Free market invisible at San Antonio Housing Summit

October 12, 2016


San Antonio’s daylong “Housing Summit,” built on a mountain of government clichés and hubris, ended without one mention of free-market competition.

The public would have been better served if city bureaucrats and rent-seeking developers attended an Economics 101 class instead.


Dozens of presentations – covering “Homelessness,” “Financing and Funding,” “Policies, Protection and Planning” and the like – presupposed that government plays a leading role in creating an “affordable” housing market.

It is the ultimate trickle-down exercise in which taxpayer funds and public benefits are redistributed to chosen developers while making the product less affordable for all.


The pump is primed by increasing public debt: a proposed $20 million “neighborhood improvements” bond (buried in a record $850 million public-improvement bond). Down the line, special tax breaks are earmarked for unidentified “partners” to build affordable housing.


The process raises costs for everyone else, including lower-income households.


Zoning and code requirements designed by city planners “cause collateral damage on an area’s cost of living, driving up the price of goods and services, which then compounds a household’s difficulty in accumulating enough capital to buy or rent a place to stay,” says Kathleen Hunker, a senior policy analyst at the market-oriented Texas Public Policy Foundation.


Impact fees on development – a favored moneymaker for local governments – grow bureaucracies while yielding negligible gains in housing.


“It’s difficult to distinguish what monies cover the physical and administrative cost of tendering public services and what if any is designed to achieve a padded budget,” Hunker says.


“A city’s fee schedule becomes fertile ground for government growth and a burdened housing market. Municipalities have used them as a form of revenue generation, so that the amount levied does not reflect the project’s cost on the public but rather caulking for gaps in the budget,” she noted.

In their top-down model, government bureaucrats assert that they know what’s best for the public. Presenters at Mayor Ivy Taylor’s Housing Summit asserted that City Hall are equipped to manage the “housing ecosystem” in conjunction with development “partners.”


Not one free-market voice was heard from the podiums.


Pointing to other cities where the government-housing complex is more entrenched, Hunker predicts that San Antonio’s initiatives will end badly.

“By adopting a restrictive attitude toward private property rights, Texas cities have begun to wear away at the governance model that spurred Texas’ economic success and its healthy housing market. As a result, Texans have seen prices climb faster and higher than market conditions would have otherwise allowed,” Hunker said.


Skyrocketing property taxes – driven by government’s ever-rising appraisals and insatiable thirst for revenue – are pulling down the ladder of self-sufficiency for lower-income households and locking buyers out of the housing market.


With the growth of government-sponsored housing programs, Texas has actually seen a decline in affordability, Hunker said.


“This is not because of a flaw in the market itself, but because cities have encumbered the supply side with unnecessary costs and delay,” she observed.


“Zoning ordinances, impact fees, administrative uncertainty and general micromanagement all have led to artificial scarcities along multiple points in the chain of production, resulting in developers moving away from low-end projects.”


It’s what government does best: producing outcomes that are the exact opposite of its stated intentions.


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