The Affordability Factor

Everywhere I travel, I hear how difficult it is for working Americans—even those earning as much as 120 percent of area median income—to find safe and decent housing at a price they can afford. That’s why, as the new chairman of the National Multifamily Housing Council (NMHC), I’m focused on working closely with federal, state and local lawmakers to design better solutions for this intensifying problem.
From 2001 to 2014, real rents climbed 7 percent while household incomes fell 9 percent, according to Harvard University’s Joint Center for Housing Studies. This combination leaves one in four renter households—approximately 11.4 million families—spending more than half of their income on rent. If rent growth outpaces income growth by even one percentage point going forward, that number could increase by three million renters over the next decade.

Lawmakers at every level are growing uneasy over these grim prospects. Budget constraints have limited the reach of housing assistance programs, so they are desperate for alternative solutions. That’s why we are seeing the rent control debate surface once again in places like Seattle and the Bay Area, and inclusionary zoning policies become more prevalent and aggressive in communities around the country.
While we understand that many of these policies might look like good fixes on paper, as industry professionals we also know that they have a negative effect on the market and can actually result in fewer neighborhood apartments for the people who need them most. We want and need our communities to be home to a diversity of housing options, allowing people to find the right housing at the right price point.

To this end, we’ve formed a Workforce Housing Committee whose mission is to raise awareness about the issue and its implications for local communities and the economy and recommend a wide range of workable solutions to promote more affordably priced neighborhood apartments. It’s early in the process, but we are looking at a variety of ways to better support and incentivize new development, renovation and preservation activities.

Broadly speaking, some of the solutions we’re working to refine aim to:
■ Grow private sector investment in existing affordable housing properties, an area in which federal funding has fallen short in recent years;
■ Encourage the conversion of existing real estate into rental
apartments;
■ Identify the barriers, regulations and mandates that discourage new apartment construction and help policymakers understand the tools they can use to support affordable housing; and
■ Expedite the often lengthy and costly permitting, review and approval process for projects with a significant percentage of affordable housing.

On the federal level, this may mean making some changes to existing policies and programs to provide greater flexibility and broader reach. Recognizing that governments at all levels have strained and finite resources, we need to understand which of the multitude of programs offer the most cost-efficient means of producing and supporting workforce housing, and then concentrate more resources through the most efficacious channels. On the state and local levels, we’re looking at ways to create a more hospitable environment for apartments. By reducing unnecessary social, political and regulatory barriers, we can more efficiently and more cost effectively produce and operate neighborhood apartments to the benefit of our local communities.

We are off to a good start, but success in addressing this shortage of neighborhood apartments hinges upon the participation and cooperation of both the public and private sectors. As an industry, we need to be visible and actively engaged in these discussions at all levels of government, providing informed insight and positive, collaborative solutions. These solutions need to create partnerships between government and industry, sharing the responsibility of creating and maintaining this critical housing option.

Providing leadership in this discussion, Clyde Holland, chairman & CEO of Holland Partner Group, recently testified on behalf of NMHC and NAA before a key subcommittee of the House Financial Services Committee on the topic of housing affordability. Holland outlined the hurdles to producing an adequate supply of affordable housing and offered policy recommendations for addressing this critical problem.

“Even in communities that want and desperately need new multifamily development, the numerous hurdles that must be overcome include entitlement expenditures; zoning rules; environmental site assessments; impact fees; mandates like inclusionary zoning or rent control; labor expenses; and building code requirements,” said Holland. Some of the key solutions Holland touched on at the local level included deferring taxes and other fees for a set period of time and leveraging tangible municipal assets, such as buildings, raw land and entitled parcels. His full testimony is available at http://bit.ly/1Rqe6Tu.

We need even more industry voices to enrich the dialogue and add to the suite of possible solutions. Please join us in our efforts to advance public-private cooperation, and ensure there is an adequate supply of neighborhood apartments as millions more choose to rent in the years to come. A vibrant rental market that can meet the diverse housing needs of people across the country is essential to the health of our local communities.

Bob DeWitt is vice chairman, president & CEO of GID and currently serves as chairman of NMHC.