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Monday, April 24, 2017

Special Report: Housing Shift — More Apartments, Fewer McMansions

By Tom Condon

www.ctmirror.org

Simsbury has two multi-family housing developments in the works that will provide 169 new apartments, of which 36 units will be affordable. Last year a complex opened in Brookfield with 72 apartments, all affordable. A 52-unit complex in Essex will have 16 affordable apartments.

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The 181-unit Garden Homes development in Simsbury, now under construction, will have 18 affordable apartments. (CLICK TO ENLARGE) Tom Condon for CtMirror.org

These and similar projects represent two major — if not seismic — shifts in the state’s housing market: away from the heavy focus on larger single-family homes, and toward more multi-family and affordable housing.

In the heady decades after World War II, developers blanketed the countryside with detached single-family houses, small and large, capes and ranches to huge McMansions.

Now the market has changed. Families are smaller. Young people aren’t as interested in owning a suburban home, and are happy, at least for a time, to rent an apartment in a walkable and otherwise interesting city or town center. Many Boomers looking to downsize seek similar situations.

And for a quarter century, state officials have been trying to inject more affordable housing into more communities.

Both trends are coming together, albeit slowly. Builders have shifted toward multi-family development, in an array of building types. A tough state law and a major investment by the Malloy Administration have brought thousands of affordable units to dozens of communities.

But many believe the state needs much more affordable housing to support economic growth. State housing officials are supporting an “inclusionary zoning” bill that would order towns to require that a percentage of the apartments in any of the new multi-family developments of more than five units be affordable. Home builders and others, while sympathetic to the goal, say the idea won’t work.

Is lack of affordable housing holding the state back?

A detached, single-family house in the suburbs was the American Dream after World War II, and that’s what builders provided. In some years in the 1980s and 1990s, according to state records, as many as 90 percent of building permits issued in the state were for single-family homes. As recently as 2004, 78.3 percent of the 11,837 permits issued were for single-family dwellings.

These homes fulfilled the dream for countless residents, but came at a cost, belatedly realized. Building single-family homes in the suburbs, particularly large homes on large lots, limited housing variety and production — more units could have been built in more compact design — and helped lead to a shortage of affordable housing.

By this century, according to the Partnership for Strong Communities, an affordable housing advocacy group, single-family homes made up 70 percent or more of the housing stock in two-thirds — 114 — of the state’s towns, with most of the affordable housing located in 19 communities. This helped give rise to the phenomenon sometimes called the “Two Connecticuts,” poor cities surrounded by wealthy suburbs.

It had become clear by the mid-1980s, when more than 25,000 permits were being issued each year, that the price of housing was shooting past the reach of many residents. In 1987 Gov. William O’Neill appointed a blue ribbon commission to study what was then called an affordable housing crisis.

The most far-reaching of the commission’s recommendations, enacted into law in 1990, was the Affordable Housing Land Use Appeals Act, better known by its statutory designation: “8-30g”.

The law says that if the housing stock in a town is less than 10 percent affordable, by certain statutory criteria, a developer can override local zoning — in court if necessary — to build government-assisted or mixed-income housing, the latter with at least 30 percent of the units affordable to people making less than 80 percent of area median income. Towns can only block the affordable housing if they can show in court that the project would threaten public health or safety.

The law has been controversial, to be sure, and there have been repeated attempts to alter or eliminate it. Critics say it unfairly usurps town authority.

While even advocates say the law could be fine-tuned, it nonetheless provided affordable housing. Officials say 8-30g has directly caused the creation of an estimated 5,000 units of affordable housing, and been a catalyst for the creation of perhaps another 10,000 lower-cost apartments.

Officials took another tack in 2007, a carrot rather than a stick, to create more affordable housing. This was the HomeConnecticut program, which was envisioned as a three-part process. Towns that voluntarily agreed to participate would get a planning grant to study their housing needs and determine where they might be met. They then would create an “incentive housing zone,” an area where developers could increase density in return for creating mixed-income housing.

Finally there was to be grant money to help build the housing. In 2007 it was to come from state surplus funds. The recession quickly dried that well, which may explain why so few of these projects have been completed.

According to the state Housing Department, 72 communities embarked on the planning process, 11 formed incentive housing zones but only two thus far — Old Saybrook and Sharon — have completed developments.

But, said David Fink, former policy director of the Partnership for Strong Communities and now a consultant to the group, 19 other towns did their own variations of the program, producing an estimated 1,700 housing units with 350 of them affordable.

Perhaps the biggest boost for affordable housing came from the Malloy Administration. Since 2011, the state Department of Housing and the Connecticut Housing Finance Authority have financed the construction of about 21,000 affordable rental units, of which about 14,500 are built or under construction and 6,500 are in the pipeline, at a cost of just over $1 billion.

This has been part of a broad range of housing assistance programs, which has included substantial progress at ending homelessness.

Do we need more affordable housing? A second blue ribbon commission on affordable housing in 2001 said the state needed another 68,000 affordable units. If that was correct, there is still a ways to go. Housing commissioner Evonne M. Klein thinks a strong argument can be made for more affordable housing.

For openers, she said, too many residents are paying too much for housing. She said nearly 50 percent of renters and 30 percent of homeowners pay more than 30 percent of their incomes for housing, the federal benchmark for “housing cost burdened,” meaning that low- and moderate-income earners may be challenged to pay for transportation, health care and other essentials.

She said inability of many workers to find housing near their jobs adds to the state’s chaotic and unhealthy traffic congestion. Also, high housing costs — Connecticut usually ranks near the top in housing costs — discourage workers from moving to the state and encourage young people, especially those with college debt, to leave.

On the more positive side, Klein cites research indicating that a stable home helps families connect to better jobs and better schools, and creates a healthier environment for children.

Also, as some towns have come to realize, a better mix of housing can keep both young families and older ones in town. Hypothetically, a young, growing family in an apartment or small starter home could trade places with a Boomer couple whose kids have grown and flown and want to downsize.

This is a more serious issue for the older folks than it might appear, said Fink. Many retirees, several studies show, haven’t saved enough for retirement. They need to get the money out of their homes. But sales of large homes in many towns have been flat or worse since the great recession began in 2008. There aren’t enough Millennials (or others) to buy Boomers’ homes.

Finally, housing construction itself is economic activity, providing building trade jobs and bringing more workers and customers to a community. Klein said the construction of 100 multifamily units in a typical U.S. metropolitan area has a first-year economic impact of $7 million in local income, $710,000 in taxes and other government revenues, and 133 local jobs.

The state has seen slight population losses in each of the last three years. Many think that trend must be reversed in a big way. For example, Joseph McGee, vice president for public policy and programs at the Business Council of Fairfield County, thinks the state needs to grow by a half-million people. They would need places to live.

Though a few are still being built in the wealthiest towns, the age of the McMansion is over, said Arthur Anderson, longtime Hartford developer and housing specialist. The recession hit the housing industry hard in Connecticut, building permits hit a low of 3,173 in 2011. They recovered to 6,077 in 2015, of which a remarkable 59.9 percent were for multifamily dwellings.

However, not all of these developments contain affordable housing. Indeed, some are high end. To get more affordable units into the mix, Commissioner Klein is supporting an “inclusionary zoning” bill that would require towns to include affordable units in multifamily developments with five or more units. She believes it would achieve its goal and still allow developers to make a profit.

Bill Ethier, head of the Home Builders & Remodelers Association of Connecticut, disagrees. He testified against the bill, calling it “unworkable and highly disruptive of the housing marketplace” and the wrong way to accomplish a “worthwhile goal.”

Inclusionary zoning rules have been used in California and other states. Prominent Hartford land-use lawyer Timothy Hollister researched their effectiveness for a national home builders group and said they tend to work only in very hot housing markets, those briefly experienced in such places as San Francisco, Montgomery County, Maryland, and a few other places in recent decades.

Curiously, Stamford might affirm both Klein’s and Hollister’s arguments. The city is experiencing a boom in apartment construction; it has added 5,000 units in the past six years, with almost 3,000 more in the pipeline, said city spokesperson Elizabeth Carlson.

Most of these are in the $1,800 — $2,200 per month range, so out of reach for workers making less than, say, $50,000 a year. Several years ago the city created its own inclusionary zoning ordinance — about two dozen communities have them — which requires developers either to provide a percentage of units at below-market rates, or contribute land or money to a fund to create more affordable housing. It clearly hasn’t impeded development.

Melissa Kaplan-Macey, Connecticut director of the Regional Plan Association, a longstanding research and advocacy group in the tai-state area, strongly supports making inclusionary zoning the statewide standard, saying more affordable housing is both a moral and “critical economic” imperative.

Whether the bill passes or not, there appears to be movement toward more affordable housing because, as Fink put it, towns see it in their best interest. Brookfield First Selectman Steve Dunn said his town wants a “mix of housing — it’s not good to have all high-end, or all low-end.”

Home Builders spokesperson Joanne Carroll said contractors are trying to build mixed-income or affordable housing, but are often stymied by land costs, high property taxes, outdated zoning or cumbersome approval processes. Veteran Avon Town Planner Hiram Peck said many towns would benefit by streamlining their land use regulations and procedures. By the same token, developers need to come in with plans that are complete, for projects in appropriate locations, with designs that complement the town. “Design is important,” said Peck.

For that, things are moving. Hollister said more 8-30g projects have moved ahead without court appeal in the past two years than in the preceding 20 years. He said the process has matured, and both developers and town officials better understand it.

There also is a recognition that housing doesn’t exist in a vacuum, that it connects to other economic and policy issues. For example, some state grant programs encourage affordable housing near transit, in the hope of increasing the housing stock without increasing traffic congestion. (The key is to build such housing for people who use transit). The state is investing in mixed-income housing in Hartford and some other cities to create economically active core cities.

Finally, affordable housing regulations are evolving at the local level. For example, Avon adopted an ordinance last year giving developers a density bonus — they can build more units than otherwise would be allowed — if they make a percentage of new units available to those making less than 80 percent of area median income.

The ordinance gives the town some authority to direct the development, more so than 8-30g projects. Peck said he expects two proposals for mixed-income housing under the new ordinance by the summer.

Interestingly, the town dropped the phrase “affordable housing.” They call it “attainable housing.”

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Posted 04/24/17 at 05:38 PM  Permalink



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