Wauwatosa wants to do a housing study...again.
I.
On March 29, the Wauwatosa Common Council’s Financial Affairs Committee voted to recommend a non-competitive bid of $69,660 by SB Friedman Development Advisors to complete a study of the City’s housing availability and future needs. The motion passed with a vote of 5-2.1
But the City commissioned almost the same study from the same consultants in 2016—it was called the Comprehensive Housing Study and Needs Analysis—and now they want to do it again. The goals of the new study would be to:
Update all core analyses from the 2016 Study, using the most recent data available, which will include a combination of 2020 Census, 2016-2020 American Community Survey 5-year estimates, and other data
Provide breakdown of key data points by race when available
Conduct key stakeholder interviews, including but not limited to members of the Senior Commission, Disabilities Commission and Equity/Inclusion Commission
Conduct new public online survey and one in-person public input session
Provide graphically oriented briefing book visually displaying new analyses with descriptive comparison to the 2016 Study when appropriate
Present findings to the Common Council
Ald. Kofroth, who did not ultimately recommend approval of the contract, was skeptical:
Have we gone through the other study and essentially completed or addressed all the items in that already? That we’re now ready to hit additional topics that we anticipate would be in a new study? Or are we still working through some of those items in the study from 2016?
A staff member responded that after SB Friedman presented the results of their original study in early-2016, the City entered into a second contract with them to further refine their general conclusions and recommendations into a menu of specific policies, funding mechanisms, and zoning changes that the City could implement to address the projected demand for housing. These recommendations appeared in another report called the Housing Policy and Action Plan which was completed and presented approximately 18 months later in September, 2017. The city took a subset of these recommendations to craft their Economic Development and Investment Policy which was presented and approved by the Common Council in December, 2018.
The staff member also explained that she anticipates roughly the same product as the previous Comprehensive Housing Study and Needs Analysis but with updated recommendations based on current conditions and new data. And as an example of a tangible result from the last study, she mentions an ordinance that was passed to allow the construction of Accessory Dwelling Units (ADUs or “in-law suites”) in response to the that study.
However, from what I can tell, the reason the second, $68,300 Housing Policy and Action Plan had to be commissioned in November, 2016, was because the recommendations in the original study were too vague to be actionable2. And the specific recommendation about ADUs was not actually a part of the original study but a part of the follow-on study. Which makes me think that if the contract is for something exactly like the first but updated to include new data, it won’t have any useful recommendations.
Ald. Kofroth also remained skeptical:
We saw this with the […] audit of the police department. Where we started talking about doing a new one, yet there was a whole list of items in the prior one that had not been even addressed. […] I think the City gets too comfortable doing these studies—just to say that we’re doing something—and then we spend a whole bunch of money on a consultant to do something, and then we don’t even address half the items that are listed in it. And then we think doing another study is going to bring up a bunch of other items that we are maybe more willing to do. So, I just wonder often times [if] it’s a waste of resources; we could put these grant funds into something else that maybe has more meaningful impact in the short-term versus hiring another consultant.
II.
So what did the original study say?
SB Friedman Development Advisors completed the Comprehensive Housing Study and Needs Analysis for Wauwatosa in March, 2016. The goal was to determine how well current housing met the needs of workers and residents and how those needs might change over the next 15 years. More specifically, it looked at whether the current rate of multi-family housing construction was sustainable; the ability of seniors to age in place; the availability of appropriate housing for the disabled; and potential policies, funding, or programs that the City could use to meet future needs.
Their 76-page report concluded that:
Moderate population growth of approximately 2,100 new residents, combined with key demographic shifts, typical replacement of existing housing stock, and normalization of vacancy rates, is anticipated to generate demand for an additional 2,227 housing units by 2030, including:
1,084 new units from 2013 through 2020,
759 new units from 2021 through 2025, and
384 new units from 2026 through 2030
They project the average Wauwatosa resident to become older and more affluent and recommended building more multi-family residential units and condos to accommodate them as about 75% of demand for new housing would probably be for these two types of units.
The report also recommended that if the city wanted to capture additional regional growth, it could also facilitate the creation of more starter homes, high-end single family homes, subsidized workforce housing, ADA-accessible housing, and programs and funding to help owners rehabilitate aging homes. This could be done through existing TIF programs, modification to existing policies that would encourage development of desired housing types, modified zoning regulations to allow the construction of ADUs, and purchasing and aggregating developable land.
III.
And why do the study in the first place?
From what I can tell, it was because people kept complaining. According to the February, 2016, Community Affairs meeting where the Comprehensive Housing Study and Needs Analysis was briefed, the City budgeted money for a study, because every time elected officials saw a new developer proposal up for approval, they would complain that too much multi-family housing was being built. Community members would complain that the new housing didn’t meet the needs of current and future residents, because it was geared toward high-income young professionals moving in from out-of-town and not the empty-nesters who would like to sell their big single-family detached-home and move into something smaller.
Housing is contentious. Disability interest groups want housing that is affordable and accessible. Older people with adult children don't need a big single-family home but want something at least large enough to house their kids when they do visit. Others worry about too much new construction. A common refrain among residents during public comment periods for almost any new development is how all the housing and office space being built is under-utilized and developers keep erecting these monstrous buildings that nobody needs. While I would note that, absent weird public funding schemes that distort incentives, developers are unlikely to build something that they don’t reasonably believe they can make a profit on, it’s also true that a study like this lets the City respond with, “Between 2000 and 2013, vacancy has declined from 0.5% to 0.1% for owner-occupied units and from 3.5% to 3.1% for rental units.”
And the follow-on Housing Policy and Action Plan did seem to produce a number of recommendations that the Common Council has subsequently acted on. Some of these included:
Creating a revolving rehabilitation loan fund (Recently funded with ARPA grants as discussed here)
Allowing construction of Accessory Dwelling Units, and
And there may be more that I am not aware of.
In other ways though, some elected officials seem intent on making housing demand more difficult to meet. The Housing Policy and Action Plan recommended relaxing C2-zoned residential density restrictions3 to make development easier, but recent proposals by some alders aim to make C2 zoning more restrictive4. Similarly, the report recommended expanding residential zoning options so that fewer multi-family projects required rezoning to add Planned Unit Development (PUD) overlays, a mechanism that allows greater residential density but that also requires more approvals and makes it more likely that projects will be stalled or prevented altogether. But I am not aware of any effort to do so.
IV.
So, the City of Wauwatosa did a housing study (Part 1) in 2016 and then a follow-on report (Part 2) to organize recommendations for a city-wide housing policy in 2017 and 2018. While they took some of the recommendations, they’re trying to do the opposite of a few others. And now the City wants to do Part 1 again, even though many didn’t like all the recommendations the first time around, but I guess that’s okay because they’re not asking for new recommendations (Part 2) anyway.
I would also imagine that a lot of the data that gets collected for Part 1—demographics, housing inventory, housing preferences—hasn’t changed much. The age of the city’s housing stock is probably about six years older5 than it was in 2016. And the original report did projections out to 2030. Insofar as the original projections were accurate, they shouldn’t need to re-analyze everything, and insofar as the projections were not accurate, why are they commissioning a new study from the same people that got it wrong the first time? And suppose the contract did include the development of new policy recommendations (which it doesn’t), do they really expect them to be substantially different than the ones from a few years ago?
Maybe they do, but I didn’t actually hear anyone make that argument.
As far as I can tell, there are two big reasons to do this study:
As a former alder said during the 2016 meeting:
It's great, and it validates a lot of things. There's a lot of armchair aldermen out there who, every time we decide to build something or every time we decide to TIF something, they'll second-guess it [and say], Why are you building that? And now we've got the data that shows there's a need for that, and we've got a need for that over the next several years.
So it’s a way to silence naysayers who complain that there’s no demand for additional housing as a reason for denying development proposals. And I mean, as far as those complaints don’t have a basis in fact, it seems reasonable to point that out.
And it acts as a marketing tool for developers. As some of the alders and city employees mentioned in 2016:
I think that this study will be a good marketing tool that, as we work with those developers that come in and have an interest in developing Wauwatosa, we can show the need that is out there. And I think that this will be a big plus in our toolkit when working with our developers and trying to get the right housing mix in Wauwatosa.
So, it’s a document that the City can use to solicit potential developers by showing them that there is demand for particular types of housing. It’s also likely a way for some in City government who want more development to convince others that we need to approve tangible financing incentives and subsidies that they can offer to these developers, if necessary, to make the proposal more profitable. In return, the City can make certain demands on what ultimately gets built (e.g. some minimum number of affordable units).
The study, in this way, helps reduce information asymmetries so developers can more accurately identify and gauge demand. And the city can act as a broker for buyers (disabled groups, empty-nesters, young professionals) and sellers (developers). The city, in a sense, helps clear the market. Which makes me wonder if there aren’t other more effective or more efficient ways that this could be done. Doesn’t Zillow track housing demand continuously? Shouldn’t developers be willing to pay money to figure out the housing needs of a city so they can come in and build things? Why isn’t this happening? There are probably reasonable answers to these questions, I just don’t know what they are.
I don’t think these are necessarily bad things for a City government to do, but I will note that people often worry that government becomes too beholden to the interests of businessmen. Wealthy developers can bring money to the community and in return, elected officials or government employees will adjust rules or regulations to attract them. To some extent this is how governments should work—they should try to make their community a desirable place in which to live and do business. But it’s very hard to get the incentives right, and citizens often feel that their concerns are ignored. And of course, people always worry about corruption and whether the interests of elected officials and city employees are truly aligned with the interests of the community members they supposedly exist to serve. One way to prevent this is to only elect and hire government workers of great personal virtue and integrity who are impervious to such temptations. I think humanity’s track record with this strategy is poor.
But another way is to minimize, as much as possible, the ability of elected officials and government employees to pull these levers of power to begin with. People get upset when others build things next to their homes that they don’t like, and the response is often to insert numerous checks and constraints or otherwise increase the government’s role in ways that are well-intentioned but that suffer from principal-agent problems. This study seems like a small example of that. Well-meaning efforts by citizens to control what gets built spawn expenditures of government resources to fund studies so that the same government can turn around and tell people their concerns aren't warranted and attract preferred developers to build things that many people would rather not have built.
People often wonder how government can feel bloated or unresponsive to its citizens. And I think it is often the slow accumulation of little things like this.
The resolution went up for a vote by the Common Council on April 5, but I cannot tell if it was approved or not.
I’m not implying that the first report was poorly done. I think the contract only called for data collection and analysis. The follow-on contract involved additional case studies and interviews to support their proposed recommendations.
An important component of the saga behind “John ‘Johnny V’ Vassallo to build 28-story middle finger in Wauwatosa”
I plan to write about this more next week.
Although not quite six, since some new buildings have been constructed and old ones demolished.