CREATING AFFORDABLE HOUSING IN YOUR
COMMUNITY
HOSTED BY LOCAL PROGRESS
Ady Barkan
Co-Director
Local Progress
Sasha Hauswald
Cornerstone Partnership
Senior Program Officer for Inclusionary
Housing Policy
Inclusionary Housing
Presentation for Local Progress
www.affordableownership.org
© Cornerstone Partnership 2013
Cornerstone Partnership
Introduction
Sasha Hauswald
Senior Program Officer,
Inclusionary Housing Policy
www.affordableownership.org
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Agenda
About Cornerstone
Why Inclusionary
Key Choices
Recent Trends
www.affordableownership.org
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What We Do
We promote housing opportunity by:
• Advising communities on inclusionary housing policy.
• Building capacity of nonprofits running homeownership programs
that build wealth and preserve affordability over time.
• Developing innovative technology solutions to increase program
efficiency and capture social impact data.
www.affordableownership.org
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What’s the Problem?
Lower and middle-income
households are increasingly
being priced out of growing
housing markets.
Lack of housing opportunities
leaves these families few
choices: extreme commute
times, overcrowding,
substandard housing, or living
in housing beyond their
means.
www.affordableownership.org
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Loss of Affordability
San Jose Home Sales History
(2014 dollars)
Year
1988
1996
2015
www.affordableownership.org
Sales Price
$378,000
$301,900
$939,000
Potential Buyer
$87,000
$69,500
$216,032
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Housing Prices Outpace Wages
source: americancenturyblog.com
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Why Inclusionary?
www.affordableownership.org
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What is Inclusionary Housing?
Local policies that require or encourage lower-priced,
income-targeted homes and apartments in new marketrate developments.
>500
www.affordableownership.org
Source:
Hickey, Sturtevant and Thaden (2014).
Achieving Lasting Affordability through Inclusionary Housing.
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Development Booming
Source: http://colors.papabeta.com/
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Income Inequality on the Rise
Source: San Francisco Human Services Agency
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Polarization: A Tale of One City
Source: J.D. Pooley/Getty Images
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Why Inclusionary?
• Affordable Housing
Development without
Public Subsidy
• Recapture Value
Generated by Public
Investment
• Build Mixed-Income TOD
• Workforce Attraction and
Retention
• Reduce pollution due to
Commuting
• Economic Integration:
Access to Good
Neighborhoods
www.affordableownership.org
Ponce City Flats,
Atlanta, GA
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How Do We Structure
Inclusionary Policies?
www.affordableownership.org
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Key Choices
• Voluntary or Mandatory?
• What is the percentage of price-restricted units (typical range is 10%
to 30%)?
• What is the threshold size for projects?
• What income groups will be targeted?
• Does it apply to both rental and for-sale development?
• Is the policy geographically targeted?
• Does the policy apply to non-residential developers?
• Will in-lieu fees, off-site or land dedication be allowed?
• What incentives will be offered?
• What is the duration of affordability requirements?
• Will specific design standards apply to the price-restricted units?
www.affordableownership.org
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Voluntary vs Mandatory
San Francisco, CA
Mandatory
Typically produce
more affordable
units.
www.affordableownership.org
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Voluntary vs Mandatory
Austin, TX
Voluntary
Must offer adequate
incentives
Strong Voluntary/
Triggered Programs
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Inclusionary Percentage
Typical range
10% to 30%
Trade Off
Lower % for Deeper
affordability
Palmers Dock Apartments,
Brooklyn, NY
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Income Targeting
Typical range
30%AMI to 120%AMI
Often lower for rental
than ownership
Atlanta, GA
www.affordableownership.org
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Geographic Targeting
Transit Oriented Development
Mixed markets
Specific zoning districts,
neighborhoods or census tracts.
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In-Lieu Fees
Flexibility
Leveraging of outside
funds
Use expertise of nonprofits
Ease of development
Monitoring costs and
challenges
New Condominium Development, Santa Fe
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Why Not Do In-Lieu Fees
Prices often set too low
Delay to see units
Administrative and
development capacity
Concentration of poverty
Scarcity of leveraging
sources
Political and public will
www.affordableownership.org
Evans Station Lofts, Denver
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Other Compliance Options
Offsite Performance
Land Dedication
Preservation
Downtown Tucson, Arizona
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Types of Incentives
Density bonus
Parking reduction
Other zoning variances
Fee / tax reductions
Financial subsidies
Expedited permitting
www.affordableownership.org
Atlanta, Georgia
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Lessons Learned
Most Effective Policies:
•
•
•
•
•
•
•
Do not miss the window of opportunity
Apply where new development is occurring/ will occur
Are mandatory
Have long terms of affordability
Plan for monitoring and stewardship
Are simple and predictable
Objectively assess financial feasibility
www.affordableownership.org
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2015 Trends
• Strengthening Existing Programs
Longer terms of affordability
Higher fees-in-lieu
Voluntary programs becoming mandatory
• Mixed Markets
Denver, New York, Pittsburgh, New Orleans
• Southern and Rustbelt Cities
Atlanta, Nashville, Minneapolis
• Inclusionary Upzoning
• Regional Efforts
California, Twin Cities
• Fee-Based Programs
Seattle, California
www.affordableownership.org
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Thank you.
For More Information:
[email protected]
affordableownership.org
www.affordableownership.org
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Valerie Ervin
Executive Director
Participatory Democracy Project
Inclusionary Zoning in
Montgomery County
BIRTH-STRUGGLEEVOLUTION
BIRTH
A long view: Visionary Leadership (It is the government’s role to expand opportunity)
• 1964: Montgomery County Council passed a General Plan which included a concept called “Wedges and Corridors”
which created wedges of low-density, open space and protected farmland and corridors of growth and
development.
• In 1974 the Montgomery County Council pioneered the nation’s first mandatory inclusionary zoning law. The
program allows that a specified density bonus allowance to builders to provide affordable housing.
• In 1980 the Council created the Agricultural Reserve which was designed to protect 93,000 acres of farmland and
agriculture.
• As Montgomery County grew as a desirable community outside the nation’s capital, community and political
leaders grew concerned that the majority of new housing in the county was being built and marketed to high
income households. Moderately priced and low-income housing was shrinking. This fact brought visionary
leadership both elected and community together to create public policy answers to this growing dilemma.
• The law requires that between 12.5% and 15% of homes in new developments of 20 units or more be MPDU’s. The
law allows a density increase of up to 22% above the normal density permitted under the zone. The density bonus,
in effected, creates free lots on which MPDU’s are constructed. When the program was established it required that
the affordability of both rental and homeownership MPDU’s be controlled for 5 years. Today, that period is 30 years
for homeownership and 99 years for rentals.
• In 2014, a household must earn between a minimum of $30,000 and a maximum of $81,000 to rent and MPDU
(based on unit size and unit type). To buy an MPDU, household income must be between $35,000 and $81,000.
These income limits are updated annually.
STRUGGLE
Who qualifies?
•The program requires that 40% of newly developed MPDU’s first be offered for sale to the
Housing Opportunities Commission, Montgomery County’s public housing agency, and to nonprofit housing providers who provide housing to the county’s poorest residents who do not
qualify for the MPDU program.
•The MPDU program is not for poor people. Moderately priced housing is designed to be
housing for teachers and firefighters and other public sector employees who cannot afford to
live in the county where they provide their public service. These residents are moving further
and further away from the county due to issues of affordability. The next generation is also
impacted by higher housing costs. They essentially cannot afford to live in the community
where they were born and raised. The Housing Opportunities Commission was established to
provide housing for the families who do not qualify for MPDU’s.
•As the County grows and the availability of land shrinks, the pressure on the county and
developers is growing. New development is actually redevelopment of older wedges that were
originally designed in the 60’s and much of that development was in the form of strip malls.
The pushback from communities is the result of the older residential communities feeling the
pressure of this new development which puts them in close proximity to neighbors who are
different. In an enclave that was a traditional bedroom community that was very
homogeneous to one that is more diverse has been a tension that creates pushback from wellorganized single-family residents and residents who live in condos in tony neighborhoods
where redevelopment is also occurring. The lack of affordable housing has also caused
neighbors to respond negatively to families due to financial constraints sharing housing.
EVOLUTION
The MPDU program is not a static program.
•It works because it is in a constant state of reevaluation and improvement.
•The County is becoming more urban and is nearing its capacity for development.
As a result, the production of MPDU’s has decreased.
•This decreased production was also a result of the recent recession which
slowed down building and development for the past several years.
•Land is expensive so the developers continue to find ways to ensure certainty to
build to make a profit.
•The MPDU program is still an important source of affordable housing but it can’t
be the only tool. There have to be many tools in the tool box to make affordable
housing a reality in our communities.
Robin Kniech
Councilwoman At Large
Denver, CO
Determining “Zones” for
Variable Cash in Lieu/Incentives
High, medium, and low zones based on the overlay of two metrics
1. Fixed-rail Transit
Why?: Proximity to transit saves moderate income families money compared
to owning and/or always using a car.
Data and thresholds: ≥30% or ≥50% of neighborhood within ½ mile of
fixed rail transit station.
2. Median Sales Prices
Why?: We have a greater need for new affordable housing as a part of
development in higher cost neighborhoods than in neighborhoods where
the market already creates moderate priced housing.
Data and Threshold: median sales distributed into three tiers citywide
by neighborhood.
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“Zones” for variable
cash-in-lieu or incentives
Distribution:
LOW = 25%
MEDIUM = 60%
HIGH = 15%
Zones Based on Need/Transit
Tiered Cash-in-Lieu and
Incentives by Zone
Tiered Cash In Lieu (CIL) and Incentives - By Zones
Zone
CIL
Cash Incentives
High
70% of
Sales Price
$25,000
per unit
50% of
Sales Price (Existing)
$6,500
per unit
Medium
Low
25% of
Sales price
(Existing adjusted by inflation)
$2,500
per unit
* Except within ½ mile of
transit, which receives
the medium incentive
Denver City Councilwoman At-Large
Robin Kniech
(720) 337-7712
[email protected]
www.denvergov.org/robinkniech
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Q and A
Please raise your hand or type a question in
the chat box
THANK YOU!
Please contact Tarsi Dunlop with questions ([email protected])