Monday, September 22

Failed policy - Rent 'Control', Causing Poverty?

There has been lots of news about Charlie Rangel and his about of subsidized housing, among other things. But there is a bigger issue here being subsidized housing itself.

Take this comment from Obama Campaign Manager David Plouffe:
Community organizing is how ordinary people respond to out-of-touch politicians and their failed policies. - National Review
How is it that for some reason many failed policies tend to be in areas of the country controlled by Democrat politicians?

Take Rent control and rent stabilization. The idea is to protect the poor with low cost housing. However, the way the system works, as in New York City, rent control apartments are currently only held by elderly people. That sounds good right? Well many of these people have children who (rightly so) also live with their parents/relatives to take advantage of the low cost housing.

Rent Control, New York:
To qualify for rent control, a tenant must have been living continuously in an apartment since July 1, 1971. When vacant, the unit becomes rent stabilized, except in buildings with less than six units, where it is usually removed from the program. In some cases a tenant living in a one or two family home may qualify for rent control if the tenant has lived there since 1953 , however once the apartment or home has been vacated the home or apartment (if in a 2 family) is deregulated. - Wikipedia
Rent Stabilization, New York:
Tenants living in buildings built between February 1, 1947 and January 1, 1974, or who moved into a pre-1947 building after 1971, or who moved into certain post-1974 buildings that received tax breaks, qualify for rent stabilization if the other financial terms are met, and the tenant moved into the unit before July 7, 1993. As part of city managed programs Some buildings become temporarily rent stabilized in return for a temporary reduction in real estate taxes when those buildings have been converted to residential use from another use group (i.e. commercial or industrial). Two of those programs, J-51 for renovated buildings, and 421-a for new construction grant temporary rent stabilization to tenants of apartments in those building, overriding other qualifications. - Wikipedia
Do you see the problem here? In an attempt to 'help' these people they have turned them into rent slaves, trapped to live in specific homes, and as it happens, in specific congressional districts. And this is a big problem because over time businesses move, bringing and taking jobs with them. One reason that businesses move is because the price of real estate increases. I bet there was a lot more manufacturing done in Manhattan in the '60s and '70s than now. The jobs over time moving to cheaper locations in the other bureaus or to the suburbs, if not further afield. These jobs that low income families depended on were replaced with much higher-paying jobs, which they were not qualified for due to a lack of education and experience. Worse, the low-cost housing distorts their impression of the actual cost of housing. While they can find jobs that pay much more by moving to where the jobs are, the increase in salary fails to encourage a move because the greater increase in rent appears unjust since the new rent is no longer subsidized or they are not able to find an available rent stabilized apartment near the new job.

One solution that has popped up on the left to solve this problem is to export subsidized rent. That is a real bad idea:
As Program Moves Poor to Suburbs, Tensions Follow
ANTIOCH, Calif. — From the tough streets of Oakland, where so many of Alice Payne’s relatives and friends had been shot to death, the newspaper advertisement for a federally assisted rental property in this Northern California suburb was like a bridge across the River Jordan.

Ms. Payne, a 42-year-old African-American mother of five, moved to Antioch in 2006. With the local real estate market slowing and a housing voucher covering two-thirds of the rent, she found she could afford a large, new home, with a pool, for $2,200 a month.

But old problems persisted. When her estranged husband was arrested, the local housing authority tried to cut off her subsidy, citing disturbances at her house. Then the police threatened to prosecute her landlord for any criminal activity or public nuisances caused by the family. The landlord forced the Paynes to leave when their lease was up.

Under the Section 8 federal housing voucher program, thousands of poor, urban and often African-American residents have left hardscrabble neighborhoods in the nation’s largest cities and resettled in the suburbs.

Law enforcement experts and housing researchers argue that rising crime rates follow Section 8 recipients to their new homes, while other experts discount any direct link. - (Found at JustOneMinute)
The problem noted above is partly due to the fact that those benefiting from the program don't pay the true cost for their housing. In the example above, the renter was only paying thirty percent of the cost of her housing. Then there is all sorts of outright fraud. By people who conceal their actual income. By people who assume residence of their parent's rent controlled apartments as they leave. Even politicians have been caught abusing the system.
While aggressive evictions are reducing the number of rent-stabilized apartments in New York, Representative Charles B. Rangel is enjoying four of them, including three adjacent units on the 16th floor overlooking Upper Manhattan in a building owned by one of New York’s premier real estate developers.

Mr. Rangel, the powerful Democrat who is chairman of the House Ways and Means Committee, uses his fourth apartment, six floors below, as a campaign office, despite state and city regulations that require rent-stabilized apartments to be used as a primary residence.

Mr. Rangel, who has a net worth of $566,000 to $1.2 million, according to Congressional disclosure records, paid a total rent of $3,894 monthly in 2007 for the four apartments at Lenox Terrace, a 1,700-unit luxury development of six towers, with doormen, that is described in real estate publications as Harlem’s most prestigious address.

The current market-rate rent for similar apartments in Mr. Rangel’s building would total $7,465 to $8,125 a month, according to the Web site of the owner, the Olnick Organization. - New York Times
And it gets worse:
Rangel owned a villa in Punta Cana, and didn't always declare the income from the renting of the property. That violates federal laws: [see his post for relevant news extract]

Rangel loves to live the high life, and claim that he's for the common man. Too bad he doesn't follow the law like the common man.

The property was rented over the past two years, and yet Rangel didn't declare income for either 2006 or 2007. That's quite curious. The resort claims that the property was utilized - meaning it was rented with rents ranging from $500 to $1100 per night depending on the season - and yet Rangel doesn't claim income from the rents? More to the point, Rangel says that this is a private matter? - A Blog For All
Now poverty is a real problem in America. However the current actions to reduce poverty do not address one of the contributing factors, that is a lack of mobility of the workforce of the poor. Rent subsidy, at least in its current form, is a contributing factor in this lack of their mobility. This is a serious issue. Much of the population of this country has to relocate to where the jobs are. For some reason, one section of the population has not been encouraged to chase work other than what they can find locally. They are told by their leaders/community organizers that their situation is not their fault, in effect discouraging them from trying to solve the problem themselves. Instead being given all sorts of aid, which instead of helping them better themselves, makes them dependent on it and those who promise them more, trading this aid for their electoral support.


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