Restrictions in Charlottesville’s West Main Down Zoning May Further Gentrify the Neighborhood

By Neil Williamson, President

Tonight, Charlottesville City Council will hold their last meeting of the year and have the first reading of the West Main Street Downzoning.  This will be the final meeting for DedeHujaMayor Satyendra Huja and Vice Mayor Dede Smith.

There have been rumors that this Council may dispense of a second reading and enact the ordinance – the Free Enterprise Forum believes that would be a huge mistake and remains hopeful that the new council will have the opportunity to vote down this ordinance in the name of affordable housing.

Please let me explain.

Over the last few weeks, I have been reading a great deal about rental housing economics.  A recent Harvard study showed that the homeownership rates dropping while the renter households increased.  The media has been very interested in the increase in the cost of rental units and its impact on the middle class.  Considering the proposed downzoning on Charlottesville’s West Main Street, one only needs to look to the larger cities to see how land use restrictions can impact the fabric of the community.

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Interestingly, the Harvard study did not go into the reasons for the increases in rental costs.  Fortunately, The Washington Post’s Emily Badger wrote recently about Why it’s so hard to afford a rental even if you make a decent salary

This chart, from a report on America’s rental housing from the Harvard Joint Center for Housing Studies published today, illustrates that only about 10 percent of our recently added rental apartments would be affordable to the nearly half of renter households in America who make less than $35,000 a year:


Note: Rents based on 30% of income affordability standard. Sources: US Census Bureau, 2015 Survey of Market Absorption, 2015 CPS. Harvard JCHS.

Badger’s article, unlike the Harvard study does speak to the reasons the rent for new apartment housing is increasing:

The number of renter households in the top 10th of the income spectrum rose 61 percent over that decade, more than for any other group. So developers are not simply building luxe apartments no one wants to rent.

But they’re also responding to the worrisome dynamic that we’ve made it very, very difficult in many cities to construct market-rate housing that would be affordable to the middle class or modest renters. It’s economically challenging for developers to create new apartments the median renter could afford — at about $875 a month — while covering the costs of constructing them.

Height limits, parking requirements and zoning restrictions all push up the cost of construction. So do lengthy design reviews and legal battles with neighborhoods opposed to new development. Developers must also build at the densities communities allow, and in the limited places where they allow higher density. And if a given parcel of land is only zoned for about five stories of apartments, those apartments may have to command $2,500 a month each to make the project profitable. Emphasis added-nw

Nobel Prize winning economist Paul Krugman’s New York Times column entitled  “Inequality in the City” also identifies New York’s land use regulations as a major factor in increasing rents.

And this is part of a broader national story. As Jason Furman, the chairman of the White House Council of Economic Advisers, recently pointed out, national housing prices have risen much faster than construction costs since the 1990s, and land-use restrictions are the most likely culprit. Yes, this is an issue on which you don’t have to be a conservative to believe that we have too much regulation.

The good news is that this is an issue over which local governments have a lot of influence. New York City can’t do much if anything about soaring inequality of incomes, but it could do a lot to increase the supply of housing, and thereby ensure that the inward migration of the elite doesn’t drive out everyone else. And its current mayor understands that.

But will that understanding lead to any action? That’s a subject I’ll have to return to another day. For now, let’s just say that in this age of gentrification, housing policy has become much more important than most people realize.

For all the lip service paid to affordable housing, it will be most interesting if this last meeting of this Charlottesville City Council will addresses this question before they exacerbate the situation with even more costly regulations.

Respectfully Submitted,

Neil Williamson

Neil Williamson December 2 2015 Albemarle BOS meeting Photo Credit Charlottesville TomorrowNeil Williamson is the President of The Free Enterprise Forum, a privately funded public policy organization covering the City of Charlottesville as well as Albemarle, Greene, Fluvanna, Louisa and  Nelson County.

Photo Credits:  City of CharlottesvilleCharlottesville Tomorrow

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