There’s no single solution for lack of affordable housing

Local governments could make building permit processes more efficient, panelists said

Oct.October 20, 2016 01:30 PM

A complete set of public policies is more likely than a solitary solution to expand the availability of affordable housing, a director of the Urban Land Institute said during a panel presentation Wednesday in Miami.

“There is no one policy tool that in and of itself is going to make a dramatic difference on this problem,” said Stockton Williams, executive director of ULI’s Terwilliger Center for Housing.

“The good news is a number of cities are starting to put together a set of solutions, a tool kit,” Williams said during the panel presentation in the Miami offices of law firm Holland & Knight, which sponsored the event.

Local governments could add to the supply of housing of all types by making building-permit processes more efficient, panelists said. “We need to look at streamlining the permitting process to encourage development,” said Sherekia Brown, executive director of the South Florida Community Development Coalition.

Brown also said local governments should pay more of the infrastructure costs associated with small-scale renovations of existing rental housing. “When you’re doing infill developments, a couple projects here and there, to pay for the entire water and sewer improvements starts to make the project cost-prohibitive.”

The panelists agreed that multiple other approaches are required to boost the supply of affordable housing.

“There needs to be a holistic approach to this issue,” said Matthew Ellish, associate general counsel of Property Markets Group (PMG), because multiple forces discourage the development of affordable housing. “As people know, the price of land is increasingly expensive. Production costs have been very high. Developers are forced to build one product and one product only, and that’s expensive housing. That’s just the economics of it.”

Williams, the ULI director, said the need for affordable housing in Miami is acute: “Here in the Miami metro area, there are 275,000 working households who earn between 60 [percent] and 120 percent of the median income and are paying more than half of what they earn for their rent or mortgage.”

Developers of more than 40 percent of the federally assisted, HUD-subsidized rental housing units in Miami will be able to charge unrestricted rents by the end of 2017, Williams said. “These all come with periods of rent-restricted time, and we’re approaching a wave of possible expirations of those affordability requirements, which will create additional pressure on the lower-priced housing stock,” he said.

Cities have taken a variety of approaches to address a shortage of affordable housing. Responses in some cities include preserving and protecting the existing stock of rental housing, providing incentives to include below-market housing units in mostly market-rate residential developments, and dedicating local government revenue to funds that foster affordable housing.

Among the most common municipal responses are so-called inclusionary zoning rules, zoning-based requirements that developers include a certain number of below-market units in a mostly market-rate residential project.

“On its surface it appears to be a no-cost way to generate the creation of below-market units,” Williams said. “But fundamentally, when you impose a requirement on the private sector to produce a below-market unit, you’re reducing land values.”

Inclusionary zoning has populist appeal but limited application, Williams said. “Whatever the design details, the inclusionary approach is only going to work in a strong real estate market — in a market where there is a substantial amount of market-rate activity happening,” he said. “Because you get the below-market housing as a result of market-rate housing development.”

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