Thread by @amoralorealis

In honour of yet again being called Far Right for criticizing Inclusionary Zoning, let's talk about why IZ is not my favourite way to fund "affordable" housing.

Inclusionary Zoning is popular because people think that it's a way to "force developers" to pay for affordable units.

This is, however, a misconception. Developers will only build when there is a profit margin - the greater the risk, the higher the profits must be - because that's how borrowing money works. They will not get financing unless there is a return on investment.

So let's say that developers (or more accurately, lenders) demand a 15% profit after 3 years of developing some rental homes (5% every year). To get that profit, after all hard and soft costs, they need to charge, say, $2000 per unit.

But the city has added a 20% IZ below-market unit requirement - these have no profit, and must be cross-subsidized by the other units. Now the developer must be able to charge $2400 per unit to *still make that profit margin lenders are demanding* - else there's no funding.

So what does the developer do? Easy if/then:
1) IF the market price is greater than $2400 per rental unit, then build
2) IF the market price is less than $2400 per rental unit, do not build

What Inclusionary Zoning does, is raise the floor price at which developers will build.

Because remember, as much as we all loathe is, capitalism is how things currently work, and yes, lenders expect a return when they lend money. There must be profit, else financing won't happen. It'll just go to other industries instead.

Inclusionary Zoning effectively puts a tax on rentals and other multifamily housing - and it’s popular because some wealthier people hate MF housing (“traffic! parking! views! property values! developer profit!”) But it doesn’t hurt developers at all.

Who it does hurt are the people that live in multifamily housing. Who tend not to be very wealthy.

IZ hurts average income people and below, by making the kinds of homes we can afford, less likely to be built, and stifling supply.

In the meantime, IZ absolves those living in the most luxury, expensive single detached houses from helping to pay for affordable housing by making it solely dependent on multifamily housing projects.

There are many, many ways to get affordable housing - my preferred term is nonmarket housing - that isn’t regressive like this.

Public housing.
Social housing.
Supportive housing.
Co-ops.

I’ve gone out of my way to support many of the above.

That all said, I’ve even supported some IZ programs, because something is better than nothing. MIRHPP - the moderate income rental housing pilot - was that. vancouver.ca/files/cov/mirh…

My experience with it was frustrating, to say the least. MIRHPP offered substantial density bonuses (like, double what’s currently allowed) in exchange for 20% pretty significantly below-market units.

There was very little uptake, only a scant few developments.

And that’s because in the vast majority of locations, the IF/THEN above didn’t work. It “didn’t pencil.”

As a result, the MIRHPP program largely failed. VERY few below-market units built. And this is why I think IZ is neoliberal - it’s completely dependent on private development

Because again, private developers MUST make profit, else they simply won’t be able to secure funding. You cannot force people to build even if they’ll lose money.

Why would we choose to chase IZ policies more when there are better ways, that could actually achieve the kind of scale that we need for below-market housing? This, for instance. theprovince.com/opinion/alex-h…

Or how about a ton more #LandBack so we can rent from xʷməθkʷəy̓əm, Sḵwx̱wú7mesh, and səlilwətaɬ people instead, and the profits from our rent can go toward helping to house and fund their communities? vancouver.ca/home-property-…

but yes I'm not all-in for Inclusionary Zoning, must mean I'm a Far Right fascist lmao

This. Vancouver’s property tax rate is the lowest in NA. We could quite simply just raise that to Burnaby levels and have literal billions to spend on nonmarket housing.

https://twitter.com/Inertnet/status/1607879867521024003

it always boggles my mind when tens of thousands of people read my nerdy af housing takes that I expected half a dozen people to care about

ty for reading and caring, everyone 🥰