With the current system, home owners have every incentive to block new housing. New housing makes their own asset less scarce, and thus less valuable. The home-owner receives zero benefit from the new construction.
With a shareholder system, home owners also have a dividend paying share in the city government. The government pays dividends out of the profits of property taxes. New construction increases property taxes, since new high rises pay a lot more tax than old row homes or vacant blocks. Thus, the owner-shareholder will also gain money from new construction. Conceivably, the city could charge a supplementary "new construction" tax to make the numbers balance out so that home owners would always net gain from new construction. This might not be perfect, the surcharge would discourage building to some extent, but it would be a lot better than the state of affairs right now.
Quite the opposite, it would promote new high density building construction, because the incentive is to maximize utilization to spread the costs.
For instance, owners of a single family home on a given piece of land would pay five times as much as 5 apartments on that land, because each apartment would only pay 20% each.
Many residents are opposing any new construction, fearing that this would lower their properties values (or even will just slow down growth). It's quite nice setup when you own very expensive property and don't have to pay much in taxes to own it (and that property gets more and more expensive without much hustle on your side)
The problem with this reasoning is that while new buildings / tenants may be marginally beneficial to the city, if the rate new condos pay is significantly lower than existing buildings, then fairness issues arise. To me, this is analogous to incentives for building factories, etc - why does the big / new factory get a tax incentive while the small / old one doesn't, if it generates the same spinoff investment / employment / revenue? Put another way, the marginal revenue gain may be positive, but lower than the community average revenue gain (or gain in comparable properties) - how is that fair?
If the residents want to fight back, they could really stick it to those investors by allowing a lot of new homes to be built, along with lots of upzoning to higher densities.
They could also streamline approval and permitting.
This would drive down the rents and property values of the homes those investors own making it easier for average people to buy.
It only encourages new building for people who can afford to develop the land. It would likely discourage small time investors and further the concentration of corporate owned real estate.
it does that for current tenants, but in a growing city the incentive to build is severely reduced. Also the incentive to buy is severely reduced, meaning all incoming tenants have a hard time getting places to live.
One idea is an expansion of a law already on the books in many cities. When you create a new building / housing complex (which will be 100% in a new city), you require X% of units to be "affordable housing". I could see the city just increasing the required % and then giving tax credits to developers to offset the lost revenue to them. Given that this city would be built in stages, it will give them time to hone in on the desired percentage.
Yeah, I haven't thought everything through yet. However, the hope that this would force more of the new housing to be more affordable. A poor person isn't going to be buying a luxury condo so I was trying to think of a way to incentivize builders to increase stock and create more affordable housing. There are definitely some second order effects.
There are already plenty of incentives to build up, as pointed out in the article; the issue is that existing home owners in the area have a strong incentive to fight against it.
I wonder to what point some of these methods just increase housing prices.
For example, having the developer plant trees along the street means the price of the new build goes up (of course the developer will pass along costs), and existing residents get an improved neighbourhood without increased taxation. But is this not something the council should be paying for? After all the new homeowners will be paying council tax, why must the also pay a fee to join the community?
If existing owners are allowed to build how they want, it would actually make their portfolio shoot up. Fewer restrictions on property use makes property values rise, obviously and trivially.
People don't block commercial construction because it raises property values. They block residential construction because it lowers their property values. You get an imbalance of jobs to housing and then people complain about expensive housing.
Consider the incentives of municipal representatives.
Faced with a choice between a change in zoning laws that would allow more construction (thereby preventing price increases that would benefit current holders of real estate), and maintaining the status quo with the effect of driving up the value of their own holdings as well as the value held by any homeowners who voted for them, what do you think they are going to do?
With a shareholder system, home owners also have a dividend paying share in the city government. The government pays dividends out of the profits of property taxes. New construction increases property taxes, since new high rises pay a lot more tax than old row homes or vacant blocks. Thus, the owner-shareholder will also gain money from new construction. Conceivably, the city could charge a supplementary "new construction" tax to make the numbers balance out so that home owners would always net gain from new construction. This might not be perfect, the surcharge would discourage building to some extent, but it would be a lot better than the state of affairs right now.
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