The supply of affordable rental homes is at a crisis point in communities across America, with millions of renters paying one-third or even half of their income on rent. The cost of homeownership is climbing too, as national median home prices ratchet higher, and mortgage rates stay stubbornly close to 7%.
Several factors are blocking the construction of new affordable homes for sale and rent, with some observers estimating that the U.S. is short 3.7 million homes, while other estimates are even more dire. Meanwhile, rising operating costs for apartments within reach of low- and moderate-income households have forced some owners to sell their properties, putting affordability of thousands of homes at risk.
NeighborWorks network members are dedicated to affordable housing and are looking at pathways that remove obstacles. One way? Changes to local residential zoning regulations, which can clear the way for the development of more affordable homes.
For example, in Binghamton, New York, Greater Opportunities for Broome and Chenango (Greater Opportunities) recently took advantage of a change in zoning initiated by its local government that significantly increased the number of available apartments in a community where affordable housing is much needed.
“Zoning designation at (46 and 48 Griswold Street in Binghamton, New York) presented a unique challenge to our plan to increase the availability of affordable homes there,” said Kelly Robertson, chief operating officer at Greater Opportunities. “While already zoned residential, the type of residential zoning prohibited increasing density on the property.”
Robertson and her development team faced a situation shared by many housing developers: multiple types of zoning designations that constrain the type of homes that can be built. “The property was zoned R1 residential with specific minimum lot sizes and set back requirements. We wanted to build more units onto the back of the existing structure, but that ran up against the lot size requirements and wasn’t allowed.”
The solution opened up when the city acted to change the zoning designation from R1 to R3, which allows for a variety of housing types, including duplexes and apartments, explained Robertson. The result of the zoning change means Greater Opportunities can increase the number of units at the location from 14 to 21, a 50% increase.
Greater Opportunities builds housing in some of the Binghamton’s most economically challenged communities. The organization has worked with successive city and state governments to develop more than 200 affordable rental homes available to very low income and formerly homeless residents.
“Binghamton has always been an excellent partner of ours in our work,” said Robertson. “Knowing what can pass muster in the community and working with all of the stakeholders is essential to getting more of the housing we need.”
The ability to work with local governments is in the DNA of NeighborWorks organizations. Since the founding of the first Neighborhood Housing Services nonprofit (the precursor to NeighborWorks America) more than 45 years ago, NeighborWorks organizations have stood on a development framework that brings together private capital, government support and nonprofit innovation to create accessible and affordable housing and resilient communities.
“The complexity of the affordable development process can be dizzying given the multitude of moving parts that must come together,” said NeighborWorks America Vice President of Real Estate programs Lisa Getter. “But when the process is complete and you look at the finished product, at what the collective team has accomplished and the people you’ve helped find a great home that they can afford, you feel incredible and appreciate what can be accomplished when all of the critical stakeholders come together.”
Maintaining affordability is what drives the team at Interfaith Community Housing of Delaware. Wilmington, Delaware, is a city with a rich and elegant architectural history, but constraints on development from zoning rules related to historic preservation and community character had to be deftly managed before Interfaith could successfully build three new townhomes in a neighborhood sorely in need of affordable homeownership choices.
“Building affordable homes for sale is always a challenge,” said Catherine Davis, resource development and marketing manager at Interfaith. “That challenge is amplified when how a building looks has to fit seamlessly into a community of older homes.”
The challenge began when Interfaith learned of a home being sold in a neighborhood that it has worked in for years. The property on 9th Street was owned by the Wilmington Neighborhood Conservancy Land Bank and needed significant repair. It was situated on a lot large enough to accommodate two homes, which offered some financial opportunity.
Darlene Sample, Interfaith’ s executive director explained why replacing one home with two was necessary. “We needed multiple units for the construction financing to work out. Even with financial support from the city and county, multiple homes on the site was necessary.”
But just as with Greater Opportunities, Interfaith had to get a zoning waiver. The nonprofit successfully obtained the multi-home waiver, but got an additional bonus, too.
“We had been able to buy an adjacent lot earlier. The combination of the two lots turned into a win-win-win for the neighborhood. Instead of building a pair of attached town homes, Interfaith was able to build three connected homes.
“Removing blighted properties has a positive effect on the entire neighborhood,” said Sample.
“There’s a huge housing need in Wilmington and it’s rare that new construction is built in the part of the city where these homes are located.”
Paying for the development required complicated financing, as is typical for affordable development, and included funds from the City of Wilmington and New Castle County.
The completed homes drew the attention of Wilmington Mayor John Carney, who attended the project’s recent ribbon cutting.
Sample expects the homes to be priced just below market, and to sell quickly, while being affordable to a family of four with qualifying income just shy of $92,000.
In the last 10 years, Interfaith has developed more than 60 homes, rehabbed another 90 and has 23 more homes in its rehab pipeline.
“I know sometimes people’s eyes glaze over when we talk about zoning,” Getter noted. But not in this industry. And not now when a small and thoughtful change can have significant positive impact on housing affordability and supply.”
