Editor’s Note: The Front Porch received the op-ed below in opposition to the new affordable fund and solicited the piece in favor so readers can consider opposing views side by side.
Denver’s Affordable Housing Fund proposal creates economic prosperity
As Denver considers a permanent revenue proposal we need to remind ourselves of what affordable housing actually means. Affordable housing benefits residents, communities, and the overall economy of our city.
Affordable housing does not mean cheap housing. It is housing that a person could reasonably pay for within their price range (without skipping on medical necessities or forgoing food to make the rent) and feel safe and comfortable in their new home. Right now, approximately 80,000 residents of Denver are paying more than 50 percent of their income on rent and utilities. That means far too many families are making unthinkable trade-offs every day to keep a roof over their heads.
Affordable housing affects people at many income levels, not limited to those who are working for low wages. Many of us have read news articles describing teachers, young people, and seniors who can no longer afford to live in Denver. Households that pay less from their paychecks for housing will spend more on other items like groceries, clothing, and healthcare. They can also afford to save for emergencies or for major purchases like a new home, car, or for education.
The mayor’s proposal will ease this burden for approximately 6,000 families across Denver and those families will finally be able to think beyond day to day survival and start planning for their economic future.
Affordable housing benefits communities. Studies have shown that affordable housing has either no effect on property values, or it can raise property values in some circumstances. When affordable housing replaces abandoned or distressed properties there will usually be a positive effect on the community.
Construction of affordable housing as well as rehabilitating existing stock creates economic opportunity. Affordable housing production creates jobs. When new structures are produced that means a higher demand for building materials, construction labor, and architects to name a few. It also means that local governments reap their own economic benefits from new construction, like revenue from building permits.
Beyond property values, the Mayor’s proposal asks that all members of Denver’s communities pitch in to solve a community-wide problem. We are being asked by our Mayor to come together to stop this crisis from becoming an epidemic. We all have a stake in solving this crisis and we, as residents, property owners, and business owners of Denver are willing to come together, roll up sleeves, and tackle this problem together.
Terrell Curtis Resident, NE Park Hill
Executive Director, The Delores Project
Denver’s proposal to keep wages low
Denver’s Mayor Michael Hancock wants to spend $150 million to fund 6000 affordable housing units. That’s $25,000 per unit to help people that can’t afford housing in Denver. But who really benefits?
Just about everybody assumes an affordable housing crisis in Denver. There are two reasons: First, some people can’t afford housing. Second, employers can’t find workers because housing in Denver is too expensive.
What makes housing affordable? The ability to pay, which is largely dependent on income. If I have no income, housing costs as low as $10 per month is not affordable.
Government subsidies for affordable housing help keep wages low. If businesses do not pay enough to afford housing near work, employees have to find work where they can afford to live. When employees leave to take jobs elsewhere, businesses have two options: automate, or raise wages to attract workers. Now Hancock is offering a third option: use taxpayer money to pay for low wage housing. If automation is not possible or practical, Hancock’s scheme allows employers to pay lower wages.
Of course, the “increased minimum wage crowd” believes they have the answer to that: make the businesses pay higher wages! Is there a limit to what we can make businesses pay?
How else does subsidized housing hurt? People in subsidized housing often receive other subsidies – Medicaid, SNAP (food stamps), earned income tax credits (federal and state), heating assistance, and the list goes on and on. If a person receiving those subsidies were to make more money, some of the subsidies go away. A person can become trapped, either working the same low-income job for fear of losing subsidies, or unable to move for fear of losing the “affordable housing.”
Owners of affordable housing units don’t participate in market increases. If they wish to sell their homes, the government establishes a maximum resale price. My research shows that in one area of Denver, homes that do not have government maximums on sale prices sold for about 40% more than government-priced affordable homes. That might keep housing affordable for the next buyer, but what was the benefit for the seller?
This ill-conceived scheme allows low wage employers to continue paying low wages, and will hurt those that it is intended to help.
Brian Vande Krol is a director of the Colorado Republican Business Coalition, which advocates for small business, but not for subsidies. He ran for State representative in 2010 and 2012, and is a residential real estate appraiser.