A Closer Look at the Proposed “The Homes Act” Legislation Reveals Several Issues
Recently U.S. Senator Tina Smith and Congresswoman Alexandria Ocasio-Cortez (AOC) revealed a legislation proposal dubbed The Homes Act, that according to their press release “would reimagine housing in America, making a historic and long overdue investment in our housing supply.” However, upon a closer look at the bill, which seems “fixed on the notion that housing is expensive because it’s mostly built and operated for profit, and because homes appreciate in value, several issues are revealed. The proposal to establish a national Housing Development Authority is just another public housing model where past experience has shown that since “Congress did not provide enough funding for ever-increasing maintenance costs as the developments aged,” poverty became concentrated in a deteriorating physical environment that reached a level that was so bad, Congress passed the Faircloth Amendment in 1998, which “bars the federal government from financing public housing beyond the number of units run by a public housing authority as of October 1, 1999” — a ban that AOC’s bill would undo if lawmakers are convinced that “government is well-equipped to be a developer, landlord, and property manager.”
The press release by AOC places the blame of the unaffordability of housing on the corporate landlords who “are raking in record profits,” without ever having sat on the other side of the table to gain a more accurate picture of the expense to build, operate and maintain residential buildings — financial challenges that are further increased by the vast volume of policies and regulations imposed upon landlords and businesses in general by federal, state and local officials, which although intended to protect the people, in actuality drive costs up for everyone. Furthermore, the proposal to have nonprofits develop and operate housing does not remove “profit” from the equation, since nonprofits have to pay all the expenses just like for-profits do — hiring staff, paying health insurance, and renting office space; and although “nonprofit executives don’t get stock options, they do get paid, often handsomely.” The article by The Real Deal further points out that although the bill’s price-capped project proposal for affordable, resident-run co-ops can achieve minimized price appreciation, there is a downside. Since owners cannot sell their units for much more than they paid for them, it is likely that residents will keep monthly dues too low and won’t want to pay for improvements — especially those that would benefit future owners more than themselves, resulting in eventual property deterioration.
It must be kept in mind that it’s the potential to make money that motivates investors to build, while profit-seeking capitalist who build and rent housing similarly compete with each other no differently than the capitalists who make light bulbs, open barber shops, and grow carrots or raise cattle.” Perhaps instead of implementing more federal housing policy by legislators and agencies that according to Supreme Court chief justice John Roberts’ views on administrative law, do not necessarily have special competence regarding all rules and regulations they promulgate, the government should ease regulations to allow housing supply to meet demand instead of further experimenting with another public housing model when the concept hasn’t had a good track record in the past.