2013-02-28 / Front Page

Subsidized sprawl

Federal spending on real estate is more likely to benefit single-family homes than multifamily housing, advocacy group study shows

A new study indicates that the sprawled suburban development of primarily single-family homes is disproportionately encouraged by Uncle Sam.

The study, conducted by Smart Growth America, a land development advocacy group based in Washington, D.C., found that the federal government spends $450 billion per year on real estate in the form of tax expenditures, loan guarantees and low-interest loans and grants. This spending has a powerful effect on the U.S. real estate market, impacting where real estate is developed and which projects are constructed.

The study further revealed that small multifamily buildings are less likely to receive financing, even though most U.S. renters live in these smaller buildings.

According to SGA, which, according to its website, “works with communities to fight sprawl and save money,” these federal expenditures are not coordinated across agencies or for national outcomes. Ilana Preuss, SGA’s vice president/ chief of staff, says, “Right now, it’s essentially a bunch of programs operating independently of one another.”

For example, there’s no cross-program intent to reinvest in existing communities, which can increase property values and save taxpayers dollars by reusing existing infrastructure.

“If we never maintain what we have, if we never reinvest, we’re subsidizing development farther from our neighborhoods,” Preuss says. “This bleeds tax dollars because we have to build roads and sewer systems from scratch and won’t return as much value.”

Preuss says that people who want to live near jobs, schools and neighborhood amenities and save money and time spent on transportation should resist sprawl and the federal government’s actions that lead to it.

SGA advocates for the following guiding principles for real-estate investment:

 Support balanced housing choices (single-family and multi-family homes).

 Reinvest in existing neighborhoods.

 Provide a safety net for American families.

 Help more Americans reach the middle class.

— Erik J. Martin

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