by Jamin Kimmell and Catherine Corliss, AICP
High housing costs in large cities are a well-worn story—and a seemingly intractable issue to address—for planners across the country. Less well-documented are the housing affordability challenges faced by a range of smaller towns, mid-size cities, and suburban communities. Cities and towns in the west are no exception. Planners can respond to a lack of affordable housing by leveraging the regulatory and institutional tools at their disposal. This article will highlight a few tools and strategies within a framework of three “levers” of affordability:
- Facilitate the development of income-restricted affordable housing
- Mitigate residential displacement
- Encourage expansion of overall housing supply
These three levers reflect the complex nature of the housing affordability problem. One particular strategy or tool may only address one part of the problem. For a more comprehensive response, planners should consider how to implement a set of strategies that addresses multiple levers.
Prior to implementing a new strategy or tool, planners should perform a detailed assessment of the local housing market and regulatory environment. The key drivers of rising housing costs can take many forms—a widening commute shed, investment in vacation rentals, or a sector-specific employment boom—and each require different strategic responses. Further, planners should consider the degree to which local policies, programs, and regulations are either addressing or exacerbating the problem. While different communities may need to prioritize different approaches, the strategies highlighted below have been found to be effective in wide range of housing markets and political contexts.
1. Facilitate the development of income-restricted affordable housing
Regardless of local market conditions, housing will remain unaffordable to some of the most disadvantaged residents of any community. Public subsidy is often required to provide housing for people with very low incomes. Some local governments use local revenues from impact fees, property tax levies, or tax increment financing (depending on the legal context) to directly fund low-income housing. In this article, we focus on how planners can use local regulatory authority to facilitate the development of subsidized low-income housing.
Local land use regulations often increase the cost of development in both subtle and significant ways. Overly restrictive limitations on density or height may require developers to acquire more land or build fewer units than would otherwise be optimal, increasing land costs per unit. Excessive minimum off-street parking requirements can have the same effect by forcing developers to build more parking than needed, at an average cost of about $5,000 per space. A long, complex review process can also add costs by limiting a developer’s ability to respond to new opportunities and increasing financing costs.[i] Most directly, impact fees (sometimes called System Development Charges) increase the cost of development.
Small towns can reduce barriers to development of low-income housing by offering special provisions for affordable or mixed-income housing developments, such as density or height bonuses that can be granted without a special review process, reduced minimum parking requirements that recognize lower rates of car ownership among low-income households, reductions or waivers of impact and/or permitting fees, and expedited permitting. Cities should ensure that developments using these provisions maintain affordability over time through restrictive covenants or management of the property by a non-profit or housing authority. These incentives can be available to all developments that include units affordable to people with low incomes or can be targeted to geographic areas—such as near transit or within a downtown—to achieve multiple policy goals.
In some markets, local governments may consider leveraging their regulatory authority to directly require that all new housing developments include some units affordable to low-income households. This approach is known as inclusionary zoning. It has been implemented in jurisdictions across the U.S. to produce up to 150,000 affordable units.[ii] The requirement to provide affordable units adds cost to the development; however, that cost may be offset by regulatory or financial incentives, such as property tax abatements, fee waivers, or density bonuses. Often, a combination of multiple incentives is needed to offset the costs. If added costs are not fully offset, the requirement may dampen new housing construction overall by making some development projects infeasible or encouraging developers to invest elsewhere, counteracting the initial goal. Yet, in markets with strong demand and a carefully calibrated policy, inclusionary zoning can harness market forces to produce more affordable units than may otherwise be possible by relying solely on public and non-profit development.
2. Mitigate residential displacement
Focused on the prospects for new housing, planners often overlook opportunities to help people stay in units that are currently affordable and to preserve affordability over the long term. Displacement occurs when a tenant is forced to move due to physical redevelopment or economic conditions that drive up rent. Planners can help enact policies to minimize and mitigate the negative effects of displacement.
TENANT PROTECTIONS AND SUPPORT
While outside the realm of a planner’s conventional expertise, local governments have authority to regulate tenant-landlord relations to reduce unjust evictions and buffer the worst effects of being displaced. Many states and cities have adopted Just Cause Eviction laws, which limit the reasons that a property owner may evict a tenant on a month-to-month lease. Eviction solely for the purpose of increasing rent is not usually permitted, but landlords may still evict a tenant for a variety of other valid reasons. Cities may also consider ordinances to require that landlords provide longer notice for evictions—such as 60 or 90 days—so tenants can have time to find new housing. Lastly, several cities have adopted requirements that landlords provide financial assistance to tenants that are displaced due to redevelopment. Even a relatively small amount of assistance—such as one month’s rent—can mitigate against the potential for a tenant to become homeless. While going too far with tenant protections can discourage investment in local rental housing (especially in a small community that is part of a broader housing market), a moderate policy is less likely to have this effect.
COMMUNITY LAND TRUSTS
In hot housing markets, the cost of land is a high share of the overall cost of housing. If the land is owned by an entity that is not driven by a need to maximize profit, then the housing that sits on that land can be sold or rented for a lower rate. This is the theory underlying the Community Land Trust (CLT) model.
CLTs are nonprofit, community-based organizations that own and manage land for the purpose of preserving affordability. The primary goal of most CLTs is to provide opportunities for homeownership to low-income residents. CLTs achieve this goal by separating the ownership of land from ownership of the dwelling. CLTs own land and lease it to low-income residents at a low rate, while the residents purchase and own the dwelling. CLTs may also lease land to non-profits or public housing agencies for construction or preservation of single family or multifamily rental housing.
The number of CLTs is growing. As of 2017, there are at least 74 CLTs operating in the states represented by the Western Planner network.[iii] Yet, there are barriers to expansion of the CLT model. The model is most effective when land can be acquired at a relatively low cost. The programs are administratively complex and require significant organizational capacity-building to get off the ground. Funding is contingent on public subsidy or fundraising. The effectiveness of CLTs can be limited in hot housing markets, which often have small reserves of vacant land and strong competition. A promising trend for expansion of the CLT model is broader partnership with city governments. Cities can provide seed funding, technical assistance, staffing, land donations, regulatory concessions, and other forms of support.[iv]
3. Encourage the expansion of overall housing supply
One of the root causes of the housing affordability problem is a shortage of supply compared to demand. As economic principles would predict, when population growth outpaces housing production, high demand for a short supply of homes will drive up prices. In many cities, insufficient supply of housing may be attributable to overly restrictive land use regulations that constrain housing production.
ACCESSORY DWELLING UNITS
In most American towns and cities, the great majority of land zoned for residential uses is limited to detached, single-family dwellings. Higher density residential development within these areas is often met with opposition, for a variety of reasons. In this context, the incremental densification of single-family neighborhoods is a practical and effective strategy for expanding overall supply of housing.
A detached, 750 square foot ADU tucked behind the main house. Photo credit: AccessoryDwellings.org
Accessory Dwelling Units (ADUs) are small, secondary dwelling units commonly located behind a primary dwelling or in a converted garage or basement. They offer a gentle method of increasing density that can directly benefit existing homeowners. ADUs were more widespread in the early 20th century, sometimes called “granny flats” because they often housed extended family members. ADUs remain an attractive option for multi-generational living, yet also provide opportunities for homeowners to generate supplemental income by renting the unit.
Regulatory restrictions often inhibit development of ADUs. Owner occupancy requirements—specifying that the owner must live in either main house or ADU—may discourage long-term investment. Minimum parking requirements or yard setbacks can become barriers on smaller lots. Maximum floor area standards that are too low may limit the potential utility of the units, and overly restrictive design standards and review procedures can increase the cost of their development. Infrastructure fees may also act as a barrier, especially as homeowners—not professional developers—are typically funding ADU development. A review of dozens of cities across British Columbia, Washington, and Oregon found that most cities retained restrictive regulations.[v] Vancouver B.C. was at the forefront of removing ADU restrictions in the 1980s; as a result, 35 percent of single-family homes in the city include an ADU, compared to less than 1 percent in Portland and Seattle.[vi]
“MISSING MIDDLE” HOUSING
ADUs are not the only way to incrementally densify single-family neighborhoods. Planners have recently found inspiration in early 20th century neighborhoods that appear similar in character to single-family neighborhoods, but include a range of higher density housing types, such as townhomes, duplexes, triplexes, courtyard apartments, and cottage cluster housing. This set of housing types has been coined the “missing middle”: an oft-forgotten development form that lies between detached, single-family housing and mid-rise apartments.[vii] Missing middle infill may be more palatable to residents of single-family neighborhoods, while subtly expanding housing supply and diversity of housing options. Additionally, missing middle housing is relatively inexpensive to construct and, over time, may increase the viability of local transit and neighborhood retail.
Zoning reforms to support missing middle housing can be tailored to local conditions. Short of a wholesale allowance for all these housing types, planners may propose reforms that allow a subset of the types or limit the locations where the types are permitted. Rows of townhomes may not be supported in a neighborhood of detached housing, for example, but duplexes or cottage cluster housing may be more consistent with the existing pattern. Corners are a natural place to allow higher density housing types, where they may function as both bookends and transitions.
The crux of the challenge for missing middle housing is navigating the tension between development economics and neighborhood resistance. One way to limit neighborhood concerns is to cap the overall size and scale of the missing middle housing type, while allowing a higher density within that building envelope. However, this may constrain the market potential for the higher density housing types. Developers may still find it more profitable to build one larger home than multiple smaller homes on a lot. A higher size cap or broader allowances for attached housing may have a better chance of generating new housing supply but may not be supported by existing residents.
The effects of unaffordable housing are wide-ranging and antithetical to the goals and values of planning, and the affordability issue is unlike to subside soon. Yet, planners possess the skills and authority to implement strategies that can yield meaningful results. From regulatory reform to non-profit partnerships, planners can initiate conversations and build support for strategies that will only grow more necessary and valuable in coming years.
- Durning, Alan. “Yes, you can build your way to affordable housing. Lessons from unexpected places”, September 21, 2017, Sightline Institute, http://www.sightline.org/2017/09/21/yes-you-can-build-your-way-to-affordable-housing
- Furman, Jason. “Barriers to Shared Growth: The Case of Land Use Regulation and Economic Rents”, The Urban Institute (November 2015), https://obamawhitehouse.archives.gov/sites/default/files/page/files/20151120_barriers_shared_growth_land_use_regulation_and_economic_rents.pdf
- Ikeda, Sanford and Hamilton, Emily. “How Land-Use Regulation Undermines Affordable Housing”, Mercatus Center at George Washington University (November 2015), https://www.mercatus.org/publication/how-land-use-regulation-undermines-affordable-housing
- Spevak, Eli and Kovacs, Madeline. “Character-Compatible, Space-Efficient Housing Options for Single-Dwelling Neighborhoods”, Oregon Department of Environmental Quality (DEQ), Oregon Department of Land Conservation and Development (DLCD) and Oregon Department of Transportation (ODOT) Transportation & Growth Management Program (TGM) (May 2016), http://www.oregon.gov/LCD/TGM/docs/SpaceEfficientHousingReport.pdf
- Whitehead, David. “There’s no silver bullet to make cities affordable, but you need these four things.”, September 27, 2017, Greater Greater Washington, https://ggwash.org/view/64930/theres-no-silver-bullet-to-make-cities-affordable-but-you-need-these-four-things.
- Woetzel, Jonathan, Ram, Sangeeth, et. al., “A Blueprint for Addressing the Global Affordable Housing Challenge”. McKinsey Global Institute (October 2014), https://www.mckinsey.com/global-themes/urbanization/tackling-the-worlds-affordable-housing-challenge.
[i] For this reason, the state of Oregon requires that jurisdictions only apply “clear and objective” standards for needed housing types. For more details, see Oregon Administrative Rules, Chapter 660, Division 8.
[ii] Lisa Sturtevant, “Separating Fact from Fiction to Design Effective Inclusionary Housing Programs”, Center for Housing Policy (May 2016), https://www.nhc.org/wp-content/uploads/2017/10/Separating-Fact-from-Fiction-to-Design.pdf
[iii] National Community Land Trust Network, “Program Directory”, http://cltnetwork.org/directory/
[iv] John Emmeus Davis and Rick Jacobus, “The City-CLT Partnership: Municipal Support for Community Land Trusts,” Lincoln Land Institute (June 2008), http://www.lincolninst.edu/sites/default/files/pubfiles/the-city-clt-partnership-full.pdf
[v] Alan Durning, “ADUs and Don’ts,” Sightline Institute, March 15, 2013, http://www.sightline.org/2013/03/15/adus-and-donts/
[vi] Dan Bertolet, “Why Vancouver Trounces the Rest of Cascadia in Building ADUs”, Sightline Institute, February 17, 2016, http://www.sightline.org/2016/02/17/why-vancouver-trounces-the-rest-of-cascadia-in-building-adus/
[vii] Daniel Parolek of Opticos Design first used this term. He maintains a useful set of research and resources on missing middle housing at http://www.missingmiddlehousing.com.
About Angelo Planning Group
Angelo Planning Group, located in historic downtown Portland, Oregon, is a leader in the urban and community planning field. Our services include Comprehensive Planning, Concept and Master Planning, Transportation Planning, Public Facility Planning, Environmental Planning, Development Code updates and Development Services. Visit www.angeloplanning.com.
Jamin Kimmell is a Planner with Angelo Planning Group. He has worked with communities large and small on planning efforts related to housing. He is interested in the many ways that land use policy is intricately linked to housing, transportation, and economics.
Catherine Corliss, AICP, is a Principal with the Angelo Planning Group. She has over twenty-five years of experience in growth management, land use, transportation, and environmental planning in the public and private sectors. She also serves on The Western Planner Editorial Board. The authors thank Rebecca Hewitt, AICP, for her assistance in editing the article.
Published September 2018