Thursday, February 7, 2008

Affordable housing –- from direct set-asides to indirect …

   Land use law is unique because land is unique.  Because location is so important, real estate can’t always be easily replaced by trying to buy it in the market.  This is a reason that “set-asides” are such a powerful tool for getting low-cost housing built and maintained.  Because developers so desire the legal right to built, they will agree to “set aside” a share of a residential development for low-cost housing, as long as it gets them their cherished government permit.  The great incentive of profit gets low-cost housing built.

Housestreet   Thus it’s sad to read of the failings of the set-aside program of Montgomery County, Md., just north of Washington, which was one of the vanguards of set-asides back in the 1970s.  According to the Washington Post today, many developers have not been held to their obligations, and many have been relieved of their duty by paying money to a housing fund.  This is reminiscent of New Jersey’s complex affordable housing system, in which localities may pay, in certain circumstances, to avoid their obligation to build a “fair share” of low-cost housing. 

   It may be in the nature of government bureaucracies to prefer a system in which they receive money that they control, rather than have the private sector spend money.  But if we want low-cost housing built quickly and efficiently, tapping the profit motive is likely to more effective than indirectly giving funds to a government fund.

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