© 2023 HR&A Advisors, Inc. Housing Policy Evaluation: Implementation Needs Tenants’ Rights Tenants’ rights policies preserve existing affordable homes and promote housing stability by using laws and regulations that increase the rights of tenants around their interests in the home they rent relative to the owner of that home. Although tenants’ rights policies can help to counterbalance landlord and market pressures, they do not create new housing that can close existing affordable housing gaps. Examples include just cause eviction, rent stabilization, tenant opportunity to purchase, right to counsel. Benefits Limitations Tenants’ rights policies cushion market pressions on existing tenants and typically reduce displacement. Particularly in areas with rising rents, tenants can be at risk of displacement due to rapid rent increases. Rent regulations, restrictions on discrimination by source of income, such as vouchers, and other policies can help to mitigate this risk and prevent landlords from evicting or displacing low-income tenants. Tenants’ rights policies form an equitable and balanced relationship between landlords and tenants. Landlords overwhelmingly have more monetary and legal power than tenants, such as in eviction court. Enhancing tenants’ rights can shift this balance of power and give tenants facing eviction additional recourse. Tenants’ rights policies will not create new affordable homes, and do not close existing shortages of affordable homes. Tenants’ rights policies have limited potential depending on the restrictiveness of state laws. Poorly designed tenants’ rights policies can reduce the development of new homes and the undermine the maintenance of existing rental homes. Municipalities primarily impact housing markets by setting the regulatory environment (land use) in which developers make investment decisions, by deploying public funds (subsidy) for infrastructure, amenities and development and by setting local policies to balance the interests of tenants and property owners (tenants’ rights). Determining the right policies and programs to prioritize involves an iterative process of evaluating a policy or program’s alignment with your community’s housing goals, feasibility to implement and potential impact relative to the resources required to implement it. This worksheet reviews benefits and limitations for each type of housing policy and provides a set of guiding questions for evaluating their implementation potential. © 2023 HR&A Advisors, Inc. Land Use and Development Approval Process Land use and development approval processes can indirectly improve housing affordability by increasing the supply of homes and reducing home price growth. Land use policies can also be used to directly produce affordable homes by requiring or incentivizing affordable homes as part of market-rate housing development. Land use policies shape where homes are located, what types of homes are built, what they look like, how many homes are built and to some degree how much those homes cost to live in. However, land use changes can be difficult to implement and have limited ability to impact housing accessibility for the lowest income residents. Examples of indirect land use approaches include expanding by-right zoning, expediting review process, reducing parking requirements or allowing two- and three-homes homes in all parts of a community. Examples of direct land use approaches include implementing inclusionary zoning, creating affordable housing incentives or implementing affordable housing overlays. Benefits Limitations Land use policies can increase, or restrict, access to opportunity. Land use policies should create more homes in areas of opportunity such as near main transit lines, jobs, amenities and public safety. When land use policies change to allow for more homes, they should also be designed to limit the redevelopment of lower cost homes and the accompanying displacement of existing community members. Land use policies contributed to racial segregation and can help redress it. Historically, land use policies across the U.S. have used overtly racist covenants to deny homebuying opportunities to non-white Americans, concentrate redevelopment activity and site noxious use (dumps, interstates, jails, etc.) in majority-minority communities. Understanding the history of these type of land use decisions in the housing market you are studying and how existing policies reinforce them is necessary to create a healthy housing market. Land use policies can increase the supply of homes and reduce the rate home prices rise, or restrict the supply of homes and increase the rate home prices rise. When a region is experiencing a net inflow of new households, either to access new job opportunities or a Land use policies will not decrease rent. Increasing the supply of homes can limit the increases in rent or home prices, but typically will not drive rents lower. This is because of the cost of development. premium on rent for new construction and length of time it takes to build homes. Land use policies may create unintended development pressures. Increasing the development allowable makes land more valuable and attractive to investors. This can cause displacement pressures, particularly in neighborhoods with a high percentage of renters. Up-zoning must therefore be undertaken in areas where these pressures will be limited or used in combination with subsidy and tenants’ rights policies that help community members remain in their homes. Land use policies will not meet the needs of extremely low-income households. Significant subsidy is needed to produce homes affordable to low-income residents, particularly those earning 30% of Area Median Income or less. At this income level, a household cannot afford to pay enough maintain the quality of an existing home and subsidy is needed to close the gap between what they can afford to pay and the cost to maintain a home. © 2023 HR&A Advisors, Inc. higher quality of life, local land use policies that permit new homes to be built to meet this increased demand and slow the growth of home prices. Land use policies support affordability without requiring additional local funding. Land use policies should be used to reduce the barriers to the private market creating homes that meet the needs of different segments of the community that the private market cannot currently meet because of regulatory restrictions that raise the land cost per home, ban the development of certain types of homes or place other restrictions. Land use policies also benefit subsidized affordable housing development. The reduction in land cost per home, faster development timelines, and similar land use policy changes benefit the economics of affordable housing development the same way they benefit market-rate development. Land use policies often face political and public approval barriers. Easing development restrictions and reducing the ability of limited numbers of community members to block the development of new homes runs against local custom in many communities. Successfully implementing land use reforms often require an ongoing commitment to community outreach and communication, as well as political will to enact proposed changes. Land use policies that increase the supply of homes need to be evaluated with infrastructure improvement plans. Adding community members can create additional demands on existing infrastructure. It is appropriate to study and evaluate this. Prioritizing infrastructure investment to communities that allow the development of new homes and increased density is appropriate. The incremental cost of additional infrastructure in existing communities is far less than the cost of development in green-field areas (Smart Growth America, 2013). © 2023 HR&A Advisors, Inc. Subsidy Subsidy programs are public and sometimes philanthropic funding that is provided through below-market loans, grants, or ongoing payments that close the gap between what a household can afford to pay for a home and the costs to develop and maintain that home. Public subsidies are necessary to close the gap for lower income households. However, subsidy programs are capital intensive, and they should be layered with other types of programs to increase efficiency and impact. No municipality has sufficient financial resources to meet all of the housing subsidy needs present in their community. Examples include down payment assistance grants, discounted owner-occupied rehabilitation loans, below-market mortgages for affordable apartment buildings, the sale of discounted public land, tax abatements, housing choice vouchers. Benefits Limitations Subsidy programs create tangible and direct impact . Subsidy programs are the most direct and impactful means of developing or renovating affordable homes. Land use and tenants’ rights programs can only facilitate this process, and cannot create new affordable homes. Subsidy programs also provide diverse ways of delivering monetary assistance directly to community members, such as through emergency rental assistance, down payment assistance, housing vouchers, rehabilitation loans and the like. Subsidy programs can leverage federal and philanthropic funding to maximize the impact of limited local public funding for the community. The impacts of public funding should be amplified by using it to leverage state, federal, and private investment. Public funding can also serve the purpose of holding funding recipients accountable to community goals, such as achieving deep and lasting affordability. Subsidy programs are the only effective way to serve the lowest-income households. The only way to adequately serve households earning households with very low incomes is through housing subsidy in one form or another. Subsidy programs do not address the fundamental issues of low incomes. Subsidy programs that lower the cost of housing or supplement tenant incomes represent only part of the solution to ensuring affordable homes. Household incomes are just as important, driven by factors such as technical skills and education, the strength of the local economy, wage requirements, and the cost of other necessities such as transportation, healthcare, and childcare. Subsidy programs require increasing fees or taxes in one form or another, or diverting public funding from another use. Because local public funding sources are finite, subsidizing affordability will necessarily entail either an overall increase in the pool of public funding or a shift in the allocation of public funding, which means the reduction of funding for another area of public expenditure. Both approaches can be politically contentious. Subsidy programs require efficient and accountable deployment. The proper stewardship of public funding is important to maximize the impact of spending, and this requires both technical capacity and procedural clarity and rigor, such as when underwriting and comparing development deals. Subsidy programs require large amounts of capital from governments or philanthropies. To deliver meaningful impact, subsidy programs © 2023 HR&A Advisors, Inc. typically require a substantial amount of funding from the public sector and philanthropies, who face competing public priorities and a limited amount of funding. It takes about $15,000 to $20,000 to reduce the rent for a single affordable rental home by $100 a month for about thirty years. So, to reduce the rent by $500 a month, which is often necessary to make a home affordable to a lower income household take $75,000-$100,000 of subsidy. In most communities the need for additional affordable homes runs into the thousands and tens of thousands, putting the total need in the hundreds of millions or billions of dollars. No municipality can afford to address these needs with just public subsidy, which is why a comprehensive approach the combines tenants’ rights and land use programs is necessary. As well as pulling in state, federal and philanthropic funding. © 2023 HR&A Advisors, Inc. Policy and Program Design Zoning Changes Are changes in zoning requirements and regulations necessary to implement this policy? Other Regulatory Support Are there changes to the b uilding permit process, construction inspection process, or other regulatory changes necessary to implement this policy? Is there a need for technical or educational assistance for non-governmental entities to use or implement this policy, and does the jurisdiction have the capacity to provide it? Financing Support Is financial support necessary to implement this policy , and does the jurisdiction have the funding to provide it? Geography Are there particular locations where the jurisdiction is most intere sted in leveraging this policy? How could the jurisdiction focus its efforts in those areas? Implementation Capacity Responsibility Who will be responsible for implementation (e.g. municipality staff, nonprofit partners, etc.)? Who is the lead, and who will be important partners? Does the identified implementation lead have the capacity to advance implementation? What changes may be needed? Does the jurisdiction need to work with any outside consultants to advance this effort? Funding and Resources How much funding or other resources (such as staff time) will be needed to advance this policy? How much funding will be needed per home, household, or other metric of progress, and what is a reasonable scale for the program? What funding source(s) are available for this? What additional funding sources should the jurisdiction consider? Outreach and Support Whose buy-in is needed? (e.g. funders, elected officials, residents) Who will champion this effort? What public education, communication, or outreach is needed to build support and ensure uptake (if applicable)? Implementation Plan Action Steps What critical actions must be taken to advance implementation, and who will be responsible for each? Timeframe What is a reasonable timeframe in which to complete these action steps (e.g. within 12 months, within 1-2 years, within 3-5 years)? What critical milestones should be met, and when? Anticipated Impacts Metrics for Success What are the target outputs of this policy ? What other measures of success will be important to track and communicate? Racial Equity How will the community ensure that the implementation of this policy enhances racial equity and does not exacerbate racial disparities? Each potential land use, subsidy, and tenants’ rights policy should be evaluated using the following criteria and guiding questions. © 2023 HR&A Advisors, Inc. Example Recommendation – Land Use | Multifamily By-Right Zoning in Charlottesville, VA Recommendation: Change zoning and development processes to increase the production of multifamily housing and expand feasible by-right development , and advocate for similar regional changes, to begin to reverse entrenched patterns of racial segregation. Context Charlottesville’s current zoning and development policies limit the production of multifamily housing and mixed-use properties. The City needs more housing for renters of all incomes, but only three percent of the City’s acreage is zoned for multifamily, and development feasibility in these areas is limited. The City’s zoning limits the production and increases the cost to develop multifamily housing. Land use reform has historically faced opposition in Charlottesville, but it is crucial to accommodate growth and meet residents’ housing needs. Recommended Changes The City should revise its zoning and approvals processes in order to increase by-right multifamily development. In addition, the City should support the development of enough housing to accommodate planned growth. Revisions should include: • Where multifamily is allowed, restructure restrictions on height, density, setbacks, and parking to ensure that multifamily and mixed-use development is feasible by-right without a special use permit. • Identify commercial and single-family areas suitable for rezoning to allow multifamily development in more neighborhoods, particularly those that are or will be served by transit, while mitigating displacement pressure in low-income neighborhoods. • Revise approval processes to limit and focus discretionary control and reduce approval times. • Work closely with Albemarle County to make parallel zoning changes that will enhance the provision of multifamily housing within the urban ring. • Establish a mandatory inclusionary zoning policy as part of any revision to the multifamily zoning. The following recommendations are excerpted from the City of Charlottsville, Virginia’s March 2021 Affordable Housing Plan, and represent an example of how responses to the guiding questions in this document might be compiled and presented. © 2023 HR&A Advisors, Inc. Impacts Restructuring multifamily zoning and approval processes will increase the production of new housing in Charlottesville and should stabilize rents through increased supply. Encouraging the development of multifamily housing in areas near employment or transit will create denser urban nodes. To stabilize rents and increase housing supply, these changes must be implemented in the City and within the urban ring. These changes should also be made in tandem with establishing an inclusionary zoning policy. Guiding Principles Racial Equity Zoning has historically been a policy to create and enforce racial segregation, so zoning reform is essential to building racial equity into housing in Charlottesville. To successfully align with this guiding principle, the zoning changes must increase access to housing near major transit lines and employment centers while limiting displacement pressures in low- and moderate-income neighborhoods. Regional Collaboration Development of multifamily housing needs to occur within the surrounding county, as well as the city, and any regional development must be supported by transit and other infrastructure. The City can and should leverage existing regional partnerships, including the Regional Housing Partnership, to identify opportunities to coordinate in encouraging multifamily by-right development. This may include developing small area plans or joint land use plans for multi-jurisdictional areas. Comprehensive Approach Additional multifamily development will help to increase the supply of housing and stabilize rents in Charlottesville, but it cannot increase the supply of housing affordable to low-income families. However, multifamily by-right zoning is an important precursor and support for improving the impacts of inclusionary zoning and other policies that more directly increase the supply of subsidized housing. Implementation Lead and Partners Neighborhood Development Services Planning Commission City Manager and Council Cville Plans Together Action Steps 1. Working with the Charlottesville community, the City and Cville Plans Together will identify suitable areas for multifamily zoning and other changes needed to the land use map and zoning code. 2. The City will review development review and approvals processes and make changes as needed to align with recommendations. 3. The City will work with Albemarle County to enact similar zoning changes within the urban ring. 4. The City will develop and deploy an anti-NIMBY public education campaign. Timeframe Immediate (within 1 year).