In Shift, States Step in on Affordable Housing

This article was originally published by Stateline, an initiative of The Pew Charitable Trusts, and was written by Teresa Wiltz.

As an affordable housing crisis continues to escalate in big cities and small towns alike, states are scrambling to find ways to combat it. This year, there’s been a flurry of state legislation to tackle the problem—with radically different approaches that reflect the highly partisan national divide.

Although local zoning rules typically play out in city council and suburban board meetings, states from South Carolina to Hawaii are getting involved. Sometimes this means removing zoning barriers to building affordable housing. And sometimes state lawmakers take the opposite approach, seeking to prevent cities from requiring that builders include affordable housing units in their developments.

These days, it’s not just the poor who are having trouble finding affordable housing. The middle class is getting hit, too, housing analysts say.  

The United States’ housing market is at its least affordable in a decade. An October report by the Urban Institute found that one in four rural renters spends more than 50 percent of their income on rent. And the Harvard Joint Center for Housing Studies found that in 2017, nearly half of all renters across the country were rent-burdened, spending about a third of their income on housing, thanks to high construction costs, restrictive zoning laws and a shortage of private, low-cost housing.

As a result, more states are beginning to intervene in what was once a purely local matter. 

“We’re really seeing things heat up this year,” said Meghan McCann, senior policy specialist for the National Conference of State Legislatures.

“Most states do not have a housing strategy,” said Elisha Harig-Blaine, program manager for housing at the National League of Cities. “And as states are figuring out what to do, you’re starting to see a bit of a [divided] response.”

“You’re seeing the formation of these policies that could have unforeseen consequences and could make the housing crisis worse,” Harig-Blaine said.

State Action

Local control of housing is important—to an extent, said Carol Galante, a former Housing and Urban Development official who is now a professor of affordable housing and urban policy at the Terner Center for Housing Innovation at the University of California at Berkeley.

But community zoning often bans anything other than single family homes. In such cases, Galante said, it’s important for states to step in and set the ground rules, because local zoning laws can be used improperly to keep out people based on race or income.

“We’ve got an emergency on our hands in lots of states,” Galante said. “Sometimes you have to go to a higher authority. We had to do that in the civil rights movement.”

Last month, California Gov. Jerry Brown, a Democrat, signed a passel of housing laws, most of which try to ease zoning restrictions around building affordable housing. Even so, some zoning bills, such as one that would have required cities to build apartments near transit hubs, failed. Last year, the Golden State passed a batch of housing laws that imposed real estate transaction fees, streamlined the approval process for developers and put a $4 billion bond on the 2018 ballot to help subsidize affordable housing.

In April, the Connecticut House passed an affordable housing bill introduced by Gov. Dannel Malloy, a Democrat. If it becomes law, it will require cities to end bans on multi-family housing units. It was aimed at roughly two dozen communities in the state with zoning laws that either restricted or outright banned affordable housing, according to the Connecticut Mirror.

“Carrots” in the form of state incentives had not worked, Malloy told reporters in February in promoting the legislation.

Lawmakers in other states—Massachusetts, New Jersey and South Carolina—have introduced bills that would encourage cities to either ease up on zoning restrictions or would require them to add so-called inclusionary zoning policies, which require developers to set aside affordable housing units.

“We’re in a place now where affordable housing is a major issue, to the point where people who work for the city of Charleston—city employees, law enforcement, first responders, school teachers—cannot afford to live in the city of Charleston,” said South Carolina state Rep. David Mack, a Democrat who sponsored a bill there last year. The bill was sent to committee in May.

In Louisiana, after New Orleans officials suggested requiring affordable housing units in some new developments, the state Legislature this spring tried to repeal the state provision that allows such inclusionary zoning.  The bill, which would have instead added incentives to developers, was backed by the Louisiana Home Builders Association, according to news reports. But Gov. John Bel Edwards, a Democrat, vetoed it.

Lawmakers in Hawaii and Tennessee also introduced legislation this year that would ban locales from adopting inclusionary zoning. The Hawaii bill is still in committee, but the Tennessee law, which was aimed at blocking Nashville’s affordable housing efforts, passed in March. Tennessee joins Texas, the only other state that bans inclusionary zoning. Housing advocates in Texas say that law has thwarted efforts to build more affordable housing.

Hawaii state Rep. Tom Brower, a Democrat who sponsored the legislation, said requiring developers to set aside affordable housing units through inclusionary zoning ordinances, while well-intended, can actually make the housing problem there worse. Inclusionary zoning ultimately acts as a tax for developers, he said, which serves as a disincentive. The state recently passed legislation to provide incentives to local builders.

“Developers say they want to build as long as the projects ‘pencil out,’” Brower said in an interview. “They need a certain combination of higher income units to subsidize the lower income units.”

Policies that require builders to set aside affordable housing units miss the point, said Howard Husock, vice president for research and publications at the libertarian-leaning Manhattan Institute. Rather than focusing on building housing around income type, cities should open up zoning to allow for different types of housing, he said, such as less expensive houses on smaller lots.

That creates a “housing ladder” of aspiration. As families move up the economic ladder, he said, they go from renting to buying.

But “if we don't have a variety of housing types,” Huscock said, “then we consign people to renting forever and wishing to move to a house with a white picket fence but never being able to get there.”

One Size Does Not Fit All

Not everyone is convinced that states should be intervening.

“We need state and federal help. But now is not the right time for the state and federal government to intercede and do the cities’ job,” said Michael Wallace, program director for community and economic development at the National League of Cities. “These are fundamentally neighborhood issues.”

He said states should work closely with city officials to tailor policies that fit the needs of their communities.

State-mandated housing policy tends to take a one-size-fits-all approach that doesn’t work for local communities, said Geoff Beckwith, executive director and CEO of the Massachusetts Municipal Association, an advocacy group representing cities and towns in the state. Beckwith isn’t opposed to state legislation on zoning, but it’s far better, he said, when state lawmakers collaborate with local governments to find a solution.

“With zoning, one size misfits all,” he said. For example, in the eastern part of Massachusetts, affordable housing is at crisis levels—even for the middle class, necessitating zoning changes to build more units. But in the more rural and suburban western Massachusetts, where finding housing isn’t so fraught, strict zoning laws wouldn’t make any sense, he said.

Earlier this year, Massachusetts Gov. Charlie Baker, a Republican, announced a plan to build 135,000 new housing units over the next five or so years. One way he aims to do this is through a bill he introduced that would make it easier to pass new zoning changes by lowering the number of lawmakers needed to approve them from two-thirds to more than 50 percent. The bill has not been put to a vote.

Another Massachusetts bill tackling affordable housing didn’t make it out of committee this legislative session. It would have banned cities and towns from passing zoning laws that effectively discriminate against apartment buildings that cater to families by limiting the size of apartments.

The legislation was crafted by the Citizens’ Housing and Planning Association, a local advocacy group. The group’s policy director, Eric Shupin, said it used as a template a 2011 North Carolina fair housing law that outlawed using zoning to discriminate against affordable housing units.