North Idaho Slow Growth

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    Why Mixed Use Development is a Menace to North Idaho

    The destiny of Kootenai County will hinge on how successfully its residents resist "Mixed Use" development.   This article will explain why this zoning type—which has proven harmful even in urban areas—is a particular menace to suburban-rural Kootenai county.  


    Mixed Use is a zoning category preferred by developers who intend to build large-scale, high density complexes incorporating both residential and commercial rental units.  The main benefit of mixed use for investors is that it allows the conversion of prime commercial property into high density housingBecause of this, Mixed Use developments have been the primary means of increasing densities of established cities for the last 20 years.

    The commercial zones of most cities are located along arterials and in order to acquire these valuable properties real estate investment firms build complexes with “retail” on the bottom floor and apartments above.  This has a number of advantages for developers:

    • Local residents are less likely to object to high rise buildings and high density development in commercial districts than in residential areas.
    • Apartments can be close to public transit so developers can request they be built with minimal parking accommodations.
    • Complexes can be promoted as “urban villages” and “walkable communities” instead of what they really are—Gigantic, high density, corporate-owned apartments.
    • Older, inexpensive commercial buildings and apartments can be expropriated by Urban Renewal Districts in order to make way for new development. 

    The problem with Mixed use is not so much the concept of mixing residential and commercial zoning, as it is the scale of development.  Many older commercial buildings had apartments above them, but they were few in number and privately owned.  But Mixed Use zoning, as it has evolved in recent years, is primarily geared to large scale corporate developers, who work with government agencies to qualify for tax credits and subsidies.  Virtually every city that has embraced Mixed Use development has done so at enormous public expense, and the over-development of mixed use complexes have very negative effects on communities


    One of the problems with Mixed Use Development is that it is far more expensive than conventional multi-family housing, and in most  cases depends on generous public financing.  This HUD Slide show on Mixed Use Development  openly discusses the difficulties combining commercial and residential properties.  Problems include:

    • High construction costs because of expenses associated with parking structures, firewalls, elevators, fire suppression systems, and municiple design standards.
    • Projects with multiple uses are inherently more complex and less efficient to design, finance and manage
    • “Affordability gaps” associated with both housing and commercial uses (i.e. target tenants unable to afford market rents.)
    • Unwillingness of private capital to fund development unless incentivized by tax credits.
    • The majority of mixed-use projects, both nationally and locally, require significant public subsidies.

    No one denies that Mixed use developments may make sense in resort areas or upscale urban neighborhoods where there is a high demand for luxury condos and apartments.  But in suburban-rural areas, there are less expensive options for low cost housing.  Manufactured homes, duplexes, and small scale apartments are more economical per square foot than Mixed use projects, easier to build, and offer opportunites for home ownership.    The sudden profusion of Mixed Use zoning in Kootenai cities is based on a percieved need  for “affordable” housing, yet Mixed Use is the most expensive, least practical way of addressing affordability problems.   Something doesn’t add up.


    The problems associated with “affordable” Mixed Use developments seem insurmountable,  but with the miraculous intervention of government subsidies and tax credits, an impractical and overly expensive building type has become a cornerstone of “affordable housing”.  We have shown that in cities like Seattle, with a twenty year history of skyrocketing rental rates, tax credits and government subsidies are behind the proliferation of over-priced, mixed use development. But even in Idaho there are an astonishing array of tax breaks and "incentives" available to investors who know the ins and outs of government handouts.   Here are just a few:

    • Urban Renewal Districts:  Over 16 UR agencies registered in Kootenai County alone. All are authorized to use tax dollars to subsidize and "incentivize" private development projects.  
    • Low Income Housing Tax Credits:  The holy grail of "affordable housing" grifters.  Investors who finance "low income" housing can be paid up front for decades of projected rental subsidies.  In Idaho the program is administered by IHFA,  a private equity corporation charted by the state.   
    • Housing Choice Vouchers:  (a.k.a. Section 8)  Federal subsidies paid directly to property managers.  (Also run by IHFA).
    • National Housing Trust Fund: Yet another federal "Affordable housings" slush fund established by Idaho's own Sen. Crapo. 
    • Panhandle Affordable Housing Alliance: (formerly North Idaho Housing Coalition) Local non-profit established to lobby for affordable housing and to help "negotiate the maze of federal, state and local requirement" for government subsidies.  (Also funded by IHFA, NHTF, etc.)
    • CdaEDC: (formerly Jobs Plus) Regional Economic Development Corporation dedicated to helping developers qualify for a vast array of State and Local Tax Break, Tax Credits, and Incentives.   

    And we haven't even be begun talking about the Local Initiatives Support Coalition, Opportunity/Empowerment Zones, Community Renewal and Rural Renewal Tax Credits, New Market Tax Credits, the Neighborhood Reinvestment Corporation, the National Low Income Housing Coalition,  or the HUD Fair Housing Assistance Program.   The selection of grants, subsidies, non-profits, slush funds, and tax-credits available to well-connected developers in the name of “affordable housing”  is utterly mind-boggling.  

    A Treasure Trove of government "incentives" are available for the taking, and Kootenai now has a Regional Housing and Growth Issues Partnership that is preparing to lead the charge on the Billion Dollar Affordable Housing cookie jar.   Unfortunately, the only long-term effect of these subsidies will be to irretrievably distort the local rental market and incentivize all the politicians, social service agencies, and developers who feed off the government trough, to perpetuate a permanent housing crisis


    The owner-occupancy rate in Kootenai County is over 70%, and home-ownership is an essential core value of current residents.   It is a well established fact that increasing the supply of rental  "housing" does nothing to lower home prices, so it is an ominous observation that NONE of the compehensive plans passed by Kootenai cities recently makes any mention of  preferencing  home ownership opportunities.

    Instead of promoting home ownership, regional planners are actively working to undermine it. The vast majority of anticipated housing development in all cities is presumed to be rentals, so much so, that by the time the region is "fully developed", the anticipated owner-occupancy rate of Kootenai is on track to drop below 45%.   This appears to be intentional.  Mixed Use developments are usually impossible to subdivide for private ownership except as condominiums.   And unliked traditional Multi-family zoning,  which allows for privately owned duplexes, townhomes, and  multi-family, Mixed use complexes are almost exclusively developed as large scale corporate rentals


    The harmful effects of Mixed Use development on a city's business district is another topic that is rarely address.  Mixed Use developments offer retail space, but they are expensive relative to neighborhood hubs, offer limited parking, and can only accommodate a limited type of enterprise.   The proliferation of Mixed Use Developments tends to destroy a city's stock of older, inexpensive commercial properties, and drives up the cost of all commercial real estate.   Many small scale businesses simply cannot compete with large real-estate investment firms that buy up all available business properties in an area to make room for large scale developments.  


    Over development of Mixed Used housing is a greater threat to Kootenai County than is acknowledged by city planners or understood by most citizens.  Kootenai is just starting down the well-trodden path to the permanent destruction of its small-town character, culture of home ownership, and civic cohesiveness.  The fatal combination of high density development, socialized housing, distorted rental markets, traffic congestion, colonized commercial districts, and have vs. have not social pathologies,—all provided courtesy of Mixed Use development,—will grease the skids.   

    Here in Norther Idaho we pride ourselves on our picturesque surroundings, but the Pacific Northwest is breath-takingly beautiful as well, and only thirty years ago Seattle was a pristine gem of a city.  Sixty years ago sunny, scenic California was a veritable paradise.   Both are now dystopian hellholes, whose desperate residents are attempting to make a run for Idaho.    If we want to get where Seattle and California are on a fast train, Mixed use will take us there posthaste.  


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