Zoning Practice — January 2007

Ask the Author

Here are reader questions answered by Jeffrey Lubell, author of the December 2006 Zoning Practice article "Zoning to Expand Affordable Housing."

Question from Todd B. Rudnianyn:

As a recent college graduate and someone who has become interested in planning and affordable housing, the plethora of information on the APA website and publications is exciting and overwhelming at the same time. I am not a planner, but for some reason can spend hours voraciously reading articles on the subject. In our community — the Ocala/Marion County MSA — affordable housing was never considered an issue until recently, when steep price escalations placed purchasing a home out of reach for members of our workforce.

Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University, says, "Density is one tool in the production of affordable housing." The LEED for Neighborhood Development Rating System — Preliminary Draft awards points on a diversity of housing options and affordability. This is a wonderful concept, but it is often difficult to persuade neighboring developments and elected officials to allow something that is "different" from the status quo into neighborhoods.

It is clear to me that without this diversity of housing types and densities within communities (and the various areas of those communities) we are increasing the cost of affordable housing (through transportation costs, time spent commuting, etc.), but I am confused as to how this message can best be conveyed to the general public and especially our elected officials. Without this understanding, many of the regulatory barriers preventing the supply of attainable housing will perpetually remain in place, often with unfortunate sprawling outcomes.

I would greatly appreciate your thoughts. Idealistically frustrated, Todd B. Rudnianyn

Answer from author Jeffrey Lubell:

You've hit on one of the most difficult challenges — persuading communities to accept greater density. There is an emerging base of knowledge on how to do this, but there's still much more that is needed to help overcome local opposition to increased density.

One good place to start is to look at the publication: "Higher-Density Development: Myth and Fact," co-produced by the National Multi Housing Council, the Sierra Club, the America Institute of Architects, and the Urban Land Institute. It's available at www.uli.org and other places.

Another useful resource is: Breaking the Development Log Jam, by Douglas Porter, available from ULI Press.

In general, I think what's needed is a combination of excellent design, better marketing of density (including more effective visual displays), and an improved understanding within the business community that its economic success depends on having adequate and affordable housing for their employees.

Question from Philip O'Hartigan, AICP:

I'd like your take on how to ease the disconnect between long-range and comprehensive planning targeting affordable housing and current planning, which coordinates the development with the building permits that allow for the housing to be built. The actual cost of construction does not equate in providing affordable housing; land prices are the primary determinant. It seems that only those land parcels with public subsidies, easements, or development transfers make it cost-effective to pursue. Yet, how can long-range planners take account of the site intangibles (market demand, site conditions, materials, labor, supply, etc.), which can only be addressed when applications are submitted under current planning and finally get to the permit counter. How then can long-range planning be the lead when the cost at the time of development causes affordable housing to exceed the targeted range?

Answer from author Jeffrey Lubell:

This is a very difficult question and one that I may not be as well equipped to answer as those with greater planning experience. I think this would be an excellent question to pose to a group of experienced planners for guidance on how to develop long-term plans that respond to the pressures you indicate.

I do have a few reflections, however, that may be helpful.

First, my sense is that it is incredibly important to try to anticipate areas of future growth and gentrification so that an affordable housing strategy can be implemented before land prices rise to unaffordable levels. This is important to help ensure that some of the existing residents have an opportunity to benefit from the rise in home price appreciation and the improved neighborhood quality, as well as to ensure that newcomers to the neighborhood will have affordable options. (The same point goes for larger areas of geography as well; inclusionary zoning policies, for example, are likely to be much less effective if enacted only after a community is fully built out, rather than a decade earlier.) I don't know how long-term the planning you reference needs to be, but surely this is a role that requires good medium-range planning.

Second, I would encourage more strategic use of publicly owned land to meet a community's affordable housing needs. As you observe, affordable housing in high-cost markets is often impossible to do without reduced land costs. Helping communities think more strategically about how public land can fit into a long-term affordability strategy (e.g., building above single-story fire stations; replacing parking lots with multifamily developments; rehabbing old hospitals for residential development; etc.) seems to be another important long-term planning question.

Moving from the neighborhood to the city and regional level, another critical question for long-range planning concerns the imbalance between supply and demand. Too often, it seems, the market is not able to respond adequately to increased demand for housing due in part to the zoning environment we've set up–relatively low densities, complicated approval processes that seem inevitably to require case-by-case variances, etc. A growing body of research suggests that this is a large part of what drives up the cost of land in the first place, placing housing out of reach of working families. Helping communities understand the need to produce more housing to respond to pent-up current and future demand and the policies that can help get them there (e.g., allowing greater densities in appropriate locations, streamlining the approvals process, etc.) is another important planning contribution.

My final point is the importance of looking at affordable housing as a continuum of needs. If we just divide the world into housing that is or is not "affordable" at a particular income level, you're quite right that we may miss the mark if land prices have gone up to the point where the house we hoped was affordable is now no longer in that bucket. But if we look at this as a continuum, with families at every income level needing housing that is affordable to them, and ask ourselves, how can we expand the overall supply of housing to keep prices reasonable, while at the same time bringing subsidy to bear when needed to make particular developments work for particular groups of households, I think that may be a way to make these two worlds work together.

I should also add that there are a variety of shared-equity strategies for helping public home ownership subsidies keep pace with the market so that as housing prices rise, the amount of recovered subsidy rises, giving you more subsidy to help the next household. More information on these shared equity strategies is available beginning on page 99 in this document: www.nhc.org/pdf/chp_hwf_analysis.pdf. We also plan to release some more in-depth policy briefs on this subject shortly.

Question from Cindy McCammack, Community Development Director, Carpentersville, Illinois:

So little is being done to preserve existing affordable housing that I was thrilled to see that you included that as an option for local governments. In the village where I work, over 60 percent of the housing stock was built as and remains affordable. Those efforts began at the end of the Korean War in 1954 and continued until 1975. Our affordable housing units are 32 to 53 years old, and 80 percent are owned by low- and very-low-income residents

Are you aware of any demonstration projects that are underway or have been completed to preserve owner-occupied existing affordable housing units?

Thank you again for the article.

Answer from author Jeffrey Lubell:

Interesting question. It would help to know a little more about the homes — what made them affordable (private market or subsidy), and what pressures are threatening their affordability? I'm going to answer on the assumption that the problem is that homes are older and in need of rehabilitation that low-income homeowners can't afford. (If this is the wrong assumption, let us know and we'll rework the answer; hopefully, this information will be useful for someone!)

Assuming this is the case, there are a number of different strategies that communities have implemented to help low-income homeowners pay for rehabilitation. To my knowledge, there has not been a systematic demonstration and evaluation of these types of programs, but the following are some of promising approaches that might help your community.

Home equity loans
Obviously, if a household has enough income to make regular payments on a conventional home equity loan (or ordinary second mortgage), that would be the least expensive approach. The balance of this discussion assumes we are discussing households on a limited income that cannot support the repayment of a conventional home equity loan.

Silent second mortgage
If homes have appreciated in value and the owners have enough equity to support a second mortgage, the local jurisdiction might want to consider using HOME, CDBG, or other locally controlled funds to offer silent second mortgages to help low-income homeowners pay for necessary repairs and improvements. Silent second mortgages are loans that require no monthly payment but are repaid upon the sale of the house (or sometimes on the death of the borrower).  Providing assistance in this form ensures it is affordable to low-income families, but still allows the funds to be recycled to help other borrowers. (You could make repayment contingent on the sale price if you are concerned about the possibility that the future sale price might not cover all the liens on the home).

A similar approach can be used to help owners faced with rising tax bills due to increased property values. While you certainly could limit their assessments or cap their actual tax increase each year, another approach is to give them immediate tax relief in exchange for a lien on their home for the deferred amount when it is sold. This way, the borrower can stay in the house as long as she needs to, but the municipality eventually gets paid.

Reverse mortgages
These are private loans that allow elderly homeowners to tap into the equity in their homes to pay for living expenses, home repairs or other needs. Unlike silent second mortgages, they are cost-effective only for the elderly. Another difference is that reverse mortgages allow you to borrow against only a portion of the equity in the home; silent second mortgages do not technically require any equity. For example, a municipality might make a silent second mortgage based on the assumption that the value of the property will rise (either because of the improvements or because of increases in property values generally) before it needs to be repaid.  You won't get a decent reverse mortgage under these circumstances.

Reverse mortgages are also more expensive in the long run for the family and expose the family to considerable risk from unscrupulous lenders or brokers. On the other hand, they carry no direct costs for the municipality (though you might consider investing in a mortgage counselor to help advise families on the process.)

For more information on reverse mortgages, see www.hud.gov/buying/rvrsmort.cfm.

Rehabilitation loans
Sometimes the required assistance is low enough that it makes sense to provide a small personal loan rather than a second mortgage.  Be sure that the payments can be kept low enough to be affordable.

Rehabilitation grants
If low-income homeowners in your community don't have enough equity in their homes to support a second mortgage or if the housing market is very weak, you may have to look into providing grants for the rehabilitation costs. The weakness of this approach is that grant funds can only assist one household. There are numerous examples of such programs.

Assistance hiring reputable contractors
Low-income households, especially senior citizens, may have difficulty successfully navigating the contracting process. It may make sense to fund a position responsible for assisting homeowners in scoping the work and finding and hiring reputable contractors. The position could be either in your office or at a local nonprofit organization.

Communities in your area are already engaged in a lot of this work.
The city of Evanston offers silent second mortgages (which they refer to as "title-transfer loans") for homeowners at or below 50 percent of area median income, other zero-interest loan products for households earning up to 80 percent of area median income, and a city rehabilitation specialist that assists low-income homeowners in finding and working with contractors. 

The village of Oak Park has emergency loans for smaller ticket projects and deferred payment loans (which often act like silent second mortgages) for households with larger rehabilitation needs. 

Chicago provides small grants to homeowners with limited incomes for rehabilitation projects as part of their efforts to preserve Chicago's historic bungalows. This type of effort also helps preserve housing affordability for the existing homeowners.

The village of Round Lake Beach provides small grants in cases of acquisition/rehabilitation where the total costs would exceed a property's assessed resale value. Although this program is focused on rehabbing vacant properties, the principle of using grants only in cases where it would be financially infeasible otherwise also applies to rehabilitation of existing owner-occupied affordable housing.

These examples are discussed in more detail in a report prepared by the Chicago Metropolitan Council called "Home Grown": www.metroplanning.org/homegrown/HomeGrown.pdf.

Funding for these programs may already be available in many communities through the CDBG and HOME programs, as well as through smaller related funding sources, such as housing trust funds and funds for weatherization.  But of course, public funding is always limited, which is why we recommend considering options for recycling the funds whenever possible.

Hope this is helpful.

Question from Candace H. Stowell, AICP, Chair, APA Housing and Community Development Division:

The new APA Policy Guide on Housing contains several proposed initiatives, one of which relates to regulatory barriers. You wrote a paper in the special issue of Cityscape devoted to regulatory barriers (Vol. 8, No. 1, 2005) where you called for the collection of basic data on local regulatory policies and practices. Do you think APA should undertake some type of survey to document the extent of barriers at the local level? The survey could utilize many of the same questions that HUD is now asking applicants for its competitive Super NOFA grants. In addition, the survey could document whether jurisdictions are permitting alternative housing types that increase housing choice and housing affordability. Do you think such a survey is needed?

Answer from author Jeffrey Lubell:

Good to meet you, Candace. Congrats on your new policy guide. It is very thoughtful and thorough.

I continue to believe it would be helpful to collect basic data on local regulatory policies and practices. Based in part on the proceedings that led to that Cityscape edition, HUD is pursuing a project to collect these data. Progress has been slow, however, in part because of the methodological difficulties involved in collecting uniform data across very un-uniform jurisdictions. HUD is presently in the process of field-testing an instrument. If you are not already in touch with the division that focuses on regulatory barriers, I would encourage you to reach out to them and see how APA can be helpful in expanding the information base on regulatory barriers. I'd suggest contacting David Engel (David_Engel@hud.gov, 202-708-0614 x 5724) or Ed Stromberg (Edwin_A._Stromberg@hud.gov, 202-708-0614 x5727).

There are also a number of other national surveys that have been conducted that one might want to consider building on.

Beyond this, it would be useful for us to talk to learn more about APA's plans in the affordable housing area and how we might work together to strengthen the availability of information that would be useful for the field and for your members' work.

Question from Leonard Sussman:

Can you point me to some pictorial resources that showcase attractive low-rise multifamily housing, the sort of thing that would help overcome local suspicion and resistance about the introduction of multifamily housing into a small historic town (on Cape Cod) whose housing stock is preponderantly single-family and traditional in design (sloped roofs, shingle or clapboard siding)?

Answer from author Jeffrey Lubell:

The Affordable Housing Design Advisor website (www.designadvisor.org) would be a good place to start. Click on Gallery and scroll down to see a list of all developments included. The Special Characteristics Index (on the left side of the page) allows you to search by specified characteristics, such as Historic District new construction.

The Urban Land Institute (www.uli.org) produces reports that often have high-quality images of affordable housing. In particular, Higher-Density Development Myth and Fact and Mixed Income Housing Myth and Fact both feature images that might be useful.

Business and Professional People for the Public Interest (BPI) also has an information sheet called What Does Affordable Housing Look Like?, which you can find at www.bpichicago.org/rah/rihi_pubs.html . The sheet features images of attractive affordable housing in communities across the country.

Finally, the Metropolitan Design Center at the University of Minnesota has a searchable image bank which includes pictures of affordable housing (www.designcenter.umn.edu/imagebank). Click on "Best of Slide Shows" and then Affordable Housing; not all projects match your specifications, but Portland Place might be a good example.

Hope these resources are helpful.

Question from Maurizio Antoninetti, Department of Geography, San Diego State University:

At the moment I'm collecting information for a paper on ancillary dwelling units (a.k.a., granny flats, ECHO housing, and companion units). In it, I propose ADUs as a viable and affordable venue for seniors who are still independent and are willing to age in place. Unfortunately, especially here in California, NIMBYistic practices at the local level have often resulted in very stringent ordinances aimed at preventing the construction of ADUs. Monumental on this subject are the provisions for companion units contained in the new general plan for the city of San Diego.

Knowing this, I would like to ask your opinion as a zoning expert on the topic, which it is apparent it will have an increasingly importance in the years to come as Baby Boomers age.

Answer from author Jeffrey Lubell:

I very much agree that ADUs can be a viable and affordable housing option for seniors who want to age in place.

As I have previously noted, Santa Rosa, California, and Mercer Island, Washington, have been cited as good examples of communities that use accessory dwelling units to expand the supply of affordable homes.

In December 2006, The New York Times published a thoughtful article documenting the increased interest in accessory dwelling units as a strategy for producing affordable homes (Janny Scott, "The Apartment Atop the Garage Is Back in Vogue," The New York Times, December 2, 2006.) Among other examples, the Times article cited recent changes to the zoning rules in Montgomery, New York, to facilitate the conversion of barns and outbuildings into rental homes, and the installation of apartments within larger homes. Interestingly, the example cited in the article involved a parent who decided to move into the accessory unit and turn over the larger home to the children's family — a good example of how ADUs can be used to support seniors aging in place.

The article also quoted a town board member in East Hampton, New York, as saying that the process for obtaining approval for an accessory dwelling unit was so complicated that no one had applied to do so — a problem the town is seeking to fix by streamlining the process.

For more information on ADUs, see www.transcoalition.org/ia/acssdwel/01.html and www.growsmartmaine.org/docs/Affordable-Housing.pdf.