This article first appeared in Builder.
Housing-related policy often incites the NIMBYs and excites the activists while keeping municipalities on edge trying to come up with workable solutions. The good news for builders and developers in relation to policymaking is that there are organizations at work on behalf of the industry—such as NAHB, Habitat for Humanity, and local home building associations—that are identifying, championing, and lobbying for the plans, provisions, bills, and laws designed to help housing. Here, we look at six initiatives from the past year that impact builders and developers and aim to benefit the housing industry.
Affordable Housing Bond
One of the big questions about building more affordable housing typically is ‘Who is going to pay for it?’ Developers and builders continue to be squeezed from all sides by land development costs, the labor shortage, the entitlement process, and tariffs.
Tax credits, subsidies, and Opportunity Zones are designed to help fill in the gaps that will provide the foundation for more affordable homes. But in central Ohio, money needed to jump-start affordability came from the taxpayers in terms of a ballot issue passed in May that approved the city of Columbus to sell $1.03 billion in bonds. Most of the funds will be used to finance infrastructure projects, with $50 million earmarked for affordable housing efforts.
According to Columbus Business First, “The bulk of the municipal bonds overwhelmingly approved [recently] go toward public works: roads, water and sewer lines, police stations, parks, bike paths. City government already has well-oiled administrative machines for those types of projects.”
The Mid-Ohio Regional Planning Commission is still figuring out how and where to spend the affordable housing money. It has issued a request for proposals in support of its efforts to “foster a housing market where every household with a full-time wage earner can obtain housing in the private market, and to effectively supplement the market where we cannot achieve that goal.”
“This is a work in progress,” says E.J. Thomas, chairman of the Affordable Housing Alliance of Central Ohio. “The grant money that will be part of the process will help fill in the gaps so builders and investors can make the deal happen with a rate of return that will attract them.”
He adds that additional input from the industry is crucial for success. “We’re making the city aware of what would be helpful to the industry,” he says.
Columbus is in the midst of a population boom and is leery about falling into the same housing shortage hole as the coastal cities. According to the Affordable Housing Alliance of Central Ohio, at least 54,000 of Franklin County’s lowest-income households spend more than half of their income on housing. The region is expected to add 1 million people, a 50% increase, by 2050, which will raise the stakes even higher.
Thomas says builders need to team up, spending less time on the jobsite and more time in the conference room. “We want to pull them out of the trenches to work with us so we can upstream their issues,” he says. “If we want to stimulate more construction, we need to make it easier to get shovels in the ground.”
Texas has one of the fastest growing populations in the U.S. According to the Census Bureau, it has added over 170,000 people from 2010 to 2018, making it No. 1 one for inbound migration. While land shortage is not an issue in the Lone Star State, population growth is still pushing up home prices and raising concerns about affordability.
In May, Austin’s City Council acknowledged these issues by approving “Affordability Unlocked,” which began as a concept proposed for the city’s Fourth District. According to Curbed-Austin, the policy requires that “as a baseline, 50% of housing in a new development must be affordable. That means rentals must be priced for families earning 60% or less of median family income for the area, with some required at 50% of MFI. Home-buying prices must be affordable at 80% of MFI and below.”
To add density, setbacks and minimum lot sizes were reduced and accessible-parking requirements were brought up to current code. According to the new rules, any multifamily dwellings that are demolished must be replaced with as many affordable units and as many bedrooms as there were in the existing building.
Greg Anderson, director of community affairs for Habitat for Humanity in Austin, says the changes were way overdue and believes more are needed. “Our land development code was written the same year Michael Jordan was drafted into the NBA, and that’s a real problem,” he says.
Even though Anderson thinks the recent moves are steps in the right direction, it’s not a perfect solution for all market segments—especially market-rate builders. “We want a mode shift—we want more people out of single-occupancy vehicles, we want people next to transit, we want better air quality. We want walkability and smaller homes that a broader amount of people can afford.”
Anderson also believes the only way to combat the NIMBYs is by getting just as involved as they are.
“It’s tough because the NIMBYs do a really good job of painting architects, developers, landscape architects, and engineers with a broad brush of evil,” he notes. “They like to say we’re ‘just trying to make money off the neighborhoods,’ so you don’t have the right people at the table. They are essentially pulling up the ladder of opportunity for their grandchildren.”
The city of Minneapolis has grown 11% since 2010, and is now home to 425,000 people. The 83,000 new households in the region are trying to squeeze into 63,000 new homes, and the city is still trying to correct the effects of redlining, which date from the 1930s and was designed to keep investment out of minority neighborhoods.
To get the city back on track, the Metropolitan Council drafted and unveiled a new comprehensive plan in 2018 known as Minneapolis 2040. Not everybody was initially on board with the idea, and the policy created strange bedfellows as liberal housing advocates found themselves on the same side of the fence as the for-profit world of building and development.
According to Politico, the main policy of the plan “called for increased housing density citywide and an end to single-family zoning.” The early draft of the policy allowed four-unit buildings everywhere in the city. Larger apartment and condominium buildings could be built closer to downtown and along public transit routes. The new rules would apply to renovation and new construction by subdividing houses, building additions, allowing new construction on vacant lots, and teardowns.
Opposition sprang up, and the provision allowing four-unit buildings eventually was reduced to three. The plan was approved by the City Council in October, but the local building community remains skeptical.
“The plan is 1,100 pages with 150 policies and 20 goals,” says Monte Mraz, vice president of W. Gohman Construction and active member of the Builders Association of Minnesota. “We don’t know yet how it will work or if it will work. It was put into policy this fall, and we are dealing with it. We want to sit and summit with the people who wrote it.”
Mraz believes a lot of the policies put in place were not actively discussed with the local homebuilding community and puts the blame on both sides. “We should be in the rooms when they’re making these decisions,” he says. “We weren’t invited, but we didn’t ask to be invited either. So now we’re in a situation where we have to figure out how we’re going to help.”
As a builder who’s also involved in advocacy, Mraz believes it behooves anybody with skin in the game to get involved early. “They should all be joining their HBA because we’re going to be the first ones to develop a business plan to make this work to succeed at achieving the goal,” he says. “I look forward to the opportunity.”
Zoning Text Amendment 19-01
Montgomery County, Md.
Like many other places in the U.S., the Washington, D.C. area is in the midst of a housing crunch. In 2010, the population of the metro area was about 5.6 million people; today it’s 6.3 million. The megalopolis includes the District of Columbia and the surrounding counties in suburban Maryland and Northern Virginia.
More than 1 million people live in Montgomery County, Md.—a number that’s gone up by over 8% since 2010. In June, school overcrowding led to a one-year halt on residential construction covering an area equal to about 12% of the county’s land area. Transportation and school impact taxes were also hiked to cover shortfalls in infrastructure spending.
The housing shortage pressure eventually found its way to the County Council, which voted unanimously in July to amend its zoning laws to make it easier to build accessory dwelling units in three county residential zones.
According to Bethesda Magazine, “The zoning change will allow the apartments as attached and detached structures in zones where the minimum lot size is 6,000 to 20,000 square feet. Detached ADUs must be limited to 10% of the lot area and no larger than 1,200 square feet. Attached ADUs must be no larger than 1,200 square feet. If the footprint of the principal structure is greater than 1,200 square feet, an ADU may occupy the basement or cellar of that structure without a square footage limit. ADU owners also must provide a parking space, except for structures within 1 mile of a Metro, MARC, or future Purple Line light rail station.”
John Paukstis, president and CEO of Habitat for Humanity for Metro Maryland, says, “It costs anywhere from $130,000 to $150,000 to build one of these—it’s basically a small house. We’re part of the [Maryland Building Industry Association] and the builders supported this bill, because they saw the benefits just like we did.”
Although granny flats are drops in the housing crisis bucket, the opportunity offered by a growing ADU market can’t be ignored. To spread the word, Paukstis and his crew have been barnstorming the county by holding information sessions with the public. Their sessions typically include presentations from market-rate builders, Fannie Mae, and local banks. For builders looking to get involved in policy matters, Paukstis says, “Go to the BIA, or in our case, the Montgomery Housing Alliance. We meet once a month to advocate for policies like increasing the Housing Initiative Fund.”
House Bill 2001
Although the addition of 60,000 people to Portland’s population since 2010 seems impressive, Oregon’s fastest-growing cities include Happy Valley, a suburb of Portland that’s grown 46% since 2010, and Bend and Wilsonville, which are both up 23%. In an attempt to stave off the housing roller coaster rides experienced by West Coast neighbors in Seattle and San Francisco, the state made national headlines by passing House Bill 2001 on June 30, the last day of the legislative session. The new law was touted as a death knell for single-family zoning in the state.
The bill affects cities with over 10,000 residents by requiring them to allow duplexes on all residential lots. Municipalities with a population of over 25,000 must also allow triplexes, quads, and townhomes by right. Smaller communities are exempt from these residential zoning requirements.
Oregon has been promoting density since 1980 when it required its cities to establish an Urban Growth Boundary to contain sprawl while setting aside land for farming and the timber industry. The states of Washington and Tennessee have similar restrictions.
Shannon Vilhauer, executive director for Habitat for Humanity of Oregon, says, “Urban Growth Boundaries for Oregon communities of all sizes add to the importance of increasing density as a strategy for accommodating growth. Measure 2001 is largely based on local zoning measures that numerous central Oregon builders, realtors, and for-profit developers worked to promote as a way to maximize a variety of housing options for growing communities.”
Vilhauer pins the credit for success of the measure on receptive legislators and participation in the process from the local home building industry. It helps to have builders working on the inside.
“Oregon is fortunate to have a strong home builders association presence at both the local and state level,” she says. Oregon legislators on both sides of the aisle work hard to provide direct access for their constituents. Several of these legislators have a professional background in construction, real estate, and development. Policy decisions are always strongest when community members with relevant experience weigh in on the conversation.”
On any given night in America over half a million people are considered homeless, and 1.4 million people will spend time in a homeless shelter during the year. Counting the homeless is not an easy or a precise job. According to HUD, the numbers have been falling since 2010, but started to tick up from 2016 to 2018. The problem is more pronounced in heavily populated states, with California, Texas, Washington, and Oregon leading the pack.
Since developers and builders actually create and improve housing, the buck can stop or start with them, but local governments usually are in charge of the purse strings. Charity organizations help fill the gap, and as the problem refuses to vanish new models are rising to the surface.
Housing First is a homeless assistance approach that prioritizes permanent housing. The concept behind the effort is to get people into homes as soon as possible as opposed to working on health or social issues that may be contributing to the problem.
The model hinges on homes getting built in the right locations, which raises the question of who is going to pay for it. The problem was recently resolved in Riverside, Calif., as taxpayers stepped up to the plate by approving funding for 10 400-square-foot transitional homes, each complete with a full bath, a washer/dryer, a kitchenette, and a front porch, that will be built just north of downtown Riverside.
Habitat for Humanity Riverside is in charge of the construction. “The city of Riverside got us into it,” says Kathy Michalak, executive director for Habitat for Humanity Riverside. “They reached out to us because we partner with them on a lot of things in the community. One thing we can do really well is mobilize volunteers to get homes built pretty quickly, once we have funding in place.”
Michalak’s crews intend to build the homes at Habitat’s local headquarters and then truck them to the site—located near vital support services—for assembly. She sees homelessness as something that transcends a number of development scenarios. “Homelessness in California has become a quality of life issue for everybody—if you’re a developer and you’re trying to do workforce housing or higher-end housing, if the community has a homeless issue, it’s an issue for everybody,” she says.
She also believes that homelessness and housing affordability problems present opportunities for builders and developers interested in stretching beyond their normal niches. “One of the things we’re looking to do is partner up more with affordable housing developers,” she says. “My guess is most for-profit developers don’t want to get involved with the logistics around finding and qualifying lower-income households, and that’s what affordable housing developers do every day.”
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