When Affordable Housing Isn't Really Affordable

Families living in affordable housing know their housing costs cannot exceed 30 percent of their incomes. But that affordability can be nullified if the housing is not located in areas with comparatively affordable transportation costs.

Chicago—Families living in affordable housing know their housing costs cannot exceed 30 percent of their incomes. But that affordability can be nullified if the housing is not located in areas with comparatively affordable transportation costs.

Those are the findings of an analysis of the Chicago region’s affordable housing developments by the Center for Neighborhood Technology (CNT), which authored the report. The CNT concluded that while Illinois has made progress in locating affordable housing in communities meeting fair housing goals, it could be doing a better job by choosing locations with greater access to employment, enhanced transportation connectivity and better access to amenities.

The CNT is a Chicago-based national organization. “While we focused on Chicago, every state in the union has a housing authority responsible for issuing tax credits and low-interest loans for the purpose of developing affordable housing, and they can all learn from this study,” CNT director of transportation and community development Maria Choca Urban tells MHN.

CNT examined all 248 Chicago-region multifamily properties financed by the Illinois Housing Development Authority (IHDA) in the years 2001 through 2008. The center applied its Housing and Transportation (H+T) Affordability Index to these developments, which are home to both low-income families and senior citizens. Transportation costs studied ranged from around $750 a month in many Chicago neighborhoods to more than $1,000 in more distant suburbs.

One of the key findings was that suburban Cook County, with comparatively low transportation costs and a third of the region’s population and jobs, has fewer affordable housing communities than the city of Chicago and the collar counties.

“Many communities really don’t want to permit affordable housing developments within their municipalities,” Urban says. “They’re OK with doing senior developments, because they see that as allowing current residents of their communities to age in place.”

In the Chicago area, Urban says, the municipalities with the fewest new developments during the period studied are the very ones in or adjacent to areas of greatest job growth. They are found primarily in the north, northwest and to some extent the western parts of suburban Cook County. “Sixty percent of the multifamily developments that were approved in suburban Cook County during the period we studied are in the south suburbs, which are about as far removed from the job center around O’Hare as you can be within the region,” she adds. “We’re shortchanging a large portion of the population that needs access to both affordable housing and jobs.”

Based on its report, CNT recommends several changes be incorporated by IHDA into its Qualified Allocation Plan (QAP). These alterations would help improve access to employment, decrease transportation costs and provide enhanced livability for residents of its affordable housing communities, CNT says.

The first recommendation is to call on developers applying for financing from IHDA to report the average transportation costs for their proposed developments’ locations. “That increases the sensitivity of the applicant to the range of transportation costs in the region,” Urban says. “If the IHDA awarded points to locations with more affordable transportation costs, it would improve the combined housing and transportation affordability of the [IHDA-financed developments].”

A second recommendation is that the IHDA use Local Employment Dynamics data as a better measure of job proximity, Urban says.

What Urban terms “a vicious cycle” leads to a third recommendation. “If you recommend you locate developments closer to transit, you find that property is higher priced the closer it is to transit,” she says. ”One thing the IHDA can do is award a basis boost for the tax credits that gives more equity to the projects within a half mile of a transit station. That allows the development to pencil out.”

Ultimately, the message from the CNT study is that affordable housing developers must embrace broader definitions of affordability. “If you’re not paying attention to transportation costs when you site affordable housing, your affordable housing really isn’t affordable,” Urban says.