“Affordable housing” is NOT affordable

“Affordable housing” is a clever code word for those who demand more of it. “Affordable housing” does not refer to any housing in the private rental market that might actually be affordable to its tenants (yes, such affordable privately-owned rental housing does exist). But the term “affordable housing” refers, instead, to just one kind of housing, that built by so-called nonprofit “affordable housing” groups using only taxpayer dollars from government sources local, state, and federal.

“Affordable housing” as a label also suggests that the product being built is affordable. If “affordable housing” were cheap to build, why don’t we have plenty of it? We don’t because it is absolutely not cheap. Cost-wise, so-called “affordable housing” is the most expensive, most UNaffordable way to build lower-rent housing.  It would be far cheaper to use existing older housing.

Let’s compare. Small landlords, who provide roughly 75% of all rental housing in Massachusetts and nationwide, are the most efficient housing providers, and such large providers in quantity that they should be carefully respected. Small landlords usually have full-time jobs with benefits, their rental property is a part-time job for them, and they do their own management and repairs from their homes, no fancy offices. Their properties are usually older housing, often historical and architecturally beautiful, built to older codes and “grandfathered,” with fewer modern amenities and mortgages often paid off. All these factors mean less upward pressure on rents, so they can keep their rents lower, especially for tenants they want to stay. Larger private landlords in contrast are inherently more expensive. They must maintain separate offices with salaried managers and employees with benefits, which puts upward pressure on their rents. Nevertheless, larger landlords have an important role in the private market where competition still keeps their rents relatively lower.

But the most expensive way to provide lower-rent housing is the completely tax-funded way, inherently expensive. Tax-funded public housing projects, once a hope, have failed badly from concentrated poverty, crime, poor educational outcomes, and poor upkeep. The current craze is for so-called “affordable housing,” which is in every way unaffordable except to the tenants. It is expensive because it is new construction or older housing completely rehabilitated to modern code standards. It is expensive because it is operated just like large landlords (offices plus hired personnel with generous benefits). And it is expensive because it relies entirely on taxpayer funding in various forms – federal, state, and local tax credits, federal “community development” block grants, and state and local “affordable housing” trusts funded by surtaxes anywhere they can be imposed – so it can only be built in small quantities that will never meet actual demand. The most economical taxpayer subsidy is “Section 8” vouchers used by tenants to help pay their rent in  – guess what! – privately owned housing.

So the “100% affordable zoning overlay” is the costliest way to go and, to prevent competition from private owners and developers, does not give them the zoning breaks it gives to the nonprofit, tax-funded groups – AND desires rent control on private owners, which slowly kills their rental housing and stops all new private rental housing construction. It’s a housing plan built to profit nonprofit groups, whose salaries plus benefits far exceed what many small landlords earn from their properties, a housing plan built in taxpayer hell.

The city promises $20 million annually for five years to help build this unaffordable “affordable housing.” How many units will be built? Over a decade ago, the Boston Globe estimated $480,000 to $500,000 per unit to build them. At that price, only 40 units can be built a year, or 200 units over 5 years. But these are high cost units that on the open market would command high rents. Or higher rents. So  the 200 tenant households in these units will still need ongoing subsidies to make the rents “affordable” to incomes below 80% of area median income. At $1,500 a month, a conservative estimate, each household will cost $15,000 a year, or $150,000 for 10 years, or $450,000 per household for 30 years – and we still have not included the ongoing cost of maintenance, repairs, and administration. A 30-year plan, then, will cost well over $1 million per household, will benefit only 200 households, for a total cost of $200 million.

Can the city justify such a disparate benefit to a few, leaving all other renters without relief? Far better it would be to take that $200 million, divide it into 30 years, giving $6.7 million each year for 30 years, and subsidize the rents at $1,000 a month or $12,000 a year per household. This would assist 550 households for 30 years.

to a selection of low- and moderate-income households, in the form of tenant-based rental vouchers, like Section 8, effectively lowering their rents in private apartments. That would benefit over 1,650 households a year – indefinitely, if that funding level is maintained idefinitely.

Will a lot of “little Rindge Towers” all across Cambridge, strictly limited to lower-income tenants, run clear of the crime problems at the present Rindge Towers? That’s a big question that has not been answered. See description of Rindge Towers history on Wikipedia article below.

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