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Affordable Housing: A Much-Needed “Carrot” in the New Starts Program

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[This is another in our series of expert blogs on TOD highlighting work and research that experts are doing in the field. The author, Keith Wardrip, is senior research associate for the Center for Housing Policy, the National Housing Conference’s research affiliate.]

Housing affordability has historically been measured by comparing monthly housing costs with monthly household incomes.  When housing costs consume a greater share of income than is deemed appropriate (often 30 percent), it is considered unaffordable for its occupants.  But high-quality housing affordable by this standard is frequently located on the periphery of metropolitan areas, where single-use zoning and auto-dependence are commonplace, rather than in walkable, mixed-use communities.  The net result can be higher transportation costs that more than wipe out the money saved on a lower rent or mortgage payment.

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Illustrating this point, recent reports by the Center for Housing Policy and its partners show that in the Washington, DC, San Francisco, and Boston metropolitan areas, housing is largely less expensive on the periphery, exemplifying the “drive ‘til you qualify” phenomenon.  But in many of these same areas, transportation costs are more expensive due to limited access to public transit, job centers, and amenities within walking distance, leaving people with no choice but to drive farther and more frequently.  As a result, there are too few communities that offer both housing and transportation costs that low- and moderate-income families can afford.  Reports like these are creating a growing awareness that discussions of affordability should be expanded to include the combined cost of housing and transportation and its relationship to the resources of low- and moderate-income households. 

Investing in the expansion of public transit is one way to lower these combined costs.  Through the New Starts program, the DOT was authorized to award $6.6 billion on a competitive basis over the last four years, funding more than 330 applicants to improve and expand their public transit systems.  But as with most major community capital investments – public or private – large-scale transit investments have the potential to make neighborhoods more attractive for homeowners and renters.  The result: higher land prices, increasing gentrification pressures, and the displacement of families that could benefit most from reduced transportation costs.

 That’s why the National Housing Conference, Enterprise Community Partners, Habitat for Humanity International, and others have asked the DOT to change the way it awards New Starts funding.  In our comments, we suggest that two new factors to incent the development and preservation of affordable housing be added to those that DOT currently uses to select applicants.  The first factor would assign points to applications based on the share of housing built near new transit stations that would be permanently affordable for low- and moderate-income renters and owners.  The second factor would prioritize projects designed to serve existing subsidized housing developments as well as to preserve and expand housing for those with the lowest incomes.  Including these factors would ensure that federal investments in transit would benefit low- and moderate-income families rather than displacing them.

In addition to improving overall affordability, expanding the nation’s public transit systems can help reduce energy use, greenhouse gas emissions, and traffic congestion, but the full potential will be realized only if we as a society take steps ensure that these benefits are distributed equitably today and are protected for the foreseeable future.  The National Housing Conference, the Center for Housing Policy, and our partners will be discussing these issues and more in two events focused on building and preserving affordable housing near transit in Denver later this month.  We hope to see you there!