How Biden hopes to fix the thorniest problem in housing

The zoning incentives are just part of a comprehensive proposal that will use billions of dollars in federal spending and tax credits to help drive the creation of new affordable homes.

However, the plan is also sparking complaints from both left and right over $ 40 billion in proposed public housing spending. Left-wing lawmakers – including the 95-member Progressive Congress – don’t believe the blueprint has enough money, arguing that New York alone needs so much help. Republicans think there is too much in the proposal.

Skepticism among housing advocates and potential opposition from major lawmakers threatens to create new barriers to the Biden government’s greatest hope of balancing housing costs with people’s incomes.

The top line of Biden’s $ 213 billion proposal is striking: the framework includes roughly five times the funding in inflation-adjusted US dollars that Congress received in the landmark 1968 Housing and Urban Development Act to develop new affordable housing The widespread unrest in 1968 was the aftermath of the assassination of Martin Luther King Jr.

As the White House suggested, Biden’s attempt to address the housing shortage would result in the construction, refurbishment or maintenance of around 2 million affordable housing units.

Tight inventory levels, currently at their lowest level in 30 years, have skyrocketed property prices, while decades of restrictive zones have prevented affordable units from being built in busy cities where people want to live. The costs are outperforming wage growth, and a growing proportion of Americans – roughly one in three prior to the pandemic – are paying more than the economist-recommended 30 percent of their income for their rent or mortgage.

Much of the cost of building new homes is determined at the local level: zoning rules, land use restrictions, and permit and development fees make building affordable units prohibitively expensive – and in some cities completely impossible. State and local regulations account for nearly 20 percent of the cost of building a single family home.

Biden would try to address the problem with a new competitive grant program to encourage state and local governments to reduce costly zoning and land use measures. The government shies away from more aggressive measures that would pressure officials to change their rules. This would risk a battle with mayors who have drawn a red line against linking zone changes with federal funding.

However, proponents of affordable housing say the plan would be more effective if the federal government put more pressure on it to cut red tape.

According to David Dworkin, President and CEO of National Housing, any serious effort to combat the exclusion zone would ideally tie federal transportation costs – a much larger pot of money than the housing funds sent to the states by the federal government – to removing regulatory barriers, a conference Representation of interests for affordable housing.

Given how many major cities have refused to add affordable housing, a voluntary grant will not have a significant impact, he said.

“To say,” We’re not going to give you affordable housing if you don’t make it easier to build affordable housing. ” [which is hard] because you don’t want affordable housing, that’s ridiculous, ”said Dworkin. “You need a carrot and a whip, not a carrot or a whip, to make it work.”

Groups representing mayors make it clear that they do not want federal interference.

“We like this approach compared to proposals that would penalize cities [over zoning]”Said Mike Wallace, legislative director for community and economic development for the National League of Cities.

Mike Kingsella, executive director of Housing Advocacy Group Up For Growth Action, said the grant model would help cities that already want to ease zoning restrictions bear the costs. But he said, “a stick approach is warranted if we are to address exclusion zones and discriminatory barriers in the more affluent, high-opportunity, job-rich communities like Cupertino in Silicon Valley.”

Mayors believe they are listening to HUD Secretary Marcia Fudge.

“The HUD’s secretary is a former mayor, one of many in the cabinet, and I think it will pay off,” Wallace said. “That will help – I think the funds will be made available to cities with less effort because they understand the complexity of how things work locally.”

Fudge said last week that she told mayors, “You will get all the money, please start thinking about how you would like to use it.”

Builders – who would be instrumental in tackling the housing shortage – are also concerned about how Biden’s plan would be implemented.

“Building or retrofitting 2 million homes is a very, very big task,” said Jerry Howard, CEO of the National Association of Home Builders. “Really, there isn’t much meat on the bone yet” in Biden’s plan.

“I am concerned about what Congress will do with these ideas,” he said.

One area of ​​concern for builders is the White House proposal to use union workers to modernize homes. Howard said it was “an interesting concept” that “has never been viable in the market”. Transformers in particular tend not to be unionized, he said.

Another part of the plan – Biden’s $ 40 billion allocation to public housing – involves complaints from Democrats and Republicans on Capitol Hill.

Biden calls for massive investments to support homes that have fallen into disrepair after years of neglect. For example, New York City Housing Authority buildings have been plagued by toxic mold, poor water supplies and lead paint.

Progressive Democrats say the $ 40 billion allotment is not enough, suggesting studies suggesting the public housing capital gap is around $ 70 billion. Repair costs of $ 40 billion have been forecast for the New York Housing Authority alone.

The day before Biden revealed his plan, a group of 61 Democrats from both chambers signed on a letter warned him to include “a minimum” of $ 70 billion in public housing support. Democrats who signed the letter included Senator Elizabeth Warren (D-Mass.) And Rep. Alexandria Ocasio-Cortez (D-N.Y.). On Thursday, the Progressive Caucus repeated that request in a list of five priorities it sent to the White House.

“Years of disinvestment have left our country’s public housing in poor shape,” tweeted Rep. Nydia Velázquez (D-N.Y.) The day after the plan was revealed by Biden. “While I estimate @ POTUS raised $ 40 billion to improve public housing infrastructure, it’s a minimal investment that doesn’t meet the capital needs of housing authorities across the country.”

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