OT: An interesting approach to fighting gentrification in Colorado. Will it work?

[XXtwindad]

https://www.nytimes.com/2023/08/17/b...n-housing.html

I read an article this weekend about a novel plan to stem the tide of spiraling housing costs and the concomitant displacement of long-term residents in Summit County, Colorado: “deed restriction payouts.”

I’d never heard of the term. Evidently, Summit County (home to many affluent ski resort communities) is offering home owners large sums of money with some stringent caveats: no AirBnB usage, rental to only the local work force, and caps on resale price.

“For a payout of tens of thousands of dollars from the local government, he recently signed onto a hefty “deed restriction” for his property, banning its use for Airbnb stays, limiting any potential renter or buyer to the work force of Summit, and limiting any potential resale price. And he did it with pride.

It’s part of a growing program led by Breckenridge and other local governments to limit gentrification without licensing a large buildup of new developments. (Deed restrictions in destination areas got off to a quieter start in the 2010s but have ticked up.)”

The article doesn’t specify how enforceable the restrictions are, and, unsurprisingly, the plan has critics. Including the Colorado governor, who essentially called the deed restriction payouts a “band-aid solution.”

Incumbent property owners willing to sacrifice lucrative short-term vacation rental income see it as a fair trade-off, key to keeping long-term residents and the dashing contours of their towns’ terrain. Policy critics, and frustrated local renters fighting over limited spots, say it is an inadequate tool for the scale and source of the problem: a lack of units.

Those critics include the governor of Colorado, Jared Polis, who is skeptical that lump-sum payments to owners in exchange for deed restrictions will be a sufficient incentive to broadly move the needle on affordability.”

“There is no silver bullet,” he said in an interview. “But one of the areas that we have focused on is removing the barriers to additional home construction.” He added that “housing is not a problem that you can solve by throwing more money at the existing housing stock.”

Emblematic of the complex affordability issue, the governor has his critics, too. Quite a few of them, it seems.

His sweeping legislation to ensure “a home for every Colorado budget” by pre-empting local land-use laws and directly loosening zoning rules statewide died in the State Senate in May, after some initial momentum. All but one of the mayors in the state’s Metro Mayors Caucus issued a letter opposing the plan.

I know there are quite a few Forum members in Colorado. Anyone aware of this program?

[prototoast]

Okay, this strikes me as one of the dumbest public policy options I've ever seen. Exclusionary zoning is bad enough as is, but now throwing in regressive transfer payments as an enforcement mechanism for exclusionary zoning really takes the cake.

[XXtwindad]

Originally Posted by prototoast

Okay, this strikes me as one of the dumbest public policy options I've ever seen. Exclusionary zoning is bad enough as is, but now throwing in regressive transfer payments as an enforcement mechanism for exclusionary zoning really takes the cake.

Well, you’re an economist, so I have to lend a lot of credence to your opinions. By “regressive” you mean that it will primarily impact the people it’s actually supposed to assist?

[rothwem]

Originally Posted by XXtwindad

Well, you’re an economist, so I have to lend a lot of credence to your opinions. By “regressive” you mean that it will primarily impact the people it’s actually supposed to assist?

Let me get this right--they're going to pay people that own homes in Breckenridge to not rent them on AirBNB? Paying people that own the expensive homes?

Lawdamercy.

Just let the developers build more ****ty condo/apartment complexes.

[mstateglfr]

The Gov is probably right- this is a bandaid solution. Thing is, a bandaid is better than nothing when you are bleeding.
So while this may not be a long term solution, it also may not be a bad idea- both can exist.

With that said, I dont see how housing costs can drop until demand softens. So either an area stops being popular or the area increases capacity to account for demand.
Since demand doesnt look to drop soon...


Wouldnt a more sustainable solution be cities/counties incentivize affordable development that is reserved for the target audiences they want to help? Building more shared wall housing(condo/apartment/townhome) at affordable pricepoints while capping the allowable increase in rent would increase housing for the targeted group and still provide incentive for housing owners to invest(albeit at a lower return than elsewhere).
Providing incentive for developers seems critical. If they have land to build 4 houses, why would they build 4 $200k houses when for just $30k more per house they could build 4 $300k houses? This is a simple hypothetical, but the concept is practiced every day across the country. There is little incentive for them to build lower cost housing when a small increase in spending will net significantly higher sale prices.

[Ken Robb]

Leslie and I used to stay at Sierra Lodge when skiing at Mammoth Mountain in California. Last year it was purchased by the owner of the resort to use for worker housing. I think most workers would LOVE to live there. I don't know if other properties were similarly converted.

[prototoast]

Originally Posted by XXtwindad

Well, you’re an economist, so I have to lend a lot of credence to your opinions. By “regressive” you mean that it will primarily impact the people it’s actually supposed to assist?

I mean it is literally transferring money to those who are wealthy enough to be property owners, and the size of the transfer payment is proportional to the value of the home, so those with the most will receive the largest subsidy.

And if anything, it will only exacerbate the existing supply/demand imbalance. It earmarks certain housing for "local workers" which doesn't necessarily make housing less affordable, and the deed restrictions, if anything, will only restrict the supply going forward and lead to higher prices.

[rwsaunders]

The first two words on the Breckinridge town government website are recreation and tourism…tough to tell people that we’d like you to invest here and spend income, but you can’t make money on your recreational property. If they’re truly worried about affordable housing costs, I’d think that a more comprehensive plan, including subsidies from sales of services and grant programs would be a more achievable and sustainable solution.

[pdonk]

As a land use planner, working for a developer, who lives in a neighbourhood that has/is working its way through the gentrification lifecycle, depending on the availability of land, labour and how big the fund is, they may be better off building town owned purpose built rental.

If land is not readily available, there always is the claim of eminent domain and expropriation available as well as a few other US terms I can't think of off the top of my head that can be used to acquire lands forcibly from landowners.

[Alistair]

Originally Posted by prototoast

I mean it is literally transferring money to those who are wealthy enough to be property owners, and the size of the transfer payment is proportional to the value of the home, so those with the most will receive the largest subsidy.

And if anything, it will only exacerbate the existing supply/demand imbalance. It earmarks certain housing for "local workers" which doesn't necessarily make housing less affordable, and the deed restrictions, if anything, will only restrict the supply going forward and lead to higher prices.

Yep, band-aid that just transfer wealth to the already-wealthy.

Even with the restrictions, is a local wage earner going to be able to afford a long-term rental on a cabin the area? I doubt it.

It does nothing to add more units, which is the real solution to high cost housing problems.

And I wonder how they're restricting resale prices? Is it capped at current value? Or current + adjustments for inflation? Or something else? That really just invites all sorts of underhanded shenanigans at resale time. There will be long lines of buyers for "undervalued" property - the end result will be crooked realtors, under-the-table cash deals, etc.

[prototoast]

Originally Posted by Alistair

It does nothing to add more units, which is the real solution to high cost housing problems.

They could also build a giant sewage treatment plant in the middle of town, but no one ever likes my solution to make housing more affordable.

[Alistair]

Originally Posted by pdonk

If land is not readily available, there always is the claim of eminent domain and expropriation available as well as a few other US terms I can't think of off the top of my head that can be used to acquire lands forcibly from landowners.

They don't even have to go that far. Just rezone ($100 says too much area is R1/single-family or equivalent) to higher density and let the market work. [insert rant about HOAs and other development anti-patterns here]

The problem is these areas are so far behind the curve on supply that even a new block of 100 units or more won't make a dent in prices. So, private development, but with massive aid from the city to labor to afford the new housing. Phase out that aid as prices eventually come down (which will take decades).

[C40_guy]

Palo Alto has it all figured out...long term street parking...

https://www.paloaltoonline.com/news/...is-even-harder

[prototoast]

Originally Posted by C40_guy

Palo Alto has it all figured out...long term street parking...

https://www.paloaltoonline.com/news/...is-even-harder

Meanwhile, a "concerned citizen" is trying to stop new housing from going in because it would involve tearing down a dumpy old building that used to be a cannery. https://www.paloaltoonline.com/news/...-frys-building

[pdonk]

Originally Posted by Alistair

They don't even have to go that far. Just rezone ($100 says too much area is R1/single-family or equivalent) to higher density and let the market work. [insert rant about HOAs and other development anti-patterns here]

The problem is these areas are so far behind the curve on supply that even a new block of 100 units or more won't make a dent in prices. So, private development, but with massive aid from the city to labor to afford the new housing. Phase out that aid as prices eventually come down (which will take decades).

Prezoning lands / Permissive Zoning could open the market up significantly, I'll let you know in 10 years, the province amended our Planning Act to allow more units as of right on lands zoned for SFD and Semis. In Toronto we have an area affectionately referred to as the "Yellow Belt" which consists of single family dwellings on large lots that in today's development framework could be redeveloped into 3- 6 ground related units very easily.

As for trying to expedite things, Toronto tried to use a tool to expedite development we have in our Act and it still took them 3 years to break ground due to the "need" for consultation and their internal processes. This was for a project with funding in place from all three levels of government and a willing land owner.