Birth of a YIMBY Folk Hero
Happy Tuesday, and welcome to another edition of Rent Free. This week’s stories include:
- The White House imposes rent controls at federally subsidized affordable housing developments.
- San Francisco undoes reform that had the unintentional consequence of allowing too much housing.
- A new National Bureau of Economic Research study finds that eviction moratoriums led to increased racial discrimination in the rental housing market.
But first, our lead story on a former government employee in California being criminally charged for bringing in a housing project on time and under budget.
Birth of a YIMBY Folk Hero
A former California government agency employee has become a YIMBY folk hero of sorts for building an apartment unit for himself within an existing train station.
This past week, the San Mateo County District Attorney’s Office charged former Caltrain Deputy Director of Operations Joe Navarro and contractor Seth Worden for allegedly misappropriating $50,000 in government funds to convert two closed train station offices into small, private apartments.
According to prosecutors, Navarro built the apartment for himself at the Caltrain station in Burlingame, California, including a shower, kitchenette, and bedroom, for $42,000 in 2019. An anonymous tipster alerted authorities to the apartment in 2022.
The low sticker price of the apartment—publicly funded apartments in California can cost close to $1 million to build—had “build, build, build” corners of X praising Navarro for his economy and thrift.
I’m sorry, they built a dwelling unit for $42,000? I don’t care if the money was stolen, they should be put in charge of California’s affordable housing development, not sent to prison. https://t.co/5Z9a6VRfJf
— Josh Barro (@jbarro) March 29, 2024
knowing literally nothing else about this… go off king https://t.co/0fXsdXM3iC
— Jerusalem (@JerusalemDemsas) March 29, 2024
Caltrain should list these on Airbnb or VRBO or whatever because I NEED to spend a night in the illegal train station apartment. https://t.co/buEexQpzX6
— Max Dubler ????️???? (@maxdubler) March 29, 2024
Much of the unit’s low cost likely comes from the fact that Navarro and Worden did not have to buy any land or build the actual structure in which the illegal apartments went.
Nevertheless, the two have shown how cheaply housing can be delivered if one can route around the cost-increasing red tape that developers normally do—impact fees, zoning approvals, environmental review, building department inspections, and more—when trying to build housing in transit-accessible locations.
To be sure, stealing government funds is hardly commendable. On the other hand, all government funds are stolen from the taxpayer already. By expanding housing supply, Navarro’s black-market apartment also marginally reduced overall housing costs.
The White House’s Rent Control Plan
President Joe Biden’s administration plans to release new rules limiting annual rent increases to 10 percent at federally subsidized affordable apartments.
According to reporting from The Washington Post, the rent cap will apply to roughly a million apartments that benefited from the Low-Income Housing Tax Credit (LIHTC) program.
The new regulations received a predictably poor reception from trade associations representing the real estate industry, who criticized the rules for their potential to limit new housing construction.
“Price controls prevent the market from efficiently allocating scarce resources and discourage the investments needed to expand affordable housing,” wrote Harvard University’s Jeffrey Miron and Pedro Aldighieri in a post published by the Cato Institute.
The administration and other housing experts dismissed the idea that the new rule would impact new supply, telling the Post that even annual rent caps of well under 10 percent don’t deter construction.
That’s a debatable clapback. To the extent that the new rent cap limits rent increases, it will almost certainly limit new supply.
Still, it is worth noting that the properties affected by the rent caps are already price-controlled.
The LIHTC program’s affordability requirements limit rents to 30 percent of a tenant’s income. To be eligible for on
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