Affordable Housing Institute : US

[Continued from Part 1 and Part 2.]

 

In Parts 1 and 2 we followed Michael Grunwald’s Washington Post essay on the rising income floor needed to afford market housing — but if there are people with money to pay for housing, why isn’t there more housing to buy with it?

In many communities, local regulations have stifled multifamily housing and even modest single-family housing. Minimum lot requirements, minimum parking requirements, density restrictions and other controls go well beyond the traditional mission of the building code and end up artificially reducing the development of safe, affordable housing.

 

A locality controls its property development with two levers:

 

A lot depends on the dummies pulling the levers

· Zoning, which caps the amount and type of development.

· Real estate taxation, which incentivizes some uses (and thereby implicitly dis-incentivizes others).

The unfashionable but accurate term for these restrictions is “snob zoning.” Suburbanites use them to boost property values by keeping out riffraff — even the riffraff who teach their kids, police their streets and extinguish their fires. Urbanites are susceptible to the same NIMBY impulses, often couched as opposition to “traffic congestion” or “overdevelopment” or protection of the neighborhood’s “character.” It’s easy to support affordable housing in someone else’s neighborhood. But when developers propose high-density projects, neighborhoods object.

 

I wish I could point to a long list of liberal communities that have put their buildings where their editorials are by embracing affordable housing.

But I can’t.

Fairfax recently bucked that trend when it approved a developer’s proposal to tear down 65 single-family houses across the street from the Vienna Metro station and replace them with 2,248 high-rise apartments.

 

That’s an astonishing density increase — and well located. Washington’s Metro — your tax dollars at work J ! — is a great element of local infrastructure, and now that it has been built, it is irrefutably logical to maximize density within walking distance of the stop.

 

Townhomes going up across from the Vienna Metro

 

The project will increase the supply of job-accessible housing and take commuters out of their cars; the county is even forcing the developer to set aside a small percentage of moderate-income units in exchange for an exemption from its anti-density rules.

Example of local levers being pulled: inclusionary zoning and density bonus.

But the Fairfax supervisors rejected a similar mega-project down the street, bowing to opponents worried about traffic congestion, property values and “the element” the high-rises might attract.

 

Maybe they’ll approve it next year?

Still, Fairfax County illustrates how the creative solutions to the current crisis are emerging locally. It was one of 130 communities to adopt “inclusionary zoning,” requiring developers to reserve a percentage of affordable units.

I’ve documented frequently that inclusionary zoning — in effect, a tax on land or land development rights — is particularly effective in local contexts since it interpenetrates a small percentage (usually up to 25%) of affordable homes within a larger, market-oriented development. This pepper-potting (as the British evocatively phrase it) enables the affordable homes and residents to blend in.

 

It is one of more than 300 communities with affordable-housing trust funds; Fairfax voters approved a “Penny for Housing” initiative that will divert one cent of property taxes to subsidized projects.

A TIF-oriented source of soft debt.

 

The Fairfax housing authority is also at the cutting edge of “workforce housing,” offering 20 single-room apartments for day laborers in its own offices, while building and buying several dozen townhouses to rent to nurses, police officers, firefighters, teachers and bus drivers.

This is a new workforce variant: the in-week apartment enabling someone to raise a family far away. It’s a means of remitting earnings from the city to the homestead, one we see throughout the world, in varying income levels and with varying housing consumption.

 

But these local projects address only a tiny fraction of the demand. For example, Los Angeles is considering a bond issue that would create 1,000 units of affordable housing — small comfort to those 620,000 families in overcrowded apartments. Economist Christopher Thornberg notes that California’s private market added 120,000 urban rental units in 1987; in the first half of 2006, the total was just 232.

 

What new housing California adds in 1 hour today, in 1987 it was adding every minute

The main obstacle, Thornberg concludes, is “the intransigence of local zoning boards.”

In other words, the best thing local officials can do to promote affordable housing is to get out of the way — stop requiring one-acre lots and two-car garages, and stop blocking low-income and high-density projects.

 

It requires more than the laissez-faire no-zoning Houston model; rather, it requires matching zoning to demography, and periodically increasing allowable density, particularly around transportation hubs or work centers.

 

Washington politicians, on the other hand, have the federal budget at their disposal. But Congress hasn’t supported new construction since the Low-Income Housing Tax Credit of 1986, which creates nearly 100,000 units of affordable housing a year [Probably a smidgen more. -- Ed.], enough to replace half the units that are torn down or converted to market rents.

 

Bush proposed a home-ownership tax credit during his 2000 and 2004 campaigns, but it turned out to be the rare tax cut he didn’t pursue.

A bill pending in Congress would divert a percentage of profits [5% -- Ed.] from federally chartered institutions such as Fannie Mae to a national affordable-housing trust fund, but it seems stalled. The only affordability ideas with any traction at the national level are not really housing ideas; for example, one way to make housing more affordable to workers would be to raise their incomes — through higher minimum wages, lower payroll taxes or an expanded Earned Income Tax Credit.

 

There are times when political force yields policy ideas, but every now and then the idea itself can create some political force. We’ve seen that nationwide there’s plenty of local interest in workforce housing affordability — how can we translate it into a national program?

For that we’ll have to turn to Recap’s Web Update 58, and …

 

[Continued tomorrow in Part 4.]

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