08/24/2006: "Guest Editorial"

Governor Holds Key to Affordable Housing
At a recent town hall meeting in Puyallup, Governor Christine Gregoire fielded a question from a young Enumclaw teacher expressing concern with the state's skyrocketing home prices. The teacher told Gregoire that he and his wife could not afford to buy a house and quizzed the governor on what could be done to lower the cost of housing.

In her response, Gregoire said she can't do much about the rising cost of housing, but promised to try passing a budget that would provide more money for teachers next year. We at the Building Industry Association of Washington (BIAW) believe the governor's response is too focused on throwing money at special interest groups and not at solving the problem.

Providing more money for teachers, or any other profession, simply doesn't address the core issue of our state's affordable housing crunch. The problem and the solution are one and the same—government. Government taxes, rules and regulations are a primary cause of the affordable housing crunch. And government (translation: Governor Gregoire) can be the solution.

From high workers' compensation and unemployment insurance taxes, to layers of redundant land use regulations, the laundry list of factors that chip away at affordable housing is extensive. While all of these issues need to be addressed, here are two things Governor Gregoire can do right now that would have an immediate and noticeable impact on the availability of affordable housing.

1. Release Buildable Lands: Let's face it—the state's Growth Management Act has done more to harm affordable housing than any other issue. Since its implementation in 1992, the GMA has, under the banner of "smart-growth," artificially restricted the supply of "buildable land" available for constructing new housing. Compounding the problem, other myriad government regulations enacted since then have further decreased the already limited "buildable land" inventory. This artificially restricted supply of land, combined with the increased demand resulting from more jobs being created, has resulted in a serious shortage of land available for accommodating even moderate growth.

My Econ 101 Professor taught me that anytime you reduce supply, without a corresponding reduction in demand, prices will rise. So it goes in Washington State, a laboratory for environmentally-driven growth management that has artificially reduced the inventory of buildable lands and made new housing all but out of reach for the average person. A study by the Reason Public Policy Institute, a nonpartisan public policy think tank, concluded the GMA increased home prices in Washington State by 26 percent from 1995-2001.

Disregarding the fact that over 92% of the land in Washington is undeveloped, the government has embarked upon a frenzied effort to confiscate land to the detriment of affordable housing. By allowing cities to replace areas put off-limits by new environmental regulations with a like amount of non-sensitive land, builders can attempt to meet the affordable housing needs of our citizens. Governor Gregoire can and should free up land.

2. Eliminate Impact Fees: Impact fees are fees tacked onto the cost of a newly constructed house to pay for the occupants' supposed impact on the area's roads, parks and schools. Depending on the jurisdiction, impact fees can range from a few thousand dollars to over $20,000. Not coincidentally, jurisdictions charging impact fees typically boast the least affordable housing markets.

But because impact fees are charged only on new homes, not on existing homes, they don't ensure those who have a new impact on a community actually pay to mitigate that impact. Here's an example: A family with six school age children could move into Olympia from elsewhere, purchase an existing "family" home and pay no impact fee, even though they will be impacting the city's schools, roads, parks, etc. Meanwhile, an "empty-nester" couple that sells that "family home" in Olympia and purchases a newly constructed "move-down home" up the street, will pay exorbitant impact fees, even though they are having no new impact (in fact—they've already paid for it!). This is hardly a fair and efficient way to pay for growth.

There you have it. Two key ways for Governor Gregoire to help make housing more affordable for working families. .

Jeff Hansell
Olympia