Category Archives: Affordable Housing
For years, research has shown that smart growth development can reduce costs for localities and in some cases can even increase public revenue. Over the last 10 to 15 years, research about smart growth development strategies has continued to develop. However, one question in particular still remained: What impact does smart growth development strategies have on municipalities’ bottom lines? An organization called Smart Growth America sought to answer that very question.
Smart Growth America published a report entitled Building Better Budgets: A National Examination of the Fiscal Benefits of Smart Growth Development. This report examined 17 case studies of municipalities across the country. Localities in this study included Afton, MN; Champaign, IL; Charlotte, NC; Fresno, CA and Phoenix, AZ just to name a few. Specifically, the report compared municipal revenues in two types of development scenarios: smart growth and conventional suburban. Smart growth development is characterized by buildings located closer to each other, neighborhoods that allow ample walking for residents, streets with better connections among destinations, a greater mix of home types and increased transportation options. On the other hand, buildings farther away from each other, neighborhoods designed primarily for driving, street systems with longer distances between destinations and fewer public transportation options are characteristics of conventional suburban development. The report by Smart Growth America focused on three financial aspects of these two strategies: the cost of upfront infrastructure, the cost of providing ongoing services, and the tax base created by additional development.
So, what did this comparison study show? First, smart growth development costs about one-third less for upfront infrastructure than conventional suburban development. Some type of infrastructure is of course required to support and supply any development. Often, the most expensive forms of infrastructure in new developments include roadways, water lines and sewer lines. The less expensive costs for upfront infrastructure in smart growth development scenarios can be attributed to the fact that smart growth development typically requires fewer infrastructures. This means that upfront capital costs, maintenance costs, and presumably costs for eventual replacements are lowered. Additionally, smart growth development scenarios often reuse existing infrastructure, which serves to further lower upfront capital costs.
Secondly, the comparison study showed that smart growth development saves municipalities an average of roughly 10 percent on ongoing delivery of services. Examples of ongoing delivery of services include the cost of services provided by first responders in emergencies such as police, fire and ambulance. The way a community is configured has a profound impact on delivery of public services. Because smart growth development utilizes street systems with better connections among destinations, service vehicles may drive fewer miles, thus allowing a reduction in operating costs. Further, research showed that the savings on services in rural areas were even higher.
Finally, the survey concluded that smart growth development produces 10 times more tax revenue per acre than conventional suburban development. Tax revenue typically refers to property and sales taxes, as well as licensing fees and other small sources of revenue in some instances. This finding is particularly significant because for most communities property taxes are an extremely important source of revenue. In fact, a 2010 U.S. Census survey of local government budgets nationwide showed that 48 percent of revenue from municipalities’ own sources came from property taxes.
The findings of Smart Growth America are significant for multiple reasons. The primary reason is because it shows that smart growth strategies create significant revenue for local governments and significant savings for residents! These findings are particularly relevant to local governments given our anemic recovery. Areas that experienced or are experiencing a lot of sprawled “McMansions” development are burdened with high land use and development costs. Localities across the country have seen that low-density developments fail to pay for their own infrastructure. Transportation costs for families have ballooned, in some cases to more than a quarter of their income. There is a significant correlation between lack of transportation and access to higher paying jobs. By making the decision to utilize smart growth development strategies, local governments may find that that their public balance sheets AND quality of life for residents can be improved for decades to come.
 Smart Growth America, Building Better Budgets: A National Examination of the Fiscal Benefits of Smart Growth Development, available at http://www.smartgrowthamerica.org/documents/building-better-budgets.pdf
 U.S. Census Bureau (2012, September), State and Local Government Finances Summary: 2010, available at http://www2.census.gov/govs/estimate/summary_report.pdf.
 Shaila Dewan, Is Suburban Sprawl on Its Way Back?, Sept. 14, 2013, available at http://www.nytimes.com/2013/09/15/sunday-review/is-suburban-sprawl-on-its-way-back.html?_r=0.
A great blog post about how best use HUD’s new data on housing affordability:
Three Ways to Use Data from the Location Affordability Portal to Inform Policy and Practice:
1. Understand the “complete costs of place” of a proposed affordable housing development. If we really want to deliver housing that is affordable, we need to focus not only on the costs of rent or a mortgage, but also on the costs of heating / cooling the home and getting to and from work and around town—collectively, the “complete costs of place.” A home that offers low housing costs but requires residents to spend all the savings on higher transportation costs is no bargain. While cost is not the only relevant factor in siting affordable housing (see below), it is an important one, and developers can increase the odds that a home with low housing costs is truly affordable by using the Location Affordability Portal to estimate a site’s transportation costs and factoring that into an estimate of the complete costs of place.
2. Target transportation investments to places with low housing costs but high transportation costs. There are two main ways of ensuring that the combined costs of housing and transportation are affordable to low- and moderate-income households: reduce the housing costs of places where transportation costs are already low (see item No. 1 above) or reduce the transportation costs of places where housing costs are already low. The Location Affordability Portal can help communities identify places where transportation investments—such as car sharing, improved commuter bus service, and improved pedestrian infrastructure—are needed to help improve affordability for low- and moderate-income households that have relatively affordable housing costs but high transportation costs.
3. Compare communities and regions. Sometimes policymakers, advocates or researchers find it useful to compare housing costs across regions—for example, to identify places with policies we may wish to emulate. If these analyses consider only housing costs but ignore transportation costs, they may well give us distorted results. For example, in an analysis of the housing and transportation costs of the 25 largest metro areas, we found that Houston had the eighth most affordable housing costs (as a percentage of income). But when we considered housing and transportation costs together, Houston dropped to 17th, making it one of the less affordable regions. The Location Affordability Portal provides useful metrics for comparing the combined costs of housing and transportation costs across jurisdictions.
Housing is a cornerstone for our families and our communities in Virginia. For 30 years, the Virginia Housing Coalition has advocated that every family and every individual in the Commonwealth should have an affordable and decent place to call home. As we emerge from the worst housing recession in our nation’s history, there are many reasons to focus on the housing status of our citizens here in Virginia.
- More than a million Virginia households are housing cost burdened – meaning, they pay more for housing than they can afford.
- Over 100,000 families lost their homes to foreclosure and this epidemic is still affecting our people and our neighborhoods. Many areas of the state still lag behind our stronger markets.
- The homeownership rate in the state and the nation are continuing to decline. We need to make sure that rental housing is available to meet this growing demand, but we also need to rebuild the opportunity for young families to buy a home and begin to build equity. Homeownership has long been the principle way that lower and middle class households increase wealth.
- The cost of rental housing has outpaced the growth of renter incomes over the past decade. In 2013, it would take a wage of $20.72 per hour to afford Virginia’s 2BR Fair Market Rent ($1,078), but the average renter wage in Virginia is only $15.79.
- Finally, while we have begun to make progress in reducing homelessness, this progress is threatened by cuts to federal rental assistance funding.
Good housing policy does more than just provide adequate shelter to Virginians. Housing is an important element of our state’s economy. Housing construction generates jobs and economic spinoff benefits the surrounding community. For example, the construction of 100 single family homes in Fairfax County supports 222 short term jobs and 20 long term jobs, bringing the total economic impact to over $16.5 million. Usually, housing leads us out of a recession. That has not been the case with the Great Recession. Our homebuilding industry has been in a depression for the past five years and that needs to change in order for economic growth to accelerate in our state.
Housing is integrally connected to many of the important issues that you will face as Governor. Housing density, location and development patterns fuel our transportation needs and expenditures. Good, stable housing correlates with improved educational achievement in young children, as well as providing mental and physical health benefits, especially to our older citizens.
As Governor, we urge you to place a priority on the development of a detailed housing policy and plan in the first year of your term. We also ask you to commit to continue funding for the Virginia Housing Trust Fund – an effort that has already begun to yield benefits to families across the state. The first round of Housing Trust Fund projects will be getting underway by the end of the year and will serve a broad range of housing needs in the state, including veterans, persons with disabilities and individuals experiencing homelessness.
On behalf of our membership across the state, we look forward to working with you to expand and improve housing opportunities for all Virginians in the next four years.
Bob Newman, President
A Fair Chance in the Economy is Humanly Possible
George Mason University Economics Professor Don Boudreaux wrote recently: “I do not in the least care about income (or wealth) inequality.”
This seems a pretty bold and heartless statement, but he clarifies:
“I care – very deeply – whether the process for pursuing one’s life’s goals is fair or not. I want everyone to have as fair a chance in the economy as is humanly possible. I despise special privileges that stack the deck either in favor of Jones or against Smith. (We can have a debate about what the details of “fair process” and “special privileges” look like, but this post is not the place for such a debate.) But I do not care about differences in monetary income or wealth as such.”
Every American is entitled to a fair chance to succeed in our economy. But here’s an incontrovertible fact: human bias and prejudice actively prevent some Americans at a fair shot.
What am I talking about? I’m talking about housing discrimination.
Zenobia of Petersburg Virginia wanted to move her family to a better neighborhood so her four children could attend better schools and build a better life for themselves. Unfortunately, she was turned down for housing repeatedly because she uses public assistance to pay for rent. This type of housing discrimination reduced the fair shot Zenobia is entitled to.
A recent study found that many low income Americans are trapped in areas with fewer opportunities:
One of the most disappointing results of the study, Tegler says, is that the majority of recipients of the Housing Choice Voucher Program still live near low-performing schools, even though the program is designed to provide greater housing options.
It is humanly possible to give these folks a fair chance in our economy. We have to eliminate discrimination against people using public assistance for housing. When people are able to choose great neighborhoods themselves, they will have the fair shot they are entitled to in our economy. We must also make sure that there is affordable housing in great neighborhoods.
The 10 minute video below was made by the Leadership Metro Richmond housing team. Housing is a regional issue that requires regional solutions.
The Richmond Mayor’s Anti-Poverty Commission presented its Final Report and Recommendations to Mayor Dwight C. Jones and the City of Richmond. The report represents nearly two years of research, public input sessions, and committee work. The commission’s findings stress the need for a regional rapid transit transportation system and a comprehensive housing policy. Commission Co-Chair Ellen Robertson plans to have the report presented to City Council during their informal session tonight, January 28, 2013.
The Virginia General Assembly moves pretty fast, leaving citizens with many concerns about what is happening with transportation. Despite the extensive media coverage, the details keep changing and many Virginians aren’t quite sure of the details lawmakers are proposing and debating. To help educate everyone about what’s going on, I’m summarizing the most recent developments and policy concerns.
Transportation is deeply connected to housing and we have to ask some serious questions about the current transportation proposal moving through the Virginia legislature. We know that the lack of affordable housing has forced Virginians to live farther away from their jobs which adds more congestion on our roads. We need a 21st century transportation solution.
Gov. Bob McDonnell has put forward a transportation proposal which basically:
- Raises the sales tax
- Permanently diverts more of the sales tax away from the General Fund (which also funds core services like education and health care) toward transportation
- Eliminates the gas tax
- Increases some transportation related fees, such as a fee on hybrids