By Samuel R. Staley
The recent request by private developers for a $7 million loan to support workforce housing in Tallahassee should be a wake-up call for local public officials. If workforce housing is unprofitable in the private market, it may be well past time to cast a hard eye on local policies that push these projects over the financially sustainable edge.
To be sure, the project in question is complex. The vacant property in the heart of downtown is owned by Bethel Missionary Baptist Church. Bethel is a visionary leader driving redevelopment along Tennessee Street and Frenchtown. Its aspirations include taking over and managing the proposed 300-unit housing complex under its nonprofit umbrella.
However, the project is within easy walking distance to Florida State University, which employs 6,600 full-time employees. A stone’s throw away are a host of major downtown employers, including the Capitol and local government agencies. Star Metro’s C.K. Steele Bus Plaza is almost right across the street. It’s hard to imagine a workforce housing project better situated for profitability.
Indeed, this project should not require subsidization to be financially sustainable.
What can local policymakers do to ensure unsubsidized private workforce housing is profitable?
First and foremost, local officials should take a hard look at their internal regulatory and permitting requirements. In real-estate development, time is money. Regulatory and permitting processes often unnecessarily add to this burden.
Notably, one of the primary reasons Tallahassee secured its historically largest private employer – Amazon – was because the land for its proposed regional distribution center was already rezoned and permitted. Fortuitously for Tallahassee and Amazon, the landowner, DeVoe Moore, secured these permissions nearly a decade earlier. This saved Amazon millions of dollars and cut off potentially years of delay. Time is money.
The DeVoe L. Moore Center’s research has revealed wide ranges in permitting times and delays for commercial projects, whether shopping malls or telecommunications towers. At times, local officials have applied rules that went well beyond their purview and regulatory authority.
Revamping, streamlining, and rationalizing regulatory permitting processes would be an important step forward in cutting costs and creating certainty for investors and builders.
Indeed, in the current environment, regulations laser focused on public impacts rather than compliance to narrow and specific rules could dramatically reduce permitting times and create more certainty in the permitting process. In short, less would be more.
In his book “The Poor Side of Town: And Why We Need It,” Howard Husock notes that American cities have historically created vast quantities of affordable and low-income housing without direct subsidy.
Since the 1940s, however, governments have adopted more stringent rules, often with little public benefit. The result has been significant increases in compliance costs, lower levels of resiliency in the housing market, and concentrating housing interests in larger and less nimble builders.
Ultimately, a discretionary regulatory process rooted in compliance rather than growth management principles creates conditions that ultimately shift risk from private developers onto the public. This is what we see now in Tallahassee as subsidized loans are used to support housing for households with steady incomes and stable jobs on ideally situated land.
The city and county are well on the way down a slippery slope toward subsidizing larger and larger shares of the private housing market. A comprehensive streamlining of the current regulatory process would go a long way toward reversing this trend.
Samuel R. Staley is director of the DeVoe L. Moore Center in the College of Social Sciences and Public Policy at Florida State University and nationally recognized expert on housing and urban policy. His most recent book is “Megacity Mobility: Integrated Urban Transportation Development and Management.”