A Framework for Detailing How Local Policies Impact Housing Affordability
By Pamela Martineau
7 min read
National Multifamily Housing Council’s Housing Affordability Toolkit
Developers and affordable housing advocates looking to provide detailed presentations or facilitate discussions on how local governmental policies impact housing affordability need look no further than the National Multifamily Housing Council’s (NMHC) Housing Affordability Toolkit.
Launched in 2018, the NMHC Housing Affordability Toolkit, developed in conjunction with HR&A Advisors, Inc., provides one-stop shopping for developers and others looking to put together nuanced presentations on how governmental policies impact housing affordability, and rents specifically. The toolkit includes detailed graphics and charts outlining the impacts of specific governmental levers.
“It is designed to be used by developers and planners to bring to local policymakers and community members to help explain how to tackle affordability issues,” explains NMHC Vice President of Research Caitlin Walter, Ph.D. “It was designed to be used in pieces.”
Impetus for the Toolkit
NMHC launched the toolkit to help provide a nuanced discussion of the growing housing affordability crisis and how it is impacting people across many income levels in communities throughout the nation.
The Housing Affordability Toolkit is broken into six sections:
- National Trends;
- Cost Drivers;
- Multifamily Benefits;
- Affordability Strategies;
- Incentives to Develop; and
- Tools and Case Studies.
Each section drills down into the particular policy issue, providing context on the issue and in some cases, how communities have grappled with the issue. Each section can be used alone or in conjunction with other sections to help guide discussions.
National Trends
The National Trends section details the macro housing market trends and primary factors impacting housing affordability. It cites the shortage in rental housing and increased demand, increasing development costs and stagnant incomes as leading drivers in the nation’s growing housing affordability crisis.
This section quantifies and depicts national trends as they pertain to the Shortage of Rental Housing, The Changing Renter, Rising Development Costs, Stagnant Incomes, Upward Pressure on Rents and how Affordability Challenges Spread.
Notably, the Rising Development Costs section illustrates how hard costs increased by 57 percent from 2000 to 2016 and land costs have increased by 100 percent. Followed by the Stagnant Incomes, which shows how renter income declined by 5.5 percent from 2000 to 2016.
An infographic depicting the “plight of low- and middle-income renters between 2000 and 2016” (Shortage in Rental Housing) explains how the U.S. needs to produce 4.6 million new apartments by 2030 to keep up with demand. According to The Changing Renter, since 2000, the number of renter households has grown by more than eight million and the number of middle- and high-income renters has increased by 13 and 27 percent, respectively.
Cost Drivers
The Cost Drivers section deploys 16 smartly designed graphics to detail the true costs of developing and operating apartments and how those costs impact affordability. This section also outlines the nexus between costs and rents and shows how state and local policies impact affordability.
Several of the graphics detail the impact on rents of various government policies. For instance, Approval Delay and Additional Studies show how a six-month delay in development approval and $200,000 in additional studies can increase rents from $14 to $30 a month. The Community Exaction graphic depicts how a community exaction for public open space costing $600,000 to secure approvals can increase rents from $20 to $50, and Tax Increase outlines how a rise in property taxes by $150,000 in the fourth year of operations can increase rents from $50 to $100.
Other graphics in this section illustrate the impacts of local government policy. For instance, Density Reduction shows how a decrease of 30 units for a 200-unit project can result in a $70 to $140 increase in required rent.
Some graphics show how local governments have policy levers they can deploy that can make rents affordable. Government Levers to Impact Land Costs illustrates how state and local governments have a broad range of powerful policy tools that can be used to lower costs and improve housing affordability. The graphic includes details on how denser zoning can aid affordability. It states that local governments can allow denser development through “up-zoning land so that more units are allowed by-right, increasing floor-to-area ratios and reducing minimum lot sizes.”
A zoning change that allows an additional 80 units, (a 30 percent increase in a project), can reduce rents by $200 a month, the Government Levers to Impact Land Costs graphic outlines.
Multifamily Benefits
Multifamily Benefits contains seven segments that detail the broad-based benefits of multifamily housing to families themselves and communities. The benefits, outlined in this section’s introduction include: “invigorating economic vitality by improving the livelihood of workers and businesses, improving fiscal health by increasing the tax base and efficiently using public resources, and increasing environmental sustainability by efficiently building and operating residential units.”
The section includes The Benefits of Multifamily Housing, Economic Growth and Vitality, Fiscal Health, Environmental Sustainability, Quality of Life and Misconceptions.
The Benefits of Multifamily Housing graphic includes details on how multifamily housing allows for more housing units to be built on any given parcel of land. “Increasing the density of households can quickly expand the tax base and commercial vitality of an area,” it reads. “It also allows for more much-needed housing to be built in desirable areas with greater employment, easier access to transit and generally a higher quality of life, as these areas typically are more land-constrained and expensive to build in.”
Economic Growth and Vitality contains statistics on how “multifamily housing supports the expansion and diversification of the local workforce.” While Environmental Sustainability sports data points on how increased urban density brought by multifamily housing “benefits the environment by reducing carbon impact and preserving open space and natural amenities.”
Looking to dispel erroneous beliefs about multifamily housing, the appropriately titled Misconceptions portion contains statistics on how multifamily housing does not negatively affect property values, public schools, traffic and emissions, but improves many of those issues in many communities.
Affordability Strategies and Tools
The Affordability Strategies and Tools portion of the toolkit provides the nuts and bolts approaches and specific tools local governments can deploy to increase affordability in communities. Also included are dozens of graphics that go into nuanced detail on the levers available to local governments. The overarching strategies include inclusionary zoning, by-right development, tax abatement, public land disposition, rent control and development incentives. Each strategy has its own framework explaining the specific tools that can be deployed.
For instance, Tool: Incentives to Develop outlines the specific inducements (Density Bonuses, Flexible Design Standards, Reduced Parking, Accelerated Approvals, By Right Development, Reduced Fees, Public Land, Tax Incentives, Public Funding and more) that local governments can use to encourage the building of affordable housing.
Tool: Tax Abatement examines the different tax mechanisms available to local governments, specifically property tax incentives, such as tax abatements, tax rebates and tax exemptions. It explains how tax incentives work, taking into consideration and ensuring that public resources are used effectively, and makes recommendations on how they can be deployed (specific examples include details on tax incentive programs in cities, such as Philadelphia and Jersey City). One recommendation even suggests that tax incentive policies should not be limited to units already receiving other federal and state subsidy sources.
While nearly all the tools in the Affordability Strategies section lay the case for local government involvement in strengthening affordability, Tool: Rent Control concludes that this local strategy has not been a useful tool in bolstering affordability. It lays out an overview of the impact of rent control on affordability.
“Rent control is a counterproductive housing policy that does not address any of the key factors driving housing affordability,” the toolkit reads.
Case Studies
The Housing Affordability Toolkit ends with an exploration of national housing market trends via Case Studies from eight cities. The case studies “illustrate different housing market conditions, reflecting common sets of challenges cities face” and outline specific affordability challenges in Atlanta, Denver, Minneapolis, Pittsburgh, Sacramento, San Antonio, Seattle and Tampa. Each case study includes several graphics detailing the nuances of the affordability issue in those municipalities.
