Author: davidw

While we have a belief that the market should be allowed to build housing, we are a non-partisan group.  Our goal is to keep Bend affordable.

Interestingly enough, last week the Obama administration released a “Housing Development Toolkit“, and a few days ago, the American Enterprise Institute, a conservative think tank, released a report “Economical Rental Housing by Design for Communities That Work”

Despite being on opposite ends of the political spectrum, the reports are remarkably similar in their policy recommendations.

The Obama administration’s suggestions:

• Establishing by-right development
• Taxing vacant land or donate it to non-profit developers
• Streamlining or shortening permitting processes and timelines
• Eliminate off-street parking requirements
• Allowing accessory dwelling units
• Establishing density bonuses
• Enacting high-density and multifamily zoning
• Employing inclusionary zoning
• Establishing development tax or value capture incentives
• Using property tax abatements

The AEI’s recommendations are:

• Find that increasing the supply of market-rate economic housing by design is in the public interest
• Declare that land use and building ordinances are to be liberally and flexibly construed to increase the supply of market-rate, economical housing so long as construction will not be adverse to the public health, safety, or welfare.
• Direct staff, to the maximum extend feasible, to assist in accomodating market-rate economical housing.
• Reduce parking requirements for economical rental housing developments to recognize reduced dependence on cars.
• Use density bonuses for economical rental housing developments.
• Where appropriate, provide relief from otherwise applicable building height restrictions for economical rental housing developments.
• Consider an equalized approach to density (regulate square feet per acre, not units per acre). For example, using a static density limit of 10 units per acre encourages larger units and higher rents, whereas allowing 12,000 square feet per acre would allow developers to produce 20 units at 600 square feet instead of 10 units at 1,200 square feet.
• Expedite or fast track planning, zoning, PUD, plan and architectural review, permitting, and variance approvals for economical rental housing developments.
• Allow just-in-time inspections for economical rental housing developments. Implement a process for economical housing whereby a code or building inspection request by, say, 10:00 AM is fulfilled the same day.
• Reduce fees to recognize the public-mission value of providing economical rental housing.
• Direct staff to exercise flexiblity and expedite appeals, whenever literal code requirements are burdensome and a substantially equivalent approach is more economical, for economical rental housing developments.

The latter are more focused on rental housing, but a lot of the ideas are the same: let developers construct dense housing, because it’s cheaper.  Don’t require X number of parking spots per unit.  Speed up and simplify the regulatory process.

Across the board, from liberal blogger Matthew Yglesias in The Rent Is Too Damn High: What To Do About It, And Why It Matters More Than You Think to more libertarian leaning economists, the policy recommendations are strikingly similar: “Legalize Cities”.

How many Italian restaurants should Bend have?  How many Vietnamese restaurants?  Should they be expensive, or cheaper?

If this seems like an odd question, it should look like an odd question for housing, too.  We have a pretty good way of determining how many restaurants, of what kind and at price point to build in Bend: a relatively free and unfettered market.  As long as you pass the safety inspections, you can serve whatever kind of food you like, and charge as much, or as little for it as you’d like.  If you have a good product, you’ll thrive.  If you don’t sell food that people like at a price that allows you to stay in business, you’ll go out of business.  Perhaps a new restaurant will take the space over and try something different.

It turns out that housing (and really, many other uses of land, too) are not that different from other things that we let markets allocate in the US.  However, cities tend to be some of the most highly regulated markets in the country. Anyone who thinks we have a “free market” for housing or commercial development isn’t well acquainted with the facts.

Just take a look at Bend’s zoning map:

What you can and cannot do with a given piece of property is spelled out in great detail in the zoning code, and mapped out for each lot.  Different types of permitted uses are given different colors in the map above, and often change from one block to the next.

The regulations below are taken somewhat at random from http://www.codepublishing.com/OR/Bend/?BendDCNT.html

• Maximum lot coverage of 50% for single story homes, otherwise 35% in residential areas.  In “high density areas”, 50% is the maximum.

• Buildings within the UAR, RL, RS, RM-10 and RM Districts shall be no more than 30 feet in height.

• All buildings shall incorporate design features such as offsets, balconies, projections, window reveals, or similar elements to preclude large expanses of uninterrupted building surfaces, as shown in the figure below. Along the vertical face of a structure, such features shall occur at a minimum of every 40 feet
• A minimum of 50 percent of all upper-floor housing units shall have balconies or porches at least four feet deep and measuring at least 48 square feet.
• A minimum front yard setback of 20 feet is required for buildings or structures, except on corner lots within a platted subdivision, one front yard setback can be 10 feet; provided, that the garage is set back a minimum of 20 feet from the front property line.

That is not a free market.  Far from it: all those areas and the minute details of what you can do there are decided on by a “central planning committee” known as the planning commission.  By and large, these rules and regulations enshrine the car-dependent single-family detached house as the gold standard of housing, and make many other kinds of housing illegal in much of the city.  Perhaps that kind of housing is what people want, but why dictate it by law? If that’s what people want, that’s what developers would provide in any case.

The trouble is, no one knows exactly what to build where.  Smart people can do an OK job at guessing, but no one knows if perhaps that house on the busy corner might be better as a barber shop.  Or maybe as a small group of 5 or 6 apartments.  No one knows what ratio of apartments to duplexes to single family homes Bend should have.  Maybe a given person would prefer a giant house on Awbrey Butte, but not everyone has that money: maybe they’d prefer a duplex or an apartment near the trails on the west side of town to a larger house in NE Bend.  Some people would prefer a large lot.  Trying to decide how many of each kind to produce is what’s known as the economic calculation problem and is one of the reasons markets are a superior (if imperfect) system for allocating many of the goods and services in our lives.

I often read commentary about how “we moved here for this” or “no one wants to live like that”, but that presumes a lot of knowledge about why other people want to live in Bend.  The only thing I’d feel reasonably safe saying is that most of us enjoy the outdoors in some way; but in terms of housing?  Perhaps a single person in his 20ies would prefer to live in a small apartment and save money for skiing.  Maybe a family would rather live in a duplex to be near one of the magnet schools their children attend – which tend to be located in expensive neighborhoods.  A student might wish to rent a large house with friends near the new college.  A family might prefer living close to a job in Bend in smaller housing to a commute to Redmond.  Others want a large lot and don’t care about driving a lot.  To me, living within biking distance of work was really important – but other people may not care. Who are we to decide how other people should live?  Just as some people prefer a larger house further out, the choice should be available to live in denser housing closer in, for those who want it.  This isn’t something the government needs to mandate – it’ll occur naturally if the rules allow it.

Rather than attempting to plan everything out ahead of time, perhaps a more flexible approach would lead to a more dynamic, adaptable city?

Furthermore, the more difficult it is to get land rezoned and projects approved and development fees paid, the more it becomes the exclusive domain of large developers who want to work with larger tracts of land.  Instead of building a few apartments, as a small developer might, which makes a more incremental change in a neighborhood, the larger developer is going to want to build an entire apartment complex.  Change is inevitable in Bend, but if it’s an incremental evolution, perhaps it will be less jarring than the larger projects that are the result of a high barrier to entry.

“YIMBY” is not a partisan group and we do not believe that markets are the solution to every problem.  We take a practical view that more market and fewer regulations would help fix this particular problem.

One thing that Bend has going for it is that it has grown relatively recently compared to a lot of places.  It can pick and choose from a lot of ideas that have already been tested in other cities.  It’s worth a look to see how other cities relate to Bend and our housing crisis.

Occasionally, I read comparisons in the Bulletin to ski resorts like Aspen or Vail, Colorado or Jackson, Wyoming.  But I don’t think these are accurate: Bend is on track to have 100,000 people in short order, whereas Vail has a bit more than 5,000 people, and Jackson has around 10,000.  These towns are an order of magnitude smaller than Bend, and are almost exclusively centered around tourism, with little to no local industry, and are extremely economically imbalanced in terms of wealthy visitors and residents, on one hand, and people who work in the local service industry on the other.  Due to the geography of where they’re located, they’re also very constrained in terms of land for new construction.  Besides having a lot of tourists, they don’t resemble Bend much, and I don’t think they provide a good example: we shouldn’t just throw our hands in the air and say that it’s inevitable that Bend will be extremely expensive and unaffordable.

Boulder is one of the cities that Bend most resembles: it’s around 100,000 people, is at the edge of the mountains, and physically has a fair amount of room to grow easily, were the political will there.  It’s also got a university – a much bigger one than Bend – and a thriving tech industry with a lot of “good jobs”, something that Bend is working to build.  Sadly, it is also a haven for “I’ve got mine, now get lost” NIMBYism.  This article in the New York Times is illustrative: http://www.nytimes.com/2016/07/04/business/how-anti-growth-sentiment-reflected-in-zoning-laws-thwarts-equality.html – with a former city councilman stating that “We don’t need one more job in Boulder”.  Having been through more than one recession in Oregon, the concept that a place does not want any more of those “pesky jobs” is mind boggling.

Boulder is like Bend in that it has mountains and National Forest land to the west, so building there is out of the question.  Like Bend, it has a lot of flat land to the east that could easily be built on, but in order to prevent urban sprawl, the city has created a “green belt”, akin to Bend’s “Urban Growth Boundary”.  I’m not much of a fan of sprawl either, but the effect this boundary has is to force sprawl further out of town, outside the green belt, to neighboring cities like Louisville and Lafayette.  This has the perverse effect of forcing people to drive even more than if they had simply been on an expanded periphery of Boulder itself!  Of course, Boulder could also build taller buildings, and fill in some of the relatively empty space it already has, but people refuse to do so, via extremely strict zoning laws.

The consequence is that the average house price in Boulder is north of 600,000 dollars!  And you thought prices in Bend were bad…  Naturally, this is pricing out people like teachers, firefighters, and police.

Boulder is a pretty close fit for where Bend may be headed if we do not do things differently.

Not really, compared to many places, but fine, we moved to Bend because we didn’t want to be someplace with lots of traffic.

Setting aside the fact that when we moved here, we contributed in your own small way to increasing the traffic, let’s think about the problem from another point of view:

One of the major reasons there is so much traffic is that it’s illegal to build in such a way that people don’t need a car for every last little thing.

Look at some of the new housing out in NE Bend:

It’s quite a ways from there to a grocery store, or much of anything, really.

If you look at Bend’s zoning map, at http://www.bend.or.us/modules/showdocument.aspx?documentid=3296 you will see that not so much as a corner store is legal in the immediate area.

Compare and contrast with a more traditional style of development, where it may have been possible to walk to a corner store, or a barber, or small hardware store, or any other number of other amenities that people use often.

By attempting to plan the city in such minute detail, we have eliminated this traditional development pattern, where small businesses might spring up close to where people lived.  We have prevented the city from evolving in any way not foreseen by the “central planning committee”.  By allowing more “mixed use” areas, more people could walk or ride their bikes, or drive a shorter distance to things they need every day.

“But…it snows! I can’t ride my bike in the snow!”

That’s fine, use the “right tool for the job” – take your car by all means if it’s 36F out and raining.  But by allowing the city to evolve, and by allowing people to reside closer to shops and offices, perhaps we’d see more people walking or riding their bikes on those plentiful sunny days we get.  It’s not a matter of forcing everyone to ride their bikes all the time, it’s about making it possible for those who want to on occasion.

Some people think that the answer to more affordable housing is to simply stop building any more luxury housing, reasoning that if developers are forced to stop creating it, they’ll build more housing that people can afford.

There’s a big flaw with that theory though: people move to Bend because they want to live in Bend, not because of the availability of luxury housing.

Say someone wealthy can spend a million dollars on a house.  They’ll go buy something in Tetherow or on Awbrey Butte and all’s well.  But say they no longer have that option, and still want to move to  Bend.  At that point, they may well decide to simply buy that 500K home somewhere else.  If this happens enough, the price of what were formerly 500K homes starts to rise as competition for them increases, and so on down the ladder.

Restricting the supply of housing of any type is not really the answer to Bend’s housing woes.

This is explained in further detail in Professor Sanford Ikeda’s How the Housing Market Works.

A lot of people are suspicious of change: “Bend’s fine the way it is, we should stop growing”.

The problem with that reasoning, though, is that you cannot keep people from wanting to move here.

In a situation where demand is rising, and supply is constant, prices will rise, which will have the effect that you start pricing people out at the lower and middle ends of the wealth spectrum.

Put another way, if someone has 10 million dollars to spend on a house, they’ll be able to move to Bend no matter what.  Gradually, as more and more people with money continue to move to Bend, the prices will rise to the point where someone hoping to move here and work as a police officer will not be able to compete, and will be squeezed out.

This will take a while, as there are plenty of teachers and police officers and others who own houses here already and won’t be priced out anytime soon, but over time, it will become more and more difficult for anyone else to move here.

I don’t want to live, nor raise my children in a town full of wealthy people served by “commoners” who must commute in from someplace far away in order to be able to afford a place to live.  I don’t think it’s healthy for anyone.

Life is a series of tradeoffs, and one of the important ones for cities is what’s known as a “trilemma”.  A city can have two of the following, but not all three:

• Affordable – it’s a place everyone can afford to live.
• Desirable – it’s a place people want to live, and a place people are trying to move to.
• No growth – it’s a town that is not adding housing, and tries to avoid “changing the character of its neighborhoods”.

For instance, at one extreme, you have resort towns like Vail, Colorado: it’s a very nice place – many people would love to live there, or at least have a house there.  Since it’s at the bottom of a deep valley without much land, it has very little land for growth, so it fits “no growth”.  This means it is not affordable: the average house price, according to Zillow, is $835,000.

At another end of things, you have a city like Detroit that has plenty of room for growth, and is affordable with an average home value of $38,100.  The reason: not many people want to live there, and indeed, the population continues to decline.

Where the United States has not been doing a good job lately are cities where people 1) want to live 2) can afford to live and 3) therefore allow lots of housing to be built.  The best examples are probably cities like Houston, which Forbes ranked as the fastest growing city in the US in 2015.  Sprawl – which many of us are not fans of – plays a role in keeping places like Houston affordable, but another big factor is a relatively light regulatory touch: Houston does not have a zoning code like most cities in the US do: How Houston Regulates Land Use.

I’m not sure we should – or could, given the mountains to the west – emulate Houston’s sprawl, but the freedom to build where there’s a market for it would certainly help Bend add housing, and contain costs.  It’s also critical to remember that the freedom to build includes efficient uses of land like building up and in, not just out.