By Fred Baser
Editors note: Fred Baser is the financial advisor and founder of Bristol Financial Services, is a commissioner of the Vermont Housing Finance Agency, former member of the Vermont House of Representatives and past member of the Habitat for Humanity of Addison County board.
Despite recent efforts, in our state and nationally, to reduce the housing affordability crunch, it is quite likely we will be in the same discouraging housing situation 20 years from now as we are today unless we make substantial changes to the way we do business.
How did we get to where we are today? Here are some ideas. To start, “local control” plays a factor. Local control is supported by most people. Let’s make sure the citizens decide or at least have a say in what goes on in their own communities. Yet, in the six or seven decades that citizen-controlled planning commissions and zoning boards have taken root in communities around the nation, building housing — especially multi-family units — has become more difficult and costly, especially in desirable growth regions, like northwest Vermont. Why? Because people that own nice properties are commonly the ones most active on their local boards and commissions, have political connections and want to maintain their property values and vision of community. They are also the people who dominate local meetings addressing controversial housing projects. The well-educated more affluent citizens control the local agenda. This circumstance does not favor the creation of affordable housing.
Our tax codes favor single-family home ownership. You get to write off interest on a home mortgage, for many, property taxes are a write off, and if you sell your home, the gain in value (with certain limits) is not taxable. There are fewer tax benefits for multi-household unit construction and ownership and as a result development suffers. This is important since most lower income households rent apartments or live in manufactured homes.
Then there are the state’s rules and regs. They have been developed to protect the environment, historic buildings and increase energy efficiency etc., but these rules drive up building costs and thus hurt affordability.
Historic trends are not helping either. About 70% of Americans live in a single- family home. The baby boom generation, now reaching ages where they will pass on this asset, will do so to a portion of society that are already economically favored, increasing the gap between those that have and have not. Then, you have the fact that household size has been going down, meaning more housing is needed even though population increases are modest.
Finally, government significantly underfunds its Section 8 Voucher program, which is rent support for low-income households.
What can we do to have more and smarter affordable housing development?
Modify the tax code in such a way to encourage multi-family housing development. Money talks. Big tax breaks for multi-family housing means more of it.
Challenge local control in building development. With incentives and or state guidance, revamp zoning rules and regulations to have more flexibility, and lower barriers for multi-family housing and manufactured housing communities.
Modify and liberalize Act 250 regulations so that costly impediments like agricultural land mitigation, historic artifact discovery and historic building rules are non-issues for all housing projects. Sometimes we need to ask not only what the negative consequences to a project are, but what are the consequences of not allowing a project to go forward.
We can also open up office, commercial and industrial space to housing.
Government will continue to play a role in funding for affordable housing projects. Their programs need to fund diverse economic household units and support projects with sustainable financial budgets.
My last thought is to make the Section 8 Housing Vouchers program an entitlement like Medicaid. Section 8 is used to help our poorest households pay for their rent (no more than 30% on their income, the rest is subsidized). It is my understanding that less than 25% of households that qualify for Section 8 receive funding. That is wrong.
The housing picture that has led to today’s “crisis” has evolved over many decades. Fixing it will take courage. It is worth ruffling some feathers to make shelter available to all. If we don’t, our grandchildren will be dealing with this very same problem.