Equibuild: a strategic blueprint on affordable housing development for local governments
Equibuild: a strategic blueprint on affordable housing development for local governments
Author: Aaron Laramore
Date: May 28, 2024
SUMMARY
In the wake of the pandemic, local governments face a critical need to address housing undersupply. The Equibuild Strategy offers a comprehensive blueprint, focusing on equitable investment financing, affordability by design, and income inclusivity to create sustainable, mixed-income housing solutions.
The rising cost of land, labor, and building materials has emerged as a key challenge for homebuilders and developers. According to the Housing Count project by Builders Patch, in which they track and analyze the rental housing shortage across the country, there is a shortage of 4.5M units for Extremely Low-Income (ELI) and Very Low-Income (VLI) households, cumulatively.
Local city and town governments play a pivotal role in shaping the destiny of communities. It is high time for local governments to adopt a strategic viewpoint, recognizing their unique position and responsibility in fostering a healthy housing market that creates adequate supply.
How can local governments develop affordable housing? Strategy, Strategy, Strategy
A local government strategy should be founded on key principles, implemented in a collective impact approach, create new strategy-specific tools, and repurpose existing components of the affordable housing development ecosystem. We have termed this approach the Equibuild Strategy and it's built on three pillars:
- Equitable Investment Financing: Long-term, affordably priced construction or permanent equity financing sources that result in public ownership.
- Affordability by Design: State and local zoning, regulatory, land use, and tax assessment reforms that enable house-scale multifamily development ( missing middle housing).
- Income Inclusive: A focus on housing for all, encompassing a broader range of housing from 30% AMI to 140% AMI.
These strategic pillars work in tandem and act as force multipliers. Let's discuss each in turn.
Equitable Investment Financing
Currently, communities are stuck with LIHTC as the primary source of capital to address affordable housing production. Local communities cannot truly take their destiny into their own hands without sources of financing that are locally controlled.
A key element of this pillar is that local communities create financing tools that result in community ownership. Promoting cooperative housing, community land trusts (CLTs), and permanent real estate cooperatives (PRECs) can convert housing in disinvested neighborhoods into community-controlled resources.
Affordability by Design
Affordability by design is critical because it not only addresses supply constraints but also promotes affordability and inclusivity. Through strategic reforms in zoning, regulations, land use, and tax assessment, local governments can unlock the potential of missing middle housing.
State and local governments should reassess zoning regulations to remove barriers hindering the development of missing middle housing and expedite the permitting process to facilitate affordable housing development.
Income Inclusivity
Our current paradigm of affordable housing development is built on a foundation of income exclusivity. Communities should widen the range of incomes that benefit from affordable housing, from 30%-140% of AMI, which can enable mixed-income projects that are more sustainable.
Creating new investment constructs that allow small investors to participate can provide new pathways for capital to flow into housing projects. Establishing cooperative ownership and shared equity structures enables communities to take control of their housing developments.
The Way Forward
In the battle against housing undersupply, clarity and action are paramount. At Consept, our role is to guide local governments through the creation and implementation of actionable affordable housing strategies. We tailor our Equibuild Strategy to fit the specific challenges and opportunities of each community, ensuring that action plans resonate with stakeholders.
Through ongoing collaboration and knowledge exchange, we help local governments to take a proactive stance against housing undersupply. Together, we're paving the way for inclusive, vibrant communities where safe, affordable housing is accessible to all residents.