Coyote Blog

Congrats to Santa Barbara for breaking new ground in government paternalism:

The City Council here had already created a class of affordable housing
several years ago for people making up to 200% of the median income.
Last week, they agreed to tailor the Los Portales project for people
making up to 240%, or nearly $160,000. (To keep these affordable condos
affordable, buyers would be subject to price controls on resale that
would restrict any price increase to about 2% a year.)

Wow, government housing projects for people who make $160,000!  I loved this quote:

"it's hard to get sympathy for people making $160,000 a year if you're
down in Texas or something," said Bill Watkins, head of the UC Santa
Barbara Economic Forecast Project.

No shit.  So, why the project? 

But this is Santa Barbara, a built-out city hemmed in by the Santa Ynez
Mountains to the north, the Pacific Ocean to the south and politics in
every possible direction. And this is believed to be Santa Barbara's
last vacant lot big enough to hold a housing development.

So this is just the fault of geography and the bad old supply and demand system, right?  Well, it turns out the government had just a little to do with it too:

The city is zoned for 40,005 housing units. About 38,000 have been
built, and the only housing construction these days is in-fill: a few
units here, a few there. Unlike other land-poor cities, Santa Barbara
has been loath to tear down large swaths of outdated structures and
rebuild, said Paul Shigley, editor of the California Planning &
Development Report.

"They think they've got paradise," Shigley said. "They don't want it to change."

The tallest building here is the eight-story Granada Theatre, built in
1924. It could never be replicated today, in part because the City
Charter strictly limits buildings to 60 feet, about four stories. And
even four stories is a hard sell.

Oh, so the lack of new lots is an artificial government zoning limit, AND the government limits the height of new building to just a few stories AND the government won't allow tear down and gentrification of old neighborhoods.

By the way, housing projects like this in expensive areas are really just massive corporate welfare subsidies of local businesses.  If workers really need their housing subsidized to live there, and the government does nothing, one of two things happen:  Either busineses go somewhere else cheaper, or else they have to pay their employees more to live in the area.  By subsidizing this housing, the local government is in effect subsidizing local businesses by letting them pay lower wages.  In particular, this is typically a subsidy of tourist businesses (hotels and restaurants) which have a hugely disporportionate influence on local governments and who typically are tied to the local area and can't leave.  The town of Vail, for example, has subsized similar housing under presure from the ski resorts.

Hat tip: Hit and Run