The voices of Urban Institute's researchers and staff
July 10, 2015

Why developers don't build more affordable housing in opportunity areas

July 10, 2015

The recent Supreme Court ruling in Texas Housing and Community Affairs v. Inclusive Communities Project should have many state and local policymakers scrambling to reconsider how they fund affordable housing development. It should also encourage developers to seek fundable projects in opportunity areas to help low-income households and people of color gain access to highly resourced and often poorly integrated communities.

Yet while those in charge of allocating federal dollars can be held liable for intentional and unintentional discrimination under the Fair Housing Act, neighbors continue to fight against the development of affordable housing in their own backyards.

Community opposition can increase costs and even halt affordable housing development. Developers know this from experience. It’s time to reverse the trend and improve their success in providing equitable affordable housing opportunities.

Community opposition to affordable housing development is common. In a recent survey I conducted with J. Rosie Tighe at Cleveland State University, 70 percent of affordable housing developers in New York State said they faced community opposition to their development plans; almost half (43 percent) face opposition frequently or almost always. Almost 3 out of every 10 developers (27 percent) had also been engaged in at least one legal challenge over a project.

While the recent Supreme Court decision dealt with the impact of funding decisions, most community opposition occurs before funding is awarded. For those developers in New York State who face opposition, some (16 percent) encounter opposition before they have even selected a project location. Most developers (87 percent) experience opposition while attempting to gain local approvals. Even after receiving necessary approvals, almost half of developers (42 percent) continue to face active opposition before they have submitted their funding applications.

Opposition drives up costs and kills projects. As a result of local opposition, New York State developers face costly delays (62 percent) and physical design changes that increase project expenses—such as aesthetic changes (33 percent), reductions in numbers of units (25 percent), and changes in unit composition (19 percent). In addition, 29 percent have been denied building permits or zoning changes, and 10 percent have been forced to choose another site or kill their project.

Local governments must anticipate and counter community opposition through more inclusive planning processes and a commitment to equitable outcomes. One obvious tool is implementing inclusionary zoning or incentive zones to proactively promote affordable housing. While this approach can be contentious, mounting evidence and recent legal victories make it worth a second look in markets facing high demand.

When proposals arise, local governments can also facilitate more bottom-up trust building between developers and neighbors. While traditional top-down public processes tend to foster conflict, developers find more success with informal meetings with community leaders where a real conversation can take place.

Finally, local governments need to consider siting and approval outcomes from the perspective of all stakeholders, including those currently absent from the community that could benefit from new affordable housing. The exclusion of these voices has contributed to widening neighborhood inequality in the face of community opposition. An important step to reducing inequality is encouraging more inclusive local deliberations and outcomes for siting and developing affordable housing.  

Photo by Mark Lennihan/AP

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