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Business Observer Friday, Apr. 9, 2004 14 years ago

The Answer to Affordable Housing: Shoes

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Here's the reality: Sarasota County will never have an ample supply of affordable housing. It will never have an ample supply no matter what government handouts and subsidies and trust funds it creates. And the reason is simple: Sarasotans ...don't want i

The Answer to Affordable Housing: Shoes

The headline was just too funny: "Group says government is key to affordable housing." It was, after all, the April Fools' edition of the Sarasota Herald-Tribune.

But, sadly, this was no joke. Yet another committee of serious Sarasota County people has decided that government is the answer to our ills.

It is mind-boggling why so many smart people believe that a series of government programs - tilting by way of government force one subsidy this way, another that way; adding a tax here, hiring another bureaucrat there - will achieve the desired results.

Every day, every week, every month, every year we all see and feel the negative effects of the Laws of Unintended Consequences. Whenever any government body imposes a new law - when it takes something away from one and gives it to another by force - government creates a new distortion in the marketplace, which in turn creates new inefficiencies, new costs and the need for more new laws to correct the unintended consequences of the first law.

Indeed, that's why the county commission, Legislature and Congress will never find the Promised Land of Equality that each one strives to achieve.

Let's pick apart the recommendations of the affordable housing committee, with the hope that perhaps sanity will prevail. Here's what the committee will be recommending to the Sarasota County Commission to solve the lack of affordable housing (based on the report in the Sarasota Herald-Tribune):

× Hire another government employee, a housing advocate, "to keep the county government focused on its commitment to more affordable housing."

If ever there was a make-work, do-nothing job, this will be it. What does this mean: "the county government's commitment to more affordable housing." Is that the role of government? Absolutely not. Its role is to create a framework that will allow the marketplace (i.e. supply and demand) to work freely. If anything, we should be begging the county commission to make this commitment: Stay out of the housing business.

× Appoint a permanent committee to work with the housing advocate.

This recommendation speaks for itself.

× Create a trust that would acquire land where developers could qualify to build houses or apartments priced for lower-income families.

When government people start talking about anyone applying to qualify, that speaks of creating laws, rules and bureaucracies that must administer and make choices on who is worthy and who is not. This is a recipe for unnecessary economic distortions, not to mention the growth of another hydra-headed government agency.

× Create a trust fund that the county could tap to buy land, subsidize impact fees or other expenses so qualified home builders can pass on lower costs to renters or buyers.

The nano-second you see the word "subsidize" alarm bells should go off. By now you would think we would know that whenever government subsidizes one activity, it forcibly takes money away from someone else. Result: more distortions, more inefficiencies and more immoral social engineering. Immoral? Yes. Just because one group believes there is a market imbalance, doesn't give it the right to force its desires on others to achieve an outcome. Absent government-imposed distortions, no government agency or program will ever fill a market niche better than Adam Smith's free hand.

But here's the really scary thing: the creation of a trust fund. This sounds Nirvana-ish - a pot of money to dole out.

Beware of trust funds (i.e. Social Security, Medicare). To begin with, a trust fund must be funded. With what? Charitable donations to a government-run affordable housing agency? Most likely it means your government is going to take/tax someone. Take from one, give to another. That's one of the onerous aspects.

Another is the effect of trust funds. Look at the state of Florida. It has hundreds of trust funds, and any legislator who has half a brain will tell you trust funds have created big problems in the annual task of deciding how to allocate Florida's tax revenues. When lawmakers say they don't have enough money for education or health care, part of the reason is the creation of trust funds has made hundreds of millions of tax revenues untouchable. These funds may be going into some trust fund created, say, for environmental preservation. But consider what happens in times of recession:

As tax revenues shrink, lawmakers must make cuts in programs not protected by trust funds. But wouldn't it make sense, for instance, to tap the funds going into the Forever Florida land-buying program to be able to fund education or health care? Don't trust government trust funds.

× Create incentives (i.e. higher densities, lower impact fees) for builders if they build homes in a certain price range.

See above. Incentives are subsidies - taking from one, giving to another.

× Work with other agencies to expedite permitting for developers of lower-priced housing.

Let's restate that: Penalize and punish home builders who don't build low-cost housing. How about expediting permitting for everyone? Wouldn't that help lower the cost of housing for everyone?

× Don't call it affordable housing, call it "community housing" to avoid connotations of public housing projects.

This is what happens when you form a committee.

Will all of these measures "create" more affordable housing in Sarasota County?

N-o.

Here's the reality: Sarasota County will never have an ample supply of affordable housing. It will never have an ample supply no matter what government handouts and subsidies and trust funds it creates.

And the reason is simple: Sarasotans - the vocal minority - don't want it.

They don't want a new neighborhood built next to theirs. They don't want more people moving here.

Here's what they want: more restrictions on development. They want to limit the supply of buildable land (i.e., the 2050 plan). They want to limit densities. They want to limit heights. They want the government to keep buying and buying more land to put it off limits to development.

Everywhere you turn, little bands of Sarasota County and city residents want to stop, stop, stop property owners from enjoying the benefits of what they own, from creating new value and new assets that will contribute to the general welfare of everyone, that will give us all more choices and lower prices.

Just look around: Sarasota developer Charles Githler wants to redevelop a small portion of one of Sarasota's rattiest eyesores - North Tamiami Trail. But the planning commission and city commission said "no." His mid-rise condos would be too high. Out in east Sarasota County, a Fort Myers developer wants to construct a 40,000-square-foot Publix east of the interstate. You would think he was trying to site a nuclear power plant. A small, noisy bunch of NIMBYs don't want it. They want government to stop a land owner from using his property for what he believes would be its highest value and in a way that would improve people's lives (they wouldn't have to drive 3 miles to an already crowded intersection for groceries). They castigate the developer as a greedy profiteer - while they live off the fruits of their own profiteering.

Consider this, too: Sarasota Planning Commissioner Joe Barbetta recently complained that developers are trying to destroy the proposed 2050 plan. And in the process, he said the cost of the 2050 plan to taxpayers probably has risen to $3 million of taxpayers money that may go down the drain.

The cost has been far, far higher than that. Barbetta didn't take into account the opportunity cost - the cost over the past 10 years of not developing, of not letting people use their creativity and capital to build new assets and create new value for the benefit of mankind.

Why doesn't Sarasota have affordable housing? Just look in the mirror.

The answer is so simple: shoes. When you walk into a women's shoe store, why are there so many amazing styles, colors and prices of shoes?

Because there isn't one government hand involved. There's only one hand, the free hand of free enterprise. That's the answer.

***

About Bennett's bill

Let's be clear about our bias, here: Most of the time we support state Sen. Mike Bennett. Sometimes he leans too much toward government intervention. But for the most part he's one of the few lawmakers in Tallahassee who understands what free enterprise is and that passing laws usually means taking away someone's freedom.

So having noted our bias, we can't pass commenting on a Manatee County staff analysis of a bill Bennett is pushing that would eliminate some of the regulatory hurdles in the state's development of regional impact permitting process. The Manatee staff, which by the way, shares few of the politico-economic views of Sen. Bennett, says his bill "solely benefits the development community."

This is a great example of the distorted lenses through which government officials typically see development. In their eyes, it is evil and must have as many hurdles as possible to keep it reined in.

They miss this important point: If developers have fewer government obstacles to overcome to build what people want, it stands to reason that the cost of development would become less and therefore the cost of housing would become more affordable.

Duh.

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