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Affordable Housing and Economic Development: Overcoming the Spatial Mismatch

Dale Winling



            Cities and suburbs across the country are said to suffer from a spatial mismatch between jobs and workers – the sources of economic development and the beneficiaries of it.  The city of Detroit is a particularly illustrative case – nearly 30 percent of the city’s residents are impoverished, while business booms to the city’s north in Oakland County.  The spatial mismatch, exacerbated by the lack of mobility and mediocre mass transit system within the city, keeps low-income workers from filling jobs outside the city.

            What is the role of affordable housing in solving the urban spatial mismatch?  And, as economic development begins in a city or region, how can municipalities deploy affordable housing to best serve the low-income population?     Affordable housing as a government priority and as a legal mandate dates back less than fifty years.  The United States Supreme Court case Ambler Realty Co. v. Village of Euclid struck down an exclusionary zoning law that prevented apartments from being built in single family residential areas because such zoning led to de facto economic segregation.  Two significant court decisions at the state level in California and New Jersey in the late 1970s mandated the inclusion of affordable housing by every municipality, which have become models for planners.[i]

            However, recent and increasingly popular growth management strategies, while reducing sprawl and promoting density, have also been found to reduce housing affordability.[ii]  Another increasingly popular strategy within communities undergoing growth is to impose impact fees for new development – “fiscal squeeze” measures.  When a city that is “built-out,” meaning developed as full as zoning and infrastructure allow, undergoes new development municipalities frequently impose the cost of new infrastructure directly upon new homebuyers through impact fees.  Whatever the intentions of such policies, one of the chief effects is to reduce the affordability of new home buying – such fees can increase the cost of a home by nearly 10 percent.  Another factor in impact fees is to make the cost of older homes – typically more affordable than new construction – disproportionately more expensive because demand is redirected to them.[iii]

            In a gentrifying housing market, like many of our largest cities have been seeing over the last decade, measures such as affordable housing subsidies and rent control may maintain a traditional housing development model, where new housing is developed for a higher income population and older housing filters down to the lower-income population.  Such measures may keep low-income groups from being wholly displaced from neighborhoods as urban pioneers swoop in to renovate older urban residences, pricing poorer tenants out of the market.[iv]  Scholars have demonstrated that the most effective protection against displacement in such a case is the availability of a wide variety of housing types and tenancy models.  The development (or maintenance) of a diverse housing stock is the best way to prevent and mitigate displacement by gentrification.[v]

            The metropolitical strategy espoused by Myron Orfield may be the most significant and effective means of overcoming the jobs-housing mismatch in metro areas.  In Metropolitics, Orfield advocates the development of coalitions between central cities and inner-ring suburbs to help address problems of sprawl, disinvestment, and declining infrastructure from the central city outward.  Among the issues that such a strategy can address is the dispersion of affordable housing throughout a metropolitan area.  The establishment of metropolitan tax-sharing, Fair Share housing requirements, and, perhaps most importantly, the cooperation of several municipalities on common issues, may all result from metropolitan coordination and may offer means of providing affordable housing in ways that help alleviate the jobs-housing spatial mismatch.[vi]

            Finally, a new model may be in order for overturning the paradigm of housing affordability in the last half-century.  Since the 1940s population density has been declining as urbanites and developers have developed cheap land at the urban periphery, spreading ever farther from the urban core.  Because of increased mobility, in large part due to the availability of inexpensive automobiles, the available area for development and settlement has also increased.  However, increased mobility has introduced its own problems into considerations of costs of living, urban finance, and even urban character.  The entry, operational, and intangible costs of owning an automobile and commuting are now being more broadly considered, and in many ways have made the total cost of living on the urban periphery higher than urban living in many settings.  A few scholars have begun to think of accessibility – the ability to find employment and services near one’s residence – as an alternative to mobility – the ability to get to employment and services that may be far from one’s residence – in promoting housing affordability and managing overall costs of living.[vii]   

[i] Southern Burlington County N.A.A.C.P. v. Township of Mount Laurel (1975 and 1983);

[ii] Schwartz, Seymour, et al.  “The Effect of Growth Control on the Production of Moderate Priced Housing.”  Land Economics.  V. 60.  No. 4.  (February 1984): 110-114.

[iii] Singell, Larry, and Jane Lillydahl.  “An Examination of the Effect of Impact Fees on the Housing Market.”  V. 66.  No. 1.  (February 1990): 82-92.

[iv] ______.  “Reassessing Rent Control: Its Economic Impact in a Gentrifying Housing Market.”  Harvard Law Review.  V. 101.  No. 8.  (June 1988): 1835-1855.

[v] Hodge, David C.  “Residential Revitalization and Displacement in a Growth Region.”  Geographical Review.  Vol. 71.  No. 2.  (April 1981): 188-200.

[vi] Orfield, Myron.  American Metropolitics: The New Suburban Reality.  (Washington, DC: Brookings Institution Press, 2002).

[vii] Jeremy R. Meredith. “Sprawl and the New Urbanist Solution.”  Virginia Law Review, Vol. 89, No. 2. (Apr., 2003), pp. 447-503.