While various groups in NYC are crying about affordable housing, how the government ought to do something, screaming about the merits of rent control and housing subsidies… did any of them stop to think about what comes next?
Let’s take a brief journey into the world of landlords and see if the following makes sense…
Perhaps you own an apartment building, either you inherited it or purchased it with your own wealth. Either way, you’re excited to provide housing to people that require it and are even more excited about the prospect of acquiring a second building in the future. Your hope is to create a place where families can raise their children for a reasonable price.
However, suppose you currently have twenty low-income tenants in the building, each paying $1000 a month in rent. The area in which your building resides is becoming more desirable to live in, so instead of $1000 a month, you realize that you could charge twice as much and find a tenant. You think that if only you increased rates for a short while you’d be able to finance the purchase of an additional building, and with two buildings in your portfolio, you’d soon be able to reduce the rents altogether because what you’re really after is friendly tenants that pay on time, not high maintenance tenants that can pay the most.
Unfortunately, you consult your attorneys and realize that due to affordable housing regulations, the most you are allowed to charge is $1000 a month. You then discover the city is hard up for cash so they raise property taxes. They also have the Buildings Department issue new and costly regulations in the name of safety and standards that you must comply with or pay fines.
Because the building is old, you are required to make necessary improvements, and in order to be compliant with the law you must work with certain city-approved contractors that employ only Union labor and charge a premium for it.
Soon, you realize that the cost of maintaining your current building will make it impossible to purchase a second one. Even worse, you are acquiring debt for having the first. You decide you want to sell your building and escape the nightmare, but no investor is interested in buying such liability with little hope for profit.
You didn’t want to, but with the building in increasing disrepair, you realize its only a matter of time before something bad happens and you get sued. You declare bankruptcy and abandon the building to the state, or bank if you had a mortgage on it.
YOU are now out of the picture, but what comes next?
If the city does not want the responsibility as the buildings fall apart, is it then condemned? Are the tenants forced to move? Let’s say it’s not condemned, but the tenants see the writing on the wall and start to move elsewhere. If the city owns the building, then what? Perhaps they decide it’s cheaper to make repairs on your former building then build some new public housing establishment.
As the city moves tenants into the building that do not earn an income but instead live off tax revenue (as redistributed to them by the city), the last of the income earning tenants move out so as to avoid interaction with their new neighbors.
The building now becomes a tax payer liability, and all the expenses that you (as the former landlord) struggled to pay on your own do not cease to exist but become the burden of many; in essence, anyone paying taxes becomes a new stake holder in this affordable housing venture — the primary difference being that while you the landlord were allowed to escape, no tax paying individual has that option.
If this trend were to continue with other landlords in the area, how soon would it be before the community at large became less desirable? And, with less new private money in the community, how soon would it be before local businesses started closing? After all, people that are on public assistance have limitations on what they can buy — food stamps and electronic benefits cards are not good for ‘fine dining.’
All things considered, how long would it be before the government realized they couldn’t pick up the tab on abandoned property.
And, with abandoned property breeding crime, how soon might it be before an altruist’s vision of affordable housing becomes the reality of a gang infested slum?
Returning to the original question: “Does Affordable Housing Create Dangerous Slums?” … perhaps the more apropos question is “If Abandoned Property DOES Create Dangerous Slums, Can ‘Affordable Housing’ Regulation be held responsible?”
For Disturbing Reading on the Question: