As rents soar, Democrats push new policies on affordable housing

Washington

DEMOCRATIC politicians at both the state and federal level are pushing plans to dramatically expand the government's role in addressing unaffordable housing costs, as rent prices hit new highs in major American cities and the party's increasingly young and urban base embraces big social programmes.

In Illinois and New York, gubernatorial candidates are touting proposals that would free cities to impose rent controls on housing units, a policy also backed this year by the Democratic parties of Washington State and California.

California's Democratic nominee for governor is calling for 3.5 million new housing units in the state, an enormous escalation of the housing plans under incumbent Democratic governor Jerry Brown. And on Capitol Hill, senator Kamala Harris, D-Calif, on Thursday will unveil federal legislation to give at least 13.3 million families new tax credits to subsidise their rents in what experts say is one of the most far-reaching housing bills recently introduced in Congress.

"There's much more interest now among Democratic lawmakers and representatives in high-cost areas about housing policy as more and more places fall into the high-cost bucket," said Jenny Schuetz, who studies housing policy at the Brookings Institution, a think tank.

Democrats' heightened attention to high housing prices partly reflects the increased geographic concentration of its voters in crowded cities on the coasts, as well as their reliance on millennial voters who are among the most hurt by the soaring rents, according to pollsters and housing experts.

The proposals, at least at the federal level, are likely dead-on-arrival with a Republican Congress and White House. But the Democratic Party's various and sometimes conflicting ideas also reveal some internal divisions, with plans ranging from the government building millions of new housing units to offering more robust tax credits and easing restrictive city zoning codes.

Progressives say these policies will meet a growing crisis for millions of Americans, while critics say they show the party is embracing far-left rallying cries that miss economic realities and could make the problem worse. Nationwide, average rents in May were within a few dollars of their all-time highs, with Los Angeles, Phoenix, Las Vegas and Atlanta seeing their highest-ever prices, according to Zillow data.

Ms Harris's bill, which expands on a measure that representative Joe Crowley, D-NY, has introduced in the House, calls for the federal government to give tax credits to renters who earn less than US$100,000 a year and spend more than 30 per cent of their income on rent - a widely used gauge of housing affordability. (The credit would be refundable, meaning taxpayers can receive payments even if their tax liability is US$0, and those in particularly expensive areas could earn up to US$125,000 and still receive the credit.) The size of the benefit increases for poorer families and decreases higher up the income distribution.

Ms Harris will submit the legislation with endorsements from Democratic senators Dianne Feinstein of California, Richard Blumenthal of Connecticut and Maggie Hassan of New Hampshire, as well as backing by the Democratic mayors of Los Angeles, Oakland, Sacramento and San Francisco and sociologist Matthew Desmond, author of a Pulitzer Prize-winning book on the housing crisis.

Ms Harris's bill was influenced by a similar though smaller plan written by the Terner Center for Housing Innovation at University of California, Berkeley that was estimated to cost US$76 billion and would "potentially bring an end to homelessness" by giving renters the money they need to avoid eviction, the center said.

"The reality on the ground, of how severe the housing crisis is, is getting the attention of policymakers," said Diane Yentel, president and chief executive of the National Low Income Housing Coalition. "But (Ms Harris' plan) is one of the most ambitious housing proposals I've seen in recent years."

President Donald Trump has proposed budgets that make deep cuts to federal housing programmes, and Housing and Urban Development Secretary Ben Carson has called for tripling minimum rents for the poorest households in federally subsidised housing.

A bipartisan bill introduced in the Senate by senators Orrin Hatch, R-Utah, and Maria Cantwell D-Wash, would also expand federal incentives for private developers who build low-income housing, though not by enough to meet the demand for cheaper housing, Ms Yentel said.

A clear and unifying message on housing policy has so far eluded national Democrats, political strategists say. During the 2016 presidential campaign, Democratic primary candidate senators Bernie Sanders, I-Vt, called for a suite of programmes to promote affordable housing, including an investment in public housing, a hike in the minimum wage to help workers pay rents, and a crackdown on predatory lending. His rival Hillary Clinton proposed stronger incentives for creating affordable housing and giving local governments "resources and flexibility" for bigger housing projects.

Neither pledge captured voters' imagination, some experts say.

"Those housing messages fell absolutely flat, but that may be changing," said Celinda Lake, a Democratic pollster who has advised former vice-president Joe Biden and House minority leader Nancy Pelosi, D-Calif.

"But it presents a huge opportunity for Kamala Harris and any other leader who wants to say they're a new generation of leadership targeting a new generation of voters. Housing is a new frame and issue that says you understand the economics of a new generation."

Kaniela Ing, a Democratic candidate for Congress in Hawaii, is expected to soon propose a Housing for All plan that would create 10 million new housing units, a national Tenants Bill of Rights prohibiting unfair evictions, and punitive taxes on some vacant properties worth more than US$2 million.

Mr Ing's plan contains elements of one published this summer by the People's Policy Project, a socialist think tank. Hawaii has the most expensive housing in the nation, according to Zillow.

"I think it's revolutionary, at least more than anything else out there," said Mr Ing, who has been endorsed by Alexandria Ocasio-Cortez, the upset victor in the Democratic primary for New York's 14th Congressional district.

"The stakes are high for our generation, so solutions should be as radical as the problems are."

But other experts worry that Democrats' plans are not addressing the root of the affordable housing crisis. Will Wilkinson, vice-president of research at the libertarian-leaning Niskanen Center, said Ms Harris's plan to put additional money in the hands of renters may simply lead landlords to increase prices rather than address the scarcity of housing that cuts into renters' bargaining power.

"The problem with housing prices is a lack of housing supply relative to demand," said Mr Wilkinson, who has instead proposed creating a pot of federal funding to reward states that rapidly create new housing stock.

"Cities need to build a lot more units, and fast. A tax credit for renters may take the edge off in the short term, but it does nothing about the fundamental problem and could even make the problem worse." WP