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Inclusionary housing expert says defensiveness is holding many cities back from building


Like much of the country, New Mexico is dealing with a crunch on affordable housing. Rent in the state has increased 70%, just since 2017, according to the Legislative Finance Committee. 

Rick Jacobus is an expert on inclusionary housing who works with cities to plan for more equitable options. He spoke recently in New Mexico as part of the Homewise Santa Fe Livability Series, and told KUNM that while many factors go into the lack of lower- and middle-income housing, the underlying problem is we have built a system that’s overly defensive.

RICK JACOBUS: We've placed a lot of value on giving people the right to protect their quality of life or the character of their neighborhoods, and those are important protections. You want to be able to protect the place where you live and keep it special. But, how affordable a place is, is a key part of what it means to have a quality of life.

You've got all these critical jobs that you need to have in your local economy, and now, people who work those jobs can't afford to live in a place like Santa Fe, and that erodes quality of life, every bit as much as if you let someone build, you know, a building that's the wrong color or whatever. How do we balance the system out so that it's more democratic, and a broader set of our full values are reflected in the decision making that happens?

And so, we put a little bit more weight on equity and racial equity and economic equity, and a little bit more weight on, you know, having a place where your kids and your grandkids can stay, and not having people who've been here forever be displaced. In order to do that, we have to accept some of the downsides that people see with development. It might be a little bit harder to park. There might be more traffic, and we have to manage those things. We don't ignore them, but we have to manage them.

KUNM: Can you give me an example or two of cities where you're seeing that now?

JACOBUS: Across the state of California, we have this kind of sea change going on where we've moved, not entirely, but incrementally toward more objective approvals processes. So, we've started to say, if we want to control where development happens, it's better to do that in the rules than by having a lot of public meetings.

It doesn't necessarily mean you don't have neighborhood meetings at all, but it means you have fewer of them so development is more predictable. Someone can sit down and read the rules, and ahead of time decide, this is going to work here, this is going to be allowed here, and this isn't.

That allows builders to move a lot faster. Sometimes it's two years faster, and that's millions of dollars that they save. They have to spend money, and they have to pay interest on that money while they're going through all these public hearings. No one likes to hear that because they think that the reason we want to do it is to save builders money. We don’t. We don't care if we're saving -– it's fine if builders have to spend money if that's what we have to do -– but we don't get the housing as a result.

If we want housing for middle-income people, we have to make it predictable. So, we've seen a lot of shift in California recently to what we call by-right development, where there are clear rules, anybody can follow them, and we're getting a better affordability mix out of it.

In most of these rules, they require the developer to provide affordable housing in order to access the streamlined approval. So the deal is, you build some middle class housing, and you make a lot of money on that, and you use some of that money to subsidize housing for people who are low income. And we get this win-win for the community because we get more low income housing, and we get more middle income housing. We sort of tied the two together.

KUNM: On that topic, since you've been in Santa Fe, you've been talking to people about the fee-in-lieu program here. Would you mind explaining what a fee-in-lieu program is for listeners who don't know and tell me about how you make that sort of program successful?

JACOBUS: You require builders of new housing to provide for affordable housing. So you have a policy here, that's called “inclusionary housing.” In other places, there's “density bonus” programs or other kinds of programs that do the same thing. But, the core idea is you're going to build market-rate housing, we're going to require you to build some low income housing as part of it.

Santa Fe, like most of the jurisdictions that have these policies, has built into their policy an option for developers to pay a fee in lieu of building those units on site. Some people feel, understandably, like developers are sort of getting out of their obligation. They're paying their way out, and that it's a loophole. They're not following the rules.

I did a statewide study in California, where we looked at who's building the most affordable housing, and we did find that a lot of the jurisdictions that set their in-lieu fees really low, they got only fees because it was much cheaper to provide the fees than to provide the units. In some places, those fees just sat in a bank account.

Of the jurisdictions in California that have done the best job of producing the most affordable housing through their inclusionary housing policies, all of them relied really heavily on the fee. The reason for that is because they were able to collect money from a developer and turn around and give it to a nonprofit builder of affordable housing, who would then leverage it with other money. So they spent $1 of the developers money, and then they got $3 or $4, sometimes $5 of federal and state affordable housing money, and they were able to build housing for a lot more people.

KUNM: On that note, how do you get buy in?

JACOBUS: For the most part, these policies work really well and the developers, they don't like them when it's a proposal, but they don't mind it very much once it's up and running and working.

So, the key way to do it is to prove it. To show people that it can work and to just have it become a regular part of doing business in the community.

But getting there, in a community that doesn't already have an inclusionary housing policy, is often a challenge, and you have to convince people. You have to look at what other communities have done, and you have to think about the alternatives. Because a lot of times people will say, “Well, we shouldn't do this,” but then they don't have a better way to address the affordable housing problem.

This coverage is made possible by the W.K. Kellogg Foundation and KUNM listeners.

Megan Myscofski was a reporter with KUNM's Poverty and Public Health Project.
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