Housing Hunger Games FAQ
FAQs:
Below are answers to some follow-up questions we received to our Housing Hunger Games posts. If you have any more housing policy design questions you’d like answered, we’d love to answer them! Please send them to jcpolicycircle@gmail.com.
General Background:
Q: Describe each policy in a sentence.
A:
Public housing: “Taxpayers pay for as much affordable housing as they’re willing to pay for.”
IZO: “Market-rate renters of all incomes pay for as much affordable housing as they’re willing to pay for.”
Upzoning: “Lower costs by spreading the cost of expensive land across tons of renters.”
Q: Describe each policy’s biggest weaknesses in a sentence.
A:
Public housing: “Taxpayers may buck.”
IZO: “Middle-income renters may buck.”
Upzoning: “Fuck up your neighborhood’s vibes.”
Q: When it comes to creating affordable housing, what’s the difference between section 8 housing vouchers and abatements?
A: For creating affordable housing, vouchers and abatements work pretty similarly. Both ask taxpayers to fund affordable housing subsidies. The big voucher programs socialize the subsidy cost across taxpayers across the country, while abatements ask local residents to fund it.
Q: How does the Jersey City IZO work?
A: The Jersey City IZO program has two components: (i) mandatory and (ii) voluntary (aka the affordable housing overlay). Mandatory programs offer developers three choices: (a) make your building fit the existing neighborhood vibe and you don’t have to build any affordable units; (b) we’ll give you some breathing room on vibes if you make some of your units affordable; or (c) GTFO and invest your money in the stock market.
Voluntary programs offer an additional option: (d) if your building fits the vibes, we’ll find you a subsidy to pay for adding affordable units in your building, whether funded by renters or the public.
Program Design:
Q: How do you grow affordable housing now to stop the onslaught of displacement?
A: Unfortunately, there’s no housing tool that has a chance to stem the tide quickly enough to protect most households that need relief today. Assuming NYC-area job growth continues to outpace the growth in the number of moderate- or low-rent units, some longtime residents’ fates are already sealed, and they’ll need to leave the area in the coming years.
The reason is because construction is slow, and each of the public housing, IZO and upzoning options rely on the construction of new affordable units. To illustrate: the Journal Squared building has taken a decade to plan and build about 2,000 units, or a bit less than 2% of Jersey City’s housing stock. Even with a massive expansion of housing vouchers and a massively expedited (let’s say 2x) construction schedule, it would take nearly a decade to build enough affordable units for each of the 40% of rent-burdened households in Jersey City today.
The really smart housing program designers will notice that planning requires deep foresight into economic and social trends, sometimes a decade or more in advance. Planners recently found this lesson out the hard way in Chicago.
Tools that can work faster than building would be making sure middle- and lower-income households have more financial support (e.g., making the social safety net more robust) or otherwise lowering their cost of living while building is ongoing.
Upzoning:
Q: Can’t we just have limited upzoning so we can grow the affordable housing stock while keeping our neighborhood character?
A: Unfortunately, what you get out of upzoning is what you put in or give up. Upzoning is the opposite of sticking to a neighborhood’s vibes. Communities usually zone restrictively precisely to prevent the kind of low-cost, mass-produced, mirthless (sometimes dystopian, seriously, like an El Salvadorian prison) construction housing that upzoning is premised on. No pain, no gain.
Q: Does upzoning guarantee lower prices?
A: Yes and no. New development can raise prices. In order for upzoning to lower prices, the Reverse Gentrification Effect of building new units (supply) must overwhelm the Amenity Effect (induced demand). It’s difficult to know ahead of time whether the next batch of permitted units will add more to supply or to demand, so communities that rely on upzoning may need to sit through rent increases before reaching the promised land of low rent.
On the other hand, induced demand isn’t always a bad thing! Imagine if the Port Authority offered to build a new PATH station in a lower-income area of Jersey City. Undoubtedly, a PATH station will cause demand to skyrocket. Unless construction can keep up with that demand, displacement will occur while prices remain high. Does that mean that they should decline to host the station?
Also, upzoning doesn’t guarantee that the affordable units will be ones or in places that lower-income renters prefer. More on that below.
Q: If upzoning can work, why does the data say it doesn’t make affordable housing in every neighborhood that needs it?
A: One of the limitations of upzoning is that it works across an entire connected housing market, not neighborhood-by-neighborhood. Upzoning will tend to create affordable units where demand for housing is lowest (e.g., older units, farther from transit and other amenities, less safe neighborhoods etc.). It’s tough to upzone your way to mixed-income communities.
IZO:
Q: How can you be so sure that in the long run an IZO can’t build affordable housing faster than the other options?
A: Because an IZO works by mandating the affordable percentage of new construction. Thus, we know that the two things that limit how fast an IZO can work are (i) the growth of new construction and (ii) the percent of that new construction that is affordable. For most mandatory IZO programs, the affordable unit % is 10-30%. If we assume 30% as the maximum, the only way to grow the stock of affordable units is to raise the growth rate.
But of course, what happens when you increase the growth rate (if you’re willing to trade vibes for affordable units)? Eventually, if you have enough supply growth, market rents will fall. A really hardcore IZO just becomes upzoning.
Q: It’s kinda bullshit to show a model showing the limits of IZO programs but not zoning programs. That’s not a fair comparison, is it?
A: Fair! The growth rate for an IZO program is dictated by 2 rates, while market prices are much more difficult to model. Out of all the housing polices, upzoning requires the biggest leap of faith because you don’t know for certain at which point in the growth cycle adding new units will reliably drive rent down.
