Supporters of affordable housing weigh in on controversial issue
Original post made
on Mar 11, 2013
Affordable housing is not only a good idea for Danville but it's also the law. Despite "legitimate concerns" about an increase in crime, traffic and lower property values, the executive director of a housing association said the opposite tends to happen when affordable housing comes into a community.
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posted Monday, March 11, 2013, 12:53 PM
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Posted by PSMacintosh
a resident of Danville
on Mar 25, 2013 at 11:35 am
I thought the operating "mechanism" for how and why Building Developers/Contractors are able to be profitable and happy to build such High-Density, Low-Income housing was more like the following description:
Start with a piece of land that ordinarily is zoned to NOT allow high-density housing, where a variety of other regulations would NOT allow this building to be built, and where ordinary Market Forces of supply and demand would NOT make this type building a desirably salable or a profitable idea.
Then you use political forces to BEND all the ordinary rules and logic of property development:
1. You alter the Zoning laws (or General Plan).
2. You allow exceptions to the Building Regulations and other agency laws: allow removal of a protected tree, speed up and make exceptions to environmental regs, re-interepret parking requirements, make negotiations for density, height, look, wild space, hilltops, carbon emissions, building materials, etc. and make supposed trade-offs (donate to a park elsewhere, leave a hillside of wild weeds).
3. You interfere with Free Enterprise and normal market forces.
Let's say (hypothetically) that, under older property laws, the Developer could build one small 10,000 sq ft Office Building (or a Custom House) on this lot with sufficient parking and would be required to build around an existing old Oak tree. (Or maybe this lot really isn't ever going to be a build-able lot with the Oak tree on it......and has to become a dog park or open space.)
The lot cost $300,000 (and the land owner is "happy" to get rid of it for the money.)
The Office Building cost $400,000 to build (with all the building issues resolved).
The Office Building now has a Fair Market Value (FMV) and Sales Price of $1 Million dollars (and is a reasonably desirable building for the area and therefore has enough interested Buyers).
So the Developer has a profit of $300,000 after a year of efforts.
Now let's say that the Developer, in conjunction with a Housing Non-Profit's political efforts and ways around the old building regulations, can build an 8,000 sq ft office space with eight 1,000 sq ft residential units above it (residential units that are out-of-character with the neighborhood....like eight Studio Apartments in Blackhawk).
The total building square footage is 16,000 sq ft.
The Oak Tree is allowed to be removed. The parking requirements, using "compact" spots, are altered and squeezed in (and insufficient in reality, but will rely on nearby public or street parking). The EPA Reports are stream-lined and speeded up. Neighborhood opposition is ignored.
The eight residential units have a FMV of $200,000 each. The Developer receives the full $200,000 each, but the units HAVE to be sold to low-income persons for $100,000 each (with the remainder of $100,000 coming from private or public grants or city-backed mortgages or ??).
The eight residential units, although very unusual for the area, have enough interested "ordinary income" Buyers that they would have sold--in a free and open market--for the full $200,00 each to some highly financially-qualified persons.
Instead, in compensation for bending the property rules and free market forces, the residential units HAVE to be sold to low income, financially risky persons (probably with low down payments and city-backed loans to them as well). (Or maybe the units are required to be rental units to Section 8 candidates.)
The Office Building "portion" sells for $800,000, so the Developer receives a total of $1.6 million.
The Land cost is $300,000. The Developer's building costs were $500,000.
So the Developer's profit is $800,000, instead of $300,000 as in the former example. This is why the Developer is interested in building such units--more profit.
The Town Council likes the fact that they accomplished their mandatory State goals (which were dictated to them by outside forces).
The end result is that FREE ENTERPRISE MARKET FORCES are majorly interfered with and overridden as a part of SOCIAL RE-ENGINEERING by certain special interest groups with their own POLITICAL PHILOSOPHY AND AGENDA.
The Housing Non-Profit Agency fulfills its mission and justifies its existence and continued private fund-raising efforts or receipt of public government grants (at taxpayer's cost regardless of taxpayer's opinions).
Instead of ordinary Free Enterprise, Open Market, and Capitalism forces at work, you have the New American Socialism becoming more entrenched.
Maybe I don't have it exactly, but isn't this more like the "mechanism" that is going on?
(I'm willing to be corrected and taught, if necessary.)