On Wed., Dec. 18, from 3 to 5 p.m., at the Caldwell Meeting Room at City Hall there will be a ‘listening’ session to consider Redding’s new affordable housing initiative. With funding from the SB2 Affordable Homes and Jobs Act, the City of Redding will be getting directly involved in the accessory dwelling unit business.
Full disclosure is a bedrock tenet of the real estate profession. Full disclosure may be uncomfortable, but it’s required. So is truth in advertising. And, bait-and-switch marketing tactics aren’t allowed. I’m not saying this is happening. But I am saying many components in this proposed scheme certainly seem close to a red line.
Let’s begin with the very concept of “affordable housing”. Consider the Woodlands, one of Redding’s more recent affordable housing projects. This 55-unit apartment, constructed on donated land, reportedly cost $16 million, or $290,000 per unit. Truth in advertising: Affordable housing isn’t affordable housing, it is subsidized housing. Heavily subsidized, as a matter of fact.
Let’s move on to the source of funding for affordable housing: the newly enacted $75-per instrument recording ‘fee’. A tax is a compulsory payment levied by government. A fee is a voluntary payment by a specific group of users to cover the specific costs associated with a specific service. Somehow, the cost of recording went from $17 to $92, with the $75 difference shifted from recording documents to subsidized housing. This fee sure seems like a classic redistribution tax, which some refer to as socialism. Bait (fee for service) and switch (subsidized housing)?
Next, let’s take a look at prevailing wage, which will be required for Redding’s affordable housing endeavor. The average wage in Shasta County is $21.30 per hour. The current prevailing wage is double that, $42.67 per hour. Add health, pension, vacation, training and other costs, and the prevailing wage paid to construct affordable housing is $73.16 per hour. Prevailing wages are anything but prevailing. I trust this construction cost structure will be revealed.
Finally, consider the supposition that the market is failing to allocate resources to a public good, in this case affordable housing. In a market failure, governmental intervention is required to right a wrong. An alternative portrayal is the lack of market-based affordable housing is government failure. Housing and zoning policies so severely constrict the market’s ability to provide affordable housing that everyone, the public and government, is worse off than they would be absent excessive governmental intrusion. If the lack of affordable housing is a governmental, rather than market failure, then local policies must sufficiently change to correct this failure. What changes, beyond subsidy, are proposed?
The ‘listening’ on December 18th should be instructive.
Meet the new boss: Same as the old boss?
Don’t get fooled again, no no!