Affordable housing is in the news these days as New York City makes headlines for its efforts to build more housing at affordable rents. Whether it’s the “poor door” controversy or the de Blasio administration’s push to mandate developers to include affordable units in every development, a widespread and growing problem is coming into focus.
The “poor door” has set off a wave of criticism because the affordable units are in a separate section from the rest of the luxury high-rise, and low-income residents must enter through a separate door. They also do not have equal access to the building amenities. The reason for the separate entrance, developers argue, is cost.
As the president of the development company told the New York Times, having the affordable apartments incorporated into the condominium tower would have meant “giving away” the most valuable units.
“We wouldn’t be able to do affordable,” he said. “It wouldn’t make any financial sense.”
The affordable housing units in the high-rise were built as part of the local inclusionary zoning (IZ) ordinances. Under the program, in exchange for including affordable units in a market-rate development—and thus losing money on those units—municipalities allow developers to build more units (higher density) than the zoning allows. Each community has a different set of rules governing the program, but most IZ programs have three features: the density bonus, a share of total units to be set aside as affordable, and requirements for how long those units must remain affordable (and what constitutes “affordable).
Inclusionary zoning is neither a new program nor only a city program. The first IZ program began in Montgomery County, a suburban expanse just northeast of DC, in the mid-1970s. Given its longevity, the Montgomery County program offers several lessons for affordable housing efforts.
To start, like de Blasio’s new push in New York City, Montgomery County mandates that suburban developments of more than 20 units designate 12-15 percent of the total homes as affordable. If they do not, they do not break ground. In other locales, IZ is voluntary. That mandate, many say, gives the program teeth. Case in point: In Cambridge, Massachusetts, the initial IZ rule was voluntary and spanned 10 years, and not one home was built,according to a RAND analysis.
Another lesson learned from Maryland is that inclusionary zoning alone is not enough. A RAND report estimated that IZ programs nationally have produced only 150,000 units over several decades, a relative drop in the bucket. The Housing Choice Voucher Program, in contrast, serves approximately 2 million households and the Low Income Housing Tax Credit has created more than 2 million homes. And that’s still not enough.
In addition, homes built under IZ eventually return to market-rate homes. From 1976 to 2011, IZ in Montgomery County produced 13,000 affordable units. However, only about 2,300 affordable homes were left by the end of 2010, according to the HUD report, as the initial affordability timespans expired and the houses shifted to market rate.
This loss is distressing given that the demand for affordable housing continues to far outstrip supply. In addition to a range of policies that create affordable housing, such as IZ, housing vouchers, and tax credits, communities also need tools to preserve affordable housing over time.
The Housing Partnership Equity Trust (HPET) is one promising model that combines private and philanthropic dollars to help preserve affordable housing units—whether they are at risk of being redeveloped into higher-price condos or they are expiring LIHTC properties. A product of the Housing Partnership Network, HPET operates as a real estate investment trust that pools funds from philanthropies coupled with debt-funding by major banks. Investors secure a stable return on their investments, while simultaneously providing stable housing to low-income households and improving the building’s environmental impact. Other innovative financing options that leverage public and private funds include the Golden State Acquisition Fund in California or the HOPE SF fund in the Bay Area. The federal and local governments are also experimenting with new models and programs to both expand and preserve affordable housing options.
These tools must also consider local conditions and community needs.
As we wrote in May, the affordable housing crunch often looks different in the suburbs than in central cities, and responses must recognize these unique conditions. In central Atlanta, for example, they might build affordable townhomes to counteract gentrification, but in the suburbs, that kind of concentrated, single-project approach will be less effective. “A scattered approach in housing and community development over a larger geography is more effective than it is in inner-city neighborhoods,” said John O-Callaghan, president and CEO of the Atlanta Neighborhood Development Partnership (ANDP).
And sometimes, the suburbs are simply overlooked altogether. As we wrote in February:
“Researchers at the University of Minnesota … argue that too much federal funding for affordable housing is going to Minneapolis and St. Paul neighborhoods at the expense of fast-growing suburbs. … In part, the focus on urban housing stems from the regional Met Council’s emphasis on locating affordable housing near transit lines to ensure connectivity. Many suburbs lack transit access, and thus end up missing out on affordable housing opportunities even if they want to develop more affordable units.”
In many respects, the “poor door” controversy in New York City masks a much larger metro-wide problem. As poverty continues to grow in the suburbs, the issue of affordability will only intensify. New solutions are needed, both in cities like New York and suburbs across the metro landscape.
Photo credit: Flickr user @MDGovpics