UPDATE #1: 2010
To keep our friends current on the Center’s activities since our last update (in our December 2009 letter), we summarize a few new developments below. The headlines are:
Ø Six summer law clerks are set to work on major report on legislative remedies for regulatory barriers to affordable housing (RBAHs)
Ø Center analyzes recent data regarding effects of RBAHs on housing prices and finds more widespread problems across United States
Ø Center investigates effects of Base Realignment and Closure (BRAC) process on affordable housing in Washington, DC, suburb
Ø Advisory Committee meets with Board, provides guidance, and welcomes outside experts
Ø Center receives generous response to 2009 year-end appeal
Six summer law clerks are set to work on major report onlegislative remedies for RBAHs
The Center has six law clerks committed to work this summer, either full-time or part-time. All are completing their first year at Washington, DC, area law schools. Three attend George Washington University Law School, two attend George Mason University School of Law, and one attends Georgetown University Law School.
The law clerks will document the existing statutes in several states that address regulatory barriers to affordable housing. The law clerks will focus on the successes and failures under each statute and on ideas for improvement, based on judicial decisions, law review articles and other studies of the effects of those statutes.
The report will be comprehensive and scholarly, and it will break new ground, as there is no such analysis published as yet. As we discussed in our last Update (September 2009, available at http://cswac.org/index.php?option=com_content&view=category&id=38&Itemid=65), legislation appears crucial to the widespread elimination of RBAHs in the foreseeable future.
Center analyzes recent data regarding effects of RBAHs on housing prices and finds more widespread problems across United States
Law clerk Ginger Collier (Georgetown University Law Center, Class of 2012), a professional economist, performed an analysis for the Center this semester of several important, recent economic studies of the effects of RBAHs on low- and moderate-income housing in the United States. She found that RBAHs are a measurable problem in numerous major metropolitan areas across the nation, in addition to those specifically discussed in those studies.
The studies’ authors are Profs. Edward L. Glaeser of Harvard University, Joseph Gyourko of the University of Pennsylvania, and their associates. E.g., Edward L. Glaeser, et al., The Impact of Building Restrictions on Housing Affordability, Economic Policy Review, Federal Reserve Bank of New York, June 2003, at 28, available at: http://www.newyorkfed.org/research/epr/03v09n2/0306glae.pdf. The studies are a big step forward in the analysis of RBAHs’ effects on housing prices.
Those rigorous studies conclude that RBAHs substantially increase housing prices in areas where prices exceed construction costs by at least 40 percent. The studies focus on metros where housing prices diverge the most from the basic, underlying costs, which are construction costs and “hedonic” land prices (the prices people are willing to pay for a larger lot for their house).
The studies indicate that housing prices have diverged strongly from physical production costs since the 1970’s in the biggest California metros: Los Angeles, San Diego, and San Francisco. During the 1980’s, that phenomenon spread to the Northeast Corridor and West Coast metros generally, as well as interior markets in California. The same phenomenon spread to certain other non-coastal markets in the 1990’s: Ann Arbor, MI, Austin-San Marcos, TX, Denver, CO, Nashville, TN, and Raleigh-Durham-Chapel Hill, NC.
Based on the authors’ “40 percent” formula, Ms. Collier found that the underlying data in those studies indicate that RBAHs substantially increase housing prices in numerous other major metropolitan areas too. By the year 2000, the problem areas included places such as Albuquerque, NM, Atlanta, GA, Charlotte, NC, Cleveland, OH, Fort Lauderdale-Miami, FL, Norfolk, VA, Phoenix, AZ, and Salt Lake City, UT.
Even the recent national financial crisis and recession have not reduced the difference between housing prices and construction costs that much. Prices have fallen to 1990's levels in some markets. However, the data described above shows that RBAHs were having severe, widespread effects during the 1990’s. And the American housing market now is largely stabilizing, with prices poised to start edging up again. It is not too early to take effective action against RBAHs, before the next big run-up in housing prices occurs.
Center investigates effects of Base Realignment and Closure (BRAC) process on affordable housing in Washington, DC, suburb
The 2005 round of military base closures and realignments is resulting in more than 20,000 new jobs coming soon to Ft. Belvoir in southeastern Fairfax County, VA. The Center is investigating whether the federal and Fairfax County governments are giving sufficient attention to affordable housing needs in that area.
Initial indications from the Center’s real estate contacts near Ft. Belvoir are that affordable housing is not getting enough attention in the BRAC process. There already is a serious shortage of affordable housing in the Ft. Belvoir area and generally throughout Fairfax County. The Center’s investigation ultimately may have implications for BRAC processes throughout the United States.
Advisory Committee meets with Board, provides guidance, and welcomes outside experts
The Center’s expert Advisory Committee conducted a teleconference with the Board of Directors on March 24. The Committee welcomed to the meeting several observers who are affordable housing experts not affiliated with the Center, among whom were:
- John K. McIlwain, Terwilliger Chair for Housing at the Urban Land Institute, who is one of the nation’s leading authorities on housing for low- and moderate-income people; and
- Philip Notopolous, Esq., a highly experienced zoning attorney with Holland and Knight, LLC, in Boston, MA, and a director of Charlesbank Homes, a foundation which gives grants to affordable housing developments.
Both the Committee members and outside experts made numerous suggestions regarding the Center’s planned legislative report. Advisory Committee members also made helpful suggestions regarding the Center’s investigative activities, web presence, and a possible alternate name for the Center, reflecting its affordable housing focus.
Center receives generous response to 2009 year-end appeal
The Center has received a healthy response rate of more than 10% to its second annual direct mail effort. So far, the Center has received $2,610 from 23 donors since December. Eight new Founding Sponsors contributed a total of $1000. (The Center now has 41 Founding Sponsors.) Also, 15 donors contributed a total of $1,610 to the newly established Annual Fund.
That generous private funding will help the Center keep operations going through 2010, while it pursues foundation grants in what is still a grant-averse environment. In particular, the Center seeks funding for the substantial expenses it will incur regarding its summer interns. Although all of the interns are volunteers, we estimate that the Center will have to spend at least $1000 on expenses such as volunteer recruitment, travel, and office supplies.
Just make your check out to the Center at the address listed above, or donate online at: http://cswac.org/index.php?option=com_content&view=article&id=58&Itemid=58. J
Thanks so much for your support!