Developers here in Seattle argue that the new high priced housing being built here will enlarge the market and drive down prices for more affordable housing. That trickle down effect is obviously not happening. An OpEd editorial in the SF Examiner may explain why this happens even when SF puts an impact fee on the new housing to offset the displacement of existing low income units. . The authors argue that impact fees do not offset the costs that housing creates by attracting new low wage workers to the city.
>>> New lux housing creates jobs for low income residents. This attracts new low income people and thus creates a demand for more affordable housing beyond the units that are displaced by the new housing. This new demand increases the costs at the low end of the housing market. <<<
The formula SF uses to estimate the offset fee is based on a planning tool called a nexus. The formula states that a certain percentage of affordable housing needs to be built to offset the impact of new luxury housing. The number seemed rather high .. around 30%.
The OpEd argues that the 30% is too low because the jobs created by having more well off people create a demand for more affordable housing than the 30% value.
So .. in algebra terms:N units of new lux housing creates N*f jobs for people to serve the wealthy folks. These jobs attract new people to the city. Lets say that “f” is 20% .. then SF gains 20 new workers nedng housing for every 100 foks who can afford the lux housing.
The N units also displace existing housing, creating a need for housing for N*g people. The “g” here is the 30% above.
So … if Vulcan builds lux housing for 100 people, the ordinance in SF says Vulcan or the city needs to create affordable housing for 30 people, But If the 50 affordable units are not built, the market will drive up the cost of affordable housing?
My Birthday January 1, 1942
This is similar to a thought I have had. When you add jobs at Amazon, those jbs require husing but thyey aso create secondary jobs. That is a great thing but the imact needs ot consider the effect of the seconday jobs on the low ncome housing supply. Another way to see this is to ask what would hapen if Vulcan took some vacant land and built s small city on the Peninsula (complete with a high speed rail Maglev from Vulcania to Seattle). Lets say that Vulcaia houses 100,000 wealthy folks, Ther eis n dispalcement at all BUT the Vulcanians will attract workers. They can not afford to use the Maglev and need housing near to Vulcania. If the worker wages are low, they will not be able to afford marekt rate housing!
Make sense?