SPUR recently had a housing affordability forum where one of the speakers pointed out that the curve of affordability appears to be directly related to the lack of construction.
Rising rents are killing housing affordability in California. Duh!
A perfectly articulated take on a couple of mayor ed lee’s affordable housing strategies.
I’ve been wrapping my brain around San Francisco’s “no-fault” evictions issues. My solution is for a city to create a transferrable development right (TDR) where for every square foot of development right purchase by a developer that square foot equals one square foot of space a landlord’s right to evict for 10 years.
A broader perspective is this:
- A landlord’s right to evict has value
- The right to build an additional square foot of building has value
- Any right which has been decided upon and regulated has a value
- That right can then be used as a type of currency, Therefore,
- That currency can be purchased by a special “rights bank”
- The right that the bank owns can then be sold at a later date for a different type right that is seen as equal value to the right the bank purchased.
For example:
First, I sell the right to evict the tenants of 4 apartment units for a period of ten years. I use a regulated formula to determine the monetary value of that right in dollars. The dollar value determined by the formula is how much a “rights bank” could pay me to forfeit that right (minus a fee from the rights bank). Let’s say, that dollar value is $200,000.
Five years later, a developer wants to buy the right to build 4 new apartment units on a zoning restricted site. To add the additional area to the development, the developer uses a regulated formula based on a regulated exchange rate which exchanges eviction rights for development rights. Let’s say the exchange rate is the right to build 1 new apartment for the right to evict people from 2 existing apartments (1 eviction = 2 developed apartments). When the dollar value is determined, then the developer pays for the right, or in this case, $100,000 for 4 new apartment units.
This could work for a broad number of rights. Not just development and eviction rights.
Rights as currency
In communities with TDR programs, the rights become the currency of development. The development value (not price) of a TDR credit is set so that one equals another. Credits can be bought and sold at any time, not just when a particular development in the receiving site is pending. Also, a TDR should be a general investment available to anyone, not just possible developers. Local citizens, land trusts and investors may all have an interest in the market for other reasons aside from development.
If you have questions about how Transferrable Development Rights work and how you can use them to preserve affordable housing, then read the following from Cornell University.
A great summary of how Seattle’s affordable housing TDRs work.