Usually, when advocates want to help any given group of people struggling with some social problem or another, those well-meaning people want two things – more money, and some sort of new or expanded government project to address such-and-such a need. Often that’s appropriate, but sometimes – and probably more often than those activists would suspect – less really is more.
The knotty problem of homelessness illustrates this well. The problem is multi-faceted, and solutions depend on individual circumstances. But it cannot be denied that affordable housing options are incredibly limited in Washoe County, and when supply is short and demand is high, prices will stay elevated.
There are many ways the government can try putting its thumb on this particular economic scale. It can simply build public housing projects, and either give the units away or rent them out at a loss to those who qualify. But this would be a hugely expensive option (made more so than necessary by prevailing wage rules), and actually building and maintaining large numbers of dwellings fall outside of government’s core competencies, generally speaking. In addition to building and maintenance costs, we would have to pay for a vast bureaucracy to administer and screen applicants for this very tangible form of welfare, not to mention deal with disciplining or evicting those who damage property or threaten harm to their neighbors in some way.
But while local governments aren’t builders or landlords (or at least shouldn’t be), they can and do control the approvals and fees associated with those who are.
The City of Reno has recognized this leverage, and is in the beginning stages of an initiative to defer certain permit and utility fees in order to incentivize developers to build more housing units in the city. More supply will eventually mean lower prices, and more options for people at the economic margins.
Unlike large “tax incentives” that are in actuality simply cash giveaways, such as the multi-million dollar subsidies for the new Raiders stadium or Tesla’s Gigafactory (which, it must be noted, helped fuel the housing crisis in the first place), the deferrals are designed to functionally be interest-free loans – the fees will still have to be paid, they just can be paid after the projects are complete (and presumably making money). In my mind, this is a much sounder approach than the direct subsidy approach from a taxpayer standpoint, and it seems to have had the desired effect. According to the Reno Gazette-Journal, Reno Mayor Hillary Schieve hoped to kickstart 1,000 homes. Over twice that have now been approved.
It’s a great example of a government body recognizing its limitations, and cutting red tape (or at least stretching it out a good ways) to make room for the private sector to address the problems. Developers and their employees profit, Nevadans have more housing options, rising supply lowers costs, more homeowners mean more property tax revenue in the long term, and politicians can righteously claim some measure of success in addressing real social problems in the next election. It’s a winner all the way around.
Reno’s plan is not without cost or risk – deferred utility fees mean more deferred maintenance on infrastructure, particularly sewer systems. And the program is flexible in that it allows applying developers to propose their own incentives. This is the sort of thing that can lead to the appearance – or reality – of graft and corruption and cause more problems than it solves if not done correctly.
But by and large, it’s a great example of government doing things right by staying small, flexible, and responsive.
There are other social problems that do simply require more money, including (while we’re thinking of the homeless) more money for addiction recovery and mental health treatment. One of the additional advantages of spurring economic growth and development via getting out of the private sector’s way rather than trying to use tax dollars directly is that it leaves those tax dollars free for what they are really needed for, and where we can get the biggest bang for the buck for them.
It’s nice to see our local government tackling a problem in a constructive, cost-effective, and market-based way. As long as the program is administered wisely, it will be a great example for future problem-solvers to emulate.
Orrin Johnson has been writing and commenting on Nevada and national politics since 2007. He started with an independent blog, First Principles, and was a regular columnist for the Reno Gazette-Journal from 2015-2016. By day, he is a criminal defense attorney in Reno. Follow him on Twitter @orrinjohnson, or contact him at [email protected]