What if NIMBYs got paid to become YIMBYs?
Imagine a large housing development was up for approval in your neighborhood. Would you support it? What if you’re worried about worsening traffic congestion or even what the added density would do to your own home value?
But now let’s say this project came with a twist: You and all your neighbors would make some money from the development. A percentage of the appraised value of the building would get distributed to everyone in your neighborhood.
I think this idea, which I’m calling Community Incentivized Developments, could encourage the construction of new affordable housing.
In Greater Boston and many other US metropolitan areas, the biggest problem in the housing market is too little supply. “We are at a point now where we’re having trouble providing affordable housing for [those] gainfully employed,” says Kenneth Chilton, a Tennessee State University professor of public administration.
One factor restricting supply is the “not in my backyard” effect. Many multifamily real estate developments are approved locally, and residents often oppose them. The truth is that these residents have little incentive to expand the local supply of housing stock.
But those dynamics would change if existing residents got a rebate in return for accepting a new development.
A system like this could create communitywide benefits from development and shift the overall political climate in cities in favor of further building. In turn, this would mean more property tax revenue to fund operations and improve living conditions.
Cities with this pro-development dynamic probably would become likelier to “upzone” — to change zoning codes so as to make dense housing easier to build in certain neighborhoods. And that would make it less complex — and thus less expensive — to build new units.
The amount of money residents would receive would differ with each location and situation.
The payments could be funded in any of a few ways. A development company could pay a fee directly to the local government, as developers often do now in the form of “impact fees” or community benefit agreements — but in this case the money would be distributed to residents. That would raise the cost of a project, but in a highly desired area, a slightly less profitable building that gets approved is better than no building at all. Donahue Peebles III, an affordable housing developer and chairman of Legacy Real Estate, says developers are incentivized to build as long as “the value complete is worth more than the cost to construct.”
Another option, which has been suggested by David Schleicher, a Yale law professor, would be to create a public entity that would pay individuals with money gained from selling bonds backed by the future tax revenue the new development would create.
I realize Community Incentivized Developments probably would not work everywhere. In some neighborhoods, no economically feasible amount of money will turn a NIMBY into a YIMBY. It also isn’t easy to say how widely, geographically speaking, the payments should be distributed, and whether it makes sense for all the payments to be equal.
Kendra Lara, a Boston city councilor who has headed the Housing and Community Development Committee, told me she thinks the idea is “really creative” but added, “I would put a focus on targeting the money towards people who really need it the most.” Says Paavo Monkkonen, a UCLA professor of urban policy: “We should continue to think about ways to more evenly and equitably distribute the benefits of urban development.”
But the ongoing crisis of housing supply demands imaginative solutions. Simply paying people to allow an increase in development might create more affordable home options than the approaches being tried now.