Ideology v. economics: Level field?
There are some stories that don’t do well in print. Affordable housing is one of those. It’s complicated, an easy target of political ideology, and not the kind of topic that grabs hold of a reader or energizes the electorate.
A few weeks ago the affordable housing issue reappeared in public view as our county commissioners were debating the merits of passing affordable housing regulations.
These were the culmination of two years of meetings, outside consultant reports, and numerous planning sessions.
Commissioner Tom Stone irresponsibly wrote a guest column in this newspaper which used the pending debate as an ideological war cry under the banner of preserving a free market economy.
His column had the intended effect. As the executive director of the Vail Valley Economic Council, I received several phone calls and e-mails by business people concerned about Stone’s claim that these regulations were anti-business. They wanted to know what the implications of the proposed regulations would mean.
To get them an answer, over a period of a couple of days I sought out and spoke at length with people who were involved in the development of the regulations, waded through pages of studies and spoke with Realtors and developers. What I learned was that this is an extraordinarily complex topic and there are no clear-cut answers. Even advocates of putting affordable housing regulations in place could not fully predict the ultimate benefits or unintended consequences they might cause.
The regulations that were proposed were only adopted as non-binding guidelines, which would provide a formula for developers of residential and commercial real estate to set aside a percentage of either housing units or cash in lieu of construction. This applied only to land sitting in unincorporated Eagle County that wasn’t currently developed or zoned.
It became clear that the structure of these recommendations was designed through the lens of real estate developers and because of that, unanticipated scenarios such as a small-business owner who wanted to build and owner-occupied building would find the regulations to be a significant burden. This is an issue that was overlooked and should be addressed.
It’s also worth noting that the 10 percent of a total project assessment that would be required for affordable housing was half of what the original recommendations called for. Other versions, some of which are far more stringent that what was proposed, are already in place in several towns in our county and other communities in the state. In other words, Eagle County wasn’t breaking any new ground here.
All this political posturing and outcry from developers seems like we’re rearranging the deck chairs on the Titanic. If there’s one thing I absolutely believe from the all the data I reviewed, it’s that more people are going to want to live and work in Eagle County. If they can’t live here, they’re going to have to commute from somewhere, so traffic and environmental quality concerns could be just as big an issue. We’ll simply be trading one problem for another.
Frankly, I’m no big fan of government acting as either a social architect or investment partner in affordable housing or rent subsidization. Yes, I believe in free markets. But in areas of universal societal need (such as housing), there needs to be some degree of regulation to insure a level playing field. America has a long history in housing subsidization, as exemplified by FHA mortgages and the deductibility of mortgage interest on our taxes.
The cold hard reality is that with a dearth of developable land and a free market desire to maximize a profit, there is little or no incentive for developers to create affordable housing.
From an economic development standpoint, that’s a problem. A big problem. If you want to raise a family, start a business, or simply want to enjoy first run movies and a choice of supermarkets, you need to live in a more economically diverse community – a community that by economic necessity must have a broader price range of housing alternatives.
On the path we’re heading, the county’s own research indicates that a future affordable housing crunch is inevitable. Despite the appearance that there is a glut of housing on the market, perception is different from reality. Yes, there is a much higher vacancy rate of rental apartments, but still very few desirable choices of properties are for sale under $200,000.
A good affordable housing policy would weed out undercapitalized developers, stop them from jurisdictional shopping which would lead to more sensible land utilization, add stability to our workforce, level the playing field for entry level home buyers, and provide a more stable and sustainable sales tax base of full-time property owners.
Real estate development is a major part of our county’s economy. However, a developer’s view of the world is measured in how long it will take to achieve project build-out and then move on to the next deal. They’re not that concerned with economic mix or community sustainability. They want to make a profit, feed their families, and meet payroll. And that’s perfectly fine.
However, a community and its government(s) need to provide some balance to that equation, since it is all of us who will ultimately suffer (or thrive) with the short-term development choices that are made today.
The Board of Commissioners kicked the affordable-housing can down the road – for now. Unfortunately, that won’t make the issue go away.
For free markets to function effectively, they need to exist within a framework of certainty. Envision one of the soccer fields at Miller Ranch. On a fall weekend you’ll find teams playing a monitored game complete with operating rules on a precisely defined playing surface. A referee and line judge are required to make sure that both teams are afforded fair treatment. If one team possesses greater skill and talent to rack up more points, they are free to do so within the structure of the game. Hmmm. A level playing field with some basic rules and no limit on the score. Imagine that?
Oh, and wasn’t the soccer field paid for by county funds?
Don Cohen is a Colorado native, entrepreneur and former high-tech CEO. He is executive director of the Vail Valley Economic Council and can be reached by e-mail at email@example.com.
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Vail’s updated plans regarding the state guidelines and isolation housing requirements is one of several pieces of information guests are waiting on heading into the 2020-21 season.