Vision 2030 - We Are Apartments

Vision 2030 - We Are Apartments

VISION 2030 OUR VISION FOR 2030 Build 4.6 Million New Apartments to Meet Demand and Control the Cost of Housing We Are Apartments In communities a...

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VISION 2030

OUR VISION FOR 2030

Build 4.6 Million New Apartments to Meet Demand and Control the Cost of Housing

We Are Apartments

In communities across the country, apartments work — helping people live in a home that’s right for them.

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NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

Vision 2030 NATIONAL MULTIFAMILY HOUSING COUNCIL & NATIONAL APARTMENT ASSOCIATION

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INTRODUCTION

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CHANGING HOUSING DYNAMICS DRIVE APARTMENT DEMAND

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WHY WE CAN'T JUST BUILD MORE

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POLICY RECOMMENDATIONS

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CONCLUSION

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RESOURCES

NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

Introduction The number of families renting their homes stands

America needs to build more than 4.6 million new

at an all-time high, placing significant pressure on the

apartment* homes at a variety of price points

apartment housing industry to meet their needs.

by 2030, according to new research from Hoyt

The ever-growing demand is making it challenging

Advisory Services (HAS), commissioned by the

for millions of families nationwide to find quality rental

National Multifamily Housing Council (NMHC) and

housing they can afford at their income levels.

the National Apartment Association (NAA).

For many families, the shortage of affordable rental

The projection of 4.6 million is low, based on estimated

housing creates significant hurdles that ultimately

demand by new apartment households through 2030. Not

hamper future financial success. And the problem

included in the number are the supply-demand imbalances

won’t go away on its own. Unless public and private

that currently exist in some markets, where households are

sector leaders take bold, innovative action today

unable to find an apartment at a rent affordable to them.

and in the years to come, the affordable housing

Possibly underestimated are older existing apartments — as

crisis will become even more desperate.

many as 11.7 million — that could need renovation by 2030.1

* Throughout this document, apartments are defined as rental apartments in buildings with five or more units.

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NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

Unless we get started today, we’ll be short millions of apartments by 2030.

Meeting projected demand means

The cost to build and operate

more balanced housing markets

building more than 325,000 new

apartments has increased as barriers

elsewhere. After all, apartments and

apartment homes each year on

to development have worsened over

their residents contribute more than

average — a number the industry has

recent decades, exacerbating housing

$3.5 billion to the economy every

not been able to hit for decades. From

affordability. For many families, the

day — about $1.3 trillion each year.4

2012 through 2016, the apartment

shortage of low and moderately priced

industry built, on average, only 244,000

housing makes it difficult to pay for

new apartment homes per year.2 The

basic necessities such as food and

last time the industry built more than

transportation, or to save for the

325,000 in a single year was 1989.3

future. Housing affordability is not

That history suggests that reaching

just an issue for low-income families.

and maintaining needed growth in new

It is increasingly affecting middle-

apartments will require a revamp of how

income families who earn too much to

we build apartments. It will also require

qualify for a subsidy, but not enough

courageous steps by policymakers at

to pay market-rate housing costs.

the federal, state and local levels who are willing to implement inventive policy ideas, provide incentives and reduce impediments to building apartments that meet demand across all income levels.

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Ultimately, if these issues are left unaddressed, states and cities risk losing workers and driving down economic activity as families seek

Apartments and their residents contribute more than $3.5 billion to the economy every day.

NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

Demand for apartments is projected to grow substantially by 2030. 5m 4m 3m 2m 1m

2017

2019

2021

2023

2025

2027

0 2030

New apartments needed

Average annual construction

UNPRECEDENTED DEMAND FOR APARTMENTS

RISING HOUSING COSTS Millions of people are paying far more than they can afford on

The number of renters has reached an all-time high,

all types of housing. They include young adults just starting

with nearly 39 million people in the United States —

out in their careers, workers who have not seen a wage

that is almost 1 in 8 — calling apartments home.

increase in years, and even some of our nation’s most valued

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They are singles, couples and families. They come from all generations and economic backgrounds.

public servants: teachers, firefighters and police officers. A standard benchmark for housing affordability is that

Annual growth in renter households exceeded 800,000 on

households pay less than 30 percent of their earnings on their

average since 2010 – and almost as much as 1.2 million,

rent or mortgage. Since 1985, the share of apartment renters

by some measures. Meanwhile, apartment vacancy

paying at least 30 percent of their income for housing costs

rates as measured by MPF Research fell or remained

(rent and utilities) has increased from 42 percent to now more

the same for seven straight years from 2009 to 2016.

than half (55 percent).7 More than one in four (29 percent)

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HAS’s research shows demand for apartments is projected to grow substantially by 2030. If current policies and population

spend at least half their income on housing costs, a sign that their housing costs are a significant financial burden.8

trends continue, many communities will have difficulty

As housing costs, to rent or to own, have gone up in many

meeting demand, an outcome that will make affordability

parts of the country, student debt and healthcare costs

challenges significantly greater and stunt economic growth.

have also spiked, while incomes have stagnated.

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NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

While increasing supply is a longterm solution, communities that have made the investment in rental housing stock are starting to see rents moderate. In recognition of this, municipalities are beginning to work with local leaders, developers and citizens to make affordable housing a priority by first recognizing the obstacles to apartment construction and comprehensively looking at ways to minimize steps or processes

We can bridge the gap between the cost of building and operating apartments and the amount of rent lowerincome and middle-class households can afford.

that artificially increase the cost of housing. This includes everything from creative financing with capital

Policymakers at all levels of

State and local governments have

partners and direct municipal

government must recognize that

a toolbox of approaches they can

investment, to mitigating actions that

addressing local housing needs

take to address the apartment

influence the soft cost of building

requires a partnership between

shortage and help reduce the

such as onerous zoning, permitting,

government and the private sector.

cost of housing. They can:

taxes, fees and the overall carrying

The federal government can ensure

cost of extended approval times —

sufficient funding of housing

which can increase the total cost of

programs, enact a pro-housing tax

of the private sector to make

housing by 25 percent to 40 percent.

policy and reform regulations that

housing affordability more feasible.

It is time to take action across the country, in ways that are tailored to the needs of each community. The apartment industry stands ready to work with urban, suburban and rural communities in every region to meet the housing demands of Americans

unnecessarily increase housing costs.

• Adopt local public policies and programs that harness the power

• Increase public-private partnerships.

• Leverage state-level authority to overcome obstacles to apartment construction.

• Collaborate with business and community leaders to champion apartments.

across all income levels.

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VISION 2030

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Changing Housing Dynamics Drive Apartment Demand

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NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

The country is in the midst of an

DEMOGRAPHIC SHIFTS

report found that in the 1970s, 80

unprecedented rise in renting. Since

According to HAS research, three

percent were married by the time they

the current upswing began in 2010,

major demographic shifts will continue

were 45 years old; in 2016, 80 percent

the number of renter households has

to have a strong impact on the

hadn’t been married until they were

increased by an average of more than

demand for rental housing: The rise

45 years old. Their homeownership

800,000 annually – almost as much as

of young adults, the aging of the baby

rate is slightly lower, too. Only 35

1.2 million a year, by some measures.

boomers, and immigration’s increasing

percent own homes, compared to

contribution to population growth.

41 percent of young adults in 1981,

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Renting an apartment offers

according to the U.S. Census Bureau.

many advantages to working- and

At more than 75 million strong, young

middle-class Americans. Apartment

adults ages 18 to 34 — the age group

These trends suggest more young

residents say they appreciate

most likely to rent – have become the

adults are renting than did previous

mortgage-free living, the ability to

largest generational demographic

generations at the same stage in

follow work opportunities across

group in the U.S.11 Their sheer numbers,

life. But high unemployment rates

town or across the nation, and

as well as long-term and short-term

of the past 10 years, just now ticking

amenities that fit their lifestyles.

social and economic trends that

down for young adults, as well as

affect them, are having a profound

the growing burden of student debt,

impact on demand for apartments.

have kept many from forming their

These choices drive economic growth. Apartments and their residents contribute more than $3.5 billion to

Historically, Americans have bought

the economy every day — about $1.3

their first houses around the same time

trillion each year.10 That impact could

they get married. But people are getting

be even greater if more apartments

married later. Today, both women and

were built to meet the needs of

men get married for the first time five

households at all income levels.

years later, on average, than they did

own households. Nearly a third (31.5 percent) of young adults live at home with their parents, a statistic that suggests pent-up demand for housing options that match their stage in life.13

in 1980.12 A recent Census Bureau

Eighteen- to 34-year-olds — the age group most like to rent — have become the U.S.'s largest generational demographic group.

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VISION 2030

There has also been a dramatic change

Immigration is also a driver of demand

populations, like Michigan, West

in the number of households with

for apartment homes, and may

Virginia and Maine, immigration

children, the kinds of households

become even more of an influence if

has in recent years accounted for a

that have typically driven demand

it eclipses natural population growth

bigger chunk of population growth

for single-family houses. In 1960,

over the next decade and a half, as

than in faster-growing states.

44 percent of all households in the

estimated by HAS researchers. That

U.S. were married couples with

is because immigrants are more

children. Today, such families make

likely to rent, and more likely to rent

up only 19 percent of households.14

longer.17 In states with slow-growing

According to HAS research, Hispanic households alone will account for more than half (55 percent) of all U.S. population growth through 2030.

More and more, renting is not just for the younger generations. Once the nation’s largest demographic group, baby boomers (those born between 1946 and 1964) now number 73 million people.15 Over half (58.6 percent) of the net increase in renter households from 2006 to 2016 came from boomer households.16

Over half (58.6%) of the net increase in renter households from 2006 to 2016 came from boomer households.

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NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

INCOME STAGNATION

As a result, in many areas where

America’s affordable rental housing

demand is strongest, even if,

shortage is more than just a housing

hypothetically, developers agreed

problem. Underlying the shortage

to take no profit when building new

is an income problem. As rental

apartments, the cost would still exceed

housing has gotten more expensive

what people can afford to pay.

to build and operate, other economic

Stagnating renter incomes

HAS researchers also found the

factors have suppressed household

proportion of renters living under the

income growth, making it harder

poverty line is highest in Mississippi

for people to pay for housing.

and West Virginia, but it is also

In 2015 dollars, the median income

high in states such as Kentucky,

of an apartment household has

Ohio, New Mexico, Arkansas

fallen by $3,000 since 1985.18 Since

and Alabama. Stagnating renter

2001, renters’ real median incomes

incomes leads to households that

have fallen 9 percent. Nearly a third

are increasingly rent burdened.

lead to households that are increasingly rent burdened.

(31 percent) of renters earn less than $20,000, according to HAS research.

Income Levels Flat for Households Near or Below the Median Level 250,000 200,000 150,000 100,000 50,000 0 1967

1971

1975

10th percentile

10

1979

1983

1987

50th (median)

1991

1995

1999

2003

2007

2011

2015

95th percentile

NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

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Why We Can't Just Build More

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NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

Recent history — specifically the lingering effects of the Great Recession — has complicated the apartment industry’s ability to meet rising demand. The collapse of U.S. financial markets in 2008 virtually shut down new apartment

The 5 most difficult metro regions in which to build apartments

1 Honolulu EASE OF ADDING SUPPLY RANK: 19.5

construction for a number of years.

82% OF RENTS ARE $1K+

According to HAS, we need to build on

2 Boston

average at least 325,000 apartments a year to meet demand. The nation hit a low of completing 129,900 new apartments in multifamily buildings of five or more units in 2011 and has only

EASE OF ADDING SUPPLY RANK: 13.1 69.2% OF RENTS ARE $1K+

now begun to reach 300,000 a year19.

3 Baltimore

Still, the current rate of growth hasn’t

EASE OF ADDING SUPPLY RANK: 11.9

been enough to meet current demand and make up for the shortfall in the years following the recession. The challenge is delivering more units each year and over a sustained period of time. But steep barriers keep the apartment industry from being able to do that. And there’s a strong connection between the difficulty of building and affordability. HAS research found that rents tend to be particularly high in cities with the

65.5% OF RENTS ARE $1K+

49.9% OF RENTERS PAY 35%+ OF THEIR INCOME ON RENT

40.0% OF RENTERS PAY 35%+ OF THEIR INCOME ON RENT

40.7% OF RENTERS PAY 35%+ OF THEIR INCOME ON RENT

4 Miami EASE OF ADDING SUPPLY RANK: 9.3 68.1% OF RENTS ARE $1K+

54.2% OF RENTERS PAY 35%+ OF THEIR INCOME ON RENT

5 Memphis EASE OF ADDING SUPPLY RANK: 8.7 31.6% OF RENTS ARE $1K+

41.8% OF RENTERS PAY 35%+ OF THEIR INCOME ON RENT

greatest barriers to new development.

Over the last three decades,

regulatory barriers to apartment construction have increased significantly

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VISION 2030

COST, TIME AND REGULATORY BARRIERS

undeveloped land. Competition for what land is available

For many reasons, building apartments has become costlier

drives the cost up, too. Labor costs have increased well

and more time-consuming than necessary. Over the last

above inflation because of a shortage of skilled workers.

three decades, regulatory barriers to apartment construction

Following the economic downturn, many workers left

have increased significantly, most notably at the local level.

the construction industry and have yet to return.

Outdated zoning laws, unnecessary land use restrictions,

Finally, localities impose a variety of fees on new

arbitrary permitting requirements, inflated parking

housing, including impact fees, inspection fees and

requirements, environmental site assessments, and

property taxes. Inclusionary zoning mandates and rent

more, discourage housing construction and raise

control further discourage housing investment.

the cost of those properties that do get built.

These time and cost burdens lead to fewer apartment

Developers navigate many steps to get projects approved.

homes being built, which further squeeze already tight

The whole process can take two to 10 years and require

rental markets. Apartments that do get built tend to have

an upfront investment of $1 million or more before a project

higher rents to cover the high cost of development.

breaks ground. There are also financial factors pushing housing costs up. Land, labor and construction costs have all been rising significantly in recent years. In many areas, there is limited land zoned for apartments or just little

Percentage of apartments built before 1980

Under 35% 35%-45% 45%-55% 55%-65% Over 65%

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VISION 2030

“NOT IN MY BACKYARD” In many communities — even ones with a deep gap between supply and demand — residents often say, “Not in my backyard” to new apartments, an attitude known as NIMBYism. Their opposition is often fueled by misperceptions about renters and

Lost Apartments

the impacts of apartments on traffic,

Adding to the apartment shortage is the fact that every year, the nation

property values, school overcrowding

loses between 75,000 and 125,000 apartment units to obsolescence

and community character.

and other factors.20 Most lost units are likely at the lower end of the

Even though these perceptions are

market, disproportionately hurting the affordable supply that exists.

largely false, NIMBYism persists and

This situation is likely to worsen going forward since more than

keeps apartments from being built

half (51 percent) of the nation’s apartment stock was built before

where they are needed most and at

1980, and without resources dedicated to support rehabilitation

prices many people can afford. Even

efforts, more stock will continue to leave the available pool.21

when building proceeds, NIMBY

Rehabilitation and preservation are vital to maintaining the stock

opposition to apartments can add

of apartments that are affordable to the broad middle class.

additional time and expense to an already long and costly process.

NIMBYism keeps apartments from being built where they are needed most and at prices many people can afford.

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VISION 2030

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Policy Recommendations

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VISION 2030

If government and private developers

Unfortunately, the current regulatory

come together to take action, we can

framework, whether intentional

build 4.6 million apartments by 2030

or not, has limited the amount of

to meet demand and control the

housing being built and increased

cost of housing. Solutions that help

the cost of what is produced. States

supply meet demand and reduce

and localities are now struggling to

the cost of developing apartments

address this serious threat to their

are out there but need to be more

economic vitality. They must balance

broadly adopted across the country.

the dwindling resources they have for housing with the need to “do something” to meet growing demand. Fortunately, there is much they can do outside of their budgets to make it easier for the private sector to build more housing and to help reduce the cost of the housing that is produced. Most importantly, they can reduce barriers to apartment construction.

There are things states and localities can do to

meaningfully reduce the cost of producing housing.

Land-use restrictions, zoning restrictions, parking requirements, slow permitting, and much more, add significantly to the cost of construction. Many of these rules and processes are well-meaning, but collectively they serve as real barriers to housing production. Even worse, some laws are specifically designed to prevent apartment construction, usually in response to NIMBY opposition. In the following pages we present a toolbox of approaches states and localities can take to address the apartment shortage and help reduce the cost of housing.

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VISION 2030

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Adopt local public policies and programs that harness the power of the private sector to make housing affordability more feasible. The most common barriers to apartment construction are

developers to seek waivers, variances or rezoning,

enacted at the local level, which means local governments

which trigger the review process.

have a lot of levers they can pull to create healthy housing markets. They also have no-cost resources they can bring to the table to reduce the cost of housing production. They can do the following:

ESTABLISH “BY-RIGHT” HOUSING DEVELOPMENT

This strategy for expanding the supply of affordable rentals, has been gaining traction across the country. Fairfax, Virginia, has implemented by-right development and flexible zoning in seven districts where they want to encourage housing construction. States can also play a role. Massachusetts, for example,

Most developments go through a discretionary review

provides incentives to municipalities that allow by-right

process such as public hearings or legislative review by

development. These development incentives have cut in

the local land use authority or board of zoning appeals.

half the nine years it otherwise takes to develop a property.

Public review is certainly important, but it’s often duplicative, arbitrary and inefficient. Reviews also increase the cost of

EXPEDITE APPROVAL FOR AFFORDABLY PRICED APARTMENTS

housing by slowing down its production or even preventing

Lengthy permitting processes add cost, time and

it from being built.

uncertainty to housing construction. Fast-tracking review

“By right” development allows projects, both new construction and rehabs of existing properties, to be approved by local administrators without discretionary reviews as long as they

and permitting of housing that includes affordable units is a no-cost way for local jurisdictions to expand their supply. Several cities are embracing this approach. San Diego’s

comply with current zoning rules and community development

“Expedite Program” fast tracks permit processing for

plans. Municipalities retain control and can deliver the housing

affordable housing and sustainable building projects

the community has already decided it wants, while loosening

with an initial business review that takes just five days.

restrictions that keep new apartments from being built.

Austin’s S.M.A.R.T. Housing program gives affordable

In addition to establishing “by right” rules, municipalities

housing builders an expedited development review, and

can also relax restrictions related to density, building

it waives development fees. Since 2005, more than 4,900

height, unit size and parking minimums. All of these require

apartments have been built through the initiative.22

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VISION 2030

REDUCE PARKING REQUIREMENTS Parking requirements are one of the biggest costs for a development, particularly in urban environments, ranging from $5,000 per spot for surface parking to $60,000 for underground parking.23 The Urban Land Institute found that parking minimums were the number one barrier to building affordable rentals.24 Many cities can significantly reduce or even eliminate parking requirements, particularly in transit-oriented or urban infill development. This approach will become increasingly valuable as ride-sharing increases and automated vehicles become adopted, dramatically reducing parking demand. In 2012, Seattle voted to reduce parking requirements by 50 percent in some neighborhoods and to eliminate them completely in downtown areas readily served by transit. Other cities such as Denver, Minneapolis, Boston, San Francisco and New York are revising parking requirements to reduce the cost of housing. In 2015, California enacted a law overriding local parking requirements for all transit-adjacent housing developments that include affordable housing units.

ESTABLISH DENSITY BONUSES TO ENCOURAGE DEVELOPMENT OF AFFORDABLE HOUSING Density bonuses make building affordable housing more cost-effective for developers. In return for including a certain number of affordable units in a building, the developer is allowed to build more market-rate apartments than are normally allowed. Fairfax, Virginia, and Denver both allow for taller buildings near transit centers if they include affordable units. Massachusetts also provides incentives to local governments that adopt zoning laws encouraging denser development near transit.

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VISION 2030

ADOPT SEPARATE REHABILITATION BUILDING CODES Maintaining the stock of older apartments — which tend to have lower rents — and improving them so they remain habitable is essential to ensuring affordability across the income spectrum. But

The Reality of Rent Control

because many jurisdictions require developers to bring a building up to the current building code

Some lawmakers are revisiting rent control as a strategy to

when they want to substantially rehab it, upgrading

control housing costs. New efforts are underway in California,

properties is often prohibitively expensive.

Illinois and Washington to challenge and ultimately change

Localities can overcome this by adopting separate building codes for rehabilitation projects that

decades-old state laws and best practices restricting and/or prohibiting rent control in local jurisdictions.

balance the need to ensure safety and structural

To some, rent control would seem a fast and easy

integrity, but don’t sacrifice affordability. They

fix — a local jurisdiction sets limits on how much property

can also offer tax abatement, for properties

owners and managers can raise rents on residents, theoretically

that include affordable housing, when property

making units more affordable. But it’s not the panacea some

taxes rise because of improvements.

lawmakers seem to think it is. Economists on both sides of the political spectrum agree that rent control is not effective policy. Forbes Magazine calls it one of the 10 worst economic ideas of the 20th century: “Here we have a policy initiative that has done huge damage to cities around the globe. It is very hard today to find an economist supporting rent control.” While the laws’ intent is positive, research shows that the real impact of rent control policy is a decline in property maintenance, stifled development activity, shrinking affordability and a chronic undersupply of rental homes. Rent control also encourages owners to convert buildings from residential to non-residential use.

CREATE AN EFFICIENT PUBLIC ENGAGEMENT PROCESS

Without profitability as an incentive, investment capital

New developments benefit from community input.

is directed to other markets and maintenance on existing

But the public engagement process can also result in

properties is deferred. Subsequently, the affordable housing

NIMBY opposition that creates long delays, and even

shortage is exacerbated.

lawsuits, that increase construction costs. There is no single model that works to strike a balance, but localities should examine their process to ensure it’s not one-sided and doesn’t create uncertainty.

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VISION 2030

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Increase public-private partnerships.

Policymakers at all levels of government can provide

USE PROPERTY TAX ABATEMENTS

incentives and share risk with the private sector to produce

Tax incentives and abatements are another way to spur

the necessary units at price points households can afford.

development. While they do reduce public revenues, they

They can do the following:

are often more politically palatable than direct subsidies.

LEVERAGE UNDERUTILIZED LAND

The Seattle Multifamily Tax Exemption (MFTE) program

Federal, state and local governments should prioritize affordable housing when disposing of public land. Land accounts for approximately 10 to 25 percent of an apartment

gives a 12-year tax exemption to new apartments that include a certain percentage of affordable units. By 2018, more than 200 properties are expected to participate.26

project’s cost, and even more in high-cost areas.25 Developers

In 2017, New York passed a program that gives 35-year

also often struggle to find developable land in urban areas.

property-tax exemptions to apartment developments of at

Yet many localities own underused or abandoned land

least 300 units in certain areas if 25 to 30 percent of units

that could be used for affordable housing. Under-utilized

are set aside for low- to moderate-income renters. The

buildings, which can be renovated, are another resource.

program is expected to generate 2,500 units a year.27

Making good use of these lands and buildings requires strong

Philadelphia abates 100 percent of the value of

public-private partnerships. The private sector contributes

residential building improvements for up to 30 months

the investment dollars and expertise, and the locality

during the construction phase. Oregon offers tax

provides the land and helps facilitate a streamlined approval

abatement to affordable housing as well as vacant land

process. In the end, such partnerships produce affordable

intended to be developed into affordable housing.

apartments while also boosting economic development. Land banks — government-created nonprofit corporations

WAIVE FEES FOR PROPERTIES THAT INCLUDE AFFORDABLE UNITS

that manage and repurpose tax-delinquent and vacant

Housing developers often pay significant fees to expand

properties — are another option. More than 140 land

public infrastructure or to support the creation of city

banks have already been created across the country.

amenities such as schools and parks. Because fees add to the cost of housing, many jurisdictions waive impact fees for properties that include affordable units.

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VISION 2030

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Leverage state-level authority to overcome obstacles to apartment construction.

Forward-thinking states recognize

States can also make some state

that their economies suffer from

financing contingent on a locality

a lack of housing supply. They are

meeting a minimum affordable

taking action to enact laws that

housing threshold or adopting policies

override local zoning restrictions

that support housing production.

that inhibit apartment construction, whether intentionally or not. Massachusetts, for example, has an “Anti-Snob Zoning Law” (Chapter 40 B Comprehensive Permit Law) that allows developers to build with more density than local zoning laws allow if the proposed apartment property has a certain percentage of affordable units and the community has an affordable housing shortage. Since it was enacted in 1969, more than 42,000 rental units have been built.28 Rhode Island approved the “Expedited Permitting for Affordable Housing” Act that sets strict approval deadlines for permitting agencies if a development is

Forwardthinking states recognize that their economies suffer from a lack of housing supply.

Leveling the Playing Field for Renters People choose to live in apartments for many reasons, and their choice should not limit their ability to enjoy financial security. We should promote policies that give people flexibility to build wealth without owning real estate and through incentivized savings. We should also adopt public policies that promote affordability in all housing.

large enough to increase the amount of affordable housing in their communities.

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VISION 2030

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Collaborate with business and community leaders to champion apartments.

Local communities are stronger and more vibrant when

Local employers can be a powerful force against NIMBY

there is a mix of rental and owned housing. Without a

opponents. For example, the Silicon Valley Manufacturing

diversity of housing options to meet a variety of lifestyle needs

Group recognized that a housing shortage was affecting

and price points, local economies are held back. We need

their members, so they formed a Housing Action

local leaders in government and business to work together

Coalition. The group goes to planning commissions

to bring a range of housing types to their communities

and city councils to actively support smart growth

by crafting creative solutions to ease existing hurdles.

developments. They also help educate lawmakers about

One of the best ways to accomplish this is to make the connection between a sufficient supply of housing and a community’s economic health and economic development.

the importance of affordable housing. They say their intervention works 98 out of 99 times and has resulted in 26,000 new homes in 18 Silicon Valley towns.

Insufficient housing causes workers to leave an area or lose productivity because of long commutes. Companies relocate or stagnate when they cannot hire the workers they need because their employees can’t find housing. In other words, ensuring a community has enough housing isn’t just the concern of those who struggle to find housing. It’s an important issue for everyone in the community whose employer might move to another market where housing is more readily available. Several areas have successfully made that connection and have generated political support for regulatory changes or even vocal support for specific projects.

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NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

What’s good for renters is good for everyone. Federal Solutions

CONCLUSION

It’s not up to states and localities alone

In 2030, today’s fifth-grader may be renting her first apartment. Her

to ensure that people have access to

grandmother may be downsizing into apartment living, too. A city lot that

housing that fits their needs. The U.S.

sat vacant for decades or a long-neglected suburban downtown may now

Congress can take the following steps:

be a vibrant place to live, eat and work because local leaders had a vision

• Enact a pro-development tax policy that incentivizes

Every American should be able to choose to live in a place that fits his

investment in rental housing.

or her stage of life and budget and to choose the community in which

• Support housing finance reform that preserves the multifamily mortgage liquidity provided by the Government Sponsored Enterprises.

• Support funding for the FHA

he or she wants to live. To make that vision a reality, we must build more apartments at all price points. Building 4.6 million apartments by 2030 will go a long way toward meeting the demand for apartments, stabilizing rents and helping to boost the U.S. economy.

Multifamily Programs, which

With the right mix of policies and strong partnerships between local

are an important source of

governments and independent developers, we can bridge the gap

capital supporting apartment

between the cost of building and operating apartments and the amount

construction and redevelopment.

• Expand the Low-Income Housing Tax Credit.

• Create a Middle-Income Housing Tax Credit.

• Increase funding for subsidy

of rent lower-income and middle-class households can afford. It helps that a growing number of people in communities from San Francisco to Boulder, Colorado, to New York are already recognizing the value of moving from “Not in my backyard” to “Yes, in my backyard.” They are seeing that it is not only renters who benefit when communities

programs that address housing

build more apartments. Communities benefit, too. When people are

affordability such as the Section 8

able to affordably live where they work, the volume of traffic is reduced.

Housing Choice Voucher Programs,

When a community has a diverse housing stock, it can attract a diverse

Project-Based Rental Assistance,

population of people with different incomes, skillsets and professions.

Rental Assistance Demonstration, HOME and Community Development Block Grants.

• Reform overly burdensome

And apartments can help the tax base and boost the local economy through mixed-use development that revitalizes communities and creates jobs.

regulations that contribute to

What’s good for renters is good for everyone. It’s time to take action

making housing less economically

to ensure every household at every income level has an affordable

feasible to develop and operate.

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for revitalization that included apartments.

place to call home.

NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

Resources There are a number of resources policymakers can consult to inform their efforts to address the affordable housing shortage. These are just a few.

CALCULATORS

TOOLKITS AND OTHER RESOURCES

• Urban Institute/National Housing Conference’s Cost

• ULI’s “Bending the Cost Curve-Solutions to Expand

of Affordable Housing Calculator. Interactive tool that shows why affordable housing deals don’t pencil out.

• U.C. Berkeley Terner Center for Innovation’s Development Calculator. Estimates the probability that a given development project will be built, given a particular set of policies and economic conditions.

• U.C. Berkeley Terner Center for Innovation’s How Much Housing Will Be Built? Policy Gauge Calculator. Using four example cities, shows how local policies impact total potential housing production.

the Supply of Affordable Rentals”

• Washington Area Housing Partnership’s “Toolkit for Affordable Housing Development”

• Obama White House’s “Housing and Development Toolkit”

• McKinsey Global Institute’s “Toolkit to Close California’s Housing Gap: 3.5 Million Homes by 2025”

• Mortgage Bankers Association’s “Affordable Rental Housing and Public Policy”

• California’s Legislative Analyst’s Office’s “Considering Changes to Streamline Local Housing Approvals”

• ULI’s “The Economics of Inclusionary Development” • The Family Housing Fund’s “The Space Between: Realities and Possibilities in Preserving Unsubsidized Affordable Rental Housing”

• HUD’s “Regulatory Barriers Clearinghouse” • ULI’s “Developing Housing for the Workforce: A Toolkit”

• ULI’s “Workforce Housing: Innovative Strategies and Best Practices”

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NATIONAL APARTMENT ASSOCIATION | NATIONAL MULTIFAMILY HOUSING COUNCIL

VISION 2030

Footnotes 1.

16. NMHC tabulations of Current Population Survey,

Hoyt Advisory Services.

2. U.S. Census Bureau, New Residential Construction. 3. U.S. Census Bureau, New Residential Construction. 4.

National Multifamily Housing Council and National Apartment Association, “The

Annual Social and Economic Supplement.

17. NMHC tabulations of American Community Survey microdata.

18. NMHC tabulations of American Housing Survey microdata.

Trillion Dollar Apartment Industry.”

5. American Community Survey, 1-Year Estimates.

19. U.S. Census Bureau, New Residential Construction.

6. American Community Survey, 1-Year Estimates

20. NMHC tabulations of American Housing Survey

and NMHC tabulations of Current Population

21. NMHC tabulations of American Community

Survey microdata.

7.

and CINCH microdata.

NMHC tabulations of American Housing

Survey microdata.

22. “Housing and Development Toolkit.” White House,

Survey microdata.

8. U.S. Dept. of Housing and Urban Development,

September 2016.

23. “Parking.” Association of Bay Area Governments, N.d.

American Housing Survey.

9. American Community Survey, 1-Year Estimates

24. “Bending the Cost Curve: Solutions to Expand

and NMHC tabulations of Current Population

the Supply of Affordable Rentals,” Urban Land

Survey microdata.

Institute, 2014.

10. National Multifamily Housing Council and National Apartment Association, “The

25. Based on evidence provided by NMHC members. 26. Ibid.

Trillion Dollar Apartment Industry.”

11. U.S. Census Bureau, Current Population Estimates. 12. U.S. Census Bureau, Current Population Survey. 13. U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement.

27. “Affordable Housing Program Gives City Tax Break to Developers,” New York Times, April 10, 2017.

28. “Fact Sheet on Chapter 40B; The State’s Affordable Housing Zoning Law,” Citizens’ Housing and Planning Association, November 2011.

14. U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement.

15. U.S. Census Bureau, Annual Population Estimates.

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