Support the Development of Responsible Affordable Housing Options

What Can Policymakers Do?

• Establish housing trust funds. To support the development of sustainable affordable housing, state policymakers can establish state-level housing trust funds and/or encourage their development at the county and city levels. Established by an elected body, housing trust funds are created by dedicating a source(s) of public revenue to a trust fund for the purpose of developing affordable housing; legislation can establish annual transfers into the fund, avoiding the budget and appropriations processes. [1] These flexible funds can be targeted and used for a variety of purposes, including to develop affordable public housing, provide housing services, fund building and rehabilitation of housing or assist low-income individuals with home purchases. [2] New Hampshire’s Affordable Housing Trust provides loans and grants to support rental housing, group homes and manufactured housing cooperatives by providing below market-rate loans or grants.

• Enable and encourage inclusionary zoning. While inclusionary zoning is commonly adopted at the local level, state policymakers have an important role to play in enabling legislation that allows local inclusionary zoning policies be enacted. To create sustainable, diverse, mixed-income communities, state inclusionary zoning legislation requires that a minimum percentage of each new housing development’s total units be designated as affordable housing and remain affordable for a set period of time; in return, they offer cost offsets, such as relaxed zoning restrictions and density bonuses, to developers. After Virginia state courts struck down Fairfax County’s inclusionary zoning policies in part because the state had not explicitly granted local authorities the power to adopt such ordinances, the state code was amended to allow local jurisdictions to pass inclusionary zoning ordinances. [3] California’s statewide mandatory inclusionary zoning policy for redevelopment areas requires private developers to set aside 15 percent of units for affordable housing and public agencies to set aside 30 percent. [4]

• Utilize the Low-Income Housing Tax Credit (LIHTC) to guide development choices. The LIHTC is the primary federal program aimed at producing affordable housing. The program is designed to be flexible with states maintaining responsibility for establishing the program’s goals and the types of rental housing developed. This allows the LIHTC to best meet the needs of a state’s specific target populations. The Wisconsin Housing and Economic Development Authority (WHEDA) modified their LIHTC scoring criteria to be more inclusive of "opportunity based housing" principles, incorporating new criteria incentivizing LIHTC developments in high-income areas with significant job growth. [5] Other types of development that states prioritize for receipt of tax credits include rental housing preservation, energy-efficient and transit-oriented development, and housing with services.

• Support sustainable transit-oriented development

o Support transit-oriented development. Policymakers can encourage transit-oriented development by offering incentives for residential and mixed-use developments near transit stations, which, in turn, supports affordability, economic development, mobility and pollution reduction. For example, in 2004, Massachusetts enacted a smart growth housing law that offers financial incentives to communities that create residential or mixed-used zoning districts, with a required 20 percent of units as affordable housing, near transit stations and in existing urban centers. The state’s Transit Oriented Development Infrastructure and Housing Support Program provides financial support for compact, mixed-use, walkable development—including housing projects, parking facilities and bike and pedestrian projects—within a quarter mile of public transit stations. [6]

o Support environmentally responsible housing initiatives. Policymakers can incentivize efforts to increase the energy-efficiency of existing properties and support new developments using environmentally responsible development principles, including transit-oriented and energy-efficient plans. By reducing the costs incurred by low-income families for energy, transportation and water, policymakers help families meet their needs while also creating more environmentally responsible communities. Georgia’s state Qualified Allocation Plans incorporate several green building strategies in their annual distribution of the Federal Low-Income Tax-Credit.