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Mandates don’t work

There they go again. City commissioners want to force Rosemary District developers to construct ‘affordable’ units. These policies always result in fewer homes and higher prices.

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The board directed staff to come back with new regulations that would tie any increased density to the creation of affordable housing.

Sarasota Observer, June 8


It’s simply astonishing and remarkably perplexing how Sarasota city commissioners — past and present — are incapable and unwilling to accept logic, the laws of economics and the disasters of government interference.

As city commissioners began discussions on whether to extend the rules of the Rosemary Residential Overlay District, which allows for increased residential densities, they opened up that old trope of using government fiat to force developers to build affordable housing. (See above)

This is how that idea always takes form: Extortion. If you, Mr. Developer, want to build on your property, we, your City Government, are going to force you to price some of your units below the cost of construction.

And how does the developer respond? As any rational person would. To earn a return on his work, risk and investment, it doesn’t take a genius to figure out what the developer will do. He raises the price of the other units, making them more expensive than they otherwise would have been.

The effect is this: Whenever you raise the price of anything, you get less of it — fewer housing units and fewer people who can afford them.

Some buyers who could have afforded his market-based prices before now can’t. 

So while the affordable units may have satisfied a few, the higher priced units left others unable to buy.

This strategy never achieves the utopia the commissioners envision.

Just last year on this page, Sarasota Observer columnist Adrian Moore, vice president of the Reason Foundation, reported the results of a mandated affordable housing strategy in Los Angeles:

“Affordable housing mandates led to 770 affordable units being sold over seven years, while during the same period reduced the total number of new units built by more than 17,000, and raised the average home price by about $50,000.”

Forget the mandates. No matter how hard government policymakers craft rules to achieve their social outcomes, government interference never produces economic results better than what a laissez-faire marketplace produces.

Instead of more mandates, commissioners should look at the city’s regulatory regime. Sarasota developer Harvey Vengroff proposed a 400-unit affordable housing apartment complex two years ago. He has encountered obstacle after obstacle and has yet to turn a speck of dirt.

Players property: What about sea level rise?

Perhaps it’s just our cynicism toward government, but it always seems government officials love to buy land. And why not — when it’s with other people’s money.

So it was no surprise — none whatsoever — when the Sarasota City Commission on Monday gave City Manager Tom Barwin the permission to begin negotiating to purchase the Players Theatre property on Tamiami Trail across from the Van Wezel Performing Arts Center.

We couldn’t help but chuckle at one of Barwin’s comments. If the city didn’t purchase the property or if it didn’t become part of the city’s Bayfront redevelopment, “We’re likely to see another 18-story condo,” Barwin said. “There’s a lot of 18-story condos underway and coming. This is a little hedge against a canyon of all 18-story condos, if we choose to go there.”

This is amusing irony. How the city manager of a city that has almost no way to grow geographically and is always short on cash wants to constrain growth and the resulting increase in city tax revenue.

Everyone’s perspective of what is desirable is different, of course. But in that vein, we’ve always embraced the simple maxim of Austrian economist Friedrich Hayek: “We can be few and savage, or many and civilized.”

When you expound on that, Hayek was noting that increases in population lead to increased wealth, increased specialization and increased choices for everyone.

At the same time, we know also that many Sarasotans would like the city not to grow. But this is unrealistic. Florida and Sarasota will continue to grow no matter what: 74 million baby boomers are retiring over the next decade. Guess what?

There is another irony here. While the city of Sarasota has erected informational posters at Lido Beach warning of the coming rising tides from climate change, where is the city manager — the advocate of the climate change signage — when it comes to considering whether the Players Theatre and the Van Wezel properties will be under water in 2050?

The commissioners have it backward: Before they gave Barwin permission to negotiate to buy, they should have asked him for the analysis showing how it will be paid for and the resulting effects on taxpayers.