What are some policies that can increase affordable housing & reduce homelessness?
What is considered affordable housing? According to the U.S. Department of Housing and Urban Development (HUD), families who pay more than 30% of their income on housing are considered cost burdened. Such a situation causes families difficulty affording necessities such as food, clothing, transportation and medical care.
While there is no one-size-fits-all solution, with the appropriate combination of resources and strategies, we believe we can create an environment that supports equitable practices in building more beautiful, functional, and affordable cities for all!
Renter Rights & Protections: Most tenants are not educated on their rights as a renter. Exacerbating the issue, in the U.S. each state has the right to create their own renter regulations and protections. Southern states, which used to rely mostly on agriculture during the first days of our nation, valued land ownership above all else and subsequently shaped their laws to protect landlords and their properties. Laws in Tennessee tend to favor landlords over renters since there are few rent control policies for landlords. Protections for renters when it comes to rent control, evictions, rent subsidies and more are fundamental in helping people maintain safe and dignified housing and preventing homelessness.
Community Land Trusts: Community land trusts emerged in the U.S. in 1969 and have been gaining popularity worldwide since the 1990s, for good reason. Community land trusts are typically organized as nonprofits that work with state and local governments to create systems of permanently affordable housing that allow households with low incomes to become homeowners and build equity and generational wealth. Community land trusts require significant investment up front but become self-maintaining over time and are effective at providing affordable housing long-term. In addition to the funding provided from Nashville’s Barnes Housing Trust Fund for homeowner, rental, and preservation proposals, the Barnes Fund participated in the creation of Nashville’s Community Land Trust (CLT) in 2017 alongside The Housing Fund.
Reform Restrictive Zoning Laws: Restrictive zoning laws and density-reducing regulations can reduce the supply of land available for new housing and impair affordability by forcing each unit to bear a greater share of the cost of land. Reforming zoning codes to shift from exclusionary to inclusionary provisions at a state or local government level can make housing more affordable. Zoning ordinances have been used in states and localities across the country to exclude low-income and people of color by only permitting more expensive forms of housing to be constructed – three quarters of all land in American cities is zoned only for single-family housing, and many areas have lot size minimums, setback requirements, prohibitions on accessory dwelling units, and similar restrictive policies. Reevaluating the intentions and scaling back some of these requirements would allow private housing developers to construct more affordable multifamily housing buildings and would increase the land available for public housing and other public investments aimed at providing affordable housing.
Increase Funding to Nonprofit Housing Developers: Nonprofit housing developers build affordable housing for individuals under-served by the private market. The nonprofit housing sector is composed of community development corporations (CDC) and national and regional non-profit housing organizations whose mission is to provide for the needy, the elderly, working households, and others that the private housing market does not adequately serve. Nashville’s Barnes Housing Trust Fund, funded in part by Metro Nashville, makes competitive grants to nonprofit housing developers to increase affordable housing options for Nashvillians. Grants include funding for preservation and creation of affordable rental and homeowner units and other supportive efforts to encourage long-term affordability. I.e. Urban Housing Solutions. While both the non-profit sector and for-profit sector build affordable housing, their missions, operations and financial and technical abilities differ. The core difference between a for-profit and a non-profit organization is that for-profit entities operate to produce returns to owners or shareholders, whereas non-profits either reinvest profits into the organization and/or donate money to serve their mission. While many people assume affordable housing developments are unattractive and poor quality, often rooted in images of public housing from decades ago that was poorly designed and poorly maintained, today, affordable housing is often indistinguishable from market- rate housing. Affordable housing developers and designers tend to drive innovation in the rest of the market by pushing for things like energy efficiency, healthy building materials, and quality common space because these efforts can have an even greater impact on the vulnerable populations that tend to access affordable housing.
Low Income Housing Tax Credits (LIHTC): The Low-Income Housing Tax Credit subsidizes the acquisition, construction, and rehabilitation of affordable rental housing for low- and moderate-income tenants. The LIHTC program does not provide housing subsidies. Instead, the program provides tax incentives, written into the Internal Revenue Code, to encourage developers to create affordable housing. On their own, tax credit subsidies provide a moderate level of affordability through rent restrictions. However, many units or tenancies are subsidized through additional sources of federal or state funding, which allow for deeper affordability to lower-income families.
Housing Subsidies: The federal government can reduce financial stress for low-income families by expanding housing subsidies, like vouchers or the National Housing Trust Fund. Unlike food stamps or Medicaid, federal housing subsidies are not an entitlement: currently around one in five eligible renter households receives federal assistance. Alternatively, supplementing incomes through the Earned Income Tax Credit or higher minimum wages would help poor families pay the rent.
Land Value Taxes: Land value tax is a tax on a piece of land, rather than the property sitting on top of it. With property taxes, owners who improve their properties can be taxed more. This disincentivizes investment. With land taxes, property improvements aren’t taxed. Owners are encouraged to make improvements, to increase returns from their land. Land value tax incentivizes landowners with empty or run-down buildings to get them back into use. They won’t be taxed on these improvements. And the money they might make through rents will help cover their land tax bill. As a result, communities might see the supply of housing in their area increase. Neighborhoods which previously had lots of empty properties could be revitalized.
Vacancy Taxes: Under split-rate taxation, a variant on land value taxation, the land is taxed at a higher rate than improvements. While not widely used in the U.S., these approaches discourage speculation and holding of empty sites, and encourage owners of vacant or underutilized parcels to make improvements that increase their returns without having to worry about the tax consequences. The community benefits from increased investment that puts formerly vacant or underutilized properties to productive use. Depending on the context, land value taxation can contribute to an increased supply of housing and also to the revitalization of neighborhoods with large numbers of vacant properties. Essentially, building owners are encouraged to make improvements/develop their property and/or fill vacancies because they can attain a lower effective tax burden if they do so. Split rate taxes ultimately discourage land hoarding, promote efficient use of urban infrastructure, decrease urban sprawl and assure that property in the community doesn’t sit empty or vacant for years. Currently, while property owners usually earn no income from vacant land, they can sometimes deduct the costs of holding onto their land such as items as property tax, interest, and other carrying costs.
Decentivize Corporate Landlords and Reduce Corporate Competition: According to the realty company Redfin, corporate investors bought a record 18.4 percent of the homes that were sold in the United States in the fourth quarter of 2021, up from 12.6 percent a year earlier. Corporations get lower mortgage interest rates (1.4 vs 2-4%) and are more often able to give offers in all cash, which is a big leg up in a competitive market.
Invest in Public Housing: Public housing is government-owned locally controlled rental housing available to households with low incomes at a below-market price. In the U.S., public housing suffers from underfunding and stigma, while European public housing has been highly successful. To improve U.S. public housing, the federal government should take notes from European countries by investing in repairing and building new public housing stock, diversifying the location and form of housing stock, and expanding eligibility.
Protection from Predatory Development: In times of crisis, some landlords and developers will take the opportunity to repossess property for development. Many neighborhoods in Nashville have experienced gentrification by such means. One of the first steps in combating unwanted development is communication, education, and organization with neighbors who may be affected. By identifying neighborhoods and communities at risk for gentrification, we can work with residents to organize and advocate for themselves to collaborate with developers. Homeowner education is critical in areas where developers are rapidly purchasing and redeveloping aging housing stock. Knowing the value of their land can help homeowners make informed decisions about whether, or when, to sell. Communities that are informed about the design and development process and where public input is possible can negotiate more effectively for things like community benefit agreements.
Homeownership Assistance: Homeownership Assistance policies take a variety of forms across local, state, and federal government, but primarily provide households with government-backed mortgage loans, tax incentives, and/or down payment assistance. While tax incentives have shown little positive effect, lending and down payment assistance programs that offer homeownership counseling have been the most effective at increasing rates of homeownership and decreasing rates of mortgage default and foreclosure.
Create and Preserve Dedicated Affordable Housing Units: This category includes all of the policies cities, towns, and counties adopt to create and preserve a supply of dedicated affordable housing units that come with legal restrictions ensuring they remain affordable to low- or moderate-income households. The policies in this category range from (a) incentives and requirements for the inclusion of affordable units in new development to (b) policies that generate revenue for affordable housing and (c) subsidies to facilitate the creation and preservation of affordable developments
Section 8 Housing Landlords: The Housing & Urban Development (HUD)’s housing choice voucher section 8 program is the federal government's major program for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. A housing subsidy is paid to the landlord directly by the local Public Housing Agency (MDHA - Metropolitan Development and Housing Agency or THDA - Tennessee Housing Development Agency) on behalf of the participating family. The family then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program. “When the waiting list for Section 8 housing vouchers opened in September 2017, over 15,000 households applied before the list was closed. In 2015, 29% of the Section 8 vouchers issued were not used because the number of landlords accepting Section 8 dropped drastically.” - Metro Development and Housing Agency. We need to educate and incentivize more landlords to participate in the Section 8 program. The Section 8 process can be burdensome for landlords, requiring additional inspections and paperwork. Streamlining this process, as well as incentivizing participation through grants or no-interest loans for property upgrades or resident services, could help recruit new landlords to the program.
Public Transportion: Continue to improve public transportation as a means to connect more affordable areas to opportunities and resources. Nashvillians spend most of their monthly budget on housing, followed by transportation. Owning, maintaining, insuring, and using a private vehicle can be extremely costly — not to mention the time cost of driving and sitting in traffic. Improved public transportation allows residents to save money and travel more efficiently, economizing the link between doors (homes) and desks (jobs and schools).
Real Estate Investment Trust (REIT): Since there will always be a need for affordable housing, we can create social impact funds for interested investors to contribute funds for a long-term, lowrisk return—making it a stable investment option for patient investors. Creating a local social impact investment fund or a real estate investment trust (REIT) can help leverage multiple smaller investments for greater impact.
Innovative Construction Techniques: The construction industry has been notoriously slow to evolve, despite significant advances in technology. Stick-frame construction has been used for centuries, yet site-built construction is subject to weather delays, inconsistencies in craftsmanship, and labor shortages. Many contractors are wary of new and seemingly untested building techniques and materials, and increase their cost to cover any associated risk. We need to encourage creative construction techniques like modular/pre-fabricated, and materials, such as cross-laminated timber. As the industry and the demographics of its labor force change, engaging in education, training, and incentives for innovative construction strategies can help mainstream new technologies.
Read more about affordable housing development in Nashville HERE.
Advocacy & Legislation in TN
On July 1, 2022, SB1610/HB0978, the bill that made camping on public property a class E felony across the state of Tennessee, became law.
Housing advocates challenge that this bill will result in prolonging outdoor homelessness across Tennessee because criminal charges, especially felony charges, make it much more difficult for people to obtain employment and housing. Citizens with felonies also don’t have the right to vote in the state of Tennessee.
SB1610 didn’t solve any new problems because there were already Tennessee laws that make trespassing on all forms of land illegal:
39-14-405 Criminal trespassing (Class C misdemeanor)
39-14-406 Aggravated criminal trespass (Class B misdemeanor)
39-14-407 Trespass by motor vehicle (Class C misdemeanor)
Additionally, there are also local ordinances across the state that render camping in public parks illegal. As a result, this bill only increased the severity of offense for people who have no other option than existing in public space while they work on finding permanent housing; meanwhile, nearly every county in Tennessee currently lacks sufficient and accessible housing and shelter beds.
Not only does SB1610 target unhoused individuals unable to access TN shelter beds, this law also targets and has the capacity to escalate charges against non-violent protestors, like during Nashville’s People’s Plaza protests in summer 2020.
Homelessness is not a criminal issue–it’s an economic and policy issue. Punitive laws haven’t ended, and will never end, homelessness because they don’t address the root cause of homelessness – a lack of affordable housing. We need legislation and funding that provides resources, employment opportunities, health care, and housing for all Tenneseans. Follow us on Instagram to stay informed on how you can get involved and make a difference.