Sep 5th 2018 | Posted in Mary Scott Nabers' Insights by Mary Scott Nabers

As city leaders struggle to help their communities become “smart cities,” elected officials also grapple with more basic issues.  Affordable housing is a priority in every city in the country.  America is literally teetering on the brink of declaring an affordable housing crisis.

Cities cannot grow – cannot become smart – and cannot function without urban housing and affordable urban housing.

Ideally, Americans should spend less than 30 percent of a monthly income on housing, but today millions of Americans are being forced to spend 70 percent or more on housing.  That leaves little room for anything else.

Ideological differences at the federal level of government have left the Department of Housing and Urban Development (HUD) out of the loop as cities take the lead in trying to find remedies for lack of affordable urban housing.

Nationwide, there are only 35 affordable and available homes for every 100 low-income families in urban America. Half of all renters of homes spend more than 30 percent of their income on housing. With housing costs this high, especially in cities, first responders, health care providers, teachers and public safety employees find it impossible to live in urban communities.

This problem has escalated significantly.  In 1960, only about a quarter of home owners or renters spent more than 30 percent of their income on housing.  In 1970, a 300,000 unit surplus of affordable rental homes meant that nearly every American could find a place to live in urban cities. Today, there’s a deficit of more than 7.2 million affordable homes to rent or purchase nationwide.

A number of bond initiatives with funding requests for affordable housing will be up for approval by voters.  Citizens will have an opportunity to approve this type of funding throughout the country. The question is whether average citizens are significantly aware of the critical issue.

Last week, Denver’s city council passed two ordinances that will generate approximately $105 million over the next five years to combat Denver’s affordable housing crisis. City leaders also approved increasing the city’s Affordable Housing Fund from $15 million to $30 million annually. Approximately 1,294 units over the next five years are needed.

City leaders in Salt Lake City are considering two measures that would create at least 2,000 new units by the end of 2019. One measure would expand the use of fee waivers for developers that dedicate at least 20 percent of any development projects to low-income residents.  The other measure would require a new affordable housing unit to be built for every affordable housing unit that is destroyed or demolished.  A new sales tax hike is expected to partially fund these objectives.

House Atlanta, a housing task force that began in 2018, was tasked with a goal of developing affordable housing strategy for the city of Atlanta, Georgia. Last week, the group announced its recommendation that $500 million in public resources and $500 million in private resources should be invested in 24,000 new and preserved affordable housing units over the next eight years. The Atlanta City Council will consider the recommendations very soon.

City officials in Baltimore recently agreed to fund an historic affordable housing trust. The trust, if approved, will guarantee $20 million in funding to build affordable housing units. By levying two excise taxes on certain real estate transactions, the city intends to secure 4,100 affordable housing units over the next decade. Additionally, the new tax will provide between $2 million and $7 million a year in additional funding for affordable housing through fiscal year 2023.

Construction firms that have never considered affordable housing units may want to reconsider this possibility.  If the federal government is no longer able to provide funds for affordable housing at the municipal levels of government, it appears that local elected officials will be forced to take on this responsibility.

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As President and CEO of Strategic Partnerships, Inc., Mary Scott Nabers has decades of experience working in the public-private sector. A well-recognized expert in the P3 and government contracting fields, she is often asked to share her industry insights with top publications and through professional speaking engagements.