LSA

Local Planning, Housing Research, Forecasts and Analyses

Defining Workforce Housing

Lisa Sturtevant

Defining Workforce Housing

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How do we define “workforce housing”? Like any assessment of housing needs and market conditions, the definition should depend on the community. “Workforce housing” is commonly defined as housing for households with incomes above those typically served by federal housing programs. Housing affordable to households with incomes between 60 and 120 percent of area median income (AMI) is a typical definition. In some higher-cost communities, “workforce housing” can refer to those with incomes up to 140 percent of AMI.


When some people refer to “workforce housing,” they are not referring to income groups but rather to particular types of workers, often workers in public-serving positions, such as teachers, police officers and fire fighters. These workers are often seen as essential to the well-being of a community and have increasingly seen housing costs rise faster than incomes.


In our work developing workforce housing strategies in collaboration with local communities, we think is important to look closely at the both the characteristics of the individuals making up the local workforce as well as the goals and priorities the local community has set for its growth and development. The “workforce housing” definition is not a one-size-fits-all definition. In James City County, for example, the local economy is highly dependent on the tourism sector. Workers in the accommodation, hospitality, food services, recreation and retail sectors are critically important to the County’s economic vitality. Many of these workers earn wages that would put them far below what might be considered “workforce housing” level but they are, indeed, essential to the County’s workforce.


Framing housing affordability issues as “workforce housing” issues has been important for expanding the set of stakeholders that are brought to the table around housing policy and planning. However, defining what “workforce housing” means in a particular community should be an important part of the planning process. Let us know if we can help you define workforce housing needs in your community!

Local Solutions in Action: Housing Trust Funds

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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.


Local Housing Trust Funds
Housing trust funds are distinct funds established by a city, county, or state government that generally receive ongoing dedicated sources of public funding to support the preservation and production of housing affordable to lower-income households. Revenue for local housing trust funds is generated from a variety of sources, including real estate transfer taxes or recordation fees, litigation settlements, inclusionary in-lieu fees and, in some cases, an appropriation from a jurisdiction’s general revenue. There is wide variation in the amounts local jurisdictions commit to housing trust funds, and the amounts can vary from year to year. Trust fund dollars can also be combined with other local funding to support affordable and workforce housing programs and services. While there may be limits on uses of local trust fund dollars imposed by the state, generally there is a lot of flexibility in how these resources may be used.


In the most effective local housing trust funds, public dollars are used to leverage a range of additional funding sources, which expands the impact the fund can have. Trust fund dollars can be used to fund a wide variety of housing production and preservation activities, depending on the goals of the community. Funds can be allocated as grants or as loans for predevelopment activities, construction, rehabilitation, or resident services. Loan repayments accounting for a share of the trust funds revenue.


Common sources of funding for local housing trust funds include proceeds from real estate transfer taxes and fees, a small portion of real estate property taxes, commercial linkage fees, and inclusionary housing in-lieu fees (developer contributions). Some jurisdictions appropriate money to a local trust fund annually during the regular budget cycle.


The Center for Community Change has lots of great resources on setting up and distributing funds from local housing trust funds. If you’d like more information on how a local housing trust fund might be set up in your community, feel free to give us a call at 703-598-1220 or email us!

Preferences or Constraints? Why Millennials Are Not Becoming Homeowners

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A recent report from the Urban Institute analyzed the factors that contribute to relatively low homeownership rates among Millennials (defined as ages 25 to 34). The most important factors the researchers identified are: delayed marriage, greater racial diversity, increased student debt, rising rents, and delayed childbearing. Parental wealth and homeownership status is also an important determinant of homeownership among Millennials. I would also add the lack of available for-sale homes affordable to first-time homebuyers.


These factors described above suggest constraints–either economic or demographic–that explain lower homeownership rates among the current cohort of young adults. But there was one explanatory factor that the Urban Institute researchers examined that is different than the rest. According to the report “The preference of educated millennials to move to more expensive urban centers has contributed to their lower homeownership rate.” This suggests that Millennials–or at least “highly educated” Millennials–are choosing location over tenure. They are willing to trade off homeownership for place.


We hear a lot about changing preferences for homeownership among Millennials. But the major factors in the Urban Institute research are not “housing preferences” but really are trends that have been shaped by economic and demographic forces. The preference for high-cost cities where homeownership is harder to attain is a reality only among a segment of the population.


So what it is- changing preferences or demographic and economic trends that are keeping Millennial homeownership rates low? And does it depend on which Millennials we’re talking about?

Back to School: Examining the Link Between Housing and Educational Achievement

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As children head back to school this fall, millions of families are worried not only about homework and tests, but also about where they will live or how they will pay the rent. When families have trouble finding safe, stable, affordable housing, children’s school performance can be adversely affected. What do we know about the links between affordable and stable housing and educational outcomes?


Affordable and Stable Housing Can Reduce the Frequency of Disruptive Moves
Moving can help or hinder children’s education depending on the context. If a family moves from a high-poverty neighborhood to a low-poverty neighborhood, children can benefit from attending higher performing schools. However, when a family moves because of unstable housing situations, rising housing costs, or other difficulties, there can be adverse impacts on children’s educational outcomes.


Residential moves often led to interruptions in instruction, excessive absenteeism, chaotic household environments not conducive to studying, stress, and disruptions of peer networks. Research has shown that residential moves—especially moves that are frequent or during key education time periods—can have a significant negative impact on school performance.


Some Housing and Residential Mobility Policies May Help Families Move to Communities with Higher Quality Schools
While frequent moves can have a negative impact on educational achievement, moves to neighborhoods with access to better schools may have a positive impact on school performance. While research on the effectiveness of mobility programs is mixed when it comes to educational outcomes, well-designed programs with a strong counseling component have been shown to be successful. A study of students in Montgomery County, Maryland demonstrated that children in public housing that moved into inclusionary housing units had higher reading and math scores compared to children who did not move.


Strengthening housing mobility programs and implementing well-design housing programs that connect children with good schools are important to helping families and children.


Affordable and Stable Housing Options Can Reduce Overcrowding and Other Sources of Housing-Related Stress
Research has shown that there is an association between overcrowding and reduced academic performance for children. Living in crowded conditions can be stressful and can lead to behavior and attention problems among children. Overcrowding mayreduce parental responsiveness by creating social overload and withdrawal. Overcrowding may increase noise and chaos that interfere with children’s studies. Or the problem could simply be a lack of space to sit down and do homework.


Affordable Housing Can Reduce Homelessness Among Families with Children
Children who experience homelessness face numerous barriers to good educational outcomes, including difficulties accessing preschool and Head Start programs, adverse living conditions that impede cognitive development and study time, and difficulties obtaining personal records for enrollment in public schools. Homelessness can have different long-term effects on children depending on their age at the first episode of homelessness. Research suggests that homelessness is particularly detrimental in the long run for infants and toddlers than for older children.


The results from the research are clear—a lack of stable and affordable housing can be associated with poor school performance. A supportive and stable home environment is a critical complement to the efforts of teachers, principals and other educators who are committed to the academic success children across the country. Let us know if there are ways we can help your community think about how to support children’s education through effective housing policy.

Should the Federal or State Government Take a More Direct Role in Local Land Use and Zoning?

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Local land use and zoning requirements, and related entitlement and development review and approval processes, are a key factor behind the housing affordability challenge since these requirements have the effect of limiting housing production (or production of certain types of lower-cost housing) and/or make it more expensive to build housing. As economist Edward Gaeser has noted, there is broad agreement from people all along the idealogical spectrum that local land use controls limits housing supply and makes it harder for lower-income residents to find housing they can afford.


Land use policy and zoning regulations are developed and administered almost entirely at the local level. Historically, there has been little direction or interference from the federal or state government in setting land use regulations. However, as housing affordability challenges persist, there has been dialogue at the federal and state level to address local land use regulations that limit housing availability.


This month, New Jersey Booker introduced legislation—the Housing, Opportunity, Mobility and Equity (HOME) Act—require local communities to develop more inclusive zoning policies to create more affordable housing options and less segregated neighborhoods. Under Booker’s proposal, communities receiving CDBG funding would be required to make changes to land use and zoning to expand housing options.


Federal legislation related to local land use and zoning would be an uphill battle to say the least. At the state level, however, there are several examples of state incentives and requirements that have had an impact on local land use and zoning regulations and have helped supply housing availability and housing affordability.


Last year, I co-authored an Urban Land Institute report on state housing policy that outlined five types of opportunities for states to help local municipalities expand housing choice and opportunity primarily through their land use powers.


One state-level initiative is Connecticut’s Incentive Housing Zones (IHZ) program provides municipalities with technical assistance and financial incentives to create zoning districts that can accommodate additional housing. While the program is voluntary, cities and towns that have adopted new zoning districts under the program have developed around 1,700 housing units that might not otherwise have been built.


In California, the state has taken several measures to attempt to promote housing production. In 2015, the state legislature passed a law that directs localities to reduce parking requirements for affordable housing developments located near transit. The parking reduction is automatic as long as the project meets the requirements. Local communities can only set higher parking standards if they conduct a parking study. Parking reductions can be an important component of reducing development costs, making it easier for developers to provide below-market-rate units.


We continue to track other initiatives at all levels of government that target land use and zoning regulations that could be amended to promote housing options. We’d love to hear what you think!

Local Solutions in Action: Form-Based Code

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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.


Form-Based Code
A form-based code is a land development tool that is designed to regulate physical form, rather than specific use (e.g., commercial, residential). A form-based code is a regulation, not simply a guideline, adopted into local law. Communities often pursue form-based codes to attempt to create denser, more walkable, mixed-use neighborhoods.


A form-based code can facilitate the production or preservation of affordable housing by writing affordability requirements into the code. Higher densities also sometimes make it more feasible to produce below-market rate housing units. Finally, a more predictable, streamlined review process under form-based code can help reduce the overall cost of development, making it easier to produce affordable units.


Often under a form-based code, developers are able to take advantage of higher allowable densities and more limited community review processes. However, local jurisdictions should invest considerable time upfront to get community input on the parameters that will shape the requirements under the code.


In Arlington County, Virginia theColumbia Pike Neighborhoods Form-Based Code applies to multifamily residential areas along Columbia Pike that surround its commercial centers. This zoning district provides incentives for revitalization and guides redevelopment along the corridor. The Neighborhoods Form Based Code will facilitate the preservation of 6,200 affordable housing units, encourage higher density development and connect housing to plazas, open space and transportation.


Nashville, Tennessee has adopted a Downtown Code. This form-based code offers bonus height for affordable and workforce housing, among other public benefits. There is no review of architectural designs; rather there is a “community character manual” that guides development.


Let us know if we can provide additional information on local housing solutions! Email us or call 703-598-1220.

Housing Affordability is an Important Issue for Counties, Too

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Housing affordability is sometimes seen as a big city issue, or at least a city issue. The National League of Cities has found that housing tops the list of priorities for city leaders, along with the related issues of economic development, infrastructure and public safety. Housing has not been a priority in surveys of county elected officials. In fact, in a 2017 report on top county challenges issued by the National Association of Counties (NACo), housing is not mentioned.



There are, of course, many counties that have been concerned about housing challenges for a long time and that have taken dramatic steps to attempt to expand housing options, alleviate homelessness and increase affordable housingas part of market-rate development. There is growing awareness from County leaders that there is an important role for them to play in working with towns, cities, and states in making it easer for residents and workers to find housing they can afford.


I moderated a panel earlier this month at NACo’s annual conferencein Nashville/Davidson County, Tennessee. On the panel were representatives from Davidson County, TN; King County, WA; and San Miguel County, CO; as well as the Housing Assistance Council.


Some of the key takeaways from the panel and the conference, generally:
Counties across the country have different relationships with the state, as well as with the incorporated towns and cities within the counties. As a result, it can be difficult for County leaders to know what the opportunities are at the County-level and what role counties can take in creating policies to increase the production of affordable and workforce housing.
A key asset counties have is land. Figuring out how to make use of County-owned and County-controlled land to help promote the development of affordable and workforce housing was seen as a key strategy by many County representatives.


While there is increasing understanding of the need for housing affordable to individuals and families all along the income spectrum, for many counties, the primary housing issue is homelessness. There is an opportunity to better make the connection between homelessness and general housing supply and affordability.


Generating local resources for housing is something that County leaders are interested in exploring, knowing that resources from the federal government will never be sufficient to meet local housing needs. Finding the right source of funding, and the right structure for a local housing trust fund, is a goal for many County leaders.


Having this conversation with County leaders at the NACo conference was a great opportunity and I look forward to following how counties—rural counties, suburban counties, urban counties—become more involved in local housing solutions. If you are doing innovative work on housing issues in your county, I’d love to hear from you!

Local Solutions in Action: Preservation

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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.


Housing Preservation Programs
Preserving affordable housing is a critical component of a local housing strategy. Both subsidized and non-subsidized (i.e., naturally occurring or market-rate) affordable rental housing may be at risk of being lost from the affordable housing stock. Subsidized housing are housing units that are supported by a federal, state or local program where rents and incomes are restricted based on program rules. Affordability periods are also set by program rules. Naturally occurring, or market-rate affordable housing, are properties where rents are affordable to lower-income households by virtue of the size, age, location or other characteristics of the properties; there is no public subsidy and no affordability guarantee. Recent analysis by the Urban Land Institute and RCLCO has found that about half of the affordable rental units in the U.S. are naturally occurring or market-rate affordable units.


Subsidized affordable housing becomes unaffordable due to expiring affordability contracts. Naturally occurring affordable housing can become unaffordable as a result of market pressures that can lead to redevelopment, rent increases, or condominium conversion. According to the National Preservation Database, nearly 500,000 subsidized housing units in the U.S. are at risk of being lost from the housing stock in the next five years due to expiring affordability contracts.


It is harder to measure losses in the naturally-occurring affordable housing (NOAH) stock. In Northern Virginia, Arlington County has lost over 14,500 NOAH units (affordable at or below 60% AMI). The City of Alexandria has lost 16,000 NOAH units. These figures represent 80 to 90 percent of the naturally occurring affordable housing stock in these communities.


There are several reasons to focus on housing preservation. In many cases, it is less expensive to rehab existing housing than to build new affordable housing. Existing affordable housing can be an important source of family-sized units (e.g. units with 3, 4 or more bedrooms). In many communities, naturally occurring affordable housing is located in gentrifying neighborhoods where there are increasing services and amenities that would be a benefit to lower-income families.


Preservation policies can target resources to specific units or buildings, or can more generally focus on preserving residents’ access to a certain number or share of affordable units in a particular neighborhood or area. Preserving units can mean preserving rents at specified below-market levels or can go further to require that rents remain low and that units be occupied by renters with incomes below a particular threshold.


Some examples of best practices in housing preservation include the following:
Property tax exemption and abatement programs offer property owners a reduction of property taxes in exchange for keeping units affordable to lower-income renters. Minneapolis’ 4d program is an example of a local effort that promotes the state’s property tax exemption policy and assists property owners in taking advantage of the incentive.


Rehabilitation programs provide technical assistance and/or financial resources to owners of (usually) smaller rental properties to renovate their properties to help ensure that their units have rents affordable to low-income households and are kept safe and up-to-code. St. Paul, Minnesota’s Rental Rehabilitation Loan Program provides financial resources to responsible landlords desiring to upgrade their properties by making property improvements that increase the safety and quality rental units.


Right of first refusal policies are local policies giving local governments, public housing agencies, nonprofit organizations and/or tenant groups have the right to match contracts on affordable multifamily rental housing being sold. Montgomery County, Maryland and its combined public housing and housing finance agency, the Housing Opportunities Commission (HOC), or any tenant organization, have the right to match contracts on multifamily rental properties built before 1981 or on rental buildings being sold for conversion to condominiums.


Housing preservation districts are an overlay to a community’s zoning code designed to encourage, incentive or require housing preservation. Arlington County, Virginia recently adopted new overlays that allow a “context-appropriate spectrum of development, ranging from renovation and addition to infill and redevelopment in exchange for dedicated affordable housing units.”


Preservation funds provide a dedicated pool of resources targeting housing preservation efforts. A new regional initial spearheaded by JBGSmith and the Federal City Council in the Washington DC area, the Washington Housing Initiative, has been established with the goal of bringing private-sector resources to preserve 2,000 to 3,000 units of affordable rental housing throughout the region. The Impact Pool, a vehicle managed by JBGSmith to provide capital for the acquisition and development of affordable workforce housing in High-Impact Locations. Capital from the Impact Pool will bridge the gap between traditional mortgage financing and charitable contributions with mezzanine investments that provide sufficient investor returns coupled with long-term affordability and neighborhood services.


Let us know if we can provide additional information on housing preservation programs. Email lisa@lisasturtevant.com or call 703-598-1220.