With land in short supply, the bleak outlook of the housing market and the lending atmosphere becoming less flexible and more risk-aware, today’s cities are taking matters into their own hands to create more affordable housing options for modern-day homeowners. Or are they?

While some cities are fostering affordable housing projects, other local governments are hindering these cost-effective new developments. The questions that remains, who is to blame for the lack of affordable housing plaguing the U.S., and, how do we alter the rulings of local municipalities to accommodate more plans for affordable housing options?

Setting an example
In Pittsburgh, the Pittsburgh Downtown Partnership is launching a $3.5 million loan program that it hopes will spur the creation of new, affordable apartments on the vacant upper floors of its Downtown midrises, as reported by the Pittsburgh Post-Gazette. The loan program will provide “gap financing” for building owners and is enough to fund 10 projects, allowing for approximately 80 new housing units. The project money will be used to leverage larger loans from banks that might otherwise view the conversions as “marginal projects.” In years past, a developer might have been able to secure a loan with less than 20 percent down. Now, some lenders want 30 percent or more. Pittsburgh city officials say it’s important to keep Downtown healthy and part of that prescription is more housing options.

The Chattanooga Times/Free Press also noted that the city gave Chattanooga Neighborhood Enterprise (CNE) $500,000 in HOME funds this year. The money will be used to bring economic diversity to the downtown area by offering low to moderate income families up to $50,000 to purchase a downtown condo. Developers are expected to break ground this month on a 24-unit residential complex encompassing eight townhomes and 16 courtyard flats with the goal of making downtown Tennessee an area where people from all income levels are able to live.

Yet some cities aren’t so lucky.

The cities are the problem
According to John Delaney, an attorney with Linowes & Blocher in Bethesda, Md., who recently spoke at last Wednesday’s “Property Rights and Land Development” session at the International Builders’™ Show, local governments are the cause of the housing affordability problems still affecting many cities around the country. “You don’t get a density bonus, but you still have to build affordable housing. Something is wrong,” Delaney said, as reported by Multifamily Executive News.” In many places, inclusionary zoning laws require developers to chip in 10 percent to 15 percent, and even up to 22 percent “for affordable housing in a new development. Why is it appropriate to ask developers to contribute some of their built housing to the city?”

So, what’s the solution?
Publicly owned land is an essential resource for affordable housing options in the form of utilizing vacant land for development, building at higher density and adding residential space on top of existing structures.

In his presentation at IBS 2008, Delaney also urged that developers and builders adopt a checklist that gauges how local and state governments are doing in balancing jobs and housing. He suggests looking at the Comprehensive Plan and the Capital Improvement Plan to see if they include housing and affordable housing provisions. He also suggests monitoring the zoning laws to see if high-density building is encouraged.

Local governments CAN make affordable housing a reality. As is the case in both Pittsburgh and Chattanooga, commiting to the development and supply of affordable housing options not only provides residents with enhanced living options but allows for an increase in vitality, economic growth and community development.