State Policy Options for Promoting Affordable Housing

Introduction

Affordable housing remains a critical issue across the United States, with millions of households struggling to find safe, stable, and affordable places to live. The document outlines a range of policy options that states can adopt to address this crisis, focusing on increasing the supply of affordable housing, preserving existing affordable units, and ensuring equitable access to housing for all residents. These policies are designed to be flexible, allowing states to tailor them to their unique housing markets, demographics, and political landscapes.

The Affordable Housing Crisis: A Growing Challenge

The shortage of affordable housing is a multifaceted problem driven by rising housing costs, stagnant wages, and insufficient construction of new units, particularly for low- and middle-income families. This crisis disproportionately affects vulnerable populations, including seniors, people with disabilities, and communities of color. Without intervention, the gap between housing supply and demand will continue to widen, exacerbating homelessness, housing instability, and economic inequality.

States play a pivotal role in addressing this crisis. While federal programs like the Low-Income Housing Tax Credit (LIHTC) and Section 8 vouchers are essential, state-level policies can complement these efforts by addressing local barriers to affordable housing development and preservation. The document emphasizes that states have a variety of tools at their disposal, from regulatory reforms to financial incentives, to promote affordable housing.

Key Policy Options for States

The document categorizes state policy options into several key areas:

1. Increasing the Supply of Affordable Housing

One of the most direct ways to address the affordable housing crisis is to increase the supply of housing units, particularly those affordable to low- and moderate-income households. States can achieve this through:

• Zoning and Land Use Reforms: Many states face restrictive zoning laws that limit the construction of multifamily housing, accessory dwelling units (ADUs), and other high-density developments. States can encourage local governments to revise these policies by offering incentives or mandating reforms. For example, states can require municipalities to allow higher-density housing near transit hubs or eliminate single-family zoning restrictions.
• Streamlining Permitting Processes: Lengthy and complex permitting processes can delay housing projects and increase costs. States can simplify these processes by setting clear timelines, reducing fees, and creating expedited review procedures for affordable housing developments.
• Incentivizing Affordable Housing Construction: States can provide financial incentives, such as tax credits, grants, or low-interest loans, to developers who include affordable units in their projects. These incentives can offset the higher costs associated with building affordable housing and encourage private-sector participation.

2. Preserving Existing Affordable Housing

In addition to building new units, states must prioritize preserving existing affordable housing, which is often at risk of being converted to market-rate housing or falling into disrepair. Policy options include:

• Rent Control and Stabilization: While controversial, rent control policies can help protect tenants from sudden rent increases and displacement. States can implement moderate rent stabilization measures that balance tenant protections with the need to maintain landlord incentives.
• Preservation Funding: States can establish dedicated funding streams to rehabilitate and maintain aging affordable housing stock. This can include grants, loans, or tax incentives for property owners who commit to keeping their units affordable.
• Right of First Refusal: Some states have enacted laws that give tenants or nonprofit organizations the first opportunity to purchase affordable housing properties when they go up for sale. This helps prevent the loss of affordable units to speculative buyers.

3. Expanding Access to Homeownership

Homeownership remains a key pathway to building wealth and achieving housing stability for many families. States can promote homeownership through:

• Down Payment Assistance Programs: Many low- and moderate-income families struggle to save for a down payment. States can offer grants or low-interest loans to help first-time homebuyers overcome this barrier.
• Mortgage Assistance and Foreclosure Prevention: States can provide financial assistance to homeowners facing foreclosure or struggling to make mortgage payments. This can include loan modification programs, mediation services, and emergency relief funds.
• Community Land Trusts: States can support the creation of community land trusts, which acquire and hold land for the benefit of the community. These trusts can provide permanently affordable homeownership opportunities by separating the cost of land from the cost of the home.

4. Supporting Renters and Preventing Homelessness

Renters make up a significant portion of the population, and many face housing instability due to rising rents and limited protections. States can support renters by:

• Expanding Rental Assistance Programs: While federal rental assistance programs are critical, they are underfunded and reach only a fraction of eligible households. States can supplement these programs with their own rental assistance initiatives, targeting households with the greatest need.
• Eviction Prevention and Legal Aid: States can fund eviction prevention programs and provide legal assistance to tenants facing eviction. These programs can help tenants navigate the legal system and avoid homelessness.
• Tenant Protection Laws: States can enact laws that protect tenants from unfair practices, such as excessive security deposits, discriminatory screening criteria, and retaliatory evictions. They can also establish just-cause eviction policies, which require landlords to provide a valid reason for evicting tenants.

5. Promoting Equitable Development

Affordable housing policies must address historical inequities and ensure that all communities benefit from new investments. States can promote equitable development by:

• Inclusionary Zoning: States can require or incentivize local governments to adopt inclusionary zoning policies, which mandate that a percentage of new housing units in a development be affordable to low- and moderate-income households.
• Anti-Displacement Measures: States can implement policies to prevent the displacement of residents in gentrifying neighborhoods. This can include tenant relocation assistance, property tax relief for long-term residents, and investments in community-led development projects.
• Fair Housing Enforcement: States can strengthen enforcement of fair housing laws to combat discrimination and segregation. This can include funding for fair housing organizations, increased oversight of housing providers, and public education campaigns.

6. Leveraging Public and Private Resources

Affordable housing development requires significant financial resources, and states can play a critical role in leveraging public and private funding. Policy options include:

• State Housing Trust Funds: Many states have established housing trust funds, which provide a dedicated source of funding for affordable housing projects. These funds can be supported through real estate transaction fees, document recording fees, or general appropriations.
• Public-Private Partnerships: States can facilitate partnerships between public agencies, private developers, and nonprofit organizations to pool resources and expertise. These partnerships can help overcome financing gaps and accelerate the development of affordable housing.
• Tax Incentives: In addition to federal tax credits, states can offer their own tax incentives to encourage affordable housing development. This can include property tax abatements, sales tax exemptions, or state-level housing tax credits.

Conclusion: A Comprehensive Approach to Affordable Housing

The document underscores that no single policy can solve the affordable housing crisis. Instead, states must adopt a comprehensive approach that combines regulatory reforms, financial incentives, and targeted investments. By addressing both the supply and demand sides of the housing market, states can create more equitable and sustainable communities where all residents have access to safe, stable, and affordable housing.

Moreover, the document highlights the importance of collaboration among stakeholders, including state and local governments, housing advocates, developers, and community members. By working together, these groups can develop innovative solutions that reflect the unique needs and priorities of their communities.

Ultimately, the document serves as a roadmap for states seeking to tackle the affordable housing crisis. While the challenges are significant, the policy options outlined provide a clear path forward, offering hope for a future where affordable housing is within reach for all.

Also Read: Understanding Housing Development in New European Member States – a Housing Regime Approach