Four Local Housing Policy Implications from the 2020 Elections

Federal support for affordable housing has declined over the past two decades, so many states have stepped in to expand access through local incentives. Meanwhile, a confluence of increased costs, stagnant or decreasing household wages, declining construction, and few long-term protections for vulnerable renters make the need for affordable housing more pressing than ever.

Along with certain states, local governments are increasingly taking matters of funding affordable housing into their own hands.

Amid growing public concern over dwelling costs, evidence from elections in November 2020 shows that urban residents will often happily vote to fund increased affordable housing—though they have had less success promoting rent control strategies. Here are four key insights from housing-related initiatives on the ballot this year.

Measures increasing local resources for affordable housing were largely successful

Two types of housing programs are often proposed through local referenda: targeted increases in resources for affordable housing construction and preservation and additional protections for renters.

The most common way cities raise revenues for housing via ballot initiatives is through general obligation bonds, which use future increases in tax revenues to repay bondholders. Several cities passed such housing-oriented measures, including $80 million in Raleigh, $50 million in Charlotte, and $250 million in Detroit. To maximize support, these bonds typically target high-priority local needs; for example, Detroit’s bond will fund the demolition of blighted homes in the city. Raleigh’s and Charlotte’s proposals will fund land purchases and gap financing for new affordable housing, necessary in these rapidly growing communities.

In San Diego, a $900 million housing bond that would have paved the way for 7,500 affordable housing units won 58 percent of the vote—but failed because of California’s requirement that such measures receive two-thirds of ballots to win.

Other cities successfully passed tax increases to fund additional affordable housing. Voters in Austin approved a $7.1 billion transit plan, funded by a property tax increase, that included $300 million to ensure low-income families along new bus and rail routes are able to stay in their homes. And Denver residents increased sales taxes by 0.25 percent to support homeless services.

These revenue increases come at a time when many local governments are grappling with cuts to housing and community development services because of massive budget shortfalls. They will offer essential relief during the slow period of economic recovery.

Rent control referenda were not as successful

Enacting greater protections for renters seems to be more difficult to promote via referenda. In 2020 alone, rent control measures failed by large margins in Burbank and Sacramento (and in California at large), although in Portland, Maine, voters approved a measure that would limit rent increases to the inflation rate.

Part of voters’ hesitation on supporting rent control could be a result of mixed evidence on its effectiveness and particular concern about its impacts on housing supply and quality. A recent Urban Wire blog post found that rent control increases residential stability and protects tenants from eviction. But this same post also indicated that rent control might lead to increased conversion of rental units into condominiums without complementary policies to mitigate this effect, as well as reductions in upkeep and maintenance, which affect housing quality.

Referenda have important equity implications

Local governments can only raise funds from people living or working within their borders—a problem in many US metropolitan areas that are jurisdictionally fragmented and economically segregated, with uneven levels of resources between different communities. This has important implications for their tax bases: to fund affordable housing, wealthier communities can tap into higher property values, higher resident incomes, and more local retail sales. On the other hand, lower-income communities—often those with the greatest need for affordable housing—are limited by the limited wealth and income of their residents.

These disparities between wealthy and under-resourced communities come at a time of increasing challenges for people of color. Black and Latino people have been hardest hit by the COVID-19 crisis and were most likely to be unable to afford rent over the last few months.

Residents in communities like Denver, which is relatively wealthy compared with the rest of the country, are willing and can afford to fund additional support for families experiencing homelessness. And communities like Austin and Raleigh have oriented their funding plans to increase social equity within their city limits. But similar initiatives in less wealthy communities may be more difficult to pass—and if communities do raise the money, they’re limited by local tax bases—leaving the families most in need in the lurch.

More resources will help, but local governments cannot fill the gap on their own

Though they shouldn’t stop trying, local governments alone, especially the least resourced among them, cannot provide enough housing to address their affordability issues. For example, Raleigh estimates that its affordable housing bond could fund more than 3,000 affordable units over five years, but tens of thousands of households (PDF) in the city are cost burdened. Communities across the nation are in a similar position.

The federal government could fill a major gap by providing additional—and more targeted—resources. In his housing plan, president-elect Joe Biden called for large-scale increases in housing expenditures, including expanding housing choice vouchers so they cover all people who qualify (currently only one in four eligible households receives federal rental assistance), and creating a new renters’ tax credit—both designed to reduce housing costs for residents. He also proposed establishing a $100 billion affordable housing fund and expanding other tax credit and block grant programs, designed to increase housing supply. If enacted, this plan would provide local governments with flexible resources they could then supplement with additional revenues as needed. But in the absence of increased federal support, local governments will need to continue to creatively fund their highest-priority housing needs.

This post originally appeared on Urban Wire, the blog of the Urban Institute.