Centrists in the Senate remain in talks with the Biden administration in an attempt to reach a bipartisan compromise on an infrastructure bill. Meanwhile, some House Democrats are preparing to move forward without the support of Republicans. A bipartite point of agreement could be the The call of the White House for a federal subsidy program to encourage communities to allow more housing construction at lower cost.
In the past, lawmakers from both parties have introduced bills to encourage communities to reduce barriers to housing construction. Something needs to change: Since the 1960s, the median tenant has spent an increasing share rental income, in large part due to increasingly rigid zoning, which hinders the construction of affordable housing for workers. Getting the right details will determine whether a new grant program is successful.
First, a federal program must be carefully targeted at all – not just a few – of local decision-makers with direct authority to reform zoning restrictions and permit approval processes. Second, it must measure precisely which localities actually provide social housing and which only seem to do so.
At the local level, policy makers who enforce rules limiting housing construction and affordability do not always have the political motivation for reform. Bipartite support because the status quo, often in the form of “NIMBYism”, is just too strong.
Construction costs (noise, new traffic, more people using local services) are very localized and often unpopular. The benefits, on the other hand, are spread out. The identities of the people who will live in a new development are generally not known.
Fortunately, at the federal level, there is bipartisan recognition of the problems caused by restrictive zoning. When locality after locality, obstacles to housing construction arise, entire regions become unaffordable. This weighs on new residents as well as long-time residents and makes it difficult for many people to live where the best opportunities exist.
Democratsand Republicans introduced bills that would encourage reform by tying existing grants to zoning reform efforts. But the potential benefit of these bills is limited, as some jurisdictions, including some of the more exclusive suburbs, don’t receive these federal grants to begin with.
The White House plan aptly suggests a “new competitive grant program that provides flexible and attractive funding to jurisdictions that take concrete action.” A race to the top style program is the best way to encourage more communities to continually improve conditions for lower cost housing over time.
However, targeting the right jurisdictions is not enough. A successful federal program to encourage local zoning reform must also be based on the right metrics for success. Past proposals have relied on measuring adjustments to zoning rules that look good on paper, but don’t necessarily improve real-world outcomes like affordability and the number of homes built. A line in a zoning ordinance that appears to allow lower cost housing does not always indicate the feasibility of construction.
For example, many localities allow owners of single-family homes to build “accessory housing units” such as back cottages, English basements or garage apartments on their properties. This, in theory, should lead to more housing available for the poor. But few places bothered to make the rules simple and realistic enough for owners to build these units.
In 2016, local authorities in Washington, DC passed a secondary suites ordinance with much fanfare on improving opportunities for lower-cost housing construction. But until 2019, the city (with nearly 700,000 inhabitants) allowed less than 100 such units. Rules on ceiling heights for basement apartments, distances of individual units from property lines and other barriers continue to hamper homeowners.
Rather than rewarding changes on paper, federal policymakers should use a formula to rank communities based on the affordability of their housing and the number of new homes they allow. The key is to deliver the largest grants to the best performing communities, and none to those that most hamper the construction of social housing.
Beyond rewarding communities that create genuine housing opportunities with federal dollars, ranking of locations creates transparency by showing which jurisdictions are using zoning to exclude new residents. It creates a tool to “name and shame” the worst offenders, where zoning rules are the greatest burden on low-income residents. This can be one of the best tools available. Highlighting some of the more restrictive localities (from Palo Alto, Calif. To Greenwich, Connecticut) could draw attention to the damage that land use regulations are causing in places where policymakers and voters see themselves as progressive. .
The White House proposal is a welcome opportunity to allow more people to live in the regions of their choice at affordable prices. But effective federal subsidies must be based on measures that reflect the real openness of localities to low-cost housing construction, rather than on superficial reforms that may not lead to concrete results.
Emilie Hamilton is a principal investigator at the Mercatus Center at George Mason University, director of its Urbanity project.