LSA

Local Planning, Housing Research, Forecasts and Analyses

Local Solutions in Action: School District-Owned Land

Lisa Sturtevant

Local Solutions in Action: School District-Owned Land

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The Local Solutions in Action series highlights strategies for expanding housing options and increasing housing affordability. The focus is on land use, zoning, financial and other regulatory tools that are available to cities, counties and towns that can be used to meet the housing needs of their residents and workforce.

School District-Owned Land

Public land policies make government-owned land available at reduced or no cost for affordable or mixed-income housing. Often, this includes land owned by the municipal government, but in some cases, the local school district controls vacant or underutilized property that could be repurposed for housing. This asset can provide an important opportunity for making below-market-rate housing available to teachers and school support staff, allowing them to live in the community they serve.

There have been successful examples of old school buildings being converted into housing, sometimes housing designed specifically to serve school staff. There are communities across the country of public school buildings sitting empty as the number of families with children decreases. In 2014-2015, it was estimated that more than 1,500 public schools in the U.S. were closed down.  While sometimes a sign of decline, these buildings could also provide an opportunity. For example, a school building Clendenin, West Virginia built in 1914 was abandon for years until the school district partnered with a developer to convert the building into housing.  Other West Virginia communities are looking for ways to build teacher housing.

Rising housing costs in communities across the country are making the issue of teacher housing a front burner issue. High turnover and difficulty attracting teachers and other school staff are the primary drivers behind the push for more affordable teacher housing.

In 2016, the California Assembly adopted a bill requiring local agencies and school districts to prioritize surplus land for affordable housing. School districts were specifically directed in the legislation to partner with a qualified developer to develop housing specifically for teachers. But the implementation at the local level has not been smooth sailing.

The San Jose Unified School District has a plan to facilitate the development of teacher housing on school-owned land. Nine district-owned properties were identified as potential sites for housing targeting not only teachers, but also bus drivers, cafeteria workers and other school support personnel who do not earn enough to afford market-rate housing in San Jose.  Despite general support for teacher housing, there has been vehement opposition to repurposing school buildings for housing.

Let us know if we can share additional information on local policies that support workforce housing options.

Three Questions We Ask at Community Meetings

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Three Questions We Ask at Community Meetings

Community meetings are critical to any local housing planning process. We know a lot more than we used to—thanks to groups like the Frameworks Institute, MacArthur Foundation and Enterprise Community Partners—about how to talk about the challenge of housing affordability to guide the conversation away from myths, misconceptions and misunderstandings.

In our work with local communities, we have also realized how important it is not only to TALK to people in a different way about the importance of housing, but also to actively LISTEN to members of the community and to UNDERSTAND the concerns they have.

In recent community meetings we asked the following three sets of questions:

  1. Does anyone here know someone who would benefit from lower-cost housing options in the community?  Is there a friend or a family member who would like to live here but can’t afford it? Maybe your grown children? Is there someone who works for you – either in a business or in your home – who might live in the community if there were more options?
  2. Do you have concerns about more affordable or workforce housing options being developed in the community? How does housing availability in the community relate to traffic or school quality? What kinds of changes to the community would you expect if there were different kinds of housing options?
  3. Do you think there are ways the community can sensibly support workforce housing options? Is increasing density in some parts of the community an option in your opinion? What about dedicated public resources? Do you think public-private partnerships can help facilitate the development of lower-cost housing?

By organizing public meetings around these questions, we allowed members of the community to define the housing affordability challenge on their own terms (question #1). We also give residents the space to voice their concerns without judgement (question #2). Finally, we encourage residents to be part of the solution, without limiting the discussion to our own recommendations (question #3).

This type of outreach is time consuming—but really important. When more residents have their voices heard and have a chance to be part of the process, we are better able to build support for local housing policies and initiatives.

Let us know how we can help build support around expanding housing options in your community.  Please reach out!  

Why We Care About Interest Rates

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Late last year, it seemed all but certain that the Fed would be raising rates in 2019, perhaps three or four times. However, now it is looking like the Fed could move more slowly on interest rate hikes.

Why do we care so much about the Federal Reserve and whether the Fed decides to push up interest rates?

The Federal Reserve sets the U.S. federal funds rate, which is the interest rate that banks charge each other to borrow money. Making changes to this rate is the Federal Reserve’s mechanism for influencing monetary policy. Raising this rate makes it more expensive to borrow in the short-term (and also impacts borrowers with adjustable-rate mortgages). Increases in the federal funds rate eventually lead to increases in the cost of borrowing over the long-term.

If—really when—the Fed does increase interest rates this year, there will be an increase in mortgage rates.  The current 30-year fixed-rate is 4.35 percent (as of February 21). The National Association of REALTORS®, National Association of Home Builders, Mortgage Bankers Association and Freddie Mac, all predict interest rates will rise to above five percent in 2019 (predictions range from 5.1 to 5.3 percent).

What this means is that current mortgage rates are likely the lowest we will see this year, but even the higher predicted rates are still low by historic standards.

So what does this increase in rates mean for the housing market?

While the relationship between interest rates and home prices or housing market activity is not straight forward, it is true that mortgage rate increases have usually been accompanied by reductions in mortgage originations and home sales nationally.

The reason is that the rate increase makes it more expensive to buy a home. Assuming you have a $300,000 mortgage, an increase from a 5.0 to a 5.5 percent interest rate would increase payments by about $90 per month. Not only does the interest rate increase monthly payments, it also increases the amount of income need to qualify for the mortgage.

Will higher interest rates lead to a slowdown in the market?

This housing market cycle is very different than past cycles. Rates have been very low for a long time and there is still pent-up demand for housing.  Furthermore, there are economic fundamentals that point to continued strength in the housing market. Strong job growth, low unemployment rates, and wage increases all suggest increases in the demand for homeownership. Demographic factors—primarily the huge Millennial population that is starting to feel more economically stable and is reaching homebuying age—will have a positive impact on homebuying activity as well.

Interested in more analysis of the housing market? Email us!

Amazon HQ2 and the Demand for Housing in Northern Virginia

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In December, I attended a forum on Amazon and the Northern Virginia housing market. The audience was primarily made up of realtors along with apartment owners and managers and the focus was on what the impact of Amazon’s arrival might be on home prices and rents in the region. If those in attendance were expecting (or hoping) to hear evidence of a dramatic spike in home prices and rents, then they might have been disappointed by what they heard. But what they heard was probably right.

Some of the key takeaways:

  • The Washington region is not Seattle; it is a bigger and more concentrated economy and housing market. The impact of the Amazon HQ2 development won’t be the same in Northern Virginia as HQ1 was in Seattle.
  • According to Amazon’s buildout schedule, HQ2 will bring about 38,000 total jobs over 16 years (25,000 jobs are phase 1, 13,000 are in phase 2). Another 33,000 jobs are expected as new jobs supported by HQ2 spending. This level of job growth accounts for a very small share of typical annual regional job growth, about seven or eight percent of typical annual job growth in the DC region.
  • Most Amazon HQ2 workers will be homeowners but the number of new owners will constitute a very small share of homebuyers in the market. Jeannette Chapman of GMU’s Fuller Institute estimated that Amazon HQ2 will result in an increase in demand for homeownership in the Washington DC region by between just one and five percent.
  • Two-thirds of Amazon-related demand will be for single-family detached homes. Not surprisingly, the strongest demand will be for housing in Arlington and Alexandria but there will be some Amazon-related housing demand as far out as Clarke, Page and King George counties.
  • The HQ2 hysteria is much bigger than the actual impacts that will be realized in the housing market:
    • Daniel Hale of realtor.com showed data on website traffic of searches for Arlington homes with a huge spike on the day of the HQ2 announcement but a quick return to normal levels of traffic.
    • In an analysis of new home demand, Metrostudy’s Ben Sage cautioned about “overreaction and overspeculation” in the new home market.
    • Sandy Paul of Newmark Knight Frank noted that the longer-term impacts of HQ2 on workforce development is a bigger deal than any shorter-term impacts on home prices, rents or new construction.
    • Michelle Winter of the Alliance for Housing Solutions made the point that the region already has a significant housing affordability problem and a major housing shortfall; Amazon won’t change that.

The primary takeaway from the data and analysis presented at the event was that while Amazon’s decision is exciting for the region and will be a driver of long-term economic growth in the region, potential homebuyers and sellers, in general, should not expect a significantly different housing market than is typical in Northern Virginia’s hot market, even when Amazon-ites begin arriving. However, the market for particular product types in particular neighborhoods could be in demand by new Amazon workers and there could be price pressure in the segment of the market. For example, single-family homes in some closer-in neighborhoods in the $700,000 to $900,000 price range could see relatively strong interest from new Amazon employees.

Local Solutions in Action: Opportunity Zones

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The Local Solutions in Action series highlights strategies for expanding housing options and increasing housing affordability. The focus is on land use, zoning, financial and other regulatory tools that are available to cities, counties and towns that can be used to meet the housing needs of their residents and workforce.


Opportunity Zones
The Opportunity Zone program was created as part of the Tax Cuts and Jobs Act of 2017 to encourage investment in low-income neighborhoods. Each state (often in collaboration with local municipalities) defined Opportunity Zones based on socioeconomic characteristics of Census tracts. A list and map of currently defined Opportunity Zones is available from the U.S. Department of Treasury. The Opportunity Zones program provides a tax incentive for investors to re-invest unrealized capital gains into Opportunity Funds that are dedicated to investing into these Opportunity Zones.


More information about how the Opportunity Zone program and the Opportunity Funds will work is available from the Economic Innovation Group and Enterprise Community Partners.


In late October, the U.S. Treasury Department and Internal Revenue Service issued proposed regulations and other guidancefor the Opportunity Zone tax incentive.
Because the regulations are not final, there is still some uncertainty about how the Opportunity Funds will work and what projects will be funded. However, there is growing interest in how the Opportunity Zone program could bring additional resources for the development and preservation of affordable housing. The question is what should communities be doing to best position themselves to benefit from the Opportunity Zone program?


A good example of a community working proactively on Opportunity Zones is the City of Norfolk, Virginia. The City includes 16 Opportunity Zone tracts and City officials have done a tremendous amount to educate stakeholders about the program, align existing planning and policy initiatives to be consistent with the goals of the Opportunity Zone program, and actively bring together key development and financial partners.


In July, the City held an Opportunity Zones Day, which included presentations about the defined Opportunity Zones in the City, as well as key information presented by Enterprise Community Partners and Novogradac & Company LLP. At this event, the City was a leader in bringing together a wide range of stakeholders to learn about the opportunities in the City and to begin to facilitate key partnerships.


In addition, the City has posted detailed information about its Opportunity Zones along with links to the existing Master Plansassociated with each community.


The City is intentionally aligning its planning efforts and public investments to make sure Opportunity Zone funding has an impact in its neighborhoods. This move to explicitly align community planning efforts with the Opportunity Zone program and to proactively outreach to developers, banks, foundations and others is putting Norfolk in a good position to attract investment to its distressed neighborhoods. Other communitiesare also taking a proactive approach even as the specific policy regulations get ironed out.
Let us know if we can help your community think through how to align broader planning goals with the Opportunity Zone program.

Did Housing Affordability Even Matter to Amazon?

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When Amazon announced that it had selected both Northern Virginia and New York locations for its second headquarters, there was outrage that the entire process had been a stunt and a sham. One criticism has been that while Amazon claimed to be concerned about housing availability and affordability in its selection process, the choice of two of the highest-cost regions in the country makes their claim suspicious. For example, in Northern Virginia there are well-founded concerns that the housing affordability challenges faced by many low- and moderate-income residents will only be exacerbated by Amazon’s arrival in Crystal City.


Northern Virginia, and Arlington and Alexandria, in particular, are indeed high-cost areas. There is strong demand for housing in these close-in locations and very little developable land. But against strong market forces, both communities have made affordable and workforce housing a priority and have put their money and land use policies where their mouths are.


For example, Arlington County’s Affordable Housing Trust Fund (AHIF) supports the production and preservation of below-market-rate rental housing. This year, the County has allocated $14.3 million to the fund. In the City of Alexandria’s Potomac Yard area, located just south of Crystal City, the community has engaged in a multi-year planning processto intensify development potential and significantly expand housing options with affordable apartments, condos and townhomes.


Arlington and Alexandria have worked to create diverse housing options, as well as a range of retail and restaurant options and other amenities. Taken together, and along with their locations close to the District, these strategies have made these communities very attractive to just the types of workers Amazon is hoping to attract.


These efforts don’t mean that Arlington and Alexandria shouldn’t do more to address housing availability and affordability. They can and should work both locally and regionally to commit to the land use changes and financial investments needed to ensure that new workers, as well as existing residents, can find housing they can afford in this sought-after region.

Local Solutions in Action: Faith-Based Development

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The Local Solutions in Action series highlights strategies for expanding housing options and increasing housing affordability. The focus is on land use, zoning, financial and other regulatory tools that are available to cities, counties and towns that can be used to meet the housing needs of their residents and workforce.


Faith-Based Development
There has been growing interest on the part of the faith community to become more directly involved in the production of housing affordable to lower-income individuals and families. Faith-based organizations often partner with local jurisdictions to provide services to vulnerable populations in the community, including food assistance, job and life skills training, personal and family counseling, and other services. However, faith-based organizations are increasingly looking for ways to partner with local governments and the development community to develop underutilized real estate resources into affordable housing.


A house of worship may have surplus land or underutilized density, which could be used for the construction of affordable housing. In addition to working with partners on the finance and development side, often the faith-based group will have to work with the local jurisdictions to get zoning changes and other development approvals.


In the City of Alexandria, Virginia, St. James Plaza is a 93-unit affordable project developed by AHC, Inc on land previously owned by the St. James United Methodist Church and the Bi-District Office of the Northern Virginia Methodist Church. The project, occupying approximately one-half of the church’s property, serves households earning between 40 percent and 60 percent of AMI along a future transit corridor and will host a daycare facility on the ground floor. The remainder of the property is being developed into a market-rate townhouse community. A $5.7 million loan from the City successfully leveraged over $27 million in private and public funding sources. The project is slated for completion in 2018.


A great resource for partnerships between housing organizations and faith communities is the Faith-Based Development Initiative (FBDI), a partnership of Enterprise Community Partners, Wesley Theological Seminary and other organizations. The FBDI provides financial support and technical assistance to faith-based organizations to develop or rehabilitate affordable housing in the mid-Atlantic region. HUD also has a Center for Faith-Based and Neighborhood Partnerships which can be a good resource.


If you’re a community looking for new and innovative approaches to housing solutions, please reach out to see if we can help!

Making the Connection Between Housing and Health

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Where we live has an enormous impact on our health and well-being. Recent research has demonstrated that the neighborhood in which a person lives can be an more important predictor of health than his or her genetic makeup. If individual and family health depends on their zip code, it is more important than ever to understand the links between housing and health, and to help find ways to improve housing and neighborhood opportunities for all.


Why Housing Opportunity is Important to Health
It has been estimated that the so-called “social determinants” of health—behaviors, environment, and social circumstances—are more important than our genetics or even our level of health care in explaining overall health. Housing is a critical component of those social determinants, and housing quality, location and access impact health in numerous ways.


The research examining the link between homelessness and health outcomes most explicitly demonstrates the connection between housing stability and good health. However, we know that housing and neighborhood quality and affordability more broadly can impact physical and mental health and well-being.


Households with poor quality housing face significantly more health problems than do other families. Living in substandard housing puts residents at risk of harm including falls, other accidental injuries and lead poisoning. Children and adults living in poor housing quality have much higher rates of asthma and greater likelihood of asthma-related emergency room visits.


In addition, research has shown that living in lower-poverty neighborhoods is significantly related to better physical and mental health. People living in higher-income neighborhoods have lower rates of obesity, diabetes and asthma, and higher levels of personal satisfaction and mental well-being.


Finally, there is growing understanding that prior discrimination in housing markets, including redlining and door slamming, have had persistent impacts over generations and can partially explain the continuing health disparities between white and minority residents. Where we live matters for our physical and mental health and well-being. It is not just the quality of housing, but also housing affordability stability that matters. The ability to access high-quality health care is important, but so, too, is living in a neighborhood with good opportunities for physical activity and social interaction.


We partner with local communities who are looking for ways to build healthy communities. Please reach out if we can help you!