New Developments, Celebrating Local Leadership
By Thom Amdur
5 min read
On March 13, the National Low-Income Housing Coalition released a new report, “The Gap: A Shortage of Affordable Rental Homes,” which finds that there is a shortage of 7.2 million affordable and available rental homes for extremely low income (ELI) households – a startling and sobering number. The report shows that no state has an adequate supply of affordable rental housing for the lowest income renters and that the most impacted states on a per-capita basis include red, purple and blue. This number is only a portion of the nation’s affordability crisis – millions more families are impacted in the 31-150 percent Area Median Income bands.
Production is simply not keeping up with demand. This is further exacerbated by rising costs and a diminished Low Income Housing Tax Credit and Historic Tax Credit (our two most important affordable housing production programs) coming out of tax reform. As I write this column, Congress is about to begin debate on an Omnibus spending package that will, at best, maintain critical HUD funding at or around current levels and could certainly result in a cut given the tenure of the President’s budget proposals. If the stars align and our efforts at advocacy succeed, we are hopeful that the Cantwell-Hatch legislation’s proposed 50 percent increase in LIHTCs and the flat four percent credit will be incorporated into the Omnibus spending measure (or another tax vehicle later this year). This would be a much-needed boost; however, the need for affordable housing coast-to-coast and across the income spectrum far exceeds even the best-case scenarios for potential short-term federal dollars.
A challenge this big requires an overlay of multiple solutions. Maintaining and ideally expanding federal funding, along with reasonable cost-containment strategies, has been a focus in this column and in broader NH&RA forums for the past several years. Another critical piece of the puzzle is innovative policy solutions at the state and local level. Increasingly in our shop, we are focused on highlighting local solutions that can be replicated and expanded to fill gaps, increase production and encourage preservation of existing affordable housing. There is not a one-size-fits-all approach, but it is our hope that by empowering our readers and members with insight into local solutions, they will be in a better position to champion and advocate for a strategy that will work in their community.
Mandates, Minimums and Zoning, Oh My
It is surprising to me how few states and local jurisdictions do not have policies that prohibit “exclusionary zoning practices,” but for those that do, it is an important tool. They can take the form of New Jersey’s blanket 1975 Mount Laurel Decision, which bans exclusionary zoning practices, or a more nuanced approach, like the Massachusetts Comprehensive Permit Act – Chapter 40B, which overrides certain zoning laws if baseline affordability goals are not met. These strategies can be combined with inclusionary zoning tools that require affordable units in market-rate projects, or better still, create market incentives, like density bonuses (as in the Affordable New York initiative) to build more affordable units. This can be further paired with additional zoning incentives linked to affordability, like reduced parking requirements and accelerated permitting processing.
Subsidy Matters
Scale, accelerated regulatory processing and the elimination of barriers are a big help, particularly for moderate income projects, but to reach the lowest part of the income spectrum or markets with high costs, additional subsidy is required. A small number of jurisdictions, like the District of Columbia, have longstanding local voucher programs that are impactful in project finance. Property tax exemptions for affordable housing and PILOT legislation are other effective local tools. Expanding these exemptions to include moderate income/workforce housing (as in New York City and current efforts underway in the California legislature) seem like obvious support mechanisms. Concerted efforts to dispose of publicly owned land for affordable housing and community development (as in Boston and Washington, DC) can be very effective in jurisdictions where land cost is a significant part of the capital stack. Local housing trust funds (often funded by impact fees, recording fees, etc.) are also powerful tools, particularly when they are administered regionally (as in the Affordable Housing Trusts for Columbus and Franklin Counties or the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund) and thus can contribute to more concerted regional housing plans.
While the federal budget situation seems intractable and unlikely to change soon, we can nudge local political leadership to take action. There is evidence that advocacy is impactful. Last year, California passed landmark legislation (SB2) to create a new permanent source of affordable housing funding and a further funding measure is on the ballot in the fall. Just a few weeks ago, the Oregon legislature adopted HB 4007, which increases the state’s document recordingfee and is expected to raise an additional $60 million per biennium for affordable housing. By the time you read this, it is likely that Philadelphia will have adopted a new inclusionary zoning measure, too. There is reason to be hopeful that more local jurisdictions have an appetite to create or expand affordable housing resources and it is our responsibility to educate and advocate for solutions that work. If you are aware of other strategies or efforts underway, please let us know.
