Affordable Housing in Suburbs Is a Money Grubbing Scam

There are few if any slurs that offend the conscience of Americans and carry more weight than the term “racist.” For this reason, most Americans go out of their way to live their lives in a way that is fair to everyone, regardless of race. Also for this reason, in order to get support for their agenda or project, people will often claim that it targets racism.

So it goes that in 2015, the Obama Administration came up with the “Affirmatively Furthering Fair Housing” (AFFH) regulation that “established a 92-question survey and grading tool requiring local jurisdictions to assess their own racial and economic disparities and present detailed plans on how to address them.”

Because this regulation was designed to combat racism in housing, like everything that drops the magic word, it didn’t get the scrutiny it deserved. The other reason it never became an issue was that after Donald Trump’s surprise victory a year later, he quietly gutted many of its provisions. Then, on July 23, President Trump repealed the regulation altogether.

If it wasn’t an issue in 2015 or 2016, it’s shaping up to be a big campaign issue in 2020. And true to form, candidate Joe Biden and a chorus of media pundits are accusing President Trump of catering to “racist” voters in American suburbs.

The problem with this analysis, however, is that voters in America’s suburbs are probably the least racist American voters in an America that has never been less racist than it is today. What Biden and the Democrats want to do, and Obama attempted with AFFH, has nothing to do with combating racism. It’s all about money.

Follow the Money

Government-subsidized housing in 21st-century America is one of the most corrupt scams ever perpetrated on the American people. As usual, California is ground zero for this corruption, although states like Oregon and Minnesota are not far behind. What they’re doing offers a cautionary tale to suburban residents everywhere.

The first step is to make it practically impossible for regular land developers and home builders to construct housing that people at or near the median income can afford. Several mutually reinforcing policies accomplish this.

First, create an artificial scarcity of land through “urban containment.” This is justified by claiming suburban expansion causes more vehicle emissions, leading to accelerated climate change. It is also justified by claiming that open space is limited and must be preserved from development. Both of these claims are preposterous lies. People telecommute. Jobs follow housing. Cars are cleaner and greener every year. And the United States is less than 5 percent urbanized.

Nonetheless, urban containment policies have taken hold through local zoning rules and state laws. Environmentalist attorneys and fanatical activists push for them, with help from municipal bureaucrats who don’t want new cities to be built that compete for residents who pay property tax and sales tax. The real estate industry and real estate investors also join the urban containment lobby, knowing that a shortage of land available for building will cause home prices to rise.

Next, impose a crippling array of building fees and permit delays. In California, it is common for these permit fees to add up to over $100,000 per home. Many of these fees are to pay for infrastructure that used to come out of municipal operating budgets, but that was before California’s state and local government agencies became unionized. The reality these days is that union-negotiated work rules, pay, and pension benefits have busted civic budgets—meaning that funds that once paid for infrastructure are now used to pay government workers.

Related to these fees are building codes and infrastructure standards that are impossibly complex and expensive. For example, every new home in California has to be “energy neutral,” adding tens of thousands of dollars to the cost of the home. And wherever there are excessive regulations, there is all the more pretext for litigation. It is impossible to develop land in California before fighting off multiple lawsuits, costing countless millions and taking years. Far too many badly needed home construction projects die in court.

Out Flee Honest Builders, In Ride the Crony Developers

When it takes years if not decades to build a housing subdivision, and the costs and financial risks become so great that even at grossly inflated prices it is tough to make an honest profit, the good guys go away. Replacing them are the cronies. These are the politically connected developers, often hiding behind nonprofit corporations, who couldn’t care less how expensive a construction project gets, because they know they’ll get government subsidies.

This is the corrupt context underlying nearly all “affordable housing” developments, along with the new homeless shelters. Examples abound. Across the state of California, a boondoggle archipelago of affordable housing projects have been constructed, with the average cost of one small apartment unit exceeding $500,000. That bears repeating, because it isn’t a typo, and it’s well documented: Affordable housing in California costs on average $500,000, or more, per unit.

And why not? These nonprofit developers happily pay high-priced consultants and experts to fill out applications, draw up overdone plans for elaborate structures, pay exorbitant permit fees, and tolerate inefficient construction using overpriced labor, because they’re getting all of it back. They are collecting subsidies and their investors are getting tax incentives. And year after year, the politicians they help put in office go to the voters with more bonds, to spend more billions.

All of this folly stems from a systemic problem, but it’s not racism. The problem is that these politicians have made it impossible to build affordable housing without subsidies. But the cost to taxpayers is so great, at $500,000 per unit, that the supply of affordable units can never hope to meet demand. And, of course, the people occupying these units will themselves have to collect permanent rent subsidies.

Destroying Suburbs Isn’t to Combat Racism, It’s to Get Rich

These are the dirty secrets behind the push to “end systemic racism” by forcing cities to build “affordable housing.” This reality is obscured by hailstorms of rhetoric that accuse anyone who objects to affordable housing of being racist. 

But beyond the fact that affordable housing projects in 21st-century America are a government-funded solution to a government-created problem, the entire argument that affordable housing is necessary to “combat racism” is fatally flawed.

The argument goes something like this: People with low incomes are more likely to need affordable housing. On average, non-whites have lower incomes than whites. Therefore low-income housing will serve a disproportionate share of non-whites, and if you object to this, you are a racist.

Exposing the flaws in this reasoning is not pleasant, but nevertheless it must be done. In 21st-century America, it is not racism that explains why some nonwhites have lower average incomes. If that were true, why is it that virtually all non-whites of Asian descent, along with Indians, Nigerians, and dozens of other non-white groups, have higher average incomes than whites? If racism is a barrier to achievement, why are these groups thriving?

One reason some nonwhites, blacks in particular, have lower average incomes than whites in America is that decades of programs designed to help them have actually harmed their communities. Two glaring and obvious examples are welfare, which created an incentive for a father to leave his family, and failed public education, which more than anything else can be blamed on the teachers unions. Why aren’t black leaders demanding welfare reform, school choice, and more law and order? The sad fact is that many of them are, but they get almost no media coverage.

What Joe Biden and the Democrats want to do by mandating affordable housing projects in America’s suburbs is to create an entirely new avenue for taxpayers to pay hundreds of billions to benefit the bureaucrats and fake capitalists who will collect all that money. They hope to take advantage of naïve voters supporting these projects by claiming to combat racism that does not exist.

People in low-income neighborhoods aspire to upward mobility. Some of them eventually can afford to move into higher-income neighborhoods. Race has nothing to do with it. Transferring people into neighborhoods where they cannot afford to live destroys the incentive for anyone to want to live in a better place. 

Even if a lucky few are helped by getting one of the limited supply of affordable housing units, it would not address the true systemic problem—inner cities beset with a culture of welfare dependency, failed public schools, and rejection of law enforcement.

Democrats are not the solution. They are the problem. Their government programs, launched with high-minded rhetoric, destroyed opportunities for residents of America’s inner cities. Their excessive regulation of home construction and land development—also imposed alongside high minded rhetoric—made homes unaffordable for everyone.

Now Joe Biden and his Democrats want to fix these problems by creating a new problem. It is epic folly and should be resisted at every turn.

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About Edward Ring

Edward Ring is a senior fellow of the Center for American Greatness. He is also the director of water and energy policy for the California Policy Center, which he co-founded in 2013 and served as its first president. Ring is the author of Fixing California: Abundance, Pragmatism, Optimism (2021) and The Abundance Choice: Our Fight for More Water in California (2022).

Photo: Andrew Lichtenstein/Corbis via Getty Images

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