The cognitive dissonance, or perhaps strategic planning to sustain its mission, of the political left truly can amaze at times, as continuing housing provision struggles in New Orleans and conflicting government housing policy demonstrate.
Last month, the Louisiana Housing Corporation took another step in reorienting the state’s housing policy away from the failed housing first model to a treatment first paradigm. The former insists on finding or building permanent spaces for the homeless regardless of whether behavioral problems hold back persons from engaging with the world in a way that permits them to use own resources in housing provision, while the latter emphasizes temporary housing for them while they participate in procedures and programs designed to produce positive behavioral change that facilitate their abilities to obtain housing using own resources.
One vocal critic was the nonprofit organization HousingNOLA, which advocates for greater government involvement in encouraging or building “affordable” housing in New Orleans, i.e. housing designed for residence by lower-income individuals. But only days later the Republican Gov. Jeff Landry Administration’s shift in approach found vindication when a report critical of the city’s housing efforts came out, with almost simultaneously the city changing policy of a few years that tried to strongarm developers into building more low-income units.
That policy, called Mandatory Inclusionary Zoning, dictated that any development, whether rehabilitation or new, greater than ten units in size would need to have five or ten percent of units be affordable (defined as manageable for households at 60 percent of median income) in several neighborhoods where high-density housing was common. Developers could opt out by paying a penalty of nearly $305,000 per forgone unit.
So, guess what? In the six years since, under this punitive program developers built no large complexes, with the only units built being quadplexes or smaller (exempt under another program). A separate federally-funded program did manage to produce a couple of hundred lower-cost units, as well as the city’s previously existing voluntary incentive program contributed a few dozen more. But, as the critical report emphasized, subsidized housing stock fell dramatically over the past year and it credited private developers with pumping out exactly one unit.
MIZ causes this. Developers will build only if a market repays them, and being forced to carry units with sub-market rents, regardless of whether renters are subsidized, can make it infeasible to operate as a whole. Note that it’s not only a matter of raw revenues collected but also that having such units may discourage demand for the others. Proponents arguing for the concept of inclusionary housing, or mixing substantially different income/asset levels of households together, wish away the fact that a large portion of those at lower income levels are there because they don’t have the optimal orientation towards achievement that promotes adoption of certain beneficial values and behaviors thereof that make more achievement-oriented individuals skittish to live adjacent to them. This reluctance serves to drive down rental rates and thus revenues to pay off the project even more. Thus, building to the extent that would increase city housing stock and thereby reduce rates doesn’t happen.
By contrast, the treatment first model relieves affordable housing pressures. Instead of subsidizing individuals, many ill-prepared to do anything but live off the dole if not degrade permanent housing stock they are granted, many can transcend their impoverished conditions while in temporary housing to acquire permanent housing subsequently because they marshal their productive skills to earn their way into it. With the greater demand they trigger, developers will see greater opportunities to build and manage properties, and overall housing stock increases.
As a response to the disappointing MIZ results, the city dropped the penalty 97 percent to $10,000, in the hopes now developers could swallow the penalty more easily and actually produce units, if “unaffordable” ones. HousingNOLA apparently had nothing to say on the matter, but as it enthusiastically backed MIZ as originally conceived, it might not be too happy as likely no affordable units will get built.
Yet the greatest irony of all this is the report moaning about depleting affordable stock – because of MIZ discouraging the building of much of any multi-family units and with the housing first model creating a greater crisis of provision – came from HousingNOLA. In other words, it dinged the city for the results of pursuing policies, until just recently (involuntarily changed in the case of the shift to treatment first), endorsed by the organization itself.
This shouldn’t surprise when dealing with the left so keen on using government and spending other people’s money to address societal problems, based upon a faulty understanding of human nature and the way the world really works. Installing a big government solution almost always doesn’t solve anything if not causes more problems, which then is argued needs an even bigger government solution, and you get the picture.
Beaten over the head by reality, New Orleans policy-makers surrendered a few of their illusions that will require mass abandonment in a great many more policy areas for the city to have its ills cured. The prognosis is somewhat less rosy for housing advocates coming to grips with the failures of mandatory inclusion and housing first, as they are unelected and unaccountable in spending philanthropic money to proselytize nonsense without suffering consequences.
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