HomeMy WebLinkAboutMemo - Mail Packet - 9/29/2020 - Memorandum From Housing Strategic Plan Core Team Re: September Housing Update
Social Sustainability
222 Laporte Ave.
PO Box 580
Fort Collins, CO 80522
970.221.6758
MEMORANDUM
DATE: September 22, 2020
TO: Mayor and City Council
THRU: Darin Atteberry, City Manager
Affordable Housing Executive Team0F
1
FROM: Housing Strategic Plan Core Team1F
2
RE: September Housing Update
Bottom Line : This memo initiates monthly updates to City Council regarding housing overall, with
an emphasis on the Housing Strategic Plan, the work of the Ad Hoc Housing Committee, and
additional accomplishments and/or updates during the month. This memo also responds to
Council’s questions regarding rental vacancy in the City (3.1% as of June 2020).
Housing Strategic Plan
Plan Progress. The Housing Strategic Plan’s development is on track with an adoption hearing
scheduled for February 16, 2021. At the August 25 Work Session, Councilmembers expressed
support for the draft vision that “Everyone has healthy, stable housing they can afford.”
In September, the plan’s development has focused on the Existing Conditions Assessment and an
RFP for an Evaluation Framework, which includes the following:
• Existing Conditions Assessment - To move from a vision to specific strategies the City and
community can implement, we need to first understand the state of housing in Fort Collins.
This document synthesizes data, stories, and policies and outlines five big challenges and
two remaining questions to begin guiding the Plan’s development and serve as a starting
point for community conversations (more below in Community Engagement).
• Evaluation Framework – This effort will create a framework to identify, evaluate, and
prioritize strategies against a consistent set of criteria. Staff is seeking consultant support to
advance this work through Home2Health and Community Development Block Grant
(CDBG) funding; a consultant is anticipated to be selected in October.
Community Engagement. In addition to developing the evaluation framework, the priority for
October and into early November will be engagement, including but not limited to the following:
• Overall engagement: “At your own pace” virtual engagement; Home2Health partner
engagement via Center for Public Deliberation, Partnership for Age-Friendly Communities,
Family Leadership Training Institute, and others; City-led workshops; presentations to other
groups as requested. Additional details will be provided in the October monthly memo.
1 Jackie Kozak Thiel, Chief Sustainability Officer; Theresa Connor, Utilities Executive Director; Caryn Champine,
Planning, Development, and Transportation (PDT) Director; Julie Brewen, Housing Catalyst CEO; Josh Birks, Economic
Health Director; Dave Lenz, Finance Planning and Analysis Director; Beth Sowder, Social Sustainability Director
2 Lindsay Ex, Interim Housing Manager; Meaghan Overton, Sr City Planner; Clay Frickey, Redevelopment Program
Manager; Marcy Yoder, Neighborhood Services Manager; Sue Beck-Ferkiss, Social Policy and Housing Programs
Manager; Maren Bzdek, Sr City Planner; Victoria Shaw; Sr Financial Analyst; Leo Escalante, Public Engagement
specialist; Sylvia Tatman-Burruss, City Planner; Shawna VanZee, Associate City Planner; DeAngelo Bowden, Social
Sustainability Specialist; Megan DeMasters, Environmental Sustainability Specialist
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• Stakeholder engagement this past month: Affordable Housing Board; Planning and Zoning
Board; Economic Advisory Commission; banking/finance /realtor community ; Housing
Catalyst; CARE Housing, Inc.; NoCo Housing Now; BIPOC Alliance; CSU classes and the
OneHealth Institute; Larimer County; The Family Center/La Familia; Fort Collins Chamber
of Commerce; and the Board of Realtors Governmental Affairs Committee members.
Ad Hoc Housing Committee
The September meeting included two main discussion items:
• The following community members shared their experiences with housing:
o Julie Brewen, CEO, Housing Catalyst
o Kendra Diede, Human Resources, and John Williams, Site Lead, Advanced Energy
o Landon Hoover, President, Hartford Homes
• Then, staff presented the Existing Conditions Document with an emphasis on the equity
and inclusion section, biggest challenges, and remaining questions.
• Meeting materials are available online at: fcgov.com/council/ad -hoc -housing-committee
Based on the September discussion, Committee members expressed an interest in focus ing on
housing types and zoning at the October meeting.
Additional Updates & Accomplishments
Rental Vacancy Rates in Fort Collins. As of June 2020, the vacancy rate for rental units in Fort
Collins is 3.1% (up from 2.6% in Q3 of 2019). As noted in the Existing Conditions Assessment on
page 33, “a vacancy rate of 5% represents equilibrium, where rents stabilize. When vacancy rates
fall below 5%, rents tend to rise.” These data are provided by the State of Colorado Department of
Local Affairs and are available here: https://cdola.colorado.gov/publications-reporting/vacancy-rent -
surveys. Vacancy rates are generally updated on a quarterly basis.
30% Housing Cost Burden. At the Ad Hoc Committee, Councilmembers asked about the origin of
the 30% maximum households can pay on housing costs without having trouble paying for other
necessities – the source is the US Dept of Housing and Urban Development. In addition, City Code
sets two standards for what percentage of income should go to housing costs – 30% for renters
and 38% for homeowners. Both definitions also include utilities as housing costs. Whether these
standards are still appropriate will be assessed via the Housing Strategic Plan.
Feasibility Study for Inclusionary Housing and Affordable Housing Linkage Fees. Finalized
report (including summaries of stakeholder input) concluding that economic conditions presently do
not support an inclusionary housing ordinance (which could not apply to rental housing per state
law) and that the City should continue to analyze w hether to impose linkage fees in conjunction
with the scheduled fee update in 2021. The Executive Summary is attached and the full report is
here: fcgov.com/socialsustainability/files/193158-final -report-08-31-2020.pdf?1599848476.
Next Steps
• Oct – Select evaluation framework consultant, community engagement, Ad Hoc Committee
meeting; two follow-up memos: (1) building stock map by decade per Ad Hoc Committee
question, and (2) Land Use Code amendments and audit per 9/22 Council Work Session
• Nov – Strategy identification & analysis; summarize engagement; Super Issue Meeting
• Dec – Council Work Session (December 8); begin drafting plan document
Attachment: Executive Summary: Feasibility Study for Inclusionary Housing and Affordable
Housing Linkage Fees
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Economic & Planning Systems, Inc. 1 193158-Report-08-31-2020.docx
1.0 EXECUTIVE SUMMARY
1.1 Introduction
The City of Fort Collins 2015-2019
Affordable Housing Strategic Plan (AHSP)
sets a goal of having 6% of Fort Collins’
housing stock comprised of affordable
housing built utilizing affordable housing
programs by 2020. The City’s long-term
goal is for this ratio of supported,
affordable housing to overall housing units
increases to 10% by 2040. The AHSP and
the 2014 Housing Affordability Policy
Study (HAPS), which formed the basis of
the AHSP, recommended that the City re-
evaluate the use of inclusionary zoning
and/or housing linkage fees in five years,
which is 2019. This Feasibility Study for
Inclusionary Housing and Affordable
Housing Linkage Fees (Feasibility Study)
was procured by the City to follow up on those recommendations from the AHSP and HAPS study.
Economic & Planning Systems (EPS) prepared this study for the City.
The purpose of this Feasibility Study is to examine housing and economic conditions in the City
and make a recommendation of whether or not an inclusionary housing ordinance (IHO) or
linkage fee program would be viable tools for increasing the City’s supply of affordable housing.
The scope of work contains the major tasks and activities outlined below. An important
consideration in adopting linkage fees and IHOs is their potential impact on the private
development market. In any housing market, most housing is built by the private market and
these two tools only generate affordable units or revenues as new development occurs. If the
programs create too much of a burden or deterrent to development, they will not be effective.
x Economic and Demographic Conditions – Analyzed regional growth patterns, commuting to
Fort Collins, and demographic factors such as household income.
x Housing Market Conditions – Evaluated housing production trends by unit type, home prices
and rents, sales volume by price range and unit type, and prices in surrounding communities.
x Stakeholder Input – Facilitated meetings with affordable and market rate housing developers
and City Council Members to hear input on housing issues and their opinions on the two
proposed tools.
x Linage Fee Nexus and Feasibility Study – Completed the legally required nexus analysis to
calculate legally allowable linkage fees. Applied potential linkage fee levels to prototypical
real estate development proformas to gauge the impact of fees on development feasibility.
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x Inclusionary Housing Ordinance Feasibility Study – Analyzed development costs and real
estate development feasibility with different levels of inclusionary housing requirements, fee-
in-lieu options, and property tax abatement options. Prepared a literature search on the
effectiveness of IHOs in the U.S.
x Recommendations – Considered the results of the feasibility analyses, potential unit and
revenue yields for the two programs, and stakeholder input in preparing recommendations
for the City.
1.2 Definitions
An affordable housing linkage fee is a form of impact fee. Linkage fees function like capital
impact fees (e.g. fire, police, transportation) or water and sewer tap fees in that they are levied
on new development proportional to its impact on the public infrastructure and facilities funded
with the fee. There must be a rational nexus and rough proportionality between the fee charged
and the impact of the development on which it is levied. The purpose of the Nexus Study is to
illustrate that nexus. Linkage fees are typically charged on a per square foot basis at time of
building permit. Like capital impact fees, linkage fees must be accounted for in a fund and spent
on costs related to their purpose, affordable housing development in this case. These costs
include construction, land acquisition, planning and design services, development fees, fee
reimbursements or any cost related to the production or expansion of affordable housing. As a
fee, not a tax, linkage fees are adopted by ordinance by the local governing body.
An inclusionary housing ordinance (IHO) is a land use regulation implemented under a city’s
or county’s land use regulation and zoning powers to regulate health, safety, general welfare,
and morals. IHOs can have numerous variations in how they are designed depending on each
communities’ goals and priorities. At the most basic level, an IHO requires that new development
set aside a portion of the units or land in a new project for permanently affordable, often deed-
restricted, housing. IHOs often include a fee-in-lieu component that is either optional or
mandated depending on the community’s preferences. The fee-in-lieu option can be limited to
circumstances of where a fraction of a unit is required, or if the development can demonstrate
that it is impractical to construct units in the project with conditions defined by the community. If
it is an option, a developer can pay a fee for housing mitigation rather than building units in the
project. The fee-in-lieu option is often preferred by developers as it is typically less costly and
involves less risk and complexity compared to developing, marketing, and selling or leasing
affordable units.
Linkage fees and IHOs differ in three primary ways:
x Fee First – Linkage fees are a “fee first” program but can be designed to allow an option to
construct units. In reality, the “build” option would be used rarely if ever. IHO programs have
been designed traditionally to prioritize the production of units or dedication of land over the
payment of in-lieu fees, although IHO programs can be designed with any number of variations.
x Applicability to Different Land Use Categories – In Colorado, IHOs have been
interpreted by the State Supreme Court to be a form of rent control which is not permitted in
Colorado. IHOs therefore largely apply only to for-sale housing, with some rare exceptions
involving partnerships between developers and housing authorities. In contrast, linkage fees
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can be levied on for-sale, rental, and non-residential (commercial) development. This allows
the burden of mitigating affordable housing impacts to be shared among more property types
rather than just on for-sale residential development.
x Legal Authority – IZ is implemented as a land use regulation. Linkage fees are
implemented under the legal authority for impact fees.
In Colorado, affordable housing as defined by the local government, can be exempt from impact
fees. Likewise, permanently affordable housing at 80 percent of AMI or below would be exempt
from affordable housing linkage fees.
This report presents EPS’s analysis and recommendations for two housing policy approaches: 1)
inclusionary zoning (referred to also as an Inclusionary Housing Ordinance (IHO) for policy
purposes); and 2) residential or commercial affordable housing linkage fees. The scope of work
for this study contained three main components, each with their own chapters within this Report.
x Economic and Demographic Conditions – An overview of key trends in population growth,
housing growth, home prices and rents, affordability metrics, and commuting patterns.
x Linkage Fee Nexus Analysis – A summary of the nexus analysis that is legally required for
adopting affordable housing linkage fees, a form of an impact fee.
x Inclusionary Zoning Feasibility Study – The analysis and results of real estate development
feasibility testing designed to determine the optimal elements for an IHO in Fort Collins.
Following are the major findings and recommendations of this study.
1. The escalation in housing prices in Fort Collins continues to elevate affordability
concerns.
Mirroring state and national trends, housing prices in Fort Collins and the surrounding
communities have escalated at a greater rate than inflation-adjusted incomes. As a result,
the affordability gap (difference between the median sales price and the purchasing power of
a household earning 100 percent of AMI) for households in Fort Collins increased
substantially between 2013 and 2019 from $54,000 to $124,000. Although similar patterns
in housing affordability occurred in surrounding communities, strong population growth in
many of them is evidence that they offer alternatives to Fort Collins to suit price or
community preferences.
2. The overlap of market-rate and deed-restricted housing prices poses a challenge to
the successful adoption of an Inclusionary Housing Ordinance (IHO).
IHOs are effective where the supply of housing available below 100 percent AMI is scarce.
Analysis of these conditions in 2013 and 2019 illustrate how this has not been the case in
Fort Collins(see Figure 25 and Figure 26). In 2013, 23 percent of home sales were
affordable to a household earning 100 percent AMI, and in 2019, the same portion of sales
were affordable to households earning median income. In markets where housing is
affordable at this income level, buyers are more likely to choose unrestricted units and avoid
deed restrictions like price appreciation caps, or shared equity.
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3. A mandatory Inclusionary Housing Ordinance is not recommended at this time.
As discussed in the section “Conditions for Successful Implementation of an IHO” beginning
on page 70, numerous conditions would need to be satisfied in order for an IHO to be
successful in Fort Collins. This includes: legal constraints (i.e. statutory prohibition against
rent control); supply-side scarcity; affordable housing buyer indifference to deed restrictions;
the absence of competitive price points or rents; market-rate housing buyer demand
inelasticity (i.e. indifference to market-rate pricing increases); and a perception from the
development community and buyer side that additional density has value and is possible
under the City’s Land Use Code. If a market cannot meet these preconditions, it is possible
that an IHO could: 1) negatively impact land values; 2) diminish a project’s feasibility; 3)
potentially deter some projects; and 4) result in “cost-shifting”, i.e. an increase of market-
rate pricing structures if a project did proceed. It is also important to consider the potential
yield for this policy, which would apply only to for-sale housing production. As discussed in
Figure 7 on page 14, the average pace of single-family construction in the City was 400
units per year between 2005 and 2019. Assuming even that an additional 100 units of
multifamily housing were for-sale condominiums, a 5 to 10 percent set-aside on a total of
500 units per year would yield between 25 and 50 units per year.
4. The City could pilot a rental project incentive policy (without violating statute) that
leverages the property tax abatement for rental projects.
Findings support this recommendation: 1) the gaps analysis (refer to Table 4 and Table 10
beginning on page 24) illustrates that the need for affordable rental housing is twice as great
as the need for deed-restricted affordable ownership housing; 2) the feasibility modeling
(refer to the discussion of Table 34 on page 66) suggests that the density bonus and the
property tax incentive are far more effective at replicating a rental project’s base entitlement
Internal Rate of Return (IRR) than the density bonus and any other incentive (e.g. per-
affordable unit cash subsidy) are at replicating a for-sale project’s base entitlement IRR; and
3) the sensitivity tests run on set-asides at various AMI levels (refer to the discussion of
Table 35 on page 68) indicate that affordability set-asides are more supportable in more
programmatically meaningful magnitudes in rental prototypes than for-sale prototypes.
Because the statutory prohibition against rent control still stands1, EPS believes it would be
strategic for the City to consider offering an incentive policy that applies to market-rate
rental projects. Under such a policy, participation in the policy is not compulsory, but
voluntary. That is, developers interested in providing affordable rentals could access a
property tax abatement equal to the difference between the market and affordable rents
provided in the development up to 50 percent of the difference between the pre- and post-
development property taxes. Modeling suggests that 3-, 5-, and 10-story rental prototypes
could provide a set-aside of four (4) to nine (9) percent of units at 60 percent AMI and
achieve base entitlement IRRs. For Fort Collins, this policy option requires the agreement and
participation of Larimer County and the Poudre School District.
1 Senate Bill 225 had been proposed at the beginning of this year’s legislative session to repeal the prohibition on rent control. As of
April 30th, the bill will not be moving forward this year. https://www.denverpost.com/2019/04/30/rent-control-bill-colorado-senate/
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5. Residential linkage fees are viable as a funding source for affordable housing and
could be implemented with minimal impact to the market.
The City currently spends approximately $1.5 to $3.0 million per year on affordable housing.
Residential linkage fees could be a useful supplemental funding source for affordable
housing, with the potential to generate roughly $750,000 per year if adopted at 5.0 percent
of the maximum justified by the nexus analysis. The market may be able to bear fees at
around 50 percent of the maximum or approximately $5.00 per square foot with a phase-in
period. At this level, residential linkage fees would generate roughly $7.0 million per year in
a strong development cycle similar to the last 10 years. It should be noted that depending on
the fee levels, markets often adjust to new fees through a combination of factors such as
gradual compression of land values, value engineering, reduced unit sizes, and compressed
developer profit.
6. Commercial linkage fees should be considered as an equitable sharing of the cost of
funding affordable housing.
While commercial linkage fees generate less revenue, perhaps $50,000 to $100,000 per
year, it could be considered more equitable for both land use categories to share the burden
in funding affordable housing. The commercial linkage fees supported by this analysis are in
the $1.00 to $2.00 per square foot range and would have a negligible impact on the market.
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1.3 Literature Review
Inclusionary housing ordinances (IHO) or inclusionary zoning (IZ) have been the topic of many
peer-reviewed research studies and law journal articles. Among the scores published over the
last 30 years, EPS has selected a few of the more notable publications to illuminate the breadth
of national academic debate around the topic. As with many policies, there is no lack of
documentation of opposition or support. While a scan of the literature demonstrates that these
articles are among the more frequently cited, we have selected what we believe represent
rigorous analyses and well-constructed presentation of the issues, in addition to the fact that
they simultaneously represent turning points in the evolution of thought regarding how to
address national housing affordability challenges.
The literature and case studies examined by EPS suggest that inclusionary zoning is most
effective under a narrow set of conditions:
x In very high cost and highly supply-constrained housing markets;
x In rental project applications;
x Where density can effectively be leveraged as an incentive for producing affordable units; and
x Where buyers of market-rate units are not price-sensitive, and buyers of affordable units do
not have reasonable market-rate alternatives to choose over deed restricted units (often
appreciation-capped).
"Reflections on Inclusionary Housing and a Renewed Look at its Viability," (Padilla, 1995)
x This journal article was written at a time when the State of California was considering the
adoption of a statewide inclusionary zoning mandate to respond to the ever-expanding
affordable housing crisis. The article is primarily a legal review but has been among one of the
more frequently cited sources of principle considerations of the positive versus negative
impacts of this regulatory mechanism. The author notes that the policy is not problem-free: it
places “the onus of solving a society-wide problem on a small group, namely developers” and
that “the group primarily responsible for solving the problem is not primarily responsible for
causing the problem.” The author suggests, though not through quantitative analysis, that the
policy may lead to a decrease in the production of housing generally, but that a balancing of
public and private interests can be achieved to “equitably share any of its burdens and benefits.”2
x “Why is Manhattan So Expensive? Regulation and the Rise in House Prices”
(Glaeser and Gyourko, 2003): This journal article for the National Bureau of Economic
Research debates the justifiability of gaps between construction costs and housing prices in
Manhattan against data from other markets throughout the US. It argues that land use
restrictions are the natural explanation of this gap and presents present evidence toward the
widely-accepted notion that a constraint in the supply of housing leads to much higher prices
and fewer units in many markets across the country. Glaeser and Gyourko are careful to note
that “regulations limiting building need not be economically inefficient” – i.e. that their
findings do not recommend eliminating regulation.3
2 Padilla, Laura M. (1995) "Reflections on Inclusionary Housing and a Renewed Look at its Viability," Hofstra Law Review: Vol. 23:
Iss. 3, Article 1. Available at: http://scholarlycommons.law.hofstra.edu/hlr/vol23/iss3/1
3 Glaeser, Edward L., Joseph Gyourko, and Raven Saks. "Why is Manhattan So Expensive?: Regulation and the Rise in House
Prices." Journal of Law and Economics 48, 2 (2005): 331-370.
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x “Economics of Inclusionary Zoning Reclaimed” (Powell and Stringham, 2005): The
authors summarize their work with the following statement: “Although authors such as
Dietrich, Padilla, and Kautz provide the most sophisticated defense of inclusionary zoning to
date, they make some fundamental economic errors and, thus, advocate misguided policy
proposals.” They provide a review of the literature, an examination of the economic errors
made in those studies, and conclude that many of the arguments “seem to be based more on
egalitarian ideology rather than sound economic logic.” For example, they illustrate that
unless affordability is subsidized by government, inclusionary zoning functions like a price
control (a tax on development), in which the impacts are felt by builders, market-rate home
buyers, and owners of undeveloped land. They also address various other arguments made,
including: 1) that builders do not absorb the cost of providing affordability as a cost of doing
business; and 2) that typical programs do not offer incentives that sufficiently offset these
costs. The authors conclude that “evidence demonstrate[s] that imposing price controls and
taxes on housing is one of the worst ways of encouraging the production of housing.” 4
x “Housing Market Effects of Inclusionary Zoning” (Bento, et al, 2008): Through
statistical analysis of California communities between 1988 and 2005, these authors found
that inclusionary zoning policies had measurable effects on housing markets such as
increasing the share of multifamily housing starts by seven percent; increasing the rate of
single-family housing price appreciation by two (2) to three (3) percent per year; and a
decrease in the size of single family houses. 5
x “Silver Bullet or Trojan Horse? The Effects of Inclusionary Zoning on Local Housing
Markets in Greater Boston” (Schuetz, Meltzer, and Been, 2009): Although the focus of
this article was on the Greater Boston area, its analytical conclusions were broadly applicable
(and in alignment with other literature) in that “prices in jurisdictions with inclusionary zoning
programs in place for 5 to 14 years [were] 3.75 to 3.95 percent higher than prices in similar
jurisdictions with very recent or no inclusionary zoning programs.”6
x “Unintended or intended consequences? The effect of below-market housing
mandates on housing markets in California” (Means and Stringham, 2012): These
authors present rigorous quantitative analysis to conclude that “cities adopting below-market
housing mandates end up with higher prices and fewer homes.” They provide findings from
their analysis that demonstrates cities that had adopted such policies ended up with housing
prices 9 percent higher prices and production volumes 8 percent lower than cities without
those policies (between 1980 and 1990). They also concluded that during the next decade,
cities with the same regulation saw housing prices increase 20 percent higher and production
decrease 7 percent overall.7
4 Benjamin Powell & Edward Stringham, "The Economics of Inclusionary Zoning Reclaimed": How Effective are Price Controls?,
33FLA.ST.U.L.REV.471(2005).
5 Antonio Bento, Scott Lowe, Gerrit-Jan Knaap and Arnab Chakraborty Cityscape Vol. 11, No. 2, Regulatory Innovation and
Affordable Housing (2009), pp. 7-26
6 Silver Bullet or Trojan Horse? The Effects of Inclusionary Zoning on Local Housing Markets in the United States Jenny Schuetz,
Rachel Meltzer and Vicki Been Urban Studies Vol. 48, No. 2 (February 2011), pp. 297-329
7 Means, Tom, and Edward Peter Stringham, 2012. “Unintended or Intended Consequences? The Effect of Below-Market Housing
Mandates on Housing Markets in California” Journal of Public Finance and Public Choice, 30(1-3): 39-64.
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x “Inclusionary Zoning in the US: Prevalence, Impact, and Practices” (Thaden, 2017):
The article in the Lincoln Institute for Land Policy broadly assesses the production yield (units
and fees in-lieu) of inclusionary zoning policies across the US and identifies the number of
jurisdictions nationwide (886) that have an inclusionary zoning policy. The study documents
that of the jurisdictions with inclusionary zoning policies, 45 percent are in New Jersey, 27
percent in Massachusetts, 17 percent in California, and 11 percent scattered throughout the
rest of the U.S. There are 12 IHO policies in Colorado (1 percent of programs nationwide).
The study finds that 373 of them reported a total of $1.7 billion in impact or in-lieu fees
generated and the production of 173,707 units. Although the authors note that “these
numbers substantially underestimate the total fees and units created”, the numbers suggest
that jurisdictions have created an average of 190 units per program since adoption, whereas
most programs have been in effect for at least 15 years.
x “Can More Housing Supply Solve the Affordability Crisis?” (Anenburg and Kung,
2018): Responding to the growing suggestion that land use regulation itself is the source of
unnecessarily high housing price or rent escalation, some began turning to the broader
debate over the fundamental proposition that relaxing constraints on housing production
supply might mitigate against housing price escalation. The authors use a Neighborhood
Choice Model with nationwide 2014 American Community Survey public-use microdata to
simulate how rental rates would respond to an increase housing supply in a neighborhood.
The findings demonstrate that “rent elasticity is low”, i.e. that rents are not likely to shift (up
or down) as a result of an increase in supply, and that “marginal reductions in supply
constraints alone are unlikely to meaningfully reduce rent burdens.”8
x “Fewer Players, Fewer Homes: Concentration and the New Dynamics of Housing
Supply” (Cosman and Quintero, 2019): A more recent contribution to the literature
examines an observed trend in the production capacity and yield of the nation’s builders. The
authors analyze nationwide data and determine that in the 10 years following the end of the
Great Recession, that the number of developers and home-builders has declined, resulting in
a “lower production, volume, fewer units in the production pipeline, and greater unit price
volatility.”9
8 Elliot Anenberg & Edward Kung, 2018. "Can More Housing Supply Solve the Affordability Crisis? Evidence from a Neighborhood
Choice Model," Finance and Economics Discussion Series 2018-035, Board of Governors of the Federal Reserve System (U.S.).
9 Cosman, J. and Quintero, L. (2018), Fewer players, fewer homes: concentration and the new dynamics of housing supply. Carey
Business School. Johns Hopkins University
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