Dalrymple’s Low Income Housing Scheme Belly Flops

Corral Creek Oil

North Dakota Governor Jack Dalrymple, much like his predecessor John Hoeven, has long been seen as the sort of leader who isn’t exactly a believer in free enterprise. Dalrymple, like Hoeven, believes in an economy driven by government “investment” in the form of a myriad of economic development schemes.

So it wasn’t at all surprising when Dalrymple sought to address western North Dakota’s housing shortage, brought about by an oil boom-driven demand spike, by creating a government fund to subsidize development of low-income housing. But to keep this fund from being a total sop to developers, the idea was to have private sector interests plop money into the fund so that it could, in turn, be used for low-interest loans to developers building low-income housing.

How has it worked out? Not great. Despite the announcement of a $100,000 contribution to the fund today, it is still $3.7 million short of its year-end goal.

It’s not surprising that this didn’t work. After all, there’s already plenty of market incentive in western North Dakota to build housing. The rents in the west, as we’ve heard endlessly from media reports and anti-oil activists, are too damn high. But high rents mean there is still plenty of room in the marketplace for housing to be built.

The surest way to bring down those rents is to remove obstacles to housing supply. Rather than asking companies to give away money to development (and the idea of the government shaking down the state’s businesses for contributions is another topic for discussion), the governor should have focused on easing what red tape may have been unnecessarily restricting construction. The governor also could have pushed back against local moratoriums on man camps, and silly policies such as the restrictions on living in campers in some areas.

Those policies took temporary housing options off the table, and only intensified an already bad housing situation. The governor should have spoke out against the policies. Instead he chose this boondoggle, and to the surprise of nobody, it has failed.

Perhaps Dalrymple will learn from this lesson. Sometimes the best course of action isn’t aggressive government policy aimed at directing private sector investment, but rather an effort to get the government out of the way of the free market.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • http://Sayanythingblog.com The Whistler

    As I said before, the state’s public employees should step up and start fundraising among themselves. Why don’t they show us peons how it’s done?

    • http://sayanythingblog.com Rob

      I don’t get it. Investing in housing in western ND is very lucrative. The people who have money to do it are already investing.

      This was such a terrible idea.

      • JW-American

        It really isn’t a super terrible idea in the fact that buy “investing” in this matching housing scheme you get some matching tax credits, which if you have to pay in anyway like Kevin F does, the housing units get built and the state more or less re-pays you. Better the housing than to a bloated fund.

        The problem is they spent no money marketing the idea. Its almost like they wanted to do something, to appease the voters of western ND, but they didn’t want to spend anything on it, so they roll it out, then keep it quiet and when it flops, blame the non-investors.

      • JW-American

        Rob, the only housing that is very lucrative, is housing that you can charge big bucks for rents. This program was to help build lower rent buildings- was it not? And I can see where finding investors in that would be difficult.

      • kent

        Two types of housing, market rent and subsidized rent. The cost to build in western ND is the same. So as a builder I am going to build Market rent housing, this is the only way to recovery the additional cost to build west of Highway 83. Cost to build in the west is 30 to 40% higher than eastern ND. In addition, the cost of infrastructure is borne by the developer in western ND, whereas in Eastern ND the roads, sewer, water systems can be special assessed, bonded and paid off over time. This makes it dramatically more cost prohibitive to build lower income housing in western ND. As a developer although you would like to build affordable housing in Western ND, the reality is, you can’t you need to build market rate units and hope rents stay high for the next 3 to five years to recover the excess costs.

        As such, that is the need for the incentive for low income housing. The difference in rents charged is made up by an incentive program. This has been done by the federal government for years. Whether it works is debatable, but its nothing new. ND tried with a difficult to understand program.

        What will happen and it will take time is supply and demand. Demand is coming on the market and rents are stabilizing. They are still high, but they don’t seem to going up. As more inventory comes on line, rents will start to moderate. Will they return to the rates of 5 years ago, I doubt it.

        • http://Sayanythingblog.com The Whistler

          You’d think almost all of the existing elderly would already own their homes, giving them the freedom of staying put or selling for a huge profit. Back a few years ago pretty much anyone could buy a house.

          We need more housing because of the workers moving in? They’re not a big problem because they will be able to afford market rent.

        • http://sayanythingblog.com Rob

          I understand the intent of the program, but as you point out the only cure is more supply. I’m sure there are plenty in the Williston area who could afford better did than what they’re in. As more housing come online they can move up clearing out lower value housing.

          But asking companies to subsidize development they’ll never see a return from?

          Silly.

  • NDConservative2011

    It’s not surprising that the governor is not exactly a believer in free enterprise. As a wealthy farmer he has been on the government dole by receiving subsidy payments in the amoujnt of hundreds of thousand of dollars as well as government aid to build a pasta plant.

    • camsaure

      Exactly, Dullrumple is a RINO. How much of his own money did he put into this? He is only interested in the advancement of himself and his cronies. A perfect example is his demand for money in exchange for an easement for rural water to cross his farmland, when almost all farmers allow it to cross for free for community betterment.

    • Mike

      Not hundreds of thousands, but MILLIONS! More than Three Million.

  • Captornado

    Daylpimple is never one to disappoint when it comes to bad ideas.

  • yy4u2

    RINO. Perhaps conservatives need to get a different party as this one has been hijacked by socialist elites.

    • Mike

      Enter Gary Emineth and Kevin Cramer.

      • yy4u2

        I’ve heard them both speak at various functions and enjoy Mr. Emineth’s writings. Let’s hope Mr. Cramer will walk his talk, get a couple of sessions in as ND’s representative and replace Dally’s RINO buddy Hoeven or our brand new Democrat to the core Heitkamp. Gary Emineth does sound gubernatorial now doesn’t it?

        • Mike

          I would support Mr. Emineth in any endeavor he undertakes.

  • Mike

    What do you expect from a government leader who also leads all farmers in the state for dependency on government farm programs? He is not known for private enterprise farm development. He is not a businessman. He is a money-user. You as a tax payer have supported the Dalrymple Farms with millions of dollars not earned by private enterprise, but by government support payments.

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