratified every year, it would revert to a basic charter which only entails common improvements/maintenance costs, and nothing more. No more of this bullshit where HOAs last for decades upon decades -- either turn yourself into a country club/co-op to get the full uniformity that some nutso suburbanites genuinely want (hey, they should be perfectly free to live how they want with like-minded nutjobs!), or GTFO.
I'm even tempted to say that they should be allowed to opt out of paying for common property in exchange for being barred from using it, but there could be some collective action problems that would make that unwise. Probably have to take it on a case by case basis of the type of common property being dealt with.
I think the Constitution should have protected a right to property in the same way it protects a right to freedom of speech and religion. So 'according to the law' would have ruled out zoning.
I'll cite the example used by Randy Barnett in "Restoring the Lost Constitution" to defend HOA's. His mom moved into a senior living facility, and in order to live there she had to agree to a list of rules. The facility has an absolute right to require this. There are other facilities with different rules, so she isn't forced to live there. I think the same applies to HOA's. You voluntarily agree to the rules, and as long as you are a resident, you have to follow them. If you find you can't, you can always move. It's unpleasant, but it's not the end of the world.
Unless demonstrated otherwise, I would equate a senior living facility to a rental, and if you don't own the property, then you have to abide by the rules of the owner, fair game there.
But if you are the owner of a property, then it's your rules as to how you see fit for the appearance of your property. If HOAs want to draw the property lines right up to your walls, and take full responsibility for the maintenance of that land, like it was common property in a condo, then so be it. Otherwise, they should not be able to leverage the law to dictate aesthetics on property they do not own.
Pretty much my feeling. I consider some HOAs to fall into the category of "mutually consensual agreements that have enough negative features it's worth government banning them."
Companies paying workers in scrip, people waiving their right to sue for gross negligence, and dueling are other examples.
Only thing I can think of is to follow the model of the speed limit or drinking age. The Federal government has zero direct control over these things, but used the power of the purse over highway funds. Given the amount that the Federal government is likely to give out in the coming decade on housing and infrastructure projects, make that contingent on following a key set of changes in the relevant state and local regulations. The major difference to the highway funding example is that this is not 1 Fed vs. 50 states but 1 Fed vs. thousands of local municipalities. Even if you target the 20 cities with the worse housing problems, each of those cities breaks quickly into its core and surrounding suburbs. Part of this would need to be a major communications program so that local residents KNOW that their taxes are higher for the sake of retaining legacy regulation and zoning. One thing people like as much as NIMBY is low taxes. Give any local Dem politician a platform to run on this stuff against the legacy incumbents. Maybe incentivize states to take over key provisions in the Gavin Newsom model...
The short version is that GAAP allows municipalities to count streets, sewers, and other infrastructure as assets rather than liabilities. The problem is that they ARE liabilities - they need to be replaced on a regular basis, and can never be sold.
Shifting them onto the other side of the balance sheet would basically expose most of SFH-zoned areas as fundamentally financially unsustainable.
It wouldn't immediately change policy -- in fact, it would spur a major shitstorm of local politics across the country -- but it would make clear where the money is actually coming from and being wasted in every single municipality. Residents would scream bloody murder about their new tax bills, and their politicians would be forced to explain why their street+sewer+etc is actually a liability and their housing isn't dense enough to pay for it.
Most would go into denial and try pushing their heads in the sand, but they'd be bitch-slapped by the cold hard reality of bond markets refusing to underwrite municipal bonds without major reforms.
We have gone round and round on our differing thoughts on the merits of the Strong Towns Suburban Growth Ponzi Scheme analysis, and we obviously aren't going to change each other's minds, so I'm going to set that aside.
I just want to say you should really temper your expectations of the general public caring at all about anything said in an audit. I once reviewed several years of a small city's audit that said essentially "fix your policies and procedures for utility billing. A council member is bullying the lone utility clerk into not shutting off their utilities when they haven't paid." After several years, the finding switched to complaining that the Mayor was bullying utility clerk, so not only did the voters not care about the councilmember not paying their utility bill and working the system, they promoted that person to Mayor, and it was right there in black and white in the audit.
Also, the idea that essentially the entire muni bond market would shut down because of a change to GAAP is very unrealistic. I've worked with issuers who are drowning debt/have eye watering tax rates/have plummeting population and/or property values/have actually defaulted and none of them have any problems getting underwritten and often pay a surprisingly small yield penalty. I just don't think the market would bat an eye at underwriting muni bonds even if they did move everything to the liability side of the balance sheet.
Those are fair objections. Perhaps I overstated my case. You’re right that the SGPS contains a very large Leviathan that carries its momentum through a lot of corruption and unsustainable financial practices.
I do think that the impact on the bond market would be more than marginal, though. Taking as given your contention that underwriters would happily keep writing bad bonds, *that* doesn’t erase the upside value. Again stipulating that the ST-SGPS analysis is roughly correct, the places that ST identifies as highly financially sustainable would shine pretty brightly in alt-GAAP-land.
Take, for example, two municipalities. One, “Marohnville”, is the ST-compliant core of the other, “Tdubston”, which is not ST-compliant. Under the new alt-GAAP, Tdubston has a temporary crisis, but the taxpayer revolt is averted because some shady bond-seller comes in and saves the day for them, figuring that the SGPS will keep the gravy train kicking the can down the road.
Marohnville, however, is able to show top-tier bond investors under alt-GAAP that its dense core is not only supporting the core’s liabilities, but also making a profit on top of subsidizing the liabilities of its handful of outlying SFH neighborhoods not incorporated in Tdubston. Marohnville promises to upzone its SFH neighborhoods (including removing other barriers like parking minimums and setbacks etc) to get in compliance with a separate provision of the Federal Alt-GAAP Bill, and now qualifies not only for a AAA++⭐️ bond rating, but also a nice little interest rate subsidy.
Tdubston may be able to keep itself afloat on the usual chicanery, but Marohnville will thrive and finance a bunch of public parks, buildings, festivals, and other services that eventually lead to talk of annexing jealous Tdubstoners - or rather, perhaps its angry NIMBY Boomer residents’ heirs as they inherit stagnating properties and beg for a bailout so they can cash out and live in hoppin’ Marohnville.
Sorry if that got a little fan-fiction-y towards the end there; the point is, even if the downside of alt-GAAP doesn’t materialize because of societal inertia, that inertia can’t stop the upside from letting WHATEVER kind of development model truly is best - ST or your own personal ideas or whatever else - succeed and shine on its own.
This is a good analogy, the highway problem and where accidents cluster and occur similarly crosses state lines. In response to this need, the FHA collects and uses national highway data in safety planning in coordination with state and local actors. The same idea could and should apply here, instead of the monolithic ACS, consolidate research and data collection efforts centrally into a housing platform with the explicit purpose of trying to see trends happening as they arise, and get ahead of them. Starting to build when everyone is already flocking to a smaller town or suburb is when you get the weird zoning laws built from resentment that we need to avoid. Removing the legacy red tape is half the issue, using the power of a large federal data program to coordinate actors around is the other half imo.
This is a very unformed idea, but if we start from the premise that a major source of NIMBY sentiment is incumbent homeowners wanting to protect their primary source of wealth, the federal government should adjust the tax code to discourage building wealth this way and encourage more pro-social alternatives (such as index funds). This would most likely piss off almost everyone, but some big structural changes are needed to gain momentum in a better direction.
Require sufficient soundproofing in multi-family buildings. Now, people try hard to avoid them due to unlivable neighbor noise and the nasty disputes that it leads to.
There are lots of things that would work, but the list of options that don’t slay sacred cows is much shorter.
In short, the problem isn’t the ability to develop innovative ideas in this space, the problem is overcoming all the political obstacles that favor the status quo.
The affluent suburbs engage in hypocrisy where they restrict new housing through elaborate bureaucracy and then have DEI teams bragging about inclusion. They’re all full of shit!
Can we do a "Race to the Top" funding rule for housing, like Obama did for education?
You'd condition state access to federal funding: to get the money, the state has to issue at least 10 housing unit permits per 1000 existing houses each year, in those municipalities that have both rising rents and restrictive zoning.
(Why 10 per 1000 per year? Because the charts suggest that's usually enough new housing to stop rent increases. Why only in municipalities with rising rents? Because Detroit has a good reason for not many housing starts. Why only if there's "restrictive" zoning (by some regulatory standard)? To give an out for states that have genuinely fixed their rules, but haven't got enough permits just yet.)
More housing is good for states even when it's inconvenient for neighborhoods. You'd think a decent pot of federal money would be all the excuse states need to cooperate with a federal upzoning/pro-housing plan.
Of course, some states haven't expanded Medicaid yet. So things wouldn't be that simple. Still seems worth a try.
Seems like a good idea - but which funding stream should be tied to this? Or if it's a new funding stream, is it unrestricted, or is it granted for a particular purpose?
No federal funding for any school district which restricts the construction of housing.
As a baseline proposal, that’s a nonstarter, but it’s also pretty easy to finagle into a workable carrot-and-stick compromise that just might be able to pass Secret Congress.
The problem here is that in many cases school districts are entirely separate governments from municipalities, and often the school district boundaries cross over multiple municipality boundaries.
Any ideas to solve the problems mentioned here? https://www.urban.org/urban-wire/housing-market-needs-more-condos-why-are-so-few-being-built
Seems to me that there are three main issues: (i) construction financing, (ii) defect litigation and (iii) purchaser financing.
A result, at least in my neighborhood which has been upzoned, is that when SFH owners decide to make an investment in their land, it's usually by splitting the parcel into two SFHs rather than use the new zoning to create ~6 condo units. (I have no data behind this.) Individual owners often aren't prepared to deal with the financing and litigation issues mentioned in that article, nor are they able to handle delayed purchasing of units. They want to invest, construct and get out.
>when SFH owners decide to make an investment in their land, it's usually by splitting the parcel into two SFHs rather than use the new zoning to create ~6 condo units
I have repeatedly attempted to explain to YIMBYs why this is/why upzoning SFH neighborhoods in general is not going to do very much. Background, I have actually worked in the commercial real estate industry. It generally doesn't make financial sense for developers to try to stuff a multi-unit building on what was previously an SFH lot. Yes, they could maybe eek out a small profit, but developers are busy and there are so many projects, so they'd generally rather focus their time on something more profitable. If you want to retort 'but in some neighborhoods I've seen 4+ unit buildings on lots that are SFH-size in my neighborhood'- yes, they were probably built 80+ years ago.
I've linked a Bay Area newspaper article here a couple of times where the reporter tried to answer your question, by interviewing actual Bay Area developers. (Have you ever noticed how few people work in the actual industry are part of the YIMBY movement? No lack of economists and software engineers who do lots of theorizing though!) I'm too lazy to find it now, but basically all of the developers and architects interviewed said 'there's too little/no profit to building a weird narrow 4 unit on an previous SFH lot. I have more profitable projects to work on'
This is so true, at least in California. Real estate developers are, for all intents and purposes, invisible in the YIMBY coalition. It appears that the movement doesn't welcome (or at least doesn't seek out) the views of those that would actually build the housing the YIMBYs claim to desire. SB6/AB 2011 are a consequence of this - well intended but destined to be minimally effective.
You may be underestimating the difficulty of getting anything passed in California. Legislators frequently have to make undesirable compromises. What in particular do you think are the fatal problems with AB 2011?
AB 2011 is less of an issue with respect to market rate housing because of its express focus on affordable housing. Nonetheless, a couple points:
For the 100% affordable projects enabled by AB 2011, all the economic constraints inherent in affordable housing development remain. Adding prevailing wage requirements only increases the economic burden. While AB 2011 may increase the viability of these projects at the margin, I doubt it will result in a construction boom.
For the mixed income projects enabled by AB 2011, the affordable housing element increases the cost of development. Adding prevailing wage requirements on top of that (plus requiring health benefits for projects of 50 units or more) increases the economic burden further. Because of these cost burdens, AB 2011’s mixed income housing provisions will result in an immaterial amount of market rate housing construction, contrary to the victory laps taken by YIMBY activists.
I do not think of AB 2011 as being focused on affordable housing. In my mind, the big gains (so far as they occur) will be in market-rate housing.
It remains to be seen how much AB 2011 will juice housing, but do not overlook the cash value of ministerial approval. Time is money, and money saved by not having endlessly pay architects for yet another redesign and endlessly pay men in well-tailored suits to defend your project in endless meetings is also money. Not having to pay for CEQA analysis, and not having to face endless bad faith CEQA lawsuits, is an enormous savings. Yes, the developer has to pay their workers more, but they save a huge amount with the speed and certainty provided by AB 2011. And a lot of these projects don't have to provide parking, though I suspect that in the expensive areas where AB 2011 makes sense, some parking will be built anyway.
This is where YIMBYs can benefit from input from market rate housing developers and, dare to dream, welcoming them as coalition partners. I am well aware and in no way am overlooking the benefits of by-rights development. Nonetheless, my prediction is that very little market rate housing will be built using AB 2011. The combination of requiring an affordable housing element plus prevailing wage requirements (and health benefits for large projects) will make projects cost-prohibitive except in very high rent areas. In Los Angeles specifically, I expect almost no AB 2011 construction because it will be cheaper and easier to rely on LA's TOD regime.
This is the point. Most land that is viable for adding housing units is owned by SFH owners, not developers/architects. If you're serious about increasing housing supply, I'd think you'd want to make the path easier for SFH owners who are interested.
Nobody's biting, so I'll take a stab at it:
- Federal loan program specifically for SFH > condo conversions.
- Change FHA rules to eliminate requirements for owner occupancy, max percent FHA financing per building, ownership concentration limits, and no-litigation condition.
- Federal loan program specifically for condo purchasers w/r/t new construction.
- Some kind of federally financed defect mitigation "insurance" pool for new condo construction that benefits GCs that meet certain criteria. Could have a pay-in structure which increases each time the GC needs to access the pool, incentivizing GCs to do good work.
Posted this as a stand alone comment, but there is also the tax treatment of of developer owned condo units:
Reform the IRS's treatment of presold condominium units by expanding the definition of "Home Construction Contract" in IRC §460 to include any and all real property intended for residential use. This would limit developer income tax liability for under construction and undelivered condos and make condo development more competitive with apartment development. Congress could also considered creating a property tax revenue replacement program to incentivize states/municipalities to create property tax exemptions for unoccupied new construction residential real estate inventory.
This feels a lot like something the dimwit on the midwit meme might think of, but could we just authorize some federal agency to build a limited number of gigantic housing towers in a limited number of very large, very expensive cities (basically just targeting NY, LA, SF)? But this wouldn't be "public housing" as we normally think of it - the agency would just build the buildings and then be authorized to auction them off to private companies. The federal government isn't subject to local zoning, so it can build whatever it wants wherever it wants. Maybe you could get conservatives on board with this because (1) the spending on the project would be offset by the revenues from selling the buildings, (2) none of their constituents would be affected as you'd only be quote-unquote "screwing over" the hated limousine libs in NY, LA, and SF.
>>The federal government isn't subject to local zoning, so it can build whatever it wants wherever it wants.
WELL WELL WELL... Before I said something stupid, I googled, and learned something new about the Supremacy Clause today.
One big problem would be 10A and the Enumerated Powers. Public housing in the US was never actually built by the federal government; it was always state and local, funded and enabled by federal agencies like HUD whenever needed. This got "Public Housing" around the 10A/EP problem, since the government was never building them.
The EPs *do* allow for building Post Offices, so theoretically a particularly insane Congress could (1) rebuild every current Post Office into a massive housing tower, then (2) sell them, and (3) buy new sites to wash-rinse-repeat. If SCOTUS objected, Congress could pretextually insist that the housing towers were for postal workers, and why is SCOTUS objecting anyways since Congress is making money for the taxpayers on the deal? At the end of the day, Congress could always go nuclear and strip SCOTUS's jurisdiction over the construction of "Post Offices".
But that's pretty fanciful.
Also, I don't think the Faux News crowd would see it as "screwing over the hated limousine libs"; they'd see it as gov't spending billions to build housing for poor people and uppity PMC Millennials in shitty Democrap-Run Cities, all so the limousine libs wouldn't have to have their mansions upzoned to oblivion out in the suburbs Where All Real Americans Actually Want To Live. Offsetting revenue would never enter our poisoned discourse.
I wasn't going to bother with getting detailed with this, but since you started it for me, I do agree that any plan here is going to have to deal with a SCOTUS that may be skeptical at best on some of these plans.
However, if I put my radical constitutional law hat on, I can think of two arguments where a constitutional right to building housing could be found--one from the right wing (Takings Clause) and one from the left wing (Due Process Clause).
Care to elaborate?
Not sure there's much to elaborate on.
The Takings Clause argument would be that denying landowners the ability to build the highest and best use on their property would constitute a taking that demands just compensation if the government won't let them develop. I think a softer version of this could be used on historic preservation regulations that could get Penn Central v. NYC overturned, especially with this SCOTUS.
And the Due Process Clause would be that there's a fundamental right to shelter in order to secure "life" in the clause, and that denying landowners the ability to build such shelter infringes upon that right. If I put my Yglesias Impersonation Hat on, I've been kind of waiting for a tweet in response to the 9th Circuit's current insanity along the lines of "We can't make it illegal to sleep in public without building sufficient housing, but we can make it illegal to build sufficient housing.".
I don't necessarily agree with these arguments, and I can see the extreme ones go to bad places, but that's what my creativity with the Constitution is leading me.
At least the Takings Clause argument was explicitly rejected in City of Euclid, which is the case that gave us modern zoning at all. I doubt that gets overturned facially
Oh all of this is highly unlikely, although I do think that this SCOTUS will broaden the scope of the Takings Clause in some manner that I can't precisely foresee yet. Kelo v. New London in particular I think will be in the near term crosshairs.
Yeah... just to play Stereotypical Hack FedSoc Clerk for a minute, here's what I'd say to that.
RE Due Process, zoning / setback / lot regulations don't say you can't build *anything* on your land, especially not "housing" in a broad sense; they just say you can't build *that* on your land, for whatever value of "that" they prohibit. Local governments have the right to prohibit whatever value of "that" they want; even if "that" is too prohibitive of most construction, they're not prohibiting construction outright, it's not targeted to deprive any one person or protected class of *a house*, and no one has a right to buy any particular house in any particular place. If they don't like that, they should go somewhere ELSE that WILL build housing; and if ALL "elses" decide to be prohibitive of housing construction, they're still each exercising an individual right to have prohibitively high construction costs.
RE Takings, even if there IS a government taking, 5A only entitles landowners to *due process*. And almost every municipality, planning, and zoning entity in the country PROVIDES such processes. The only question therefore is whether any particular zoning regulation has (1) no compelling government interest behind it, AND (2) a calculable harm -- BOTH must be true in order for a regulation to be impermissible, because a harm with an interest is OK ("keep polluters from playgrounds"), as is any interest with no harm ("mailboxes must be on THIS side of the driveway"), or a harmless lack of interest (dunno).
RE #1, zoning codes have long been established as a legitimately compelling gov't interest (for at least a century stretching back to the original zoning discrimination cases) as a general concept, and I'm sure I can get at least 5 of the court's 6 conservatives to hackishly/reflexively agree with me that the general legitimacy exempts MOST classes of particular zoning regs from any kind of scrutiny unless they're "really bad, like racist or something... a racism we will blindly ignore anyways".
RE #2, how in the hell do you calculate the potential harm, HUH? Any old Boise landowner can claim he's been deprived of billions of dollars from not being allowed to build a Manhattan skyscraper, even if he's never lined up an investor for it. Calculating harm based on the local market is OK for damages when there's a real damage, but gets us too far into hypotheticals when we're extrapolating a harm caused by some impermissible regulation vs any permissible one. Take lot sizes - we know that for any given locality, there's SOME relationship between the allowed lot size and construction cost. But where's the break-even point where it starts to inhibit construction "too much"? Even if we CAN logically conclude that the landowner is in some vague way harmed by the restriction's putative taking, if we can't establish an inherently permissible lot size, then we can't determine the amount of harm caused by impermissibly overregulating it - the value that was never captured by the landowner. And all that goes for 10x, 100x, 1000x - a million times, even - for any other aspect of zoning regulation. The clear solution is for the Court to leave well enough alone and let the market take care of it, rather than get bogged down in decades of zoning minutiae that could entrench dozens of horrifically over-precise precedents into federal law.
Anyways... not saying I believe any of that, just that if I were a complete but not incompetent legal hack, that's what I'd be arguing.
I think Stereotypical Hack FedSoc Clerk would be eager to try to expand the scope of the Takings Clause. Other than that, very much expected and reasonable counterarguments.
I like where you're going with this. SCOTUS expanding the Takings Clause seems to be a plausible path towards nationwide YIMBYdom. I'm trying to game out how the federal government could get them to re-consider Penn Central v NYC. Maybe pass a federal law that requires state and local governments to compensate people who have their right to build inhibited? Or that requires them to stop collecting property taxes on the property if they deny a permit to build the profit-maximizing use of their land?
I think if you found a really favorable plaintiff, such as poor homeowners in a historic district whose only wealth is in their house, and kept the damages in a small amount, like the differences in cost and energy efficiency of windows, that could be a starting path forward.
The major problem is calculating compensation.
If I were Stereotypical Hack FedSoc Clerk's Earnest Liberal Hack Counterpart, I'd probably start with something like this...
"Although the 'Boise Landowner's Imaginary Manhattan Skyscraper' problem is real, there absolutely IS a real and reasonable way to calculate the alleged gov't 'taking' here. The base assumption is that the homeowner is losing out on the Next Increment Of Development (NIOD) being restricted in any given case. If a zoning code restricts a homeowner from building a duplex in their single-family home, then the 'taking' is the difference between their current home's value and the local market value of a duplex, less the market cost of the project, and amortized over the period which such a project could be completed."
"This gives us two important limiting principles. One, the homeowner's putative lawsuit can only target existing restrictions that are preventing them from realizing their NIOD. If their locality's height restrictions wouldn't prohibit their NIOD, then they can't sue for that taking. Two, the homeowner cannot claim any taking more than the NIOD. This is grounded in economic reality - no one would build a Manhattan-style skyscraper on the outskirts of Boise, but much of the economic history of development is a simple story of people taking a building and improving it to the next increment."
I think you're right that the right would see this as a hand out for the left instead of hurting the left. Everyone very conveniently flips on whether more housing is good or bad depending on who's proposing it.
Eh, 10th Amendment, whatever. I think you can make a pretty clear Interstate Commerce case for NYC at least. Maybe harder in California, sure.
Like all Secret Congress legislation, the idea would be that you'd float it to the other side to see if they'll go for it, with whatever modifications they want to make, and then you pass it on a bipartisan basis if they agree, or you don't introduce it at all if they don't. This isn't the type of issue you'd have a big public partisan fight over. Those fights only happen when both parties want them for their own internal political reasons.
The other issues seem easy to avoid. Just say in the legislation that there will be no rent subsidies or income restrictions for any buildings built under the program.
I don’t see how this one passes Secret Congress in any form resembling one that actually builds *towers*. It’s not permitting reform or some other low-enough profile issue, it’s literally spending billions of dollars to build hundreds if not thousands of towers across the country.
People will notice that shit, if not at the very least by actually seeing the towers themselves.
Also, mail would be disrupted. No matter how optimally the plan was sequenced, you’re still talking moving the physical space where every single parcel of snail mail gets sorted and shipped. *Eventually*, after a decade or so, the USPS would get accustomed to rapidly setting up and shifting its physical operations, and probably even come to excel at it. But it’s not something people just don’t notice.
Just build a few big towers in a few select cities. I never said anything about building hundreds of towers across the country. And forget the post office part.
My point was, you CAN’T “just build towers”. Our government only builds buildings for specific purposes - housing a tax authority, housing a post office, military bases, intelligence agencies, regulatory agencies, etc.
It can’t just build towers because there’s a general housing shortage and wouldn’t that be nice. Housing people is not an enumerated power, nor is it remotely construable as necessary or proper for some other enumerated power.
The plan either has to be big enough to require we drive a monster truck through the Post Office Loophole or some other loophole, OR it doesn’t meaningfully solve the housing crisis.
Nah. Interstate commerce is an enumerated power. How could the housing market not be part of interstate commerce? In 1787 maybe it wasn't, sure, but the effects on interstate commerce today are kind of obvious. The main reason Congress hasn't done anything like this thus far is that we've never had a generalized housing crisis before.
The FHA has a lot to do with both (1) incentivizing the use of housing as a store of wealth, and (2) disincentivizing the underwriting of mortgages for all property types that *aren’t* SFH.
Wall Street has become super dependent on the streamlining and standardization of these mortgages, which has trickled down into banks just not knowing how to write mortgages for the Missing Middle and/or condos.
We should focus on reforming FHA standards in the short to mid term, and getting the FHA out of the market’s way in the long term.
Get rid of the mortgage interest deduction.
Trump already capped it!
Should be capped at zero.
How would eliminating the mortgage interest deduction help increase the supply of housing?
Good question! I'm so enamored of getting rid of the mortgage deduction that I reflexively citied this idea even though, as you hint, there's no obvious way it would increase the supply of housing. My bad. But let's try.
Clearly, getting rid of the interest rate deduction would lower housing prices in ownership areas, because the owners would no longer be able to lower their effective cost by deducting their mortgage.
Also, getting rid of the interest deduction would make make renting more appealing versus buying that it is now, because the owner wouldn't be able to deduct part of their cost. And then once we've got a mass of middle-class renters, when those renters become empty nesters or retirees, or when their life changes in some way, they'll be more interested in continuing to rent rather than buying, because they have less financial attachment to their homes.
These middle-class renters would have political power. So when they got to the life stage where they preferred a more dense alternative to a single family home, there would be political pressure to allow those more dense alternatives, in the same areas where they live now. This, combined with the political power of existing renters, would mean a bigger constituency for loosening local regulations that now don't allow housing to be built, particularly in single family areas. And at the same time, single family homes would become cheaper for developers to buy and turn into multifamily homes.
So then when an existing homeowner in a single family home sold their house, it would be more likely to be snapped up by a developer and turned into, say, a fourplex.
Why is it good to encourage more renting? Current tax law allows owners of rental property to deduct interest expense. Why shouldn't owner-occupants enjoy the same benefit?
As to why it is good to encourage more renting, I didn't say it was good. I said that if the mortgage interest deduction were eliminated, it would encourage more renting. That's a positive statement, not a normative statement.
It's not the same. Landlords are running a business, with business deductions *and business revenue*. Landlords can deduct their interest expense, but the rental income counts as income.
If owners wanted to pretend they were renting to themselves, they could deduct their mortgage, but then they would also have to count the imputed rent to themselves as income.
Take advantage of negative polarization to do some good. Create a scheme called the “President Trump American Community Award” that gives high marks for cities with restrictive zoning. Then put up billboards in the “winning” cities congratulating them for making life tough for immigrants.
A 10:30 PM PST post?! Matt should make this the normal posting time so us west coast people have a chance to comment...
Here is a wild idea: The government should launch a massive ad campaign (or pay someone else to run the adds). promoting normal condo ownership. Most people believe multi-unit housing is apartments that are rented out to occupants, not owned by occupants. But most American's want to own their home, not rent, and that is where condos can be useful, but there doesn't seem to be a lot of positivity toward condos amongst the general public. Promoting condos positively may help.
Condos are perfectly popular when they are built, and people buy them. The issue is (as described in the next post by Therethere2000) there are financial reasons why builders don't want to build them. The biggest is construction defect litigation: builders have to plan to be sued down the road whenever they build condos, but the same problem doesn't occur if they build otherwise identical apartments.
Is Matt still in Europe? That would explain the timing -- he's finally over his jet lag and posting at something close to 6 AM local time.
Doesn't seem like any of these categories relate to expanding the pool of trade workers which is a big problem in some (many) markets.
Building code reform could be a blue ribbon commission opportunity? Most other countries' building codes are legislated or run out of quasi-public agencies, where as the ICC is a private industry trade group, and the "international" in the building code applies to the US, and a couple latin american and persian gulf countries. Canada doesn't have it's own baseball league, but even they have their own building code.
Honestly, it seems Trumps idea of building new cities works the best it works around the inherent political problem of resident resisting new housing, that seems to be intractable. Use tax breaks for remote workers and corporation to lure citizens to these new high density cities, and even offer digital nomad visas to foreigners. As the cities gain their own inhertia, take tax breaks away slowly. You can even allow for forgotten cities lie Baltimore, Detroit and Milwaukee to apply for these tax benefits if they, give their zoning authority to the federal government.
Where is this idea described? I haven't heard of Trump proposing new cities, but it could be interesting. I'm skeptical about finding locations for truly new cities, but perhaps it's about taking existing small towns and turning them into cities?
Yeah, part of the problem is that most of the places where one might put a city, one is already there and taking up all the resources one would use to build a city with.
The southwest is a perfect example of this. You can't just plop a city a hundred miles north of Las Vegas, because Vegas and Phoenix and Albuquerque and LA are already sucking the Colorado River dry!
I know this is impossible , but I think the answer is to strengthen property rights instead of further weaken them with federal laws.
The owner of a property should be allowed to do anything they choose with their property according to law. Allowing non-owners to veto owners' choices is the root of the problem.
Homeowners associations, voluntarily accepted when moving to the neighborhood, take care of most cases, and self-interest handles most others.
I think empowering the government to further restrict individual choice is unlikely to succeed.
The "according to law" is doing a lot of work here: zoning and other forms of regulation that narrow the types of land use are very much "according to law".
And HOAs can very much apply the long arm of the law and government to their own regulations too, they should not be ignored in this mess.
HOAs should get the right-to-work treatment.
Anyone should be able to opt out of their HOA. They would still have to pay for common improvements and maintenance governed by the HOA, and they would still retain voting rights over any plan regarding such issues, but could not be bound by any other regulation or voluntary expenditure.
HOAs should also be subject to re-ratification requirements. If an HOA fails to be re-ratified every year, it would revert to a basic charter which only entails common improvements/maintenance costs, and nothing more. No more of this bullshit where HOAs last for decades upon decades -- either turn yourself into a country club/co-op to get the full uniformity that some nutso suburbanites genuinely want (hey, they should be perfectly free to live how they want with like-minded nutjobs!), or GTFO.
I'm even tempted to say that they should be allowed to opt out of paying for common property in exchange for being barred from using it, but there could be some collective action problems that would make that unwise. Probably have to take it on a case by case basis of the type of common property being dealt with.
And yes, the perpetuity of HOAs is horrid.
I think the Constitution should have protected a right to property in the same way it protects a right to freedom of speech and religion. So 'according to the law' would have ruled out zoning.
I'll cite the example used by Randy Barnett in "Restoring the Lost Constitution" to defend HOA's. His mom moved into a senior living facility, and in order to live there she had to agree to a list of rules. The facility has an absolute right to require this. There are other facilities with different rules, so she isn't forced to live there. I think the same applies to HOA's. You voluntarily agree to the rules, and as long as you are a resident, you have to follow them. If you find you can't, you can always move. It's unpleasant, but it's not the end of the world.
Unless demonstrated otherwise, I would equate a senior living facility to a rental, and if you don't own the property, then you have to abide by the rules of the owner, fair game there.
But if you are the owner of a property, then it's your rules as to how you see fit for the appearance of your property. If HOAs want to draw the property lines right up to your walls, and take full responsibility for the maintenance of that land, like it was common property in a condo, then so be it. Otherwise, they should not be able to leverage the law to dictate aesthetics on property they do not own.
Pretty much my feeling. I consider some HOAs to fall into the category of "mutually consensual agreements that have enough negative features it's worth government banning them."
Companies paying workers in scrip, people waiving their right to sue for gross negligence, and dueling are other examples.
Only thing I can think of is to follow the model of the speed limit or drinking age. The Federal government has zero direct control over these things, but used the power of the purse over highway funds. Given the amount that the Federal government is likely to give out in the coming decade on housing and infrastructure projects, make that contingent on following a key set of changes in the relevant state and local regulations. The major difference to the highway funding example is that this is not 1 Fed vs. 50 states but 1 Fed vs. thousands of local municipalities. Even if you target the 20 cities with the worse housing problems, each of those cities breaks quickly into its core and surrounding suburbs. Part of this would need to be a major communications program so that local residents KNOW that their taxes are higher for the sake of retaining legacy regulation and zoning. One thing people like as much as NIMBY is low taxes. Give any local Dem politician a platform to run on this stuff against the legacy incumbents. Maybe incentivize states to take over key provisions in the Gavin Newsom model...
Fixing GAAP would help this a LOT.
The short version is that GAAP allows municipalities to count streets, sewers, and other infrastructure as assets rather than liabilities. The problem is that they ARE liabilities - they need to be replaced on a regular basis, and can never be sold.
Shifting them onto the other side of the balance sheet would basically expose most of SFH-zoned areas as fundamentally financially unsustainable.
It wouldn't immediately change policy -- in fact, it would spur a major shitstorm of local politics across the country -- but it would make clear where the money is actually coming from and being wasted in every single municipality. Residents would scream bloody murder about their new tax bills, and their politicians would be forced to explain why their street+sewer+etc is actually a liability and their housing isn't dense enough to pay for it.
Most would go into denial and try pushing their heads in the sand, but they'd be bitch-slapped by the cold hard reality of bond markets refusing to underwrite municipal bonds without major reforms.
We have gone round and round on our differing thoughts on the merits of the Strong Towns Suburban Growth Ponzi Scheme analysis, and we obviously aren't going to change each other's minds, so I'm going to set that aside.
I just want to say you should really temper your expectations of the general public caring at all about anything said in an audit. I once reviewed several years of a small city's audit that said essentially "fix your policies and procedures for utility billing. A council member is bullying the lone utility clerk into not shutting off their utilities when they haven't paid." After several years, the finding switched to complaining that the Mayor was bullying utility clerk, so not only did the voters not care about the councilmember not paying their utility bill and working the system, they promoted that person to Mayor, and it was right there in black and white in the audit.
Also, the idea that essentially the entire muni bond market would shut down because of a change to GAAP is very unrealistic. I've worked with issuers who are drowning debt/have eye watering tax rates/have plummeting population and/or property values/have actually defaulted and none of them have any problems getting underwritten and often pay a surprisingly small yield penalty. I just don't think the market would bat an eye at underwriting muni bonds even if they did move everything to the liability side of the balance sheet.
Those are fair objections. Perhaps I overstated my case. You’re right that the SGPS contains a very large Leviathan that carries its momentum through a lot of corruption and unsustainable financial practices.
I do think that the impact on the bond market would be more than marginal, though. Taking as given your contention that underwriters would happily keep writing bad bonds, *that* doesn’t erase the upside value. Again stipulating that the ST-SGPS analysis is roughly correct, the places that ST identifies as highly financially sustainable would shine pretty brightly in alt-GAAP-land.
Take, for example, two municipalities. One, “Marohnville”, is the ST-compliant core of the other, “Tdubston”, which is not ST-compliant. Under the new alt-GAAP, Tdubston has a temporary crisis, but the taxpayer revolt is averted because some shady bond-seller comes in and saves the day for them, figuring that the SGPS will keep the gravy train kicking the can down the road.
Marohnville, however, is able to show top-tier bond investors under alt-GAAP that its dense core is not only supporting the core’s liabilities, but also making a profit on top of subsidizing the liabilities of its handful of outlying SFH neighborhoods not incorporated in Tdubston. Marohnville promises to upzone its SFH neighborhoods (including removing other barriers like parking minimums and setbacks etc) to get in compliance with a separate provision of the Federal Alt-GAAP Bill, and now qualifies not only for a AAA++⭐️ bond rating, but also a nice little interest rate subsidy.
Tdubston may be able to keep itself afloat on the usual chicanery, but Marohnville will thrive and finance a bunch of public parks, buildings, festivals, and other services that eventually lead to talk of annexing jealous Tdubstoners - or rather, perhaps its angry NIMBY Boomer residents’ heirs as they inherit stagnating properties and beg for a bailout so they can cash out and live in hoppin’ Marohnville.
Sorry if that got a little fan-fiction-y towards the end there; the point is, even if the downside of alt-GAAP doesn’t materialize because of societal inertia, that inertia can’t stop the upside from letting WHATEVER kind of development model truly is best - ST or your own personal ideas or whatever else - succeed and shine on its own.
This is a good analogy, the highway problem and where accidents cluster and occur similarly crosses state lines. In response to this need, the FHA collects and uses national highway data in safety planning in coordination with state and local actors. The same idea could and should apply here, instead of the monolithic ACS, consolidate research and data collection efforts centrally into a housing platform with the explicit purpose of trying to see trends happening as they arise, and get ahead of them. Starting to build when everyone is already flocking to a smaller town or suburb is when you get the weird zoning laws built from resentment that we need to avoid. Removing the legacy red tape is half the issue, using the power of a large federal data program to coordinate actors around is the other half imo.
This is a very unformed idea, but if we start from the premise that a major source of NIMBY sentiment is incumbent homeowners wanting to protect their primary source of wealth, the federal government should adjust the tax code to discourage building wealth this way and encourage more pro-social alternatives (such as index funds). This would most likely piss off almost everyone, but some big structural changes are needed to gain momentum in a better direction.
Require sufficient soundproofing in multi-family buildings. Now, people try hard to avoid them due to unlivable neighbor noise and the nasty disputes that it leads to.
There are lots of things that would work, but the list of options that don’t slay sacred cows is much shorter.
In short, the problem isn’t the ability to develop innovative ideas in this space, the problem is overcoming all the political obstacles that favor the status quo.
The affluent suburbs engage in hypocrisy where they restrict new housing through elaborate bureaucracy and then have DEI teams bragging about inclusion. They’re all full of shit!