Affordable housing, part II

Developers of vertical mixed uses must set aside 10% of the units for low income families.  I noted some of the problems with these set asides in a recent post.  The City Council discovered another problem at its last meeting:  homeowners association fees.  These can be huge.  The Austin City Lofts' are $575/month.  The Nokonah's are over $700 per month.   (Since the condominium owners have no incentive to tax themselves unnecessarily, I assume these reflect the real costs of maintaining and operating these properties.)

As McCracken recognized, the "affordable" units in condominium development won't be affordable for long if low-income residents are asked to pay the same dues as everyone else.  (He worried without a trace of irony that HOA fees might make affordable housing merely "symbolic.")  But, as Kim recognized, if you fix the rate for the low-income residents, the other homeowners will have to pay more, which, she argued, would be unfair if there was a special assessment for a new roof, etc. 

That's a tough one.  But I think I have a reasonable solution.  Let the developer donate the amount of the subsidy -- the difference between the market price and the "affordable" price -- directly to the low-income family.  For example, suppose the project has a quota of four affordable units, each with a market value of $400,000 but an "affordable" price of $100,000.  The developer could give $300,000 to whichever four households the City identifies.  The developer could then sell the four units at market rates.

The developer should be indifferent to this; its net revenue will be the same either way.  It might even have lower administrative and marketing costs.

The low income household will be better off because it's better to get $300,000 in cash than $300,000 worth of condominium.  It can spend all the cash on housing (even on the condominium) or spend some on a car, or clothes, or retirement, or whatever.   

The other condo buyers will be better off.  They may still have to cover the cost of the initial subsidy (that'll depend on how much demand there is for the units when they're being marketed), but they won't have to pay someone else's share of HOA dues indefinitely.

The City's better off because it doesn't have serve as a super nanny for HOAs, which would take lots of regulations and lots of people to enforce them.

The only drawback to this suggestion, of course, is that it is a patently absurd affordable housing program.  The scandal is that it is an improvement in every respect on the affordability quotas the Council just enacted for VMUs.