Last week I introduced the idea of using wargaming techniques to look at room problems and called it room gaming. The idea is to come up with a fictitious scenario and then see how our current policies and relationships can solve those problems to determine if we have the right policies or if we need new ones. We decided to focus the exercise on staffing issues the chamber is working on, and we used affordable housing as the topic last week.
We ended by outlining that the key to affordable housing is the supply of all housing at all levels. The problem arises when we stop building middle-class and upper-middle-class housing, because we just want to demand more housing projects for lower incomes.
The problem is, if there is no inventory for the $400,000 buyer, they will outbid the $300,000 buyer. If there is no stock for the $300,000 buyer, they will outbid the $200K buyer. If there is no inventory for the $200,000 buyer, they will outbid the $100,000 buyer. The same goes for rental properties: Those who can afford $2,000 in rent offer more than the $1,600 tenants; $1,600 renters offer more than $1,200 renters and so on.
We need housing at all levels, and last week we also discussed that there are somewhere in the neighborhood of 19,000-25,000 job openings within 40 miles of Brunswick, and if even a third of those workers need housing, we’re looking at 6,000 – 8,000 homes needed. Now that we’ve caught up, let’s dig deeper into existing policies.
Let’s start with a concrete housing policy as an example. The City of Brunswick is convening a group to examine what policies are currently needed for housing while limiting approval for the next 180 days of new projects of more than 30 housing units unless at least 15% of the units meet the requirements. city standard for affordable housing. Developers dealing with supply chain shortages, workforce growth, and construction supply inflation are working with banks to see which projects they can submit under those parameters and still get bank financing. Some developers think they can make those numbers work, while other developers aren’t so sure.
To be clear, the City of Brunswick’s policy is temporary and we use it as a tangible example of policy to see what happens when this type of policy is in place. At the moment, it appears that the three projects that started when the regulation was introduced are adjusting their plans to make it work. However, going ahead with a plan is one thing, because you’ve already scheduled the contractors and suppliers to do the work and reschedule, which can be more expensive than adjusting the final prices for the units. To make sure this policy works for brand new projects is quite another.
This situation is very weak because other Maine communities have recently adopted housing policies that have been more restrictive than the temporary guidelines Brunswick uses and have seen developers move their projects to other communities or sit on a plot in the hopes that the policy will will change in the future. We need housing for our employees close to where they work, so what are some key aspects to consider when making new policies?
First, we must always remember that not every community is adopting a new housing policy, and if a developer decides between building somewhere with more restrictions or building somewhere with fewer restrictions, developers can move to the areas where they can build more easily. Demand for housing is so great that people are moving to places where they can find affordable housing, and for those with transportation difficulties, where they live can be a limiting factor on where they can work.
Second, any policy with a limit will always encounter signups that are just below the threshold. For example, if there are different building rules for projects with more than 30 housing units, look for many entries of 29 housing units. If 15% of homes have a ceiling on rental costs, don’t expect more than that number at that rate. It’s like the speed limit: set it to 70 and you won’t get many drivers driving 80.
Finally, we need to develop policies that have the real incentives developers want. There is sometimes a negative connotation around providing added benefit to developers, but the fact is that there are a limited number of investors willing to spend thousands upon millions of dollars on projects in our communities. Developers do want to work in the areas most in need of housing, which our area certainly does, but if they have to choose between our area or 30 miles from our area, we want to make sure our incentives are competitive to hire people. to pull. to invest here.
Finally, today we focused on Brunswick as the city is now working on these issues, so it will be an easy place to start the discussion and get examples. However, all of our communities in this region should be doing the work Brunswick is doing looking at their developer incentives and the best policies for growth. I commend them for having a public-private partnership explore what is needed, and I am confident that through open dialogue they will come up with solutions that will help Brunswick continue to grow.
And for all the communities that want to address this, our room is ready to help. I can’t promise you I’m a housing expert because I’m not. I am director of a chamber of commerce. However, I do have a network of very intelligent people who I may be able to put you in touch with, depending on what you need advice on. It’s basically what we’re good at connecting business leaders, so if you’d like our help, we’d love to talk to you.
Cory King is the Executive Director of the Bath-Brunswick Regional Chamber.