Upvalley in the People’s Republic of Aspen, they have an “affordable housing” program. The theory is that some people should pay for the housing of other people.
The program is implemented in two ways. In the first, the city uses taxpayer money to buy or develop housing units. So the city is in the residential real estate business. The units of course lose money hand over fist, and require constant cash infusions because they charge rent that is far less than necessary to cover the purchase and development costs. That’s what it means to be subsidized, after all.
The second way is that the city coerces private developers into building affordable housing units as part of their developments. It does this in a crude but effective way: It conditions the building permit on the inclusion of affordable housing units where the rental rates are controlled by a city bureaucracy.
This, too, is in effect a taxpayer subsidy. The developers incur bigger expenses in developing housing in order to include the mandated affordable units. They have no alternative but to pass those bigger expenses on to the buyers of the other units, or else operate their development business at a loss. There’s no free lunch.
The program is fraught with practical problems. For one thing, the real estate business attracts a lot of shrewd businessmen. The city of Aspen is not as shrewd. So it winds up on the short end of transactions. For example, it has a notable habit of buying high and selling low. In addition, the city’s projects are plagued with construction defects.
The question arises, who gets to live in this taxpayer-subsidized housing? In theory, it’s for lesser-income people who are required to “qualify.” But the program is not for poor people. In Aspen, the income cutoff is $184,000 a year.
Moreover, the enforcement of the qualification criteria by the city bureaucracy is spotty. The program notoriously houses people who simply lie about their qualifications. And while residents in affordable housing pay below-market rent, they often re-rent their units at market rates during peak season or even year-round. The net effect is that the rest of us subsidize their little subletting businesses. It’s impossible for the affordable housing bureaucrats to keep track of all that, and they don’t.
But they do keep track of openings in the units. Often, those units miraculously get filled with the friends and cronies of the affordable housing office.
In Aspen, the taxpayers who pay for all this include some rich folks, but also a lot of middle and lower-income people. So you have the phenomena of middle and lower-income taxpayers subsidizing upper-middle class insiders making up to $184,000 a year.
The kicker is that the true beneficiaries of the program are not the residents who live in them. It’s their employers. Here’s how that works.
Employers naturally pay their employees what the market dictates, no more (else they waste money) and no less (else they fail to attract and retain the employees they need). To the extent employees can get housing that is subsidized by the taxpayers, the employers can pay them less. The end result is that the subsidies from the taxpayers wind up not in the pockets of the employees, but in the pockets of their employers.
What the employees wind up with is cheap housing that is offset by their cheap wages. And that’s if they’re insiders who are lucky enough to wheedle their way into affordable housing. For the others, they get the cheap wages without the cheap housing.
Apart from the practical problems with an affordable housing program, there is also a philosophical question: Should the beneficiaries be limited to certain professions?
There is talk, for example, of making affordable housing available specifically for schoolteachers. I like schoolteachers as well as the next parent, but why just them? I also like firefighters, police, ministers, rabbis and my editor. They, too, do good work.
What about volunteers with Mountain Rescue who literally risk their lives for free?
And while we’re at it, why not subsidize their groceries too?
Here’s a better solution. If employers are unable to attract the teachers they need — or the firefighters, police, ministers and rabbis that they need — because people can’t afford to live here, then the employers should pay them more rather than demanding that taxpayers spend money subsidizing their housing.
That way, they can use the additional money as they wish. (Who am I to say that they should have a house and not 11 pairs of skis if that’s what they choose?) They’ll actually receive that additional money, and not see it offset by lower wages from their employees. All of them will receive it, not just the insiders who manipulate the system.
Best of all, we could avoid another expensive government bureaucracy catering to its cronies.
(Published Sept 18, 2015 in The Glenwood Post Independent at http://www.postindependent.com/news/18234909-113/column-glenwood-cant-afford-affordable-housing)