Monday, June 17, 2019

Joshua Einstein: Government housing policies creating a tale of two cities

The May 23rd editorial by the Star Ledger Editorial Board entitled “Jersey City mayor would build more housing for gentrifiers, call it ‘affordable’” is right in its critique of the housing problem facing Jersey City (and many Democratic controlled cities across the county) but misidentifies the problem. First and foremost, the issue is not the assignment or dolling out of limited housing stock to ill-defined groups (ie gentrifiers or non-gentrifiers) with inherently subjective definitions (what is affordable to one, is not to another), but that there is a nationwide shortage of housing stock in the medium to large American cities under Democrat rule. 
In cities from San Francisco to New York, South Bend to Jersey City, and more, limousine liberals have pursued the height of hypocrisy - a dual policy of presumed property value protection and neighborhood development that props up existing upper-class owners and the 1% big developers. They have done so by creating a bifurcated two-tier system in which the bottom level is that of a "just say no" policy to the small scale development of carriage buildings (backyard or “granny” apartments), limiting additional new floors to existing housing, preventing the conversion of single-family housing to apartment buildings (unless it’s a tony condo conversion) and adding costs to new construction that make medium scale housing for the non-luxury building market unaffordable. The second and top tier is that of the rarified large-scale developer who can trade favors for exemptions from the existing rules. (To see this sad truth one need only look at the Hoboken Hilton project in which the city shamelessly negotiated in public over what “donations” to select non-profits the developers would give to get their variances). In Jersey City, the small to medium developers have not received the same treatment the large scale luxury 1% developers has, nor the Payment in Lieu of Taxes (PILOT) agreement (that has further brought chaos to the city's education funding) for building in areas that were already developing and becoming "desirable".
This inequity artificially adds to and acts as an accelerant to the wildfire that many identify as gentrification. Yet it remains a reality of life that entropy, the status quo, never holds, and applied to housing - that neighborhoods always change. This principle applies when a neighborhood is becoming wealthier or poorer. It applies to neighborhoods in which the economics have remained constant but the community has changed ethnically. To acknowledge change in neighborhoods is not to advocate for it, but to recognize that it is a constant. Yet, everyone wants a system that is more equitable than the current en vogue one ruining American cities and communities. No one should want to boot out working-class Americans.
Indeed, the Star Ledger editorial board is right to attempt to suss out a more equitable idea in response to the repeated bad ideas of the Democrats who rule Jersey City and Hudson County. This desire should be applied not only to Jersey City but also to the urban areas around the country suffering from a housing shortage, almost all Democrat run. But the editorial board is wrong to posit that more of the same top-down government directives provide a substantive solution. Whether the proposal by Jersey City Mayor Fulop to define 50% of new development set-aside apartments as “affordable housing” for a family of four making $100,000 or the editorial boards critique that this is a set-aside for the wealthy, one need look at the reality of government intrusion in the market - every single non-set-aside apartment in a new development required to have set-asides will be more expensive. This will push up the price of and put beyond reach for even more people, the non-set-aside apartments. 
In and of itself, ending set-asides, which help those lucky enough to line up for them first, but leaves every other working-class citizen in a crunch, does little to solve the problem of the housing shortage. Indeed set-asides actually create two problems. First, it creates a client-patronage relationship with the politician that gets credit for their creation.  It is almost guaranteed that those living in set-asides will form a special interest voting block to hold local government hostage and support only those politicians who bend to their will. Second, and even more morally important, is that developments with set-aside units are used as an excuse to justify the uneven playing field that created the same housing stock shortage they are used as a Band-Aid for. Politicians point to the small number of lower-income apartments in rich neighborhoods they claim to have created as a distraction from the fact that their “just say no” policy to small and smart growth through regressive zoning rules and double standard for the small homeowner have created the housing shortage, have limited the options, and raised the cost of living of the working class.
Only when zoning is reformed to allow the mom and pop small property owner to convert their house into rental units rather than incentivizing condo conversion, build a new floor without the added cost of municipal micro-management, lower their tax burden and kill regulations that preclude them from building new apartments on their property, can a greater supply of housing stock accessible to working class Americans be realized. If the small homeowner or small developer were given the same latitude, freedom, and lower taxes as the 1% big developer receiving a PILOT agreement there would be more housing stock across the board within reach of working-class Americans.
There is no situation in which 100% of the people will be satisfied. There is not even one in which everyone will have their basic need for a more affordable situation met. Yet the question remains how to best address the needs of the greatest number of people, both in Jersey City and in cities across the country. Both the editorial board's critique of Mayor Fulop’s proposal and the proposal itself show that top-down command economics decrees are selective, limited in whom they assist, and ultimately harmful to the majority of the working class. The board disagrees with the favoritism being shown towards an economic slice it believes is just a subset of gentrifiers. Economic history shows that both Mayor Fulop and the board are methodologically wrong both in that they misidentify the problem and that their proposed solutions will actually accelerate it. The way to create greater housing options for working-class Americans is to liberalize the top down regulations of the housing market and end the regime of special deals for large 1% developers. Only then will Jersey City, Hoboken, and other small to large urban areas have greater housing options for all Americans.

This guest piece comes courtesy of Hoboken resident Joshua Einstein.
Guest pieces of 1,000 words or less may be submitted for publication to Please include a phone number for verification purposes.