Housing: Building for Tomorrow
Highlights and analyses of remarks made by 2015 Smart Growth Summit speakers John Fregonese, Theresa O'Donnell, Terri North and Chris Leinberger regarding affordable housing and the changing housing market.
Housing: Building for Tomorrow
Ten years after hurricanes Katrina and Rita destroyed more than 350,000 homes and damaged half a million more, the conversation about housing in Louisiana has slowly taken a back seat to other issues. However, advocates and many struggling residents know that affordable housing continues to be a serious challenge. And while accessible housing is an important gateway to financial stability for low-income families, Louisiana’s prospects for healthy economic growth also depend on provision of a wider range of housing products that reflect changing preferences and anticipate future needs of all income and age groups.
Growing Needs, Dwindling Resources
As is the case with our transportation infrastructure, despite growing need, resources are dwindling. Terri North, CEO of New Orleans-based Providence Community Housing, told us during her Smart Growth Summit presentation that Louisiana is experiencing a “dramatic reduction of resources to support development of affordable housing as disaster recovery fund sources have been depleted.” The U.S. Department of Housing and Urban Development defines “affordable housing” as “housing for which the occupants are paying no more than 30 percent of their income.” Affordable housing is in crisis nationwide – “a family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States” – but the lingering losses suffered as a result of hurricanes and other natural disasters, the growing impacts of climate change and subsidence on our working coast, and longstanding challenges of poverty and racial disparity contribute to a housing situation in Louisiana that is especially dire.
In Louisiana, 41% of households either live below the poverty line or are “ALICE” (asset limited, income constrained employed)” households that earn less than the basic cost of living and struggle to meet basic needs. In New Orleans and Baton Rouge, the percentages are even higher – 48% and 44% respectively. Yet while wages have stagnated and poverty rates are climbing, housing costs have increased substantially, especially in our urban centers. According to HUD, households spending more than 30% of their income on housing are “cost burdened.” The 2014 housing needs assessment conducted by LSU’s Public Administration Institute found that since 2000, for owner-occupied homes, the fraction of cost burdened households rose from 18.6% to 21.4%” – an increase of 15%. The fraction of cost-burdened renters increased from 36% to over 53%.” These are alarming trends, as access to appropriate and affordable housing is essential for families seeking to stabilize their lives, maintain steady employment, and build economic self-sufficiency.
Location, Location, Location
Location efficiency is key to the effectiveness of affordable housing and notably absent from much of the existing stock. In order to truly be affordable, units should be reasonably close to transit, job centers and other daily destinations. As stated by U.S. DOT’s Federal Highway Administration and demonstrated by data compiled by Center for Neighborhood Technology and others, “In places with fewer transportation choices, savings on housing costs can be more than offset by increased transportation expenses.” The cost burden threshold for combined housing and transportation costs has been established at 45% of household income, though the average U.S. household is using 52% of their income to cover these expenses. The Louisiana Housing Alliance has determined that the cost burden in Louisiana for combined housing and transportation expenses exceeds the national average of 52% in every congressional district, ranging from 52% to 63%.
Location efficiency isn’t only a priority for low-income families – increasingly, young professionals, baby boomers and empty nesters are seeking smaller homes in walkable neighborhoods with access to transit, retail, and other daily destinations. During his Summit presentation, Chris Leinberger, president of LOCUS Responsible Real Estate Developers and Investors, explained how developing the right mix of housing stock is inextricable from the economic success of our state. He observed that in Baton Rouge, “we are not participating in a very important part of the economy because we are not building what the economy – particularly the knowledge economy – is demanding.” The knowledge economy is driving the market. If we don’t provide what they want, they’re not coming.” What do they want? A variety of housing choices in walkable urban places in close proximity to retail, transit and green space.
As it happens, these same features contribute to the success of affordable housing by enabling residents to reduce household expenses and access social networks, services, and jobs. A “both-and” strategy is essential for addressing the range of housing needs and preferences in Louisiana. In his talk about development of walkable urban places that create value for neighborhoods, cities and households, Leinberger emphasizes the importance of “having a conscious affordable housing strategy in place – drive until you qualify won’t cut it.” Pricing low-income residents out of centrally located homes is creating new slums on the outer rings of cities and erecting additional barriers to opportunity for struggling families. Leinberger recommends broadly-applied inclusionary zoning, impact fees for suburban development, and business improvement districts as place-based approaches that can support housing affordability. Over the long term, Leinberger points out, simply increasing the supply of walkable urban residences will lower housing costs in these areas by reducing scarcity.
The unprecedented investment in housing following hurricanes Katrina and Rita did yield significant successes that should be replicated and adapted as needed. With shifting demographics, a 28% poverty rate, and dramatic increases in both home values (54%) and rents (50%), New Orleans is an amplified example of statewide issues and thereby an important testing ground for solutions that can be applied elsewhere.
Terri North gives the example of Providence Community Housing's partnership with Enterprise Community Partners to redevelop the Faubourg Lafitte public housing complex in a way that shows that, done right, affordable housing is an asset to the community. The new Faubourg Lafitte is a scattered site, mixed income neighborhood that North’s presentation pictures depict as “beautifully integrated with the character and style of the surrounding neighborhood.” They now also operate the Sojourner Truth Neighborhood Center, which provides residents with employment counseling, literacy training and other supportive services, and is accessible by the recently opened Lafitte Greenway trail as well as multiple transit lines. Opportunities are growing in the area as it has seen an influx of other investment – redevelopment of the historic Carver theater, the BioInnovation Center, the VA Hospital, University Medical Center, a new Head Start, new libraries, and new schools have opened in the community.
Planning to Meet Future Demand
Well-informed and well-integrated plans are needed to transform singular successes into replicable practices. The Greater New Orleans Housing Alliance’s HousingNola 10-year plan is an important step towards creating the policy environment and partnerships needed to replicate successes such as the redevelopment of Faubourg Lafitte and identify new solutions. HousingNola addresses the housing affordability crisis in New Orleans by identifying the data, action items, policy changes, cross-sector collaborations and benchmarks needed to “create equitable, sustainable and affordable homes for all New Orleanians.” The plan charts a course for developers to work with public, private and philanthropic entities to focus on “neighborhood revitalization that builds safe, accessible communities” and create “quality neighborhoods with a mix of affordable options across New Orleans.” An important component of HousingNola is its compilation of past and current plans and initiatives in order to provide a context of progress made, lessons learned and ongoing efforts on which the HousingNola plan can build. Just as important as the plan is the community-driven process that has been designed and deployed to “guide the goals and vision of this 10-year plan.” Engaging a diverse array of stakeholders and residents in the planning process works to create a shared understanding of needs, shared responsibility for developing solutions that are acceptable to the greatest number of stakeholders, and robust support for implementation of the plan.
Alongside efforts to replicate and scale what’s working in Louisiana, we can and should learn from other cities and states that are making progress on this front. For instance, when the city of Dallas got into trouble with HUD over its allocation of housing tax credits, Theresa O’Donnell, Dallas’s Chief Resilience Officer, “knew we had to think differently about how we were building neighborhoods.” During her Smart Growth Summit presentation, she explained that while previous housing plans for the Dallas area did not “look strategically at how we invest in neighborhoods, how we stabilize neighborhoods, and how we grow neighborhoods,” the Neighborhood Plus plan developed in partnership with fellow Summit speaker John Fregonese did just that. Dallas’s Neighborhood Plus plan is setting a new standard for using data (more on this in the forthcoming “Good Data” essay) and a collective impact strategy to form a plan that more accurately reflects the needs and preferences of current and future residents. Neighborhood Plus doesn’t only match a wide variety of residents to the housing choices they seek – it is also designed to actively address the growing disparity between the very wealthy and the very poor in Dallas.
In addition to its transformative use of consumer data, another key element of the groundbreaking Neighborhood Plus plan is the collaboration entailed in the collective impact model, bringing dozens of government agencies, businesses and nonprofit organizations and their resources together around implementing the plan. The plan’s recommendations include creation of a joint program to align planning and community investments with transit and transportation planning to support TOD. Most importantly, this plan isn’t sitting on a shelf. Dallas has actually restructured its metro government to support and manage the plan and its partnerships.
Again, as is the case for Louisiana’s transportation network, it isn’t just about money. Smarter strategies are critical – and this is where planning comes in. Developing regional plans and policies that take into account changing demographics, emerging job centers, transit infrastructure and climate change impacts, and coordinating with economic development, transportation and land use planning efforts will enable states, regions and communities to make the most of limited resources. With poverty rates significantly higher than the national average and population growth rates lagging the nation, meeting the needs for affordable housing that connects families to opportunity and developing the housing choices that will retain and attract residents should be a top priority for Louisiana.