Observing how creative practitioners have addressed the knotty problems involved in providing good homes to people who otherwise could not afford them is one of the great pleasures I get from my work as a student of low-income housing.
I discuss five of these efforts in Innovative Strategies for Affordable Housing, a new report assessing the work done by the many nonprofit entities that have received grants from the JPMorgan Chase & Co. program Partnerships for Raising Opportunities in Neighborhoods (PRO Neighborhoods) over the last five years. The five collaborations of nonprofit organizations highlighted in the report not only operate in different parts of the country but also have built, renovated, and/or preserved many different types of dwellings, including subsidized and privately owned rental units, houses for purchase, and manufactured housing.
Interestingly, instead of relying primarily on federal government programs, leaders of these diverse approaches identified creative ways to increase, improve, or better distribute the private market’s provision of housing for low- and moderate-income Americans. Such federal programs as the Section 8 rental vouchers or the Low-Income Housing Tax Credit (LIHTC) have helped generate millions of dwellings but come with requirements that can be difficult or sometimes impossible for nonprofit organizations to use in a timely manner. So while the organizations profiled in the report worked with government agencies to bridge the gap between the cost of good housing and the ability of low-income people to pay for that housing, their strategies emphasized market interventions rather than government subsidies.
For example, leaders of the Chicago CDFI Collaborative, which we profiled in a 2017 case study, saw the need to rehabilitate the one-to-four-unit properties scattered throughout low-income neighborhoods on the city’s South and West Sides. These modest, privately owned apartment buildings and houses provide almost half of the affordable rental units in the city, but the individuals and mom-and-pop operators interested in fixing up the properties found it hard to access capital or operate efficiently. Recognizing these difficulties, leaders of the three community development financial institutions (CDFIs) that made up the Chicago CDFI Collaborative agreed to work cooperatively to identify and buy troubled properties, provide investors with purchase and rehabilitation financing, and train investors to do high-quality rehabilitations in cost-effective ways.
In contrast, the problem in Washington, D.C. was how to create and preserve affordable housing in one of the country’s hottest real estate markets. The city’s decision to build a new bridge over the Anacostia River and a multi-featured park on the piers of the old bridge sparked concern that the high housing prices in the affluent areas west of the river would soon come to the low-income neighborhoods east of it. In response, local leaders and residents formed a community-wide alliance called Equitable Development at the 11th Street Bridge Park. As documented in our 2019 report on equitable development planning, this has been a multifaceted effort, which included creating a community land trust to purchase residential properties before prices skyrocketed, ensuring that these dwellings would continue to be affordable to the neighborhood’s low-income residents.
Residents of manufactured housing face unique problems, Innovative Strategies points out. Although the residents usually own their homes, many live in mobile home parks where they do not own the land under their homes. Because mobile homes are, in fact, difficult to move, the residents are vulnerable to park owners who may jack up the rent precipitously or evict the residents in order to develop the sites for other uses. In response, New Hampshire-based ROC USA, the lead organization of Expanding Resident Owned Communities, helped organize residents of threatened manufactured housing communities in states as far-flung as Connecticut and Washington and, with Leviticus Fund and Mercy Loan Fund, provided financing so the homeowners could create resident cooperatives to purchase and manage the parks in which they lived.
The fourth challenge presented in our new report is that many nonprofit community development groups seeking to acquire residential properties in appreciating markets do not have ready access to large amounts of capital. Furthermore, even when public subsidies are available, the funds come with regulatory requirements that often make it impossible for CDFIs to move quickly. This is a problem because many private real estate firms have deep pockets, which means they can move quickly to snatch up properties when they come on the market. In response, leaders of the NALCAB (National Association for Latino Community Asset Builders) Network, a collaboration of groups based in Texas, Arizona, and Colorado, created a social investment fund to attract and channel private capital to nonprofit developers of low- and moderate-income housing in areas where there are both economic opportunities for low-income residents and rapidly rising housing costs.
Finally, the report highlights Small Homes, Big Impact, a California-based collaboration, whose leaders have devised a double-pronged strategy to produce moderately priced housing in the high-cost real estate markets in Silicon Valley and Los Angeles. One component, dubbed the RETHINK Housing program, aims to preserve or develop “naturally occurring affordable housing,” small, affordable multifamily projects built without tax credits and public funds. The partners calculated that by building at a small scale and using a single source of financing, RETHINK projects can be built for less than $125,000 per unit, compared to $500,000 for units built with LIHTC funding. The second component, called the Backyard Homes Project, is using an aggressive education campaign and a tailored construction loan program to help low- and moderate-income homeowners create small, income-generating accessory dwelling units (ADUs) on their properties.
The individuals behind each of these five efforts observed the ways in which markets work (or do not work) and then imagined novel approaches that either took advantage of market forces or addressed the problems they created. While each of these stories is unique, the problems are not: similar conditions exist all over the United States. For that reason, I hope readers will recognize that these programs, and the individuals and entities that created them, could inspire leaders of other nonprofit housing organizations to replicate the approaches described in the report, or come up with their own creative approaches to address the thorny housing problems of our time.