Affordable Housing

Years ago a Des Moines Business Record reporter was interviewing me about low-income housing tax credits. If you know my tax policy views, you know how I feel about them. The poor reporter was disturbed. "You are for affordable housing, aren't you?" Yes, just not tax credits. They aren't the same thing.

Low housing income tax credits are a push-on-the-string approach that gives allocations of tax credits to developers, often insider politicians, who agree to set aside some portion of their units to low-income tenants.

There is a way to increase the stock of affordable housing without the Rube Goldberg LIHTC system. It's to let people build them. Zoning, code restrictions and other limitations on development are key causes of high housing costs. If you doubt it, consider one modest attempt to build apartments in super-expensive San Francisco.

So Des Moines, home of a number of LIHTC properties, proposes to simplify things by... making it more expensive to build new houses. And the reason for doing so is astonishing. From the Des Moines Business Record (my emphasis):

Des Moines is in the midst of updating its zoning code, which provides development guidelines for its industrial, commercial and residential districts. The proposed code spells out the types of materials that can be used in various types of developments, including housing. It also sets minimum square footage requirements for different styles of houses and mandates that new houses have basements and garages.

City officials have said the new requirements will provide Des Moines higher valuations that will generate more in property tax revenue to help pay for city services provided to both existing areas and new development areas. About 40% of the property in Des Moines is tax-exempt, so the city must look for ways to create valuation that generates property tax revenue, officials say.

Give them credit for bald honesty. They want to prevent construction of houses that people can afford just to jack up tax revenue. Oh, and to increase the discretionary power of city officials:

In addition, city officials say homebuilders can ask for variances from city staff, the Plan and Zoning Commission and the City Council if the houses they want to construct don’t comply with the proposed city code.

Because government by special favor is the funnest kind.

But we don't want contractors building shacks? According to one realtor, there are 60 houses under construction right now that would fail the proposed new building code.

So for some Des Moines politicians, "affordable housing" means insider tax credits and political favoritism -- but not new construction.