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Bribing Homeowners To Build Tiny Houses Won’t Solve NYC’s Housing Problem

New York Post

November 27, 2023

Those who believe New York City not only needs more housing but more types of housing to serve its many types of households should be cheered by the Adams administration’s support for “granny flats.”

These small “accessory dwelling units” built in backyards, converted basements or converted garages can help homeowners pay their mortgages and older adults stay in their neighborhoods.

But leave it to New York to mess up a good idea.

City Hall plans to pay — bribe? — 15 homeowners up to a staggering $400,000 each to build an ADU on their property.

And, of course, that subsidy comes with strings attached: “affordability” income restrictions for future residents and, yes, rent control, with a $2,600 a month cap.

This is the opposite of the type of zoning reform New York City needs.

Rather than further distorting the housing market, already saddled with a million rent-regulated units and hundreds of thousands of “affordable” units, the city should free homeowners to build small, cheap ADUs that are naturally affordable — because they’re small and cheap.

Keep in mind that what may seem like a tiny unit — the city envisions 750 square feet — is about the size of a postwar house in Levittown.

The model for Gotham should, surprisingly, be California, which has sharply checked the power of localities to limit ADUs, thanks to 2019 YIMBY (yes in my backyard) legislation.

The law includes such free-market improvements as eliminating ADU minimum lot sizes and so-called “impact” fees (regulatory costs) for units 750 square feet or smaller and not requiring owner-occupancy — all zoning tricks localities had used to keep them out.

California also requires authorities to rule on an ADU permit request within 60 days.

In other words, the Golden State took steps to let the market operate.

If it turns out no one wants to live in a tiny ADU, builders will opt for bigger ones.

Better not to tell them what size is best nor assume costs will be exorbitant.

Why should it take $400,000 to build a tiny house, after all?

California’s results have been promising.

“Between 2019 and 2022 the number of ADUs permitted grew 88%,” the Cato Institute reports.

Constructed ADUs rose from “5,852 in 2019 to 17,460 by 2022 (an almost 200% increase).”

Without a $400,000 subsidy per unit — and without rent controls.

Other states, including Massachusetts, where single-family zoning has been the norm — as it is, surprisingly, in Queens — are looking to Sacramento as a model.

The Bay State is rediscovering the natural affordability of its pre-zoning standard of two- and three-family homes.

(Although Boston Mayor Michelle Wu is toying with bringing back the housing insanity called rent control, guaranteed to limit new construction and encourage the low turnover that plagues New York, making it hard for newcomers to find a place to live.)

Cities were able to provide naturally affordable housing before zoning strangled housing variety.

Between 1870 and 1940, Brooklyn built some 120,000 buildings with ground-floor retail and upper-floor apartments, often occupied by those who owned the stores.

In Philadelphia during the same period, 299,000 small attached, single-family rowhouses accommodated that city’s waves of immigrants.

And in Boston, 60,000 units were found in the city’s trademark “triple-decker” frame homes — where extended families often lived under one roof.

This is the sort of housing variety we need to rediscover.

To underscore: New York and the nation need not just more housing but more types of housing.

The Adams administration had, until the ADU-bribery idea, been on the right track with zoning reform.

Proposals to allow incrementally more density — including the time-honored outer-borough model of small apartments on second and third floors above stores — and relaxing parking requirements are both steps in the right direction, as even the liberal NYU Furman Center has signaled.

New, high-cost subsidies for what should be units homeowners will want to build — because they make financial sense — are a way to spoil a good idea.