The U.S. Senate Committee on Banking, Housing and Urban Affairs’ Subcommittee on Housing, Transportation and Community Development held a hearing, “Housing Supply and Innovation,” on September 12. Witnesses and members of the Subcommittee discussed local reforms to boost housing supply, such as zoning reforms, land use regulations, and alternative housing development models like modular housing. Witnesses included Dr. Jenny Schuetz, senior fellow at Brookings Metro; Janne Flisrand, co-founder and executive director of Neighbors for More Neighbors; Gregory Good, chief real estate officer and director of asset management at Invest Newark; and Eric Shaefer, chief business development officer at Fading West Development.
Senator Tina Smith (D-MN), chair of the Subcommittee, opened the hearing by emphasizing the severe shortage of affordable housing, stating that the “annual supply of housing units is running severely behind demand, and needs to dramatically increase in order to catch up.” Chair Smith cited NLIHC’s Gap data, referencing a shortage of 7.3 million homes affordable and available to extremely low-income renters. Chair Smith noted that the housing shortage exists in rural, suburban, and urban areas, and that innovation is strong at the local level, stating that “we have made it very hard, and very complicated, and too expensive to build homes. And yet, we have great examples of local innovation.”
Witnesses testified to the housing shortage and shared proposals for ways Congress can adopt innovative solutions. Dr. Jenny Schuetz summarized the persistent and widespread housing shortage in the U.S. and emphasized that tight housing supply and rising housing costs have put the greatest stress on low- and moderate-income households. Dr. Schuetz addressed the role of regulatory barriers like zoning ordinances that limit housing development. “Reducing regulatory barriers to new development, especially for smaller homes, could help increase housing supply and improve affordability,” stated Dr. Schuetz. She recommended that Congress take action to require HUD to serve as a connector and facilitator between both state and local policymakers as they reduce barriers to housing and enact pro-housing policies. Dr. Schuetz also recommended that HUD and other federal agencies assemble and disseminate clear, accessible guidelines on the types of policies that support housing production. Her final recommendation was that Congress work with HUD, the Department of Transportation, and other relevant federal agencies to create well-targeted financial incentives that encourage local and state governments to better integrate investments in housing, land use, transportation, and other infrastructure. This recommendation has already been embodied in the form of fiscal year (FY) 2023 appropriations bills included in the enactment of the Pathways to Remove Obstacles to Housing (“PRO Housing”) Grants, drawn from the “Housing Supply and Affordability Act” (S.902) introduced by Senator Amy Klobuchar (D-MN). Further progress could be made with enactment of the “Yes in My Backyard Act” (S.1688) introduced by Senator Todd Young (R-IN), which would use Community Development Block Grant (CDBG) funding to incentivize localities to act against discriminatory land-use policies.
Janne Flisrand, co-founder of Neighbors for More Neighbors, stated that Minnesota has a deficit of about 95,000 homes that are unbuilt, and that Minneapolis alone needs 4,000 new homes a year in order to house its growing population and respond to its housing shortage. Flisrand credited recent policy challenges in Minneapolis with addressing this housing shortage. Minneapolis city leaders recognized how local zoning laws and permitting processes were barriers to meeting the demand for housing supply and acted by shifting regulations away from the kind of arbitrary, discretionary, project-by-project approvals that have been the status quo. “We used humor, art, social media, and blogs to focus attention on the problems and demand solutions,” Flisrand stated. Together, advocates, city staff, and elected officials worked together to implement “policies that match our stated values: affordable, inclusive, and climate-friendly.” Flisrand recommended that Congress incentivize similar local zoning reforms, subsidize new homes, and re-establish federal low-interest loan programs for affordable housing for urban and rural communities.
Gregory Good, chief real estate development officer and director of asset management at Invest Newark, summarized how the Newark Land Bank serves as the vehicle powering the City of Newark’s economic development agenda. Connecting housing supply to local government support, Good highlighted that Newark’s Mayor Ras J. Baraka has committed his administration to creating and/or preserving 6,600 affordable units by 2026, with the Newark Land Bank providing capacity to prioritize local homeownership and counteract investor-owner trends. Good attributed the Newark Land Bank’s success to its ability to leverage public assets to preserve and support affordability, explaining that “there remains a key missing ingredient – affordable financing not just to buy, but to build.” Good recommended that Congress develop additional incentives or mandates for banks to lend to housing developers for smaller projects and to small-scale developers receiving bank commitments.
Eric Shaefer, chief business development officer at Fading West Development, testified to how his organization helps the homebuilding industry “continue to innovate and thereby be a partner in resolving the housing shortages across several states and localities.” Shaefer named four root causes of the nation’s affordable housing crisis: a declining skills trades workforce, supply chain disruptions and escalating building costs, complex regulations, and unique jurisdictional approval issues. Shaefer lauded his organization’s construction process for eliminating inefficiencies in housing development. Shaefer recommended that Congress enact legislation to provide grants and loans to modular manufacturing facilities to increase housing supply rather than “subsidizing demand side projects”; require federally funded housing projects meet a standard construction code; and mandate the streamlining of building codes.
Read witnesses’ testimony and watch the hearing at: https://tinyurl.com/3yfkayek