Housing shortageLegislation

What Can the State Do to Support a Healthy Housing Market?

The Urban Land Institute has proposed five ways the State can help ensure that the local housing market suits the needs of its residents. They are as follows: 1. Quantify housing needs and create targets. 2. Provide financial and other incentives to assist municipalities. 3. Streamline and reduce regulatory barriers. 4. Authorize municipalities to invest their own resources. 5. Empower municipalities to override NIMBYism.

To the point of numbers 1. and 2., many communities have no local efforts to analyze housing needs or knowledge of how to properly use their authority. Therefore, it would be helpful for states to establish some guidelines. California has a long-standing example of such a standard. There is a process called regional housing needs allocation (RHNA) which establishes each community’s housing needs, then asks those communities to update their plans to conform to their goal. The RHNA is not without its pitfalls, though, as the goal is rarely enforced. With the only possible sanction being withholding funds or suspending permitting, which are both required to ever meet the goal, many communities haven’t met it, and some haven’t even tried. Virginia has recently started using a similar process, new enough that not much is known about its relative success. The Incentive Housing Zones (IHZ) program in Connecticut and the Smart Growth Zoning Overlay, or Chapter 40R, in Massachusetts provide financial assistance to communities that meet specific goals. The IHZ is voluntary, but in addition to the financial incentive, also offers technical assistance, which have led over 40% of Connecticut communities to start or continue the process.

Minnesota and again California have made efforts to streamline processes. The Minnesota Challenge began as an idea contest and has developed into an ongoing process which identifies key areas where development costs can safely be reduced and regulations eliminated or streamlined. In addition, it resulted in the establishment of standardized loan documents. Multiple laws in California have addressed red tape in parking construction, as well as repurposing of garages or backyard structures into accessory dwelling units (ADUs), long in existence but previously heavily regulated.

Empowering municipalities is an approach taken by a few states, including Washington, Utah, and Texas, while Massachusetts has limited municipal power in some cases. Washington has allowed for temporary tax exemptions for multifamily residences in certain areas. In Utah, local redevelopment agencies are authorized to leverage tax revenues generated by developments to finance future development projects, with a percentage going toward affordable housing. Texas authorized local communities to provide financial incentives for developing affordable housing in areas with high poverty rates. Though their method does not necessarily empower municipalities, Massachusetts has been the most successful state in combatting neighborhood opposition to redevelopment. Their Chapter 40B law limits the authority during the review process of localities that do not have at least 10% affordable housing, as well as providing a streamlined approach to those with at least 20% affordable housing. Despite criticism and some abuse cases, the law enabled some affordable housing developments that under normal zoning laws could not have occurred.

More: https://americas.uli.org/wp-content/uploads/sites/125/ULI-Documents/State-Housing-Policy-Report-2017.pdf

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