June 12, 2018

Proven Local Strategies for Expanding the Supply of Affordable Homes and Addressing Cost Challenges

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It is increasingly recognized that nearly every city is short of affordable housing. Nationally, 11 million renter households – more than one in four – spent at least half their income on rent in 2016. In high-cost housing markets, the numbers are significantly worse. Given the tremendous demand for affordable, well-designed homes, increasing their supply through new construction and preserving existing homes at risk of lost affordability or habitability is critical. 

A new Enterprise white paper highlights proven strategies for boosting the supply of affordable housing and reducing costs. It draws on the successes of some of the country’s most expensive areas to offer guidance to communities working to address the scarcity of affordable homes and the rising cost of development.

Proven Local Strategies for Expanding the Supply of Affordable Homes and Addressing Cost Challenges builds on recent Enterprise research on these topics, including Bending the Cost Curve: Solutions to Expand the Supply of Affordable Rentals and Public Benefit from Publicly Owned Parcels: Effective Practices in Affordable Housing Development. The new study was also informed by the High-Cost Cities Housing Forum’s 2018 convening, which focused on strategies for containing the cost of housing development. 

The white paper highlights how jurisdictions across the country have leveraged existing assets to create affordability, created public funding opportunities for gaps in financing, utilized land use controls to address regulatory barriers to increasing supply, and improved approval processes to expedite construction. 

Leveraging Existing Assets to Create Affordability

While financing the production of new affordable homes is essential for expanding supply, it is also important to leverage existing assets to create and preserve affordable homes. This white paper notes that jurisdictions such as Chicago, the District of Columbia, New York City and the state of Washington have been undertaking efforts to utilize surplus public property to create affordable housing.

It also describes how several transit agencies, including Los Angeles County Metropolitan Transportation Authority and the Seattle region’s Sound Transit, use their property to support creating affordable housing and community benefit facilities. Several jurisdictions have been also acquiring and transforming privately owned vacant and/or underutilized buildings and sites into affordable housing, such as Chicago’s Troubled Building Initiative and Boston’s Vacant Site Acquisition Fund.

Finally, the paper highlights how jurisdictions across the nation have pursued ways to preserve their stock of unsubsidized affordable housing -- functional homes that are affordable largely due to their age and limited amenities. Examples include the District of Columbia’s Tenant Opportunity to Purchase Act, New York City’s Neighborhood Pillars program, and San Francisco’s Small Sites program.

Creating Public Funding Opportunities for Gaps in Financing

Jurisdictions have the ability to raise revenue outside of budget appropriations to support affordable housing development. This paper explains that they can, for example, adopt development linkage fees, which generate funds by charging developers of new residential and/or commercial projects; examples come from Boston, Denver and Los Angeles.

It also points out that jurisdictions can establish housing trust funds to allocate a dedicated stream of funding to affordable housing, as happens in Chicago, Denver and the District of Columbia. Finally, the white paper notes that housing measures on ballots give voters the opportunity to approve legislation that allocates additional funds to affordable housing.

Examples in the paper include the Miami Forever GO bond, which provides $100 million to affordable housing and economic development projects, as well the 2016 Seattle Housing Levy, which will generate $290 million, primarily to fund affordable rental housing for low-income residents.

Leveraging Land-Use Controls to Address Regulatory Barriers to Increasing Supply

State and local land use regulations can significantly affect the supply and cost of affordable housing. These regulations, such as building height maximums, lot-coverage ratios and unit-size minimums, influence costs by limiting the type of housing and the number of units that can be built on a given site. Jurisdictions have responded to the need for more affordable housing by adopting inclusionary zoning, offering density bonuses and reducing or eliminating parking requirements, among other strategies.

As the white paper describes, several jurisdictions, including Chicago, the District of Columbia and New York City, have adopted inclusionary zoning programs to require and/or incentivize developers to set aside a share of their new units as affordable for low- and moderate-income households. It also notes that many jurisdictions, such as Denver, Los Angeles, Miami-Dade County and Seattle, provide inclusionary zoning incentives so inclusionary zoning requirements do not inhibit the feasibility of development or to encourage more market-rate developers to provide affordable units in the case of voluntary zoning programs.  

Improving the Approval Process to Expedite Construction

Jurisdictions can expedite and spur the construction of affordable housing by implementing policies that streamline the development process. One option is legislation or ordinances that streamline approval for affordable housing proposals that meet local zoning requirements and design standards, exempting them from additional review. Jurisdictions can go a step further by offering entities responsible for reviewing affordable housing proposals flexibility in approving them, lowering barriers to development of affordable homes.

The white paper looks at Massachusetts’ Chapter 40B, a statue that streamlines approval processes for qualified affordable housing proposals and offers local zoning boards, and at a Los Angeles ordinance that streamlines development of permanent supportive housing by creating a ministerial approval process to reduce permitting time and limit the ability of local opposition to stall the process.  

The adoption of effective local policies, programs and tools that help jurisdictions boost their supply of affordable homes and contain the cost of housing development is a key piece in the national affordable housing delivery system. Enterprise will continue to research and disseminate best practices, as well as engage with practitioners to assist them with identifying and implementing innovative cost-containment strategies.  

Read the Paper

This research was made possible through the generous support of the JPMorgan Chase Foundation.

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