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Setting aside for the moment the fact that the so-called Affordable Housing crisis is fake, and ignoring the fact that Connecticut housing stock has grown three times faster than the population, 8-30g should be scrapped both because it is proven ineffective and because it is a very bad deal for Connecticut.
In a nutshell, 8-30g is a 1989 law which allows developers to override local zoning restrictions if they allocate 30% of the units they build as deed-restricted units which may only be bought or rented by lower income families. While there are many questions about 8-30g, including how it prevents families from transitioning out of low-income status by locking them into low value real estate which doesn’t appreciate, the main problem is that 8-30g simply hasn’t worked.
After 36 years, 8-30g provides fewer than half of a percent of housing units in the state, (0.4 percent or 5,632 out of 1.6 million) according to state data, while the state over-all subsidizes 11% of its housing units.
Some claim without evidence, that 8-30g created as many as 8,500 (0.6%) housing. But the real number is likely lower than even 0.4 percent given that the 36-year-old regulation requires deed restrictions which hold for 40 years, yet the state data shows a five percent decline in the number of 8-30g deed restricted units since 2014. This shouldn’t be possible. And, other state data indicates that some towns had more deed restricted units than affordable units. This also should be impossible. And yet elsewhere, the state claims “It is difficult to determine the number of units added to the state's housing stock under the procedure” because records for 8-30g units are managed by local Planning and Zoning.
Either way (0.4% or 0.6%), 8-30g has done next to nothing to produce low-income housing in the State, and 8-30g does have significant costs but these costs never show up on the state budget (which is how politicians like it). Those hidden costs include the cost of unconstrained developments on local infrastructure like roads, sewers and schools; the cost to nearby property values; and, the cost of the litigation that ensues when 8-30g projects are rejected (as is the case in more than 35% of 8-30g projects).
Absent government intervention, surging home prices drive new home development. Not so in Connecticut, for a variety of reasons, including that there has been no job growth in Connecticut since 2000, and a net out migration. As a result, there is little demand outside of NYC refugees in lower Fairfield County causing Connecticut to lag the nation in home appreciation.
But the largest of these 8-30g costs is the cost to nearby homeowners. Americans prefer single family dwellings and this preference has increased since Covid-19, with more than two million people leaving America’s big cities between 2020 and 2022. Such a strong market preference translates into price, and single-family home prices have surged 60% nationally since 2019. Unfortunately, 8-30g is a threat to anyone planning to invest in homes in Connecticut, a threat which is not found elsewhere, and which is part of what stifles growth in Connecticut.
A recent study from NBER showed that the closer a home is to an area with high housing density, the lower its price relative to comparable homes further from high density housing, and the impact is larger if the high density units are multi-family, renter-occupied units like 8-30g units.
Adjusting for factors like schools and age of home, the study found this translates into an average drop of at least 10% in price per half a unit per acre of increased nearby density within a radius of about a half a mile.
Based on Census data, there are approximately 260,000 single family homes in Fairfield County, occupying 344,000 acres of land, or an average of approximately fourteen homes within a given half mile radius, with a median home value of $627,000.
So, an 8-30g development with six affordable units translates into a loss of at least $10 million ($627k*10%*14*6*2) to properties within a half mile (there are additional losses beyond that). There is a corresponding loss of over $100,000 per year in tax revenue to the town ($10MM * 0.7 * 1.75% average tax rate). So, excluding the litigation and infrastructure costs for schools and sewers and so on, each of those six affordable housing units costs the town $15,000 in lost tax revenue.
In Greenwich and similar communities, this is at least triple. The same six 8-30g units cost nearby residents $30 million in lost home value. Each 8-30g unit costs the town $45,000 a year in lost revenue.
Imagine what those low-income families could do with an additional $45,000 or even $15,000 in income each year. To put this in perspective, the total of all housing assistance programs in Connecticut, including federal aid and programs like CHFA provide less than $10,000 per recipient household per year.
Looking at it another way, 8-30g low income residents pay rent as shown here, or roughly $2,100 for a two bedroom apartment which has a market value of $2,700. This amounts to a subsidy of $7,200 a year. Who reaps the benefit of the other $7,800 ($20,000+ in Greenwich) in lost revenues to the town?
It’s no surprise that 70% of new building permits are for buildings with 5 or more dwellings, despite the clear American preference for suburban life and despite the stagnant population?
The two reasons 8-30g hangs around are: First, it’s a “feel good” law that can be touted by politicians who deny the losses and hidden costs because those costs don’t directly impact the state budget. 8-30g also allows these politicians to blame “NIMBY Rich People” despite the clear evidence that the additional infrastructure and other costs impact the middle-class most heavily because for the middle-class, real-estate taxes are a much larger percentage of both income and worth, and home appreciation is a much larger proportion of middle class savings.
Second, 8-30g is a boon to developers who, even when they don’t build 8-30g units, use the threat of 8-30g to brow-beat local planning boards. These developers spend a lot of money supporting “desegregate CT” and those local “feel good” politicians who call themselves champions of the poor, despite the costs and despite clear evidence that 8-30g does not produce results or even helps those 0.4% or 0.6% of households long term.
The truth is that all Government subsidized housing costs 20 percent more per square foot than unsubsidized developments and developers capture nearly all of that difference. This makes rental assistance for low-income households the most cost-effective solution, allowing low-income households to live near their jobs and providing immediate help which does not require any construction.
So even ignoring the negligible impact after 30 years, and even ignoring that developers capture most of the benefits, 8-30g creates a significant net loss to nearby homeowners, which over time translates into reduced tax revenues for the whole state, while at the same time increasing the burden on local infrastructure.
This is a downward spiral which is a proverbially stupid lose-lose solution. Only developers gain at the expense of the nearby homeowners. The towns and the State loses. Meanwhile the state has no job growth to speak of for over 20 years and is losing people and revenue, as politicians get reelected by claiming to be “helping” the poor with bad policies like 8-30g that hurt the middle class and stifle the economy.
Anyone who gives this issue any serious consideration should realize that 8-30g is a terrible deal for Connecticut. When will the voters catch on? They certainly won’t hear this story from the legacy media who are effectively a propaganda arm of the establishment.
