The Persistent Housing Strategy Gap of Local Governments

We Have a Housing Crisis. Local Governments Must Act

In the wake of the pandemic, the role of local governments in housing development is more crucial than ever. Among the myriad challenges faced by urban communities, the pressing need for adequate housing across the income spectrum demands immediate attention. In Indianapolis alone, according to Prosperity Indiana's 2023 report, Indianapolis will need to build about 100,000 housing units by 2028 to meet its housing needs. This is simply to meet population growth by 2028 and close the housing deficit, let alone get ahead of it. City governments must, without delay, formulate and commit to a strategy that ensures a consistent and sufficient supply of housing for working-class and middle-class families. However, what we observe across the state of Indiana and the Midwest is a persistent strategy gap. Most cities and towns have no strategic assessment of the problem and no plan of attack to address it. This state of affairs cannot be allowed to continue. The time for action is now.

The Imperative for a Strategy

City and town governments play a pivotal role in shaping the destiny of communities. They hold the reins to local development priorities, allocate funds for affordable housing, and decide on the most suitable partners for community development initiatives. In the complex web of relationships that constitutes the community development system, the city government emerges as the linchpin, if for no other reason than the fact that local government is the entity with the longest life span and the most significant influence. It is high time for local governments to adopt a strategic viewpoint, recognizing their unique position and responsibility in fostering a healthy housing market that creates adequate supply.

Components of a Strategy

A robust local government strategy should be founded in a collective impact approach that utilizes community-based organizations (CBOs) to provide the last mile of service delivery and connectivity. A local government strategy must incorporate several key components to be effective:

1. Revitalization of Low-Income Neighborhoods: The strategy should focus on low-income neighborhoods. This isn't about charity, it's a straight forward investment in the self interest of towns and cities. These neighborhoods have to be reconnected to the local and regional economy. Restoring a healthy housing market in these neighborhoods is a key starting point. For most local governments, low income neighborhoods offer some of the biggest and sustainable long term gains from investment, returns that show up as lower costs for city service delivery, increased property tax revenue and higher levels of beneficial economic activity.

2. Financial Backing for Affordable Housing: City governments must commit to financing affordable housing initiatives, but moreover, must do this with funds in addition, and complementary to, federal resources such as HOME, CDBG, LITHC and Section 8. It is a fact that these federal resources are insufficient to scale housing production in local communities to the levels required. Shelterforce forcefully made this point in a recent publication. Local government financial support, in conjunction with funds from other sources, is absolutely pivotal for scaling up the development of housing supply to the levels actually required.

Two additional efforts local governments can make bear mentioning, though we would consider them implementation imperatives rather than strategic. Implementation of a strategy should include the following objectives:

Streamlining Property Acquisition and Disposition: Where local governments have significant inventories of vacant properties, reforming the process of acquiring and disposing of city-owned property is a significant opportunity. The strategy should ensure that this process facilitates rather than impedes housing development, thus creating a more favorable housing market that preserves the opportunity for long term generational investment by working and middle class families.

Efficient Project Processing: Smoothing and speeding up the creation of housing supply is vital for reducing costs and improving coordination. The strategy should examine, revise and/or reform systems to streamline the too often cumbersome procedures involved in neighborhood housing projects. This is particularly critical for local governments who are leaning into strategies that incorporate missing middle housing design to help them address the housing under supply crisis.

Learning from Best Practices

Cities that have successfully tackled housing and neighborhood revitalization challenges share common best practices:

- Targeted Goals: Cities that have excelled in increasing housing supply have set well-defined goals based on local market conditions and actively shaped policies and programs to meet these goals.

- Local Resource Allocation: City governments play a crucial role in filling financing gaps by dedicating funds from locally generated resources, complementing subsidies from other sources.

- Property Development Focus: Best practice cities have reformed property acquisition/disposition processes and design review which encourages rather than inhibits development.

- Efficient Project Processing: Successful cities have implemented systems to expedite project processing, reducing costs and improving coordination.

A Call to Action

Creative and proactive local government officials must actively respond to the circumstances at hand and develop policies, programs, and practices to address housing persistent housing undersupply. Here at Consept, we can help local governments look at the tools they have in hand, develop approaches that utilize their CBO resources and assist with connecting you to CDFI resources and investment. Local governments possess substantial financial clout and wield diverse powers, making them central players in the community development system. The urgency is clear, and the call to action is unequivocal: local governments must adopt a strategy, incorporating best practices, to ensure a consistent and adequate supply of housing across the income spectrum. The viability of our communities and the well-being of our citizens depend on it.