NE2: Housing Deregulation Act (Failed)

[Deus Naturae]

Thank you, Mr. Speaker.

I proposed this bill in an attempt to deal with high housing costs. I normally don't like to interfere in the affairs of local governments but the high cost of housing in this country is a significant problem, especially in urban areas. Local/municipal regulations are a main contributor to this problem and need to be dealt with if we want to counter it.

Section 1, clause a would prohibit so-called "rent control" policies that have been implemented in many cities. These policies run entirely contrary to basic principles of economics and have been condemned by economists from Thomas Sowell to Paul Krugman. Under a free price system, prices (including rents) are determined by the amount needed to satisfy production costs. However, when governments impose artificial price ceilings, sellers are unable to satisfy production costs and are forced to reduce the supply of whatever good they are selling. At the same time, artificially lower prices result in greater consumer demand. In this way, price ceilings run entirely contrary to the basic laws of supply and demand. In the context of the housing market, this means that the supply of housing is artificially restricted, while the demand for new units is artificially increased. This situation results in a housing shortage, which will not be fixed until rent control laws are repealed.

Section 1, clause b would prevent zoning agencies from prohibiting homeowners from converting their single-family residence into a multi-family residence, or vice versa. During the Great Recession, many homeowners in need of an extra flow of income sought to rent out part their homes/apartments to other families in need of housing. This was/is a win-win situation, the original family is able to improve its finances while the new family is able to find affordable housing. However, many localities and municipalities have zoning ordinances that make this illegal. If these ordinances were repealed (which this bill would effectively do) many families would be able to find cheap housing, while others would be able to generate additional income.

Section 1, clause c would prohibit laws establishing minimum or maximum lot sizes for buildings ("lot size" refers to the area of the base of a building). Minimum lot size laws are by far the more harmful of the two forms of regulation. They force small builders out of the market and discriminate in favor of large developers. By forcing housing providers out of the market, these laws restrict competition, thus preventing prices ensuring that prices remain high. Maximum lot size laws have mostly been enacted in response to minimum lot size laws. It's arguable whether they are an effective tool in counteracting the harmful effects of minimum lot size laws, but with those gone, they would be obsolete barriers to competition. Clearly, both forms of housing regulation need to go.

Section 1, clause d would prohibit laws establishing height limits for buildings. Height limits serve to do nothing other than increase costs by preventing buildings from adding additional floors. They are yet another form of economically unsound regulation that increases costs and prices by restricting the supply of housing.

Section 1, clause e would prohibit limits or fees on new construction. As I have already said, it makes no sense whatsoever to limit the supply of housing or to increase the costs of new unit construction. Getting rid of regulations that do so will decrease prices.

Section 1, clause f prohibits the practice of "inclusionary zoning," a policy which some municipalities have considered with hopes of promoting affordable unit construction. This policy essentially requires new developers to construct a certain amount of units that are priced below a certain level. This seems like a good idea, but it really isn't for two main reasons. The first is that, because, like rent control laws, these regulations just impose artificial price ceilings on housing providers, they restrict the supply of housing and actually increase prices. The second is that these regulations effectively function as a tax on developers, thus discouraging new unit construction and increasing prices overall by increasing production costs.

In short, this bill is an attempt to fight high housing costs by getting rid of regulations that restrict the housing supply, increase production costs, and impose artificial price ceilings on housing providers.

For more in-depth arguments and analyses of housing regulations, see the following study:
http://repository.upenn.edu/cgi/viewcontent.cgi?article=1007&context=penniur_papers

[Deus Naturae]

I oppose this all the way to the bank. This is big government regulation at its finest. I'm tired of the regional government telling communities how to run themselves. Maybe height restrictions benefit their community? Who are we to decide on any of these issues.

I understand and sympathize with your concerns, but housing is an issue where the costs of regulation are incredibly high, and there is no incentive for local or municipal governments to do anything about them due to the power of special interests. This is unfortunately the only way in which we can seriously attempt to tackle the enormous costs of housing regulation.

[Deus Naturae]

This bill hurts the rights of small businesses, landlords and local governments. I will not stand idly by as their rights are trampled on. I disagree with Rep Deus Natura that the only way to deal with housing prices is to subject them to further regulation by the regional government.

This bill will have no effect on small businesses and will allow landlords to charge rents high enough to satisfy production costs (something that many of them are unable to do under current regulations). It will also allow more homeowners to become landlords by allowing them rent out parts of their houses/apartments to other families. This bill does not increase regulations, it repeals them.

[Deus Naturae]

This law takes power away from local government, as a libertarian its absurd that you support this. Local governments and communities should be able to determine their needs in their own community. Maybe a small suburban community doesn't want a skyscraper next door, and they should be able to pass ordinances and zoning laws doing that.


This bill would eliminate any attempt at community cohesion by municipalities, and it would even prevent affordable housing options. Under this law, local governments can't even define lot sizes to sell buildings on! This bill obliterates urban planning, suburban planning and rural planning one one fell swoop.

This bill eliminates all community input into how their community expands, develops, and grows.

You have made this point of view clear. I must reiterate that although some municipal and local governments would like to keep these regulations in order to benefit special interests, restrict newcomers from entering neighborhoods, etc, the fact is that these government regulations are harmful to a great many people in our region, and we need to get government out of the way in order to ensure affordable housing.

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It's clear that rent control laws are not an effective way to reduce housing costs, and actually contribute to increasing them. See the following articles:
http://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html
http://www.nationalreview.com/articles/220039/pricing-101/thomas-sowell
http://seattletransitblog.com/2013/10/24/rent-control-is-bad-for-affordability/
https://mises.org/daily/3483/
Now, I doubt that the respective authors of those articles agree on much, but if there's one thing they all get, it's that rent control is NOT good for affordability.

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I'm actually not sure what effect this would on occupancy limit ordinances. If you want to propose an amendment that would clear that up, I'd probably be fine with it. But, converting single-family homes into multi-family homes is a creative solution to tough financial circumstances and lack of affordable units and that has the potential to help countless people. In addition to helping people generate new income and find cheap housing, getting rid of these regulations would also help prevent senior citizen homeowners from abandoning homes which have grown too large or expensive for their needs. I'm open to compromise, but key purpose of this clause (getting rid of ordinances that hurt homeowners and home searchers) is a must.

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I'm open to keeping minimum lot sizes, as long as they're kept below a certain level. If you can come up with a reasonable figure that won't force small housing providers out of the market, I would be willing to consider it.

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I see your point. Height limits are mainly a problem in urban areas, so we can amend the bill to only apply to municipalities.

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How to construction limits or fees promote growth? And yeah, the whole purpose of this bill is to prevent government from stifling growth, and therefore keeping prices high.

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http://en.wikipedia.org/wiki/Inclusionary_zoning

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Another good point. I will amend it to only include the portions of statutes that perform any fo the listed regulatory functions.

[Deus Naturae]

The opposite can also be true -- a community may not have many small businesses and has a high demand for a mega-store like Wal-Mart --then they can use zoning regulations to entice a mega-store to come to their community!

I hope you realize that the "enticement" you describe constitutes making it illegal to start or own a small business...

[Deus Naturae]

The opposite can also be true -- a community may not have many small businesses and has a high demand for a mega-store like Wal-Mart --then they can use zoning regulations to entice a mega-store to come to their community!

I hope you realize that the "enticement" you describe constitutes making it illegal to start or own a small business...

Pick a synonym, you get what I mean.

So, you realize that these laws violently force small businesses out of the market in favor of large developers, yet you still support them?

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So, you propose eliminating a tool that many municipalities use beneficially! Look at the rest of that article especially in the "in practice" section.

You're taking tools out of the toolbox of municipalities, and if this bill passes it will be harder for those communities to fix problems.
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Read the introduction further. For one thing, you'll see that it says that while political activists favor inclusionary zoning ordinances, economists tend to be opposed. Furthermore, it also says that these ordinances have been  enacted to counter "exclusionary zoning" ordinances. Go to the examples section of the page on exclusionary zoning, and you'll see that these practices mainly consist of supply restrictions and cost inflators, such as prohibitions against multi-family conversions, lot size requirements, and construction fees. Inclusionary zoning ordinances have mainly been enacted in response to exclusionary zoning practices, which you have also defended. You can't have it both ways.

[Deus Naturae]

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[Deus Naturae]

Do any other Representatives have anything to say about this bill?

[Deus Naturae]

How about this?

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[Deus Naturae]

Sirnick, calm down. First of all, I didn't even add a new clause. That's been there all along. I will gladly get rid of the word "limits." You make valuable points and I'm willing to consider them, but I wish you'd just stick to doing that instead of throwing a fit and launching ad hominem attacks

[Deus Naturae]

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Cinyc, I will try to address your concerns with another amendment shortly.

[Deus Naturae]

Sirnick, calm down. First of all, I didn't even add a new clause. That's been there all along. I will gladly get rid of the word "limits." You make valuable points and I'm willing to consider them, but I wish you'd just stick to doing that instead of throwing a fit and launching ad hominem attacks

I'm legitimately wondering why you haven't come across asbestos regulations

The original intent of that clause had nothing to do with what materials developers can use in construction. It was more to prevent the prohibition of new construction. But, I see how it could be interpreted as you did, so that's why I took it out.

[Deus Naturae]

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This amendment would allow zoning agencies to maintain maximum lot size ordinances (which I'm not really concerned with because they aren't nearly as cost inflationary as minimum lot size ordinances) and would establish a six-year time table for phasing out minimum lot size ordinances. Do you think that time table is long enough?

[Deus Naturae]

The time table doesn't matter because the policy is still horrendous.

Why do you support minimum lot size ordinances? What benefit is there to forcing small, affordable builders out of the market?

[Deus Naturae]

The time table doesn't matter because the policy is still horrendous.

Why do you support minimum lot size ordinances? What benefit is there to forcing small, affordable builders out of the market?

Minimum lot sizes allows for more small lots (or more small businesses, or more single-family homes...you can cut it many ways...). I don't see how small lot sizes force small affordable builders out of the market...when they'd be building smaller more affordable houses/offices/etc.

Minimum lot size ordinances mandate that building lots be at least a certain size, not that building lots have to be below a certain size. In effect, they say "If you can't afford to build a building at least x large, you can't build at all." They prevent smaller, more affordable houses from being built by making it illegal for developers to build houses below a certain size.

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Once again, minimum lot sizes do exactly the opposite. They promote larger lots by mandating a certain lot size that all lots must be equal to or larger than. If your business, apartment complex, etc is too small, minimum lot size ordinances make it illegal for it to exist at all. They are nothing more than indirect corporate welfare for large chains and developers, who don't have to worry about competition from smaller businesses or developers because minimum lot size ordinances make it illegal for smaller competitors to exist at all.

[Deus Naturae]

To quote you "If your business, apartment complex, etc is too small, minimum lot size ordinances make it illegal for it to exist at all."

Are you sure you're not confusing minimum with maximum? It sounds like you're confusing minimum and maximum.

No, I'm not. A minimum wage law makes it illegal for an employer to pay an employee anything below a certain level. Similarly, a minimum lot size ordinance makes it illegal for a developer to build anything smaller than a certain size, thus preventing developers from building smaller, more affordable houses or smaller complexes with more affordable units.

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I don't see your point. I'm aware of that fact that municipalities can create different zoning areas. I don't see how that makes minimum lot size ordinances any less cost inflationary.

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Small houses=/=anarchy. I really don't see how preventing developers from building small houses makes the housing market any more "ordered."

[Deus Naturae]

I plan to vote against this because I don't see a serious problem with the current system and I don't think this bill will do anything more than give landlords and megacorps more power. Generally things like this are the domain of the community because it affects those beyond the individual landowner

How will this bill benefit mega-corporations? I could understand saying that getting rid of maximum lot size ordinances would benefit them but I already amended the bill to take that part out.

As for landlords, I assume you're referring to Section 1, Subsection a? I've already provided evidence that rent control a harmful policy that leads to housing shortages.

Also, the problem with the current system is that it inflates housing costs and prices, thus preventing new unit construction and making it harder for Northeasterners to find affordable housing.

[Deus Naturae]

I plan to vote against this because I don't see a serious problem with the current system and I don't think this bill will do anything more than give landlords and megacorps more power. Generally things like this are the domain of the community because it affects those beyond the individual landowner

How will this bill benefit mega-corporations? I could understand saying that getting rid of maximum lot size ordinances would benefit them but I already amended the bill to take that part out.

As for landlords, I assume you're referring to Section 1, Subsection a? I've already provided evidence that rent control a harmful policy that leads to housing shortages.

I'm not very comfortable with D or F either. It would suck if DC was in our region and we set out to do this. Capitalism would destroy the city's character.

I already amended the bill to get rid of Subsection F. How would Subsection D destroy DC?

[Deus Naturae]

I motion to extend debate for 30 minutes. It seems like there's a slight possibility we might be able to reach something here.

[Deus Naturae]

I motion to extend debate for 30 minutes. It seems like there's a slight possibility we might be able to reach something here.

I'll give you 30 minutes until 12:30 AM - but not much more.  It's getting late.

Thank you. Are you okay with the current version of the bill?

Also, Representative SWE, are you still opposed to the bill or have the amendments I've made since you initially stated your opposition ameliorated your concerns?

[Deus Naturae]

I plan to vote against this because I don't see a serious problem with the current system and I don't think this bill will do anything more than give landlords and megacorps more power. Generally things like this are the domain of the community because it affects those beyond the individual landowner

How will this bill benefit mega-corporations? I could understand saying that getting rid of maximum lot size ordinances would benefit them but I already amended the bill to take that part out.

As for landlords, I assume you're referring to Section 1, Subsection a? I've already provided evidence that rent control a harmful policy that leads to housing shortages.

I'm not very comfortable with D or F either. It would suck if DC was in our region and we set out to do this. Capitalism would destroy the city's character.

I already amended the bill to get rid of Subsection F. How would Subsection D destroy DC?

DC has height restrictions to prevent Manhattan style skyscrapers from crowding the city.  I agree with sirnick to an extent that communities should be able to establish certain rules and regulations. Is rent control your main issue?

I amended the bill to get rid of the part that got rid of height limits for buildings.

[Deus Naturae]

I plan to vote against this because I don't see a serious problem with the current system and I don't think this bill will do anything more than give landlords and megacorps more power. Generally things like this are the domain of the community because it affects those beyond the individual landowner

How will this bill benefit mega-corporations? I could understand saying that getting rid of maximum lot size ordinances would benefit them but I already amended the bill to take that part out.

As for landlords, I assume you're referring to Section 1, Subsection a? I've already provided evidence that rent control a harmful policy that leads to housing shortages.

I'm not very comfortable with D or F either. It would suck if DC was in our region and we set out to do this. Capitalism would destroy the city's character.

I already amended the bill to get rid of Subsection F. How would Subsection D destroy DC?

DC has height restrictions to prevent Manhattan style skyscrapers from crowding the city.  I agree with sirnick to an extent that communities should be able to establish certain rules and regulations. Is rent control your main issue?

I amended the bill to get rid of the part that got rid of height limits for buildings.

You didn't. You amended it but you wrote it more broadly so not only does it encompass height, it encompasses a lot more.

No, I didn't. When I amended the bill to get rid of the original Subsection D, I didn't add anything new.

[Deus Naturae]

Aye

I know that this bill is guaranteed to fail, and will attempt to reinitiate discussion next session. Hopefully we can clear things and reach a compromise on this.