Growth Management and Affordable Housing: Do They Conflict? / Edition 1

by Anthony Downs

Overview

"Advocates of growth management and smart growth often propose policies that raise housing prices, thereby making housing less affordable to many households trying to buy or rent homes. Such policies include urban growth boundaries, zoning restrictions on multi-family housing, utility district lines, building permit caps, and even construction moratoria. Does this mean there is an inherent conflict between growth management and smart growth on the one hand, and creating more affordable housing on the other? Or can growth management and smart growth promote policies that help increase the supply of affordable housing? These issues are critical to the future of affordable housing because so many local communities are adopting various forms of growth management or smart growth in response to growth-related problems. Those problems include rising traffic congestion, the absorption of open space by new subdivisions, and higher taxes to pay for new infrastructures. This book explores the relationship between growth management and smart growth and affordable housing in depth. It draws from material presented at a symposium on these subjects held at the Brookings Institution in May 2003, sponsored by the U.S. Department of Housing and Urban Development, the National Association of Realtors, and the Fannie Mae Foundation. Contributors seek to inform the debate and provide some useful answers to help the nation accommodate the curtailment of growth in urban and suburban domains while still ensuring a supply of affordable housing. Contributors include Karen Destorel Brown (Brookings), Robert Burchell, (Rutgers University), Daniel Carlson (University of Washington), David L. Crawford (Econsult Corporation), Anthony Downs (Brookings), Ingrid Gould Ellen (New York University), William Fischel (Dartmouth College), George C. Galster (Wayne State University), Jill Khadduri (Abt Associates), Gerrit J. Knaap (University of Maryland), Robert Lang (Virginia Polytechnic Institute and State University), Shishir Mathur (University of Washington), Arthur C. Nelson (Virginia Polytechnic Institute and State University), Rolf Pendall (Cornell University), Douglas R. Porter, (Growth Management Institute), Michael Pyatok (University of Washington), Michael Schill (New York University School of Law), Samuel R. Staley (Reason Public Policy Institute), Richard P. Voith (Econsult Corporation).

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Product Details

ISBN-13:	9780815719335
Publisher:	Rowman & Littlefield Publishers, Inc.
Publication date:	06/15/2004
Series:	James A. Johnson Metro Series
Edition description:	New Edition
Pages:	304
Product dimensions:	5.99(w) x 9.00(h) x 0.71(d)

About the Author

"Anthony Downs is a senior fellow in the Economic Studies Program at the Brookings Institution. His specialties are housing, real estate, real estate finance, metropolitan planning, demographics, and transportation. His books include New Visions for Metropolitan America (Brookings/Lincoln Institute for Land Policy, 1994), and Still Stuck in Traffic: Coping with Peak-Hour Traffic Congestion (Brookings, 2004)."

Read an Excerpt

Growth Management and Affordable Housing

Do They Conflict?

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Brookings Institution Press

Copyright © 2004 Brookings Institution Press
All right reserved.
ISBN: 0-8157-1932-9

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Chapter One

ANTHONY DOWNS

Introduction

The rapid growth of many American metropolitan areas over the past few decades has created several problems that have aroused widespread citizen dissatisfaction. These problems include rising traffic congestion in both cities and suburbs, the development of a great deal of open space and environmentally sensitive land, increased air pollution, the high cost to taxpayers of providing roads and other infrastructure to accommodate growth, some loss of the sense of community, and serious disinvestment in older inner-city neighborhoods. Citizens unhappy with these results attribute them primarily to the specific form that most U.S. metropolitan growth has taken for the past fifty years: urban sprawl.

Sprawl can be characterized as low-density peripheral growth that includes new subdivisions that leapfrog far beyond existing settled areas onto vacant or agricultural land. Sprawl also relies on the almost exclusive use of private automobiles for transportation; the control of land use by fragmented and relatively small local governments; and the lack of even moderately coordinated land use planning among communities.

Government officials and other citizens have reacted to sprawl by advocating several planning and policy responses. The most prominent strategies have been entitled growth management, growth control, or smart growth; however, all three have focused mainly on the specific growth-related problems mentioned above without strong regard for another major urban problem: the high cost of housing for millions of American households, especially poor ones. Data from the 2001 American Housing Survey reveal that almost one-fourth of American households-including 85 percent of poor households-spent more than 30 percent of their incomes on housing. Most of these households suffer from what the U.S. Department of Housing and Urban Development (HUD) calls housing affordability problems, meaning that they cannot afford to occupy "decent quality" dwellings without devoting an "excessive" fraction of their income to housing.

Moreover, the highest-cost housing in most regions is in the suburbs, where the newest housing units have been built. Hence many people who work in the suburbs-or who would benefit from access to the new jobs being created there-cannot afford to live there. They are forced to drive long distances from neighborhoods where less costly housing is available, thereby aggravating traffic congestion, or are prevented altogether from gaining access to the jobs they need.

From the standpoint of rational planning, these two basic problems-sprawl and the lack of affordable housing-ought to be considered together and strategies to cope with each should deal with the other. But experience to date indicates that most growth management, growth control, and even smart growth efforts have not paid a lot of attention to providing more affordable housing in the U.S. suburbs where these strategies are being applied. The purpose of this book, which is based on papers presented at the Symposium on Growth Management and Affordable Housing held at the Brookings Institution on May 29, 2003, is to analyze why that is the case and to explore what can be done to change this disjunction. Is there some inherent conflict between trying to manage growth more rationally and providing more affordable housing? If not, why have those pursuing growth management, growth control, and smart growth not done more about making more affordable housing available?

Definitions of Key Terms

In the interest of clarity, all authors were asked to use the same definitions of key terms:

Growth management: specific regulatory policies aimed at influencing future growth so that it occurs in a more rational manner than it would without overall planning. Growth management policies affect density, availability of land, mix of land uses, and timing of development. It seeks to accommodate growth sensibly, not to limit or prevent it.

Growth control: specific regulatory practices aimed at deliberately slowing or halting growth within a locality or region. It encompasses building moratoriums, building permit caps, population growth caps, and severe downzoning of densities to prevent significant additional growth. It is much more restrictive in intent than growth management.

Smart growth: a set of broad goals and policies designed to counteract sprawl. Goals usually include limiting outward expansion; encouraging higher-density development; encouraging mixed-use zoning instead of fully segregating land uses; reducing travel by private automobiles; revitalizing older areas; and preserving open space. Promoting more affordable housing may or may not be an explicit smart growth goal.

Affordable housing: "decent quality" housing that low-income households (those whose income is below the poverty level or below 50 percent of the median income for their area) can afford to occupy without spending more than 30 percent of their income or that households with slightly higher incomes (50 to 80 percent of the median income) can similarly afford.

Most of the authors held strictly to these definitions, and those that did not usually indicated what other definitions they were using.

Does Growth Management Aid or Thwart the Provision of Affordable Housing?

In chapter 2, Daniel Carlson and Shishir Mathur tackle the subject of whether and to what extent growth management aids or thwarts the provision of affordable housing. They analyzed four fast-growing counties in states that had growth management policies-King County in Washington, Montgomery County in Maryland, and Somerset and Middlesex Counties in New Jersey-to examine the relationship between growth management and housing affordability. They also looked at one similarly fast-growing county-Fairfax County, Virginia-in a non-growth management state for comparison.

The authors devised three sets of measures for their analysis. The first looked at changes in housing affordability for low-income households in the metropolitan areas containing these counties during the 1990s. Changes were measured by comparing percent changes in home prices and gross rents during that decade with percent changes in median incomes; computing whether the ability of low-income households to occupy median-price housing had risen or fallen; and calculating changes in the percentage of such households that spent more than 30 percent of their income for housing. The second set of measures indicated whether each county made use of certain tactics that favor the creation of affordable housing, such as allowing small "cottage" units, allowing accessory apartments, waiving impact fees for affordable units, adopting inclusionary housing programs that grant bonuses to developers who built affordable units, encouraging transit-oriented development, and others. The third set of measures contained data on how many additional affordable housing units had been built in each county during the 1990s, both in absolute numbers and as a share of total housing construction.

Their findings are more suggestive than conclusive, given the complexity of the environments that they analyzed and the questions that they probed. The authors find that the affordability of homeownership for low- and moderate-income households worsened during the 1990s for all four counties with growth management programs, although the affordability of rental units varied among them. Montgomery County, Maryland, had the best record in improving affordability for both low- and moderate-income residents, and it had the second-best record in producing the highest share of affordable units among its additional units. Montgomery County also had the most complete repertoire of tactics to improve affordability. King County, Washington, had a wide range of affordability tactics and the second-best overall record. The authors therefore conclude that employing a full panoply of instruments to encourage affordable housing and exhibiting a strong political desire to do so were the two key factors in aiding the provision of affordable housing under a growth management program.

COMMENT BY GERRIT KNAAP. Knaap expresses considerable skepticism of Carlson and Mathur's analysis. He points out that their list of growth management tactics that might affect affordability did not include growth boundaries, minimum-lot zoning, and agricultural reserve areas, which he thinks are much more significant than the tactics they included. He is surprised at the finding that overall the affordability of owner-occupied housing increased in four counties even though housing prices rose notably. The reason given was that incomes rose even faster, which Knaap argues might have occurred because poor people could not afford to live there. His third criticism was that causality is unclear: perhaps the counties with the most growth management programs had them because their housing was less affordable instead of their housing being less affordable because they had the most programs. In short, he says, the authors do not present enough evidence to answer the basic question that they pose about whether growth management aids or thwarts affordable housing.

COMMENT BY SAM STALEY. Staley raises two other criticisms of the Carlson and Mathur analysis. First, he notes that they did not take into account the complexities of the private housing market and the fact that most housing for low- and moderate-income households was provided by filtering in the existing inventory. Hence they did not pay enough attention to the market's ability to meet housing needs through different kinds of housing. Second, they ignored the political reality that often a huge difference exists between the stated goals of regulatory policies and the actual motives of the localities that adopt them. Some areas, like Ventura County, California, adopt many tactics seemingly well-suited to achieving smart growth goals, but they apply those tactics in ways that deliberately thwart achievement. That an area has formally adopted certain tactics-which is what Carlson and Mathur measured-does not in itself mean that the area actually uses those tactics effectively in practice. More realistic data about actual practices are needed to test the question they analyzed.

Is There an Inherent Conflict between Smart Growth and Affordable Housing?

Richard Voith and David Crawford explore in chapter 3 the issue of whether adopting smart growth policies makes providing affordable housing more difficult. They start by declaring that they analyze how smart growth could affect affordable housing in theory, not how it does, will, or is likely to affect it in practice.

Their fundamental argument has two main points. First, smart growth policies encourage high-density housing and discourage low-density, land-intensive housing. This effect tends to make high-density housing less expensive and low-density housing more expensive than under other land use policies. The net effects on housing affordability are ambiguous. However, since higher-density housing-especially multifamily rental housing-has traditionally been a major source of shelter for low-income households, smart growth policies can improve housing affordability for such households. The restriction of land available for housing called for by smart growth therefore need not always generate higher housing prices for the poor.

The second point is that smart growth policies, at least in theory, encompass many nonhousing aspects that can affect housing affordability. For example, smart growth policies call for concentrating more people in smaller areas and redeveloping older inner-city areas. If those goals are achieved, such policies can bring more jobs closer to low-income households. The authors did not explore whether such effects actually occur on any significant scale or are likely to occur in the future. However, they cited the "Costs of Sprawl: 2000" by Burchell and others to show that if a significant amount of future sprawl were replaced by more compact settlements, the savings over the next two decades could be significant.

Smart growth policies are not likely to benefit everyone. There are almost certain to be some gainers and some losers-including some low-income households. But the disparity could be offset if certain now-dominant institutional arrangements are changed to compensate those who would lose from smart growth policies. For example, permitting construction of low-cost housing within a locality may cause property taxes to increase if many new families with school-age children move in. Such an increase would violate local zoning principles aimed at minimizing property taxes, and because of that local governments often resist creating such housing. Their resistance could be mitigated if tax base inequalities among communities within a metropolitan area were reduced by adopting some type of regionwide tax-sharing agreement, as in the Twin Cities area of Minnesota. Or the state government might increase its funding for total public education costs, thereby reducing local property taxes.

In summary, the authors conclude that there is no theoretical reason why adopting smart growth policies should negatively affect housing affordability, even for poor households, if all the appropriate smart growth policies are in fact implemented.

COMMENT BY MICHAEL SCHILL. Schill argues that it is politically unrealistic to expect either suburbs or central cities to encourage affordable housing. Suburbs are unlikely to do so because they are politically dominated by homeowners, most of whom want to protect the value of their homes by excluding lower-value single-family units or multifamily units-in other words, affordable housing. And each suburb's officials are concerned only with the welfare of their own voters, not the region's overall need for affordable housing. As a result, many suburban governments accept those aspects of smart growth that limit the availability of land for housing but not those that encourage the development of affordable housing.

So proponents of more affordable housing have to try to place it mainly in denser communities like central cities. But many city residents also are opposed to increasing the density of their neighborhoods; furthermore, construction costs typically are much higher in central cities. Complex city regulations also add to costs because ensuring compliance with them delays completion of projects. Moreover, putting more low-income households in central cities is not socially desirable in view of the heavy concentration of the poor already there.

Schill therefore fears that adopting smart growth policies in a region would result in successful implementation of land use restrictions that raise housing prices, but not of policies that increase production of units affordable to the poor.

Continues...

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Table of Contents

Foreword—U.S. Department of Housing and Development

1.   Introduction—Anthony Downs

2.   Does Growth Management Aid or Thwart the Provision of Affordable Housing?--Daniel Carson and Shishir Mathur

3.   Smart Growth and Affordable Housing—Richard P Voith and David L.

Crawford

4.   The Link between Growth Management and Housing Affordability: The Academic Evidence—Arthur C. Nelson, Rolf Pendall, Casey J. Dawkins, and

Gerrit J. Knaap

5.   The Effects of Affordable and Multifamily Housing on Market Values of Nearby Homes—George C. Galster

6.   The Promise and Practice of Inclusionary Zoning—Douglas R. Porter

7.   Growth Management, Smart Growth, and Affordable Housing—Anthony

Downs

Contributors

Index

Editorial Reviews

"The book gives excellently documented insights into a current intractable problem in the US, that of affordability of housing in growing regions....Anyone who is looking for a good analysis of current urbanisation in the US with special reference to the issue of the supply of affordable housing, however, must read Anthony Down's book." —Hugo Priemus, Faculty of Technology, Policy and Management, Delft University of Technology, Urban Studies

"This book provides one of the most comprehensive attempts to address this issue that has been suprisingly overlooked." —Richard M Haughey, Journal of the American Planning Association

From the Publisher