High-cost regions around the country have become increasingly unaffordable to many of the workers who serve the community, and there can be repercussions for persistent high housing costs and a lack of a sufficient supply of affordable housing. Recent reports have demonstrated that more young workers are deciding to pick up and movefrom high cost cities to places with more affordable housing. Insufficient housing that is affordable to the workforce puts at risk the sustainability of the economy as high-cost regions have increasing difficulty attracting and retaining workers.
One key reason rental affordability remains a challenge in the region is that we are not building enough overall housing in these places. Indeed, recent research and commentary have suggested that limited housing development has propped up housing costs in high cost cities. A plethora of reasons—including high land costs, local zoning and land use regulations, NIMBYism, and insufficient federal and state resources—contribute to the difficulty of producing enough affordable rental housing in high-cost places like Washington DC, San Francisco, and Boston.
In addition, in high-cost areas, if is very difficult to build housing that is priced at levels affordable to low- and moderate-income households. As federal subsidies for affordable rental housing continue to fall short of the need, the role of local governments in the development and preservation of affordable housing has become increasingly important. Jurisdictions in high cost regions need to be particularly innovative and strategic to find ways to evolved considerably.
Here are several approaches that have been adopted by some high-cost jurisdictions to increase the supply of affordable housing.
1. Tie affordability requirements to increased density
In many places around the country, height and other zoning restrictions could be relaxed to expand housing supply, and these development incentives could be linked to the provision of affordable housing. “Inclusionary upzoning,” which links affordability requirements to increased density, is a policy used in jurisdictions across the Washington DC region, including Arlington and Fairfax counties, and other high cost markets have adopted policies that aggressively push for the development of affordable housing as market of re-zonings, including New York, Los Angeles, and San Francisco.
2. Make use of public land for affordable housing
Reducing the land costs of a residential project can be a valuable way to foster housing affordability for lower-income residents in high cost areas. Across the country, local jurisdictions are taking a broad view of public land development opportunities, exploring the potential for affordable housing on not just vacant publicly held sites but also under-utilized parking lots, sites where no-longer-needed public facilities are located, and—increasingly—as part of the development of new public facilities such as community centers, libraries, fire stations, and police stations.
A recent report prepared for ULI Washington highlights some of the best practices in local public land policy and development in the Washington DC region. Other innovative and effective public land policies have been adopted in San Francisco and in King County, Washington, among others.
3. Consider establishing commercial linkage fees to fund affordable housing development
Commercial linkage fees are a form of impact fee assessed on new commercial developments or major employers based on the need for housing generated by new and expanding businesses. Revenues generated by the fee can be used to help fund the development of affordable housing opportunities within the locality. A variety of methods can be used to determine appropriate linkage fees; many jurisdictions have adopted as Jobs-Housing Nexus Analysis approach.
Seattle has debating thesuitability and specific design features of a commercial linkage fee policy, which advocates claimed could produce five to 10 times the amount of affordable housing the city gets under its current incentive program. In Boulder, city leaders have considered a commercial linkage fee—on top of their existing capital facilities impact fee—to mitigate the upward pressure on home prices and rents resulting from strong job growth. It is estimated that the fee could bring in between two and three million dollars a year for affordable housing in the city of Boulder.
4. Require or incentivize mixed-income developments near transit
In many cases, investments in transit and other infrastructure catalyze increases in the values of properties that are well-located near the new amenities. While this growth can be positive for the overall neighborhood, it can also threaten the continued availability and opportunities for the construction of new affordable housing, especially for families with very low incomes.
Chicago recently amended its affordable housing ordinance to provide incentives to developers that build more than half of a project’s required affordable housing units in transit-served locations. The new incentives would result in a greater number of mixed-income properties near transit and would benefit lower-income households, who are more likely than higher-income households to use transit.
The city of Denver implemented a Transit-Oriented Development Fund in 2010 designed to help create affordable housing in transit-accessible locations. The city expanded investments to the fund in December 2014, recognizing the growing need associated with the city’s fast-rising rents.
5. Revise and/or streamline the development review and re-zoning process
A report by the Urban Land Institute and Enterprise Community Partners offers a set of recommendations for how to make the development review process more efficient to make it easier and less costly to produce below market rate housing. Some of the key recommendations related to the development review process include coordinating steps in the review process, creating clarity in the public engagement process, and making explicit the incentives associated with affordable housing provision.
In Los Angeles, the Planning Department is rewriting the city’s 70-year old zoning codeto better reflect the community’s needs and the market realities developers face. The goal is to create clearer standards and more focused community plans that will help expand the supply of affordable housing in the city.
6. Review and revise parking requirements
Minimum parking standards can make it more difficult to build affordable housingby increasing the overall cost of the development and by reducing the amount of housing that can be built on site. To help ensure that parking requirements do not impeded new affordable housing construction, local jurisdictions can revise parking standards for all new development or reduce or waive standards for certain types of housing (i.e. affordable or housing for older adults, or units located near public transit) on a discretionary basis. Short of making changes to parking requirements, jurisdictions could consider studying the current parking policies and local parking demand to better understand residents’ parking needs, particularly in developments located near transit.
The city of San Diego conducted a parking study in 2011 that analyzed local parking needs, reviewed best practices from other places around the country and made recommendations for how to modify the city’s parking requirements. Key considerations from the report include differentiating parking requirements based on building type and with consideration of access to transit and walkability of the neighborhoods.
7. Experiment with new building types
As housing needs grow and change, there are opportunities to encourage experimentation around building types. Many high-cost jurisdictions have adopted accessory dwelling unit (ADU) ordinances, which outline the requirements for creating small housing units set aside either within or attached to a single-family home or located on the same lot. Portland, Oregon is just one example of an ADU ordinance that has successfully create smaller, less expensive housing units throughout the city. Other jurisdictions have explored zoning changes that would allow for the construction of so-called “tiny houses,” which have gained popularity in recent years.
In San Francisco, one way that has been suggested to spur affordable housing development is to provide developers with an opportunity to experiment with different housing models, including co-housing and other shared housing models. While not allowed under typical zoning regulations, the experimental projects can offer some evidence about the viability of new housing models to expand affordable housing options.
