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The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Deborah Bailey
September 9, 2016
How we live in America is changing. While incomes remain flat for most working people, the cost of housing has continued to rise. It’s difficult for many hard working-class and professionals to rent or buy homes at price points they can afford, in the cities and communities in they teach or work as police officers, firefighters and civil servants. Inclusionary housing is a concept and public policy decision whose time has come for America’s cities and counties.
Part of the legacy of the Great Recession, government announcements of 4.9 percent unemployment rates just don’t get people that excited about “Livin’ in America.” If unemployment rates under 5 percent are supposed to represent full employment in America, then it’s time to peep underneath the curtain to see how fully employed people are living these days.
Employed… but hardly keeping a roof over my head
According to the U.S. Department of Housing and Urban Development (HUD), more than 12 million Americans are now paying more than 50 percent of their household income on the rent or mortgage. Remember that old formula you learned growing up that good personal budgeting meant spending no more than 30 percent of your household income on housing. Well that formula has gone out the high- priced window for one-third of American households who are paying more than the 30 percent of their monthly income on housing.
HUD has developed the official title of “cost burdened households” for those of us paying upward of 30 percent of household income on housing and “severely cost burdened” for the poor souls anteing up more than half of their income for a place to lay their heads at night.
Basic affordable housing in today’s economy
Inclusionary housing/zoning ordinances are local legislative tools that help balance the housing market and make it more affordable for middle and lower wealth income persons. In the last quarter of the 20th century, inclusionary housing legislation was primarily used to ensure a developer set aside a certain number or percentage of their units for low-wealth residents.
But as we continue our so-called economic recovery from the Great Recession of 2008, many full-time working professionals cannot afford the price of housing stock. The average price of rent in the United States in August 2016 was $1,120, with $1,300 for a two-bedroom unit. In New York, the most expensive rental market, the one-bedroom price shoots up to $3550. Given these prices, what are the prospects for a middle income family?
According to Dietderich’s landmark article on Inclusionary housing policy, there are a variety tools that cities can use to regulate the housing market. But all of them involve a developer either voluntarily setting aside a certain percentage of units for a planned development below market rate or having to abide by legal ordinances that mandate the set aside percentages and/or the terms of opting out of the set-aside program.
Inclusionary housing is of course, not without controversy. For example, Baltimore currently has ordinances that compensate developers for building affordable units. Other cities, like San Jose, California, have a highly controversial law that requires units be built at the developer’s cost.
Today, more than 200 cities across the U.S. have inclusionary housing ordinances, and 170 such ordinances in the state of California alone where the state Supreme Court has ruled in favor of a citywide, mandatory inclusionary housing ordinance for San Jose, California. The Court let stand San Jose’s inclusionary housing ordinance that required developers building housing projects of more than 20 units to include 15 percent of for-sale housing units at below market rate housing or pay an in-lieu fee.
The future for our cities
The U.S. Supreme Court declined to hear a challenge to San Jose’s mandatory inclusionary housing ordinance signaling that for now, inclusionary housing ordinances are on safe ground..
A recent HUD study examined two of the wealthiest counties in America—Montgomery County, Maryland and Fairfax County, Virginia—determined their Inclusionary housing policies had a positive impact for families. Both of these communities have had inclusionary housing policies in place for more than 30 years. They are examples that over time, inclusionary housing does not lead to our greatest fears of urban decline. Instead, it points us to our greatest hopes – communities that work for citizens from all walks of life.
Author: Deborah Bailey, PH.D. M.P.A. is a visiting research scholar at Johns Hopkins University where she is conducting a study on social capital in the Sandtown-Winchester area of West Baltimore.