In March 2021, the California Housing Partnership and Housing California released a ten-year project to address the housing crisis in the state. The mission of “Roadmap Home 2030” is to provide affordable housing for low-income households and the homeless population in California. Housing as a human right is the foundation of the Roadmap’s framework and backed with equity and evidence-based solutions. The project also aims to minimize racial disparities in homeownership, homelessness, and housing insecurity. In order to achieve these goals, the Roadmap outlines a four-step approach that highlight the most important aspects of the housing crisis:
- Create affordable homes: 1.2 million homes will be built for homeless people in California.
- Protect low-income renters: 1 million low-income renters in California and 300,000 households that face eviction every year.
- End homelessness: house the 150,000 people who are homeless every night and 400,000 people who are homeless throughout the year.
- Ensure racial equity: reduce racial equity gaps in housing that harm Latinx, Black, and Indigenous people .
In a 2019 study, the National Alliance to End Homelessness estimates that 567,715 people experience homelessness on any given night, including 96,141 people who are chronically homeless and 35,038 homeless youth. Using the Roadmap Home as a template, the federal government can implement a similar policy to properly address the housing crisis and those who are most vulnerable.
Expanding the Roadmap Home
The biggest barriers for creating affordable housing nationally are the increasing demand and the insurmountable price for development. These push and pull factors of the free-market have caused 40 million Americans to spend more than 30% of their incomes on housing while homeownership decreases and rental prices increase. At the national level, the Roadmap Home project would require immense funding and support in order to meet the demands for housing. Federal and state funding are allocated based on need, determined by the local housing authority and its tracking of the homeless population throughout the year, homes facing eviction or foreclosure, households that are severely cost-burdened, and other populations in need of affordable housing. In California, the Department of Housing and Community Development and the Department of Social Services administer these funds across the state. Focusing on localized needs allows for efficient and effective use of funding.
Funding
Lawmakers in California proposed a policy that eliminates second-home tax credits on income taxes for people with multiple homes that would create $300 million dollars in revenue for affordable housing. Bringing this to the national level would allow for a large influx of revenue specified for affordable housing development. Mortgage deductibles often receive scrutiny for benefiting wealthy homeowners, where the average household that benefits from mortgage deductibles have incomes above $100,000. In addition, both state and federal ventures can increase incentives for developers to construct affordable housing by increasing the Low-Income Housing Tax Credit (LIHTC). The LIHTC is the most important policy for affordable housing development in the country and since its creation in 1986, the LIHTC program has subsidized construction or rehabilitation of over 2 million units, or roughly 110,000 affordable units every year. Congress sets the amount of LIHTC that can be allocated to each state and developers are required to rent units to low-income households in return for the credit. In 2018, each state was allocated $3.1 million or $2.70 per capita. Credits are claimed over a ten-year period causing most developers to sell the credits to private investors in order to secure funding to start construction. If Congress restructured the allocation of the LIHTC to coincide with each state’s demand for affordable housing, funds could be used more effectively and efficiently. This approach emphasizes the need for local authorities to track housing insecure populations throughout the year to secure adequate funding.
Public-Private Partnerships (PPPs) also provide a similar incentive for developers when local municipalities recruit private companies to build affordable housing. PPPs are contracts between public partners (government entities) and private partners that outlines responsibilities and financial mechanisms for both parties in a long-term project. Local municipalities can defer taxes and offer assets like land, buildings, and entitled parcels to assist with maintaining equal benefits for developers and low-income households. The public partner incentivizes the private partner at a price point that allows low-income households to occupy the units and still produce profit. PPPs allow for public entities to conduct important social or economic projects with capital and competency from for-profit developers. It is vital for contracts to outline potential risk factors and social or environmental forces that could impact said project due to their long-term characteristics. This generation of capital for affordable housing is vital for the extended Roadmap Home project and municipalities with high homeless and low-income populations should prioritize the partnerships where federal or state funding is not available.
Meeting Demand
Beyond funding, the immense demand for housing among low-income and moderate-income households creates another barrier to this project. To create affordable and safe housing, federal and state entities need to look towards more sustainable options. Land and zoning create another obstacle for developers by limiting where affordable units can be constructed. To combat this, state-aided programs should focus on acquiring motels and hotels for rehabilitation into affordable housing units. Rehabilitation is significantly cheaper than developing new units from scratch and these buildings are already zoned for a multi-family dwelling. The Roadmap Home 2030 report estimates that a new unit costs $172,000 to construct, whereas acquiring and rehabilitating old hotels and motels costs $59,000 per unit. This model allows for quicker and more efficient provision of affordable units. Funding options for developers should be centralized in each state to streamline the application process and make this project more efficient. Many states have disjointed funding channels for affordable housing, forcing developers to submit applications to multiple different sources, increasing the cost of affordable housing through the tedious burden to acquire funding.
The Opposition
Another obstacle that cannot be ignored is the strong opposition to affordable housing and social services as a whole. Many oppose increasing the social safety net and government intervention. Also, creating a national project for affordable housing centralizes the housing sector in the social safety net, another reason that many voters would be less inclined to support an expanded Roadmap Home.
Government involvement is a necessity when it comes to affordable housing and preventing homelessness. Leaving it up to the free market necessarily impacts low-income households and has started to pull down middle-income households as well. Between 2005 and 2015, the supply of moderately priced rental units for $800 a month decreased by 261,000 units whereas units renting for $2,000 or more increased by 1.5 million units. However, without a substantial push for affordable housing, more Americans will be affected by the housing crisis, as the renting base is already expanding.
Outside of politics, there are significant social stigmas associated with affordable and public housing. The presence of “Not in My Backyard” (NIMBY) has spread throughout neighborhoods in response to affordable housing projects, homeless shelters, and other social services. “NIMBYism” is characterized by residents in a specific neighborhood that oppose affordable housing projects being built in their “backyard” and make conscious efforts to dissuade the developers. Instead of looking at the broader problem of homelessness and housing insecurity, residents see the influx of low-income residents to threaten property values, safety, and aesthetics of the neighborhood.
Key Takeaways
For the last fifty years, the U.S. has tried to address the affordable housing crisis to no avail. Now, while still experiencing the economic and social impact of the COVID-19 pandemic, it is more important than ever for vulnerable populations to have shelter. The biggest component of this policy is the emphasis on housing as a human right and using equity-based methods to house everyone. The United States is too large and decentralized for the federal government to fund and construct affordable housing. Instead, the federal government and local authorities need to strengthen communication in order to streamline funding in an efficient way, allotted based on regional need. The LIHTC is already the most important policy for affordable housing development so increasing the number of credits allotted will benefit increased housing development. Similarly, the rehabilitation of old buildings is already a successful project in many areas, with places such as Denver that implemented a 139 micro-apartment complex in a former Quality Inn and Suites for low-income and houseless people. These are affordable and achievable housing goals that this country can achieve, but first, housing needs to be understood as a necessity for everyone, regardless of socioeconomic status.
Reflection Questions
- Does everyone deserve to be housed?
- Do federal and state authorities have a responsibility to provide affordable housing for everyone?
- Do you see disparities in housing where you live?
- What other approaches could solve the housing crisis besides direct action for funding and development?