LNP article “Housing Shortage threatens economy” misses an important point. PART ONE

By Robert Field, NewsLanc publisher and builder/ developer

We regret that we are unable to link to “ Housing: Shortage threatens economy” because it is not posted at www.lancasteronline.com or accessible by LNP’s search engine. Please bear with us as we supply excerpts and then comment below. [Subsequently a reader supplied the link and explained that LNP is not consistent in its search engine posting with its printed headlines.]

“Lancaster County faces a lack of affordable apartments, condos and townhouses”

“Late last year work began on the the 60-unit Brunswick Farms Apartment complex, on South Donnnerville just south of Columbia Avenue. Built by the nonprofit Community Basics Inc., the project includes six units for people experiencing homelessness, eight for people with mobility issues, and 46 for families earning between $13,000 and $40,000 annually.”

“Single family homes still account for up to 80 percent of the housing being built in Lancaster County.”

“ ‘This is a critical issue,’ said James Cowhey, executive director of the Lancaster County Planning Commission. ‘If we can’t meet a more balanced demand for a variety of housing types, we may eventually price the workforce out of the market.’”

What is not mentioned here is that much of the cost of this low cost (“affordable”) housing is borne by taxpayers, through an intricate process of tax credits purchased by persons in the top income bracket. For every one dollar of capital investment in the project, the federal government is out about $0.50 in income tax revenue.

The solution to lack of transportation for people of modest incomes would not be to give each one a new car. But that is what Brunswick Farms is about.

“So more lower-cost housing should be built, and it needs to be close to where jobs are, Cowhey said.”

The thrust of any housing shortage has to do with ‘affordability’ and ‘housing trends.’”

1) The idea that we can afford to provide new housing for the disadvantaged is as economically preposterous as giving new cars to the poor.

2) Housing patterns have altered considerably over the past two decades. It started with the introduction of specialized developments for senior housing and assisted living. People who earlier bought suburban homes in order to raise their children had become ‘empty nesters’ and sought smaller houses, rental apartments or condominiums designed primarily for those 50 years and older.

3) There is a national trend for affluent empty nesters and young professionals to move downtown to enjoy burgeoning city living.

4) In the 1970’s 1980’s and, to a lesser extent, the 1990’s, large apartment complexes were developed in the suburbs to accommodate a wide spectrum of the housing market. Today, those complexes face stiff competition from specialized forms of housing and the trend back to downtown.

Much of the solution to the current housing problem is to provide new housing for those who can afford to pay for it. Under the benighted Mayor Rick Gray and planner Randy Patterson, the City of Lancaster has turned its back on opportunities to facilitate market rate condominium developments on the former Watt and Shand site (now occupied by the Marriott Hotel and Convention Center) and Lancaster Square East (still occupied by the long neglected former Brunswick Hotel now the Lancaster Hotel, the derelict Brunswick Annex, and the long vacant and virtually worthless Bulova Building.)

In New Jersey, the state operated Federal block grant ‘Section Eight’ program provides about 85% of the cost of renting well operated suburban apartments and the resident is permitted to pay the difference. Landlords don’t profiteer from the program, but they do benefit from higher occupancy. (Our experience in the Greater Atlantic Area has shown that the quality of residents and reliability of rental payment does not differ for our small minority of Section 8 residents than from market rate renters.)

Unfortunately in Pennsylvania as well as West Virginia, state run Section 8 programs do not allow residents to pay the difference between the Section 8 payments and the market rental rate. Hence, there is a pool of hundreds of vacant apartments in the Lancaster region alone that otherwise could be occupied if the landlords didn’t have to provide about a 20% discount.

If more condominiums and rental housing were provided in Center City, existing units elsewhere would be freed up. This would tend to bring down their costs.

Resulting vacancies for suburban apartment complexes would slow rental increases. Under a reform of Section 8 to allow tenants to subsidize Section 8 payments, far more people would be served per tax payer dollar than through newly constructed subsidized housing.

Through good urban planning and enlightened reform of zoning and subdivision regulations, we could encourage development of more market rate housing for those who can afford it. In turn, the ‘trickle down’ effect would make older housing available at more modest costs for those of limited means.

Moreover, instead of wasting money building extravagantly expensive housing for the poor, units that would bring over a thousand a month if offered to the general public, we could also use some of the money to subsidize the purchasing and upgrading of housing in run down, inner city neighborhoods.

Had residential development taken place on the Watt & Shand site across from the LNP plant, downtown gentrification would have naturally moved to the south as well as to the north, west and east. Instead, the zero block of Queen South without shops and pedestrian traffic has become a virtual ‘Chinese Wall’. Hopefully someday the vacant former LNP printing building will be torn down and replaced with upscale residential condos.

If and when this is accomplished, instead of offering millions of dollars to developers to redevelop the 100 block of South Queen Street, builders will be eager to build market rate condos or rental units with conventional financing.

Concerning the homeless at the very bottom of the economic ladder, governmental eyes should turn to acquiring or renting older suburban motels that no longer can compete for business but would provide excellent short and mid-term housing. This would require a cross municipality effort, since the motels usually are located in the suburbs.

Wouldn’t it be wonderful if once again housing development could take place based on free market forces, investor equity funding, and conventional financing rather than through government largess?