Q&A With the Terwilliger Center for Housing
Vice President Rosemarie Hepner on challenges to new supply and how some states and cities are innovating for affordability.
Housing affordability and attainability were front and center at the ULI fall conference in Las Vegas. Discussions of national challenges were on the agenda but so was a session on local conditions.
“How many years would it take for a typical medium-income family in Las Vegas to save for a downpayment?” posed RCLCO CEO Adam Ducker. “The answer is: They can’t do it.”
I sat down with Rosemarie Hepner, vice president of ULI’s Terwilliger Center for Housing, to get the center’s view on “the housing crisis” and the state and local strategies to build up supply that are bearing fruit.
Hepner came to ULI from Habitat for Humanity International’s Terwilliger Center for Innovation in Shelter. She has an undergraduate degree in International Relations and master’s degree in Regional and City Planning.
For those who may not know, what is ULI’s Terwilliger Center for Housing and what is your role at the center?
Hepner: ULI’s Terwilliger Center for Housing was set up in 2007 with a gift from Ron Terwilliger. What we’ve been working on with our members, and the industry at large, is furthering affordable housing. And, as ULI works with our members, who are mostly in the real estate development community, the center has primarily taken on the role of addressing supply issues through research, convenings, best practices and the like.
We produce annual reports on any number of research topics that might be of interest to the industry. We also have an annual report, our home attainability index, and that is our way of showing where each market stands in terms of meeting their affordable housing needs. We have housing awards so we can elevate best practices in either development or policy. And then we do forums and a Housing Conference to really pull together industry folks—from policymakers, academics, developers, investors, planners—so that they’re all talking to each other.
Finally, we work directly with local communities and provide technical assistance. ULI members will volunteer their time and go somewhere, like Boise, to offer their expertise to the kinds of local housing challenges cities are facing. As vice president of ULI’s Terwilliger Center for Housing, I oversee everything we do.
READ ALSO: California to Vote on Rent Control Overhaul
What’s the center’s take on the housing crisis? Is it as dire it seems?
Hepner: Our main focus over the last few years has been on the supply issues, and that is a dire issue. You have cities, like D.C., San Francisco, L.A. and New York, that have been facing this for a while now. And then you have newer markets that have really been hit with it very suddenly. And I’d say COVID and more of a shift to remote work has been behind that. And that’s put those cities in Montana or Boise and some of the resort communities at the forefront of the issue. You see what took decades for San Francisco to get to in a very short time. We’ve worked in Steamboat Springs, Vail, Aspen, Rabun County, Ga. I’ll never say Aspen was ever affordable, but it didn’t have the year-round residents that those communities are now hosting, which has driven up the demand for housing. And in rural communities, you don’t have the supply that cities can provide, and so that’s a new challenge we’ve seen. All to say, it’s dire. It just looks different in different places.
You wrote a report a few years back titled “Yes in my Backyard.” How big of an issue is NIMBY today? And have you seen any progress or creative solutions to the problem?
Hepner: The “Yes in My Backyard” report was really looking at state and local communities and what they can do—whether it’s what a state can legally do vs. what a city can do. And some states have more control over their cities than others, and so we were showing some examples of different actions that states and cities had taken at that time. We talked about changes in parking requirements, which, in a place like California, can really help with the cost of housing. It’s not going to suddenly make it affordable, but that can drive down the per unit cost quite significantly, and then more severe measures, like Massachusetts, which has a state law that allows them to preempt local control.
I live in D.C., but we’re very close to Maryland and Virginia. It’s better when the region works together than separate. Other than talking about ways that states or cities can override or appeal to your NIMBYs, we didn’t really delve that deeply into this phenomenon that NIMBY has become.
I’ll say that it’s only grown. I think that each NIMBY group has learned from the ones that have preceded it and use the same arguments. And while I can sympathize with concerns that they might have about infrastructure costs—or other things that they would have to pay for or maybe they are scared about their community changing—I would say that we are in a place where we can’t really afford not to.
Housing has become so expensive that we’re seeing people that have jobs that were once able to afford a middle-class lifestyle really struggling to make ends meet. And that means that communities don’t have really vital parts of their workforce living in them. And we’ve seen this with doctors in Steamboat Springs. It can be as severe as that.
We also heard that they don’t have school buses because they can’t bus drivers. They can’t afford to live there, and so every morning, all the parents have to individually take their kids on the outskirts of town where the school is located, and then get in the traffic to come back into town. So, they’re shooting themselves in the foot by not making the kind the appropriate housing for all these different jobs and these different price points and salaries. And, ultimately, if everybody says not in my backyard, there’s just there’s not going be much left. I think that really the issue is that we don’t have enough supply. We don’t have the right supply. I don’t think that many people making the argument against housing understand who we’re talking about when we talk about affordable housing—not that it should matter. You should want everybody to have a home. But how much it will impact their life? Maybe they don’t care if their kids’ teacher can live in the community. They probably care if there’s a lot of traffic and about the infrastructure needs for that traffic—and the pollution!
So, there are different messaging tactics you can use with communities to address some of that, but it’s certainly an escalating issue,
How about zoning reform? Is that another lever that you try to activate?
Hepner: Beyond the YIMBY report, which is from 2017, we have a newer report “Building the Future.” I’m very optimistic because there have been a lot more innovation at the state and local level. I feel like nobody really did anything for a while or there was just your San Franciscos, and DCs just biting up the problem a little bit. And now you’re really seeing a lot of other communities coming forth with different plans, whether it’s changing their parking minimums or allowing ADUs—small infill changes—to bigger swaths of like changing single family zoning and other reforms. But really what it comes down to is a lot of towns and even cities just haven’t modernized their zoning code, and we live in a different time than when they were made. It’s really about looking at the way people live, where they want to live and allowing for that type of housing more legally because, ultimately, it’s not even about some scary new density. A lot of it is legalizing things that we used to build a lot of, like missing-middle housing and townhomes. In some communities, those are not legal because they’re not single family detached homes Zoning is 100 percent part of it.
Commercial conversions—is there any hope there for new supply?
Hepner: Our Capital Markets team actually did a report on office-to-residential conversions a couple years back, and we’ve done panel topics on it from a housing perspective. We’ve seen a couple of these conversions, and D.C. is incentivizing them a little bit. But they’re hard. I mean they’re not impossible. We got to make use of all the land we have, and, if that’s one of the tools, absolutely. We actually saw one across the street from the headquarters. It was the Peace Corps headquarters, and now it’s a residential building. But it requires code changes and things like that—and just creativity—because offices don’t look like apartment buildings.
Home ownership is difficult to attain today, and new rental housing supply tends to be the less affordable type due to the high cost of construction. What housing models do you think we need to focus on and replicate?
Hepner: Again, every community is a little different. We’ve seen through our awards program lots of innovative high-rise apartment buildings to low-rise townhomes. And it’s really about finding the Goldilocks of that community, and it’s about making use of the land you have. In some cities, that’s really constrained. One thing ULI’s Terwilliger Center has been exploring a little bit is houses of worship. We see declining membership in churches and other faiths, and they sit on a lot of land. There’s an opportunity there. And we’ve seen some churches convert or add housing, especially affordable housing. We’ve seen schools and federal land convert and other infill measures. But honestly, it’s just so expensive to build. I feel like every award winner we get is honestly a snowflake, and they have replicable lessons from each of their entries, certainly financing incentives that maybe the industry isn’t as familiar with. We’ve seen beautiful townhomes in places like Boise to 30-floor high-rises in Brooklyn. It looks different for each community. It’s really what makes sense there, and it’s feasible to build at the end of the day.
READ ALSO: Boosting Florida’s Affordable Housing Stock
It seems to be projects-by-project, step-by-step. There’s no big solutions that can be replicated nationally.
Hepner: I would say New York award examples are great for other people in New York, and maybe some of the more rural ones or town ones are replicable in similar communities. But each state has different ways to incentivize or have different tax exemptions or different grant programs. This is what they all come down to: It’s like a hodgepodge of different programs and funding to make it pencil. It’s really hard to say, “This is the model we should all be using everywhere.”
So, we have an election next week. Trump vs. Harris. Is there a candidate who has emerged better for housing have promising proposals?
Hepner: We’re a nonpartisan organization, so we can’t really speak to that. And most of the work that ULI’s Terwilliger Center does is at the state and local level. And there are really fantastic bipartisan efforts. Montana and Florida have both passed bipartisan legislation to increase housing supply. Florida has the Live Local Act, which is going about it in many different ways, but the intention is to increase housing supply because Florida has such a huge population shift there, and I like to see that they’re proactive. It’s a very divided state and it has bipartisan support. Similarly, in Montana, they may have leaned into their libertarian mindset, but ultimately people care a lot about the open space there and recognize that lots of people are moving to Montana and this was an affordable place not that long ago. They don’t want it to be California-ized or whatever they say. They were able to—every community is different—leverage those feelings from the community to pass meaningful legislation to increase housing supply. Again, everything we’ve looked at both in the NIMBY report but also the newer Building the Future, are mostly state and local efforts. We don’t look as much at the federal.
Despite that, does the center have recommendations for the new president’s first 100 days and beyond when it comes to housing?
Hepner: I would say that anything that is in the wheelhouse of the Federal power to incentivize state and local communities to take the measures that we’ve covered in both these reports. There have been some efforts to either curtail federal funding or release more of it—incentivize it. I read an article was that used the alcohol minimum age as an example of what you could do about housing. The federal government said: “You’ll get federal funds for highway expansions and highway dollars if you have the minimum age for drinking be 21.” And that encouraged most states because it was a state power to make that the age 21.
I’d be interested to see if there was a mechanism to do something similar—all states and communities rely on this kind of funding—if you’re building your fair share of affordable housing. And a lot of this doesn’t necessarily have to be regulations. It’s more liberalizing in removing regulation. You can go the route of what Boise, Montana, Florida and Texas have done, which is use the language that this is not some top-down regulation. This is really letting the market do its job. And, in other communities that might be more progressive, you can use the arguments that Minneapolis used when it did their 2040 plan, and others have used, about environmental considerations or why it’s important to embrace density and a diversity of housing options. There are different ways to work with communities.
Otherwise, it’d be great to see more federal funding for housing. I think we’ve seen that just decrease over the years, and the need has only increased. The Bipartisan Policy Center’s Terwilliger Center does a lot in terms of working on both sides of the aisle to come together for that.
