Asheville for All

This member commentary post does not necessarily reflect the views of Asheville For All or its members.

In a recent post, I pushed back on the idea that developers should be tasked with—and we might even say taxed with—the obligation to set aside brand new homes in multifamily projects as below-market-rate. (In Asheville, city leaders are calling this a “community benefits” program.)

Following others, I even suggested that such an idea might be “neoliberal” (not a good thing!). But most importantly, I indicated that a growing body of research shows that mandating below-market-homes without subsidizing them is, more often than not, a recipe for exacerbating, not solving, housing scarcity. And as California YIMBY points out, what you end up with is effectively a tax on middle-class renters. The whole thing lets wealthier homeowners (especially those that can afford single-family homes) off of the hook entirely.

But this doesn’t mean that housing affordability isn’t important. We can, of course, make housing more affordable by increasing the number of infill homes in our high-demand neighborhoods, and by allowing for more diversity of housing type. But in a dire housing crisis, it makes sense to desire some newly built construction to be set aside as below-market rate too.1

The problem is that homebuilding is expensive. So the question is: how do we pay for it?

When Pushing for Below-Market-Rate Housing Makes Sense

Shane Phillips, the prolific housing researcher at UCLA who we like to quote quite a bit over here, says the key to making these “community benefits” schemes—they are sometimes called “inclusionary zoning” or “value capture”—work without stifling production is to make such programs voluntary.2

This idea of a “voluntary” affordable housing program requires some explanation, and as is the case with a lot of the discussion around affordability programs, lines that appear clearly drawn at first glance can end up being a little bit fuzzy.

First it’s important to note that if a program is voluntary, then by definition that means that if someone wants to build homes in a certain place, they should be able to do so whether or not they include below-market rent homes. This also means that in order for a voluntary “community benefits” program to be viable—that is, for there to be anyone to want to volunteer—there must be some kind of reward for opting in.

We don’t know the details of the “community benefits” scheme being discussed by Asheville’s leaders, but we do know that the reward is intended to be “by right” permitting, or in other words, the developer doesn’t have to get approval from city council just to build some homes. But that doesn’t really count as a reward, as it violates the rule above. The assumption is that in a really actually voluntary approach, by-right permitting should not be dependent on opting in.