I’m late to this party, and clearly more exciting political news has taken over, but I’ve been thinking about this some more and wanted to share my thoughts. Overall, I think it is a well-intentioned proposal but likely to cause more harm than good. I think it will create some disincentives that will outweigh its potential benefits. I think the proposal may wind up driving up the prices for single-family homes and conversions in desirable city neighborhoods without providing as much market-rate affordable housing as alternatives. As a current owner of a single-family home in an in-demand neighborhood, I may personally benefit from higher prices if the proposal leads to fewer single-family home conversions and increased demand for the existing single-families, but I think it will be a net loss for the neighborhood and city overall.
One group that I think could be impacted by this is families with young children. I don’t have any kids (and I suspect people with school-age children are underrepresented on this forum—would be interested if any one has demographics on forum participants vs the city at-large vs the region overall), but I know several families with kids who live in homes that were converted from duplexes to single family homes. The smaller square footage of older homes is less appealing to them. This is already a demographic the city struggles to retain, and, in my social circles at least, when they stay in the city they often choose Tower Grove East/Tower Grove South/Shaw/FPSE/Botanical Heights areas based on local schools. At the margins, making city properties they might choose more expensive will result in some buying in the suburbs, where the housing stock in general is already more favorable, school districts have better metrics, etc. Probably not a huge number overall, but given how hard it is for the city to retain these families already, I think any disincentives to keeping them should be avoided.
The other structural problem I see with trying to freeze the old stock in its current form is if remote work is a long-standing trend. If so, space for a home office will be increasingly desirable. Conversions offer a way to fit more living space in an existing building, including office space for those who need it. Again, plenty of properties in the suburbs and greenfields for people to move to if they want the extra square footage, and I think that if the market will support them moving to the city instead, we should make it easy for them to do so. There is already some
evidence from NBER that increased remote work was a major contributing factor to the rise in housing prices, and this proposal would be expected to drive up the prices more.
I appreciate the focus of more affordable housing but think there are better ways to fund it. One issue with the way the proposal is structured is that if the proposal stops conversions, it keeps an additional unit on the market at the cost of the disincentives above. If developers think the $10,000 fee is worth it, an additional $10,000 goes to the affordable housing fund, which probably covers about a years worth of rent for the typical subsidized housing unit for a single family--doesn't seem like that much to me. A modest broad-based property tax would generate more money from a wider and more fair base, with predictable receipts rather than dependent on whether developers bite the bullet on conversions or not, and without the negative externalities above. Maybe it could even be progressively structured with brackets? Not sure if city/state law allows for that.
From the supply side, encourage denser development/more units being provided by revising zoning codes for density, streamlining the review process so that current residents cannot quash new apartment buildings being built, and relaxing historic infill guidelines in neighborhoods under significant price pressure and strict guidelines regarding historic examples and precise forms/sizes (Lafayette Square, Soulard, Shaw), maybe tied to meeting certain density metrics, affordability metrics, etc. My real pipe-dream is to re-legalize SROs to provide a housing option in between shelters or city-provided housing and market-rate studios, but I know that is a political non-starter!
