Are we gambling on growth? | TheUnion.com

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Are we gambling on growth?

As a teenager, I loved going to my local fair, which in my day included a few gambling enterprises run by local nonprofits. One was called “chuck-a-luck” and involved oversized dice inside an hourglass-shaped cage. You bet on a number and if it came up, you would double your money. Clever me (teenagers know everything), I put money on two numbers, one number would “hit” and I “won” often – not realizing that, at best, I was only getting my money back.

Now I am older – and maybe a little wiser – and I am beginning to think that our community is playing “chuck-a-luck” with affordable housing. Let me explain: the premise is, we don’t have enough housing, especially “affordable” housing for our police officers, firefighters, teachers, families starting out, etc. Our “solution” is to allow more houses to be built, of which we negotiate with developers to set aside a portion of the new housing to be “affordable” housing.

Take a theoretical example: a developer proposes a project of 100 houses. City or county planners negotiate with the developer to put deed restrictions on 20 of them so that they are on the market as “affordable” and will stay that way for the foreseeable future. Result? Well, the obvious one is that 20 more struggling families may be able to buy and live in our area. But has the community at large “won?” Here are what I see as flaws in this scenario.

Let’s look at the other 80 houses and residents who bought at market rate. How likely are those householders to have local jobs that can pay the mortgage? Aside from retirees, I suspect that most buyers will be forced to become commuters traveling out of the area in order to earn enough to make mortgage payments. In a world of rising fuel costs and expensive road improvements, one has to ask how this ‘pencils out’ for commuters and the rest of us.

Meanwhile, increasing the population inevitably leads to a need for increased services; i.e., more commercial development and more government services. Now governments like commercial development because the taxes generated are what helps governments survive. But who works in these new businesses? Generally, people who are not able to make enough money to buy a house, so now we get a reverse commute situation, where people live in other, cheaper areas and drive here to work. Again, rising fuel prices and expensive road improvements born by the community at large make this an expensive option.

Does a government entity come out ahead? After all, not only is there new tax revenue but also developers can be made to mitigate any direct negative effects on the community at large. Unfortunately, developers are not required to mitigate indirect effects and have no legal responsibility to fix, for example, the growing number of failing intersections. Any improvements are paid for by the government – you and me. How to pay for it? More tax revenue. From where? More new businesses. Leading to? More traffic.

There is another issue at play here that hurts first time homebuyers – real estate speculation. Now, it is the American Way to make a profit – but it becomes a moral and ethical challenge when it hurts the community at large. I have personal knowledge of a number of local people who own several single family homes (one person I know owns 15). As they buy up houses, it drives market prices higher, the ‘value’ of their homes inflates, they borrow off the new value and take the money to buy another house – always competing against the first time buyer. This is a variant of a pyramid scheme. Who loses? The entry level buyer – and eventually, the speculator, when the bubble bursts, due I suspect to an eventual awareness that the speculators are bidding against each other.

Where will we be in five years? Will rising fuel costs cut travel and relieve pressure on our roads? What will fuel costs mean for commuters? Will developers be able to sell houses profitably if the speculation bubble bursts and, will this mean more affordable housing or projects abandoned? If a glut of houses on the market cause values to drop, what will this mean to homeowners with adjustable rate mortgages? To governments counting on property taxes?

An Economic Resource Council document indicates that Grass Valley’s birth and death rates are nearly the same. Can we have a self-sustaining community without relying on massive growth?

Place your bets …

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Terry Lamphier is a member of the Grass Valley’s planning commission.