Developers Maximize Profits At Community’s Expense

Let’s say it right up front. Most developers aren’t interested in affordable housing. They are interested in profitable housing. Maximum profits.

They want less government regulation so they can maximize the money they make on each unit. They blame growth management for the increase in the cost of land and places to live.

Some might even want you to believe they are in business just to provide a roof over the head of all the good citizens who are at the mercy of an oppressive government.

The state of Washington has almost doubled in population since 1960. Before we repeal the law of supply and demand, let’s be aware that the side effect of such growth is higher housing costs.

Two of the most exhaustive independent land use studies - by John Landis of the University of California at Berkeley and Harvey Moltooch of the University of California at Santa Barbara - have found no statistical basis for the assertion that government regulation and Washington state’s Growth Management Act have increased housing prices and reduced economic growth. We have to stop debating the affordable housing issue from the position of the developers’ interests.

The cost of money is the foremost consideration in how difficult it is to provide housing. That’s what refinancing is all about, isn’t it?

In 1990, interest rates were around 9.7 percent and we are at about 7 percent or less now. That change alone has reduced the average payment on a mortgage by almost a third. Federal monetary policy is the biggest bully or benefactor for the buyer.

I’m waiting for developers to be so concerned about the real drop in personal income that they increase the wages they pay their workers. Surely, affordable housing is largely determined by income level in the community.

Don’t we all know by now that if you eliminate the jobs in state government and a few key businesses in Spokane, everyone else is working for the average of about $8 an hour or less. That’s hardly enough to buy a condo at Riverpoint.

Are the developers concerned about personal spending habits? I don’t think so, yet 17 percent of the disposable income in America is being spent to make payments on installment credit debt. Credit card delinquencies are at a 15-year high and personal bankruptcies are at the highest levels in history. Why do I suspect that even a few developers might be living beyond their means?

A trophy house mentality has been encouraged by the home builders who trumpet big square footage numbers and houses with complicated roof lines that look like triple garages with annexes. All the decorator touches, expensive fixtures and large lots increase the possible profit margins so they do all they can to encourage those choices.

Why don’t these contractors build small apartment buildings that fit into existing single-family neighborhoods instead of huge complexes that have a short shelf life and will be even more slumlike in the future? Profits seem to overwhelm community responsibility, community pride and corporate ethics.

What about the people who come here and increase the population and the demand for housing? The rate of population increase is a huge factor in the increased cost of housing. And we didn’t get our dramatic population growth through natural means.

These immigrants didn’t bring their roads, bridges, schools, police or fire protection, sewers and other community services with them, either. The people who live here have to subsidize that population increase.

Numerous studies have shown that the cost of providing the infrastructure for a new single-family home averages about $22,000 and that the developer pays only a fraction of that cost, passing the rest on to the buyer. A real impact fee that would reflect the actual cost of housing and make growth pay for itself would have a dramatic effect on housing costs.

Instead of yielding to short-term special interests, we must discourage the bigger-is-better mentality and turn our attention to responsible development practices that promote redevelopment of existing urban land.

Reasonable scale of living space and high-quality design with environmental safeguards will help to make affordable housing more available. With proper decisions, we can achieve a high quality of life along with plenty of quantity.

xxxx