The Answer to Affordability

The Answer to Affordability

Mr.-Nalaty-243x300

While many sub-markets in Orange County have yet to reach the previous high water mark for rents set prior to the great recession, owners and operators alike are pleased with the rebound as it suggests that with continued job growth and growing retail sales figures, a general sense of well-being is back in the marketplace.

Time and time again, people suggest that rent control is the solution for affordability. And as we have seen in neighboring Los Angeles County, rent control encourages blight, dis-incentivizes reinvestment and discourages development activity that ultimately limits the availability of new product (further limiting inventory) and creates obstacles for future generations. Alternatively, an affordable housing developer can construct a beautiful new Class A property with social and site amenities that will not only add value to a neighborhood but to the lives of its residents.

With rental limits set by Metropolitan Statistic Area or MSA and individual project specific income limits and restrictions, affordable housing is a City’s best friend when it comes to promoting and providing a clean, safe and affordable place for residents to live. To make it work, real estate developers generally receive a density bonus and or discounted fees for building an affordable project. That is, they are able to build more units or a larger project to help take care of the downside (the shortfall incurred by below market rents). Consider it an incentive for building housing with rents far below the going market rates.

What we need now are more business minded public agencies to solicit affordable housing developers to create equitable solutions for residents, owners and operators alike. After all, this marriage is not just good for our communities, but for the economy as well.

Advertisements