In my hometown of Dixon, a recent study found only three available rental apartments in all of Lee County. Under normal market conditions, there would be over 220 vacant rental apartments at any one time. Local leaders fear that this shortage of rental housing will prevent job growth and business expansion, especially in manufacturing.
Thousands of vacant lots, many of them city-owned, plague the South and West sides of Chicago, representing the rubble of racial and economic segregation and the aftermath of redlining, contract buying and the loss of manufacturing jobs.
This lack of homes, both owned and rented, threatens the viability of our state. It reduces our tax base, limits population growth, discourages business expansion, exacerbates mental health crises, increases health care costs and recidivism in the criminal justice system, and prevents working people from building wealth and climbing to the middle class.
What’s happening reflects a larger national trend. Studies show that our nation has been underproducing homes for nearly two decades. Our nation produced fewer homes from 2008 to 2018 than in any decade since the 1960s. We now face a deficit of nearly 4 million new homes. As a country, we used to build for working people. Today, we build largely for the affluent—and then try to shoehorn in a few homes for working people via local mandates or incentives. Only 8% of new construction homes today are starter homes, compared with nearly 70% in the 1940s.
What’s the answer to this lack of supply? Build more homes, of all kinds, in urban, suburban and rural communities. Build more starter homes and affordable apartments. And make existing housing more affordable with a recommitment to targeted rental assistance. Supply-chain issues, increased material costs, rising interest rates and a broken immigration system increase the degree of difficulty, but there is plenty that we can do together.
The federal government can act in several ways. One, expand tools that have proven their worth. Increase the Low-Income Housing Tax Credit and the capital programs that are used with it. Expand homebuyer grants to help working families buy homes (a program with a proud history extending all the way back to Lincoln’s land grants for home settlers). Pass the Neighborhood Homes Investment Act to spur private construction of starter homes on vacant lots and explore broad-based tax reductions to encourage development of multifamily housing.
Two, reinvest in rental assistance. It has been almost four decades since our nation abandoned investing in new streams of rental assistance and resorted to merely funding rental assistance obligations already in the marketplace. During that time, the economy has grown radically more unequal (in terms of both wealth and income) and a larger share of our workforce labors for low wages. The results have not been surprising. More people now need to spend more of their income on rent; there is not enough rental housing affordable for people who work in the service sector for modest wages; and homelessness has dramatically increased. The economics of producing and operating high-quality affordable apartments do not work without rental assistance.
Three, return to our nation’s roots and welcome more immigrants to our shores. Every building boom in our nation’s history has been birthed from the muscles, ingenuity, engineering and craftmanship of immigrants. Our urban, suburban and rural communities would all benefit from immigrant labor, culture, investment and new business formation. And our democracy would benefit from more people yearning for liberty and freedom.
State government can participate in the solution by continuing to invest in, supplement and leverage proven federal housing strategies. The Illinois General Assembly can build upon recent housing legislation by dedicating funds for rental assistance and for homebuyer subsidies, passing the Build Illinois Homes Tax Credit to draw down more federal Low-Income Housing Tax Credits, and continuing to dedicate and release state capital and American Rescue Plan Act dollars for the production of both affordable apartments and homes.
Local government can follow the advice given by former Cubs manager Joe Maddon when he recently returned to town: “Do simple better.” Make government work for housing production. Zone more land for starter homes and multifamily housing. Speed up permitting processes and approval times, waive permitting and impact fees for affordable homes, and remediate and transfer vacant lots to developers who are building homes at scale. Remove obstacles. Move available funding sources. Focus on the outcome. Produce more homes. We need our elected officials, regardless of ideology or political affiliation, to focus not just on running for office but on running the office.
Corporate, civic and private leaders can contribute to this cause by advocating with elected officials and by raising private funds for the production of affordable homes. Public dollars often come with excessive strings and bureaucratic process. When Chicago wanted to step out on the world stage and to pave the way for its future growth, an array of leaders raised money for and organized the World’s Fair of 1893. A similar effort is needed now for housing.
Our democracy remains, as Lincoln so aptly phrased, the last best hope of Earth. But hope will die without action. We can meet the challenge of the housing crisis. Not with any one action. But if we act together, there is no limit to what we can do.
Nick Brunick is a partner at Applegate & Thorne-Thomsen, a Chicago-based law firm that specializes in affordable housing and economic development.
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December 19, 2022 at 07:30AM