Your Guide to the Ephesus-Fordham Renewal Plan

This isn't Reaganomics - it's basic Econ 101 supply and demand. When supply of a good is too limited to meet demand, prices go up. That's exactly what's happening in not just Chapel Hill, but desirable places to live all across the country, and in many cases, these other places have enacted similar policies as Chapel Hill to limit and control the housing supply, which is why we're seeing these housing affordability crises across the country.You want proof? Look no further than the impact of Lux Apartments and Shortbread Lofts in the student housing market right here in Chapel Hill. Warehouse Apartments dropped their rents by 21% in the wake of new competition.  This now brings Warehouse into competition with other mid-market student rentals who offer fewer amenities than Warehouse, so now other rental communities have to make choices about their own rents because of greater competition in their price range, too. This is undeniably good for affordable housing in Chapel Hill, and it's all because of increasing the supply of housing to get closer to meeting demand.This great article in CityLab (formerly The Atlantic Cities) does a great job of summarizing the reason increasing housing supply is so critical to keeping housing affordable, and why the problem isn't being addressed:

Why are some metros more affordable than others? Flashback to Econ 101 – it’s supply and demand. Demand is how much people are able and willing to pay to live in a place, which depends on how desirable and economically productive a place is. Some factors that affect demand – like a good climate or an educated workforce – change very slowly over time, while others – like an oil boom or dot-com bust – can change more swiftly.

Housing demand alone does not determine home prices. Supply is crucial, too. Home prices depend on whether construction keeps up with demand. For the same increase in housing demand, a market that builds less housing will see bigger price increases than one that builds more housing. Although the real world is a lot more complicated than that, a simple scatterplot makes the point: expensive markets build little housing. Every metro where the median price per foot is over $200 has added housing at an annual rate of no more than 10 new units per 1,000 existing units since 1990. Conversely, no metro that builds a lot of housing is expensive. Of course, many markets are inexpensive and build little, like Detroit, Cleveland, St. Louis, and the upstate New York metros of Buffalo, Rochester, and Syracuse – all of which have faced long-term economic challenges and relatively weak housing demand.

For America’s most expensive housing markets to become significantly more affordable, they would need either a spectacular drop in demand – a local economic collapse, for example – or a dramatic increase in housing supply. But in these markets, geography and regulations limit new construction. Coastal California, south Florida, and parts of the Northeast are hemmed in by oceans, mountains, or both – unlike large swathes of the Midwest and South. Furthermore, regulations like zoning, onerous approval processes, and high permitting costs hold back construction. It’s complicated to tease out whether geography or regulations matter more because geographically hemmed-in areas also tend to be more heavily regulated (see this academic paper for evidence). But short of filling in San Francisco Bay or paving over the Everglades, local governments have a lot more control over regulation than geography. So why don’t expensive cities relax regulations in order to build more?

The politics of building new housing in expensive markets are tricky. While expanding the housing supply would improve affordability, new construction can change the character of a place in many ways: more congestion; a different skyline; an influx of new residents who are richer, poorer, darker, or whiter than current residents; as well the inconvenience during construction itself. Furthermore, not everyone wants to improve affordability. Another name for “housing costs” is “property values,” and current homeowners and landlords want property values to stay high. The beneficiaries of improved affordability are renters (though less so if they’re already protected by rent regulations); people who are priced out of expensive markets and therefore live elsewhere; and future generations – who usually have less political power and influence than homeowners and landlords. Plus, even people who might benefit from greater affordability might care more about preserving the character of their neighborhood.

In all, today’s unaffordable markets are likely to stay unaffordable. A collapse in demand is nothing to wish for; geographic constraints are nearly impossible to change; and strong political forces make building regulations difficult to relax. Although some expensive metros, like San Francisco, New York, and Boston, are currently building more housing than in the recent past, and New York’s new mayor is pushing to increase construction further, it would take many years of construction activity at much higher than historic levels to make today’s least affordable metros more within reach of the middle class.

And then there's this article from New York Times Magazine that explains how the problem of constrained housing supply is affecting affordable housing worldwide, and what some policymakers have and are planning to do about it:

New York’s new mayor, Bill de Blasio, who promised, on the campaign trail, to build more than 100,000 affordable apartments, seems to have an inkling of what will be required. “It’s going to take a willingness to use height and density to the maximum feasible extent,” he has said. “I don’t have a hang-up about it.”

But then, lots of people think they know what to do to fix housing: Stick it to the landlord with rent controls. Require developers to set aside low-cost units. Build more subsidized housing. Distribute more rent vouchers or, as San Francisco has recently done, funnel taxes and fees into a housing trust fund. For those with more faith in market forces, there is always the loosening of zoning regulations, in imitation of sprawling Houston — which is indisputably cheap, so long as you don’t factor in the cost of driving.

Yet many of these solutions are dwarfed by the sheer size of the problem. London alone needs, by one count, 800,000 new units by 2021 to meet both pent-up and new demand. Sydney, where the median rent on a two-bedroom apartment is now $2,600 a month, aspires to build more than half a million units by 2031, a goal for which it would have to double its normal pace of construction. New York needs more than 300,000 units by 2030. By contrast, inclusionary zoning, a celebrated policy solution that requires developers to set aside units for working and low-income families, has created a measly 2,800 affordable apartments in New York since 2005. It’s not clear we have the fortitude to deal with these shortages head-on.

And here's another CityLab article about San Francisco's affordability crisis and how it got to be so bad. (Hint: They did a lot of things Chapel Hill has done/is doing to create the most unaffordable city in the country):

A great quality of life and a lot of high-paying professional jobs meant that a lot of people wanted to live here. And they still do.

But the city did not allow its housing supply to keep up with demand. San Francisco was down-zoned (that is, the density of housing or permitted expansion of construction was reduced) to protect the "character" that people loved. It created the most byzantine planning process of any major city in the country. Many outspoken citizens did—and continue to do—everything possible to fight new high-density development or, as they saw it, protecting the city from undesirable change.

Unfortunately, it worked: the city was largely "protected" from change. But in so doing, we put out fire with gasoline. Over the past two decades, San Francisco has produced an average of 1,500 new housing units per year. Compare this with Seattle (another 19th century industrial city that now has a tech economy), which has produced about 3,000 units per year over the same time period (and remember it's starting from a smaller overall population base). While Seattle decided to embrace infill development as a way to save open space at the edge of its region and put more people in neighborhoods where they could walk, San Francisco decided to push regional population growth somewhere else.

Whatever the merits of this strategy might be in terms of preserving the historic fabric of the city, it very clearly accelerated the rise in housing prices. As more people move to the Bay Area, the demand for housing continues to increase far faster than supply.

I've seen no reason to believe that Town staff would deliberately and purposefully produce wrong figures when it comes to estimating the cost of service and the returns from a potential investment, and so far, all the figures presented by independent, Town-hired consultants and Town staff about pending developments indicate that there will be positive returns for the Town.As for your other claims, could you provide some context and citations for your statement, "We all know that the opposite has happened" with other developments when it comes to cost of service and returns on investment?