Quote:
Originally Posted by west-town-brad
How can you quantify restricted rental income on a unit inside of a building that would not have been allowed to have been built in the first place per city zoning?
See, the developer gets an upzone to make more profit, but to do so he has to build a few "rent restricted units" inside of the building. The developer is not giving up any profit at all, instead he is being allowed to make more profit than he would have made has he constructed the building as of right before the upzone.
I'm as critical as anyone of the local politicians and the games they play - but this makes sense. Otherwise poor people will be commuting for 3 hours each way for the honor of serving you french fries and making $11 per hour before taxes.
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That's a strange approach. The zoning restriction is artificial. When we say that the affordable units reduce profit, that's relative to the case where similar square footage is constructed without the affordable units. It's a theoretical comparison but the relevant one, since we need to consider the impact of the AHO on the supply of housing; by reducing the return on investment, we discourage the development of new housing units. After all, the upzoning itself is endogenous; where the return on investment is sufficiently high, we generally see upzoning since the developer lobbies more aggressively and positive spillovers to the community are generally (but not always) correlated in magnitude to the private benefits to the developer. Unnecessarily excessive zoning restrictions that are almost always lifted are just ways for aldermen to increase their negotiating power.