Stop offering subsidies for special groups

Government agencies are picking winners and losers – and not just poor people, but specified groups of government and perhaps non-profit employees.

California faces a serious housing shortage, which imposes financial burdens on residents from all walks of life. The Legislature and governor have – in a useful but limited manner – worked to address the root cause – building regulations that constrict housing construction. But officials have also doubled down on the costly approach of throwing subsidies at the problem.

Most “affordable” housing projects utilize government funding, even though it imposes unnecessary costs on projects (and on taxpayers) by requiring union-only Project Labor Agreements and other mandates. The Wall Street Journal reported that a developer who rejected subsidies built a Los Angeles low-income project for half the per-unit costs of projects relying on bond funding. That reminds us that these subsidies are inflationary.

Yet California officials haven’t learned the requisite lesson. In 2020, Gov. Gavin Newsom signed legislation (Assembly Bill 3308) that “permits school districts and developers in receipt of local or state funds or tax credits designated for affordable rental housing to restrict occupancy to teachers and school district employees.” A 2016 law first started this concept.

Districts sometimes have problems attracting teachers, but that speaks to the need for a proper salary system (merit pay, etc.). Given the administrative costs in building these projects, it would be better to just, you know, offer direct rent subsidies for employees who might need them.

“There is also a bill currently wending its way through the Legislature that would expand the type of people who can live in school district housing to include employees of non-profit groups that work with the district,” notes Thomas Buckley in the California Globe. “So why is discount teacher housing a ‘thing’ if they – on average – make more than other people?” That’s the key question.

Government agencies are picking winners and losers – and not just poor people, but specified groups of government and perhaps non-profit employees. And what happens when recipients decide to leave the district’s employ? Instead of embracing complex and expensive solutions, officials need to reduce barriers to building so that everyone has a chance to find an affordable home or apartment.