Assault on the American Homeowner
Sixty-nine percent of Americans are homeowners, and they are
under siege. A number of "unfriendly" policies, proposals and
court decisions within the past year have produced an atmosphere
which is arguably antithetical to the American dream of carving
out a slice of the apple pie and plopping a single family
residence on it.
The assault weapons have catchy titles, such as inclusionary
zoning, smart growth, density bonus incentives, eminent domain
and mortgage interest tax reform. It could be said that
corporations and developers attack from one side while
politicians and government officials, acting in the interest of
the less well-off, attack from the other.
In the tug-of-war between the "have a lots" and the "have a
littles," the flag shifts back and forth in an effort to balance
interests, and those in the middle are swept along for the ride.
This argument is more than a refrain of "the gap between the
rich and the poor" tune as sung in Kevin Phillips' Wealth and
Democracy, Lester Thurow's Fortune Favors the Bold or
Lawrence Mishel's The State of Working America. The
"middle" encompasses more than the middle-class. Most homeowners
are at risk.
"Eminent domain" refers to the government's right--with fair
compensation--to seize private property for public use, such as
when residences could be bulldozed to make room for much-needed
freeway. But in this "property assault era," the U.S. Supreme
Court has ruled that the word "public" can be synonymous with
the word "private." Do you remember what the definition of "is"
is?
Any private property that can produce greater tax revenues in
the hands of a more enterprising private property owner, such as
a corporation that plans to build a shopping mall or high rise,
could be plucked away for so-called public benefit. Attorney
Dana Berliner said of the ruling, "This is a dark day for
American homeowners." An "attempted assault" emerged recently
from President Bush's tax-reform panel, which proposed replacing
the mortgage interest deduction with a meager tax credit equal
to 15 percent of the homeowner's mortgage interest. According to
Al Mansell of the National Association of Realtors, this could
translate into a 15% decline in home prices in some parts of the
country; and therefore, a significant loss of equity for
homeowners. Fortunately, Congress is not expected to countenance
the recommendation.
Because measures related to eminent domain and mortgage interest
tax deductions are criticized by a vocal majority, they are
unlikely to become permanent policy. However, inclusionary
zoning, smart growth and density bonus incentives are another
matter altogether.
"Smart growth" (SG) is supposed to be smart, but it can be
short-sighted. SG advocates generally promote taller structures
near mass transit lines, greater use of the existing
infrastructure, conversion of obsolete and distressed commercial
and industrial buildings into mixed-use properties and
preservation of the countryside from urban sprawl. While these
goals are noble and often sound, the impact of high density
building upon existing residents must be factored into the
equation.
"Smart growth" could be likened to a finely constructed ship.
Without fuel, a place to dock and an unobstructed sailing path,
the boat is useless. "Smart growth" proponents must consider the
capabilities of the existing infrastructure to fuel new growth;
they are often not upgraded to handle additional customers. They
must factor in the parking and traffic situation--especially
along mass transit lines which may already be congested--and the
current density figures for the target area. Los Angeles, for
example, is the densest city in the country with just over 7000
people per square mile. The plan which means smooth sailing in
Oklahoma City may stall in L.A.
Directives or incentives aimed at providing affordable housing
for low or moderate income residents are touched upon in most
"smart growth" plans, but they are integral to "below market
rate" (BMR) housing programs, such as inclusionary zoning and
density bonuses. BMR initiatives ignore market forces--such as
the law of supply and demand and the natural "trading up"
homeownership process--by requiring or incentivizing builders to
set aside a portion of their sale or rental units at below
market rates for those deemed unable to afford current prices.
In addition to density increases, government may permit BMR
developers to erect taller structures, skirt parking and open
space requirements and dot single family neighborhoods with
townhouses. Homeowners--from the "struggling" to the
affluent--may, in turn, feel assaulted by the resulting traffic
congestion, parking problems, loss of backyard privacy and
inferior quality of life on previously serene streets. It could
be likened to a cramped elevator; as passengers flood through
the doors, claustrophobia increases as well as a fear that the
community will exceed its capacity and plummet to its figurative
death.
BMR programs exist in at least 134 cities, towns and counties in
America, and in the following states: California, Colorado,
Illinois, Maryland, Massachusetts, New York, Vermont and
Wisconsin.
We cannot stop growth, but we must be intelligent about it.
Above all, we must not take homeowner assault with a grain of
salt.