☆ Mark Burns: Why does so-called “affordable” housing cost taxpayers twice the market rate to build? (2/2)
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Outside of highly regulated government housing projects, which can cost $1 million per unit, the real price of similar dwellings is about half as much. So says Silicon Valley realtor Mark Burns, who provides a healthy reality check in this Opp Now exclusive Q&A. Despite the passage of statewide bonds this year, Prop 5 may have failed because taxpayers are tired of throwing away money and, as he says, lowering bond approval to 55% would be “terrible.”
Opportunity Now: I'm curious why you think Prop 5 failed, but statewide bonds passed. What explains the ballot splitting?
Mark Burns: I think part of it is people feeling like it’s our duty to help pay for schools and clean water. When it comes to local elections, I used to work on a few bond measure committees for Cupertino and Fremont Union High School District; and they would regularly pass above the two thirds margin, 68%, 70%, 72%. Citizens, property owners, people paying those taxes think it's the right thing to do, and figure they can always exempt the seniors from property taxes.
ON: Opponents of Prop 5 pointed out that Californians are generous. Why reduce the threshold to 55%? If a bond is good enough, you'll get that two-thirds.
MB: Yeah, that's exactly right.
ON: Prop 5 didn’t have a specific project attached to it; it was just making a number of new and future bonds easier to pass. Perhaps voters thought it was too risky?
MB: Yeah. Instead of nearly 14 people out of 20 needed to pass something, which is a good number, it would drop it to 11 out of 20.
So, on a rainy day, or any kind of day, all it takes is one more vote out of 20 to get something to pass. So, 55% is terrible.
ON: And that’s all BAHFA would have needed to get RM4 passed, if Prop 5 passed. By the way, why do you think RM4 was dropped from the ballot over the summer?
MB: I bet they were polling between 51 and 55 and got really antsy about it. That’s my own conspiracy theory: there was somebody with a little bit more intuition or understanding who thought, "This could really be a much bigger mess if it fails."
ON: So you don’t think RM4 would even have gotten 55%?
MB: There was a huge headwind on that campaign.
Local cities spend upwards of close to a million dollars per unit for low-income and transitional and homeless shelters. It costs a minimum $700,000 to build a unit.
I think down in Santa Monica, they just passed $132 million to build 122 housing units. That's absolutely crazy. And when they announced it, I thought, "Hey, two years ago, I sold four units in downtown San Jose. Two were under $500,000. Another two were under $600,000. Then I sold one in Gilroy; it was 900 square feet. It sold for, like, $450,000."
How come they can't build new units like that? Why does it have to be double that? It just makes people scratch their head and say, "No, I'm not throwing away all that extra money."
I mean, how awful. Why would they want people to live in shipping containers that were converted to housing?
ON: Are taxpayers in California getting wary?
MB: I think there’s a slow change. It takes decades, but people are getting sick and tired of throwing money away at this stuff. The intolerance is building up.
Down the road, there will be a need for a really good campaign to explain to voters why something is beneficial to the community. That's all we saw when I was a little kid, signs saying “Your tax dollars at work” as you're driving down the interstate highways.
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