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January 4, 2007

Gov. Kaine, step in now and help the working man buy a home

By and

Given the virulence of the anti-growth sentiment sweeping the state, it was only a matter of time before one of Virginia's counties adopted a building moratorium. In November 2006, Prince William County was the first to take this step, and Loudoun may soon follow.

Pretending that this harsh action was forced upon them by the state government's transportation policies (or lack thereof), the county's clever contrivance will largely serve to (1) further enrich those of its constituents already lucky enough to own their own homes, (2) add immeasurably to the hideous traffic problem that burdens Northern Virginia, and (3) severely limit the economic opportunities for families of moderate means.

Over the past decade or so, Northern Virginia's more distant counties--Loudoun, Stafford, Prince William, Spotsylvania, and Fauquier--have attempted to slow their growth by adopting land use regulations that have the effect of excluding from their communities low and moderate income households.

Of course you can't do this directly--a series of U.S. Supreme Court decisions in the 1930s ruled that it was illegal for communities to exclude people by income. But as country clubs demonstrate, you can do this indirectly by raising the "membership fee."

In the case of Virginia's counties, the implicit membership fee is the price of a home--and by making its housing less affordable to families of moderate incomes, a county can easily limit its new entrants to the better-off.

In an effort to deter growth and upgrade community demographics, in the late 1990s Virginia counties began to adopt a series of restrictive land use regulations to limit the availability and affordability of building lots (down zoning and limited rezonings) and/or impose a substantial implicit tax on all new houses (called a proffer).

These higher fees and artificial land shortages caused home prices to soar, forcing families of moderate means into the rental market, or pushing them to the distant fringe of the metropolitan area--where lower land costs and less onerous land regulations provide affordable housing.

Forced to move farther away from their jobs, the time they spend on the road lengthens, and traffic congestion worsens.

Restrictions = skewed values

Data published each year by the U.S. Census Bureau reveals the adverse impact that Prince William's extant abusive land use practices have caused. In 2000, the median value of a home in the county was $149,600--25 percent greater than the national average.

But by 2005, the census reports that the median home value in the county rose to $391,500, 133 percent greater than the national average.

Reflecting the county's use of high home prices to upgrade its demographic characteristics, over the 2000-2005 period, the median income for households in the county rose 24 percent--from $65,960 to $81,904--while incomes nationally rose by just 10 percent.

Nonetheless, because home price escalation substantially outpaced income growth, Prince William County homes are unaffordable even by the distorted income standards of the region.

And with its new moratorium on home building, affordability will only worsen.

Apologists for counter-productive land use regulations often respond by arguing that the home price inflation is due to a booming regional economy where demand outstrips supply, and is thus beyond a community's control.

And while, yes, the federal government's profligate spending and high salaries have helped juice the local economy, booming metropolitan areas like Atlanta, Houston, and Dallas have managed to maintain affordable housing.

Whereas median home prices in the Washington area reached $431,900 in late 2006, median home prices in Atlanta are $176,100 and are $152,800 in Houston.

Returning to the alibis offered by Prince William County, in fact their land use practices--as well as those of their predecessors, and that of their colleagues in contiguous counties--have substantially worsened the quality of transportation services in the region.

And notwithstanding VDOT's poor performance in recent years, local officials have collectively accomplished this failure by prohibiting or limiting higher density (or any!) development on a substantial portion of close-in vacant land, thereby forcing new households of more modest means to look to the distant exurban fringes like King George and Caroline counties (in Virginia) and Jefferson and Berkley counties (in West Virginia) for affordable housing.

As a consequence of this compulsory commuter diaspora, their daily struggle to get to and from work each day clogs the roads, wastes energy, and soils the air.

Solutions

So what to do? In the center of it all is Gov. Kaine, who has yet to advance beyond campaign promises to give counties more control over growth. In fact, Virginia counties have tremendous control over growth, as Prince William has demonstrated by invoking a moratorium on it.

If such an extreme act of property rights abuse reflects limited control, then the logical enhancement of such existing powers must be to allow them a policy of "ungrowth" whereby existing subdivisions are bulldozed into rubble.

While this seems an awfully harsh assessment on Mr. Kaine's accommodation of what constitutes public encroachment upon an individual's property rights, keep in mind that the state agencies reporting to him--notably VDOT--were exceptionally aggressive during the last legislative session in preserving state and local government's right to abuse eminent domain for the benefit of big business.

Over the past year more than 29 states have responded to the U.S. Supreme Court's recent anti-consumer Kelo decision by adding further protections for their residents' property.

Virginia is not one of them.

Under the circumstances, the governor might want to reconsider his role in this debate, and a good place to start is to remember that he is a Democrat, and that his party has traditionally stood for the rights of the little guy over those of the privileged elites who have often abused their influence to enhance their lifestyles and bank accounts.

Thanks to more than a decade of land rights abuses implemented by local officials, Virginia has managed to achieve the ignominious distinction of experiencing the sharpest decline in homeownership of any state between 2001 and 2005--a period in which the nation's homeownership rate continued to increase.

As the next legislative session unfolds, the governor must decide whether to continue to pander to the wealthy landowners of Fauquier and Loudoun counties, or to the ordinary people now excluded from homeownership through abusive local land use regulations.

Voters will be watching.

Ronald Utt is the Herbert and Joyce Morgan Senior Research Fellow in the Roe Institute for Economic Policy Studies.

First appeared in Fredericksburg.com

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