Connecting state and local government leaders

Cities' Affordable Housing Practices are Limited by State Government

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Connecting state and local government leaders

New research from the National League of Cities illustrates the broad differences in housing policy from place to place.

Municipalities face different barriers to implementing inclusive housing practices based on the policies of their state governments, according to new research from the National League of Cities.

Cities exert some local control, but “there are examples, particularly in the affordable housing policy arena, in which state policy is needed to make progress for everyone,” says the analysis. “In some cases, significant community backlash against proposals to increase the supply of affordable housing has led to a standstill on the issue. This has prompted states to limit, or preempt, cities’ decision- making powers related to land use and housing.”

To illustrate the differences from place to place, researchers analyzed data and interactions between state and local governments in several policy areas, including rent control, inclusionary housing, housing trust funds and low-income housing tax credits.

The results illustrate broad variations between cities, depending largely on how much local authority a municipality is granted by its state government. Broadly speaking, “the District of Columbia, as well as cities in New York and California, have more tools to address housing affordability than other cities,” according to the analysis. “Cities in Idaho, Indiana, Kansas, Texas and Virginia have fewer.”

For example, cities in just 13 states have the ability to implement rent control practices, defined as ordinances that limit or cap how much a landlord can charge tenants. Just nine of those states, along with the District of Columbia, can enforce rent control without state-level restrictions.

But just because cities are permitted to implement something, doesn't mean they will, the report notes. In seven of those places (Montana, Nebraska, West Virginia, Ohio, Hawaii, Pennsylvania and Maine) there are no state laws regulating rent policies at the local level—but no cities have created rent control policies. 

Thirty-six states either don’t authorize or expressly prohibit local rent control measures. On the flip side, in February, Oregon became the first state to mandate statewide rent control, requiring cities to follow state guidelines and preventing municipalities from passing their own policies.

“The law limits rental price increases to once per year and a maximum of 7 percent plus the yearly change in the consumer price index,” the analysis says. “Any property built within the past 15 years is exempt from rental control. Landowners who give reduced rent from federal, state or local government subsidies or programs are also exempt. The legislation also prohibits no-cause evictions, except for the first year of tenancy.”

A policy dispute exists about the effectiveness of rent control. While Oregon recently embraced the the tactic, voters in California last fall rejected a ballot measure that would have allowed greater local government flexibility on rent control policies. Advocates argue that rent control is an effective way of allowing residents to remain in their neighborhoods, thereby reducing gentrification, while opponents “say rent control dissuades developers from building new housing or improving existing stock.”

Despite the differences from place to place, researchers note, “the significant housing problem facing our country is compelling cities and states to rethink how they address the issue, and to adapt the relationship they have with each other to meet the scale of the challenge.”

The analysis recommends a host of actions for cities looking to improve housing affordability, including proactively engaging state partners, including legislators; taking advantage of state programs like tax credits and housing trust funds, and taking a closer look at “low-hanging fruit,” including planning, zoning and development regulations.

“For example, cities can relax density requirements in areas designated as single family, modify parking requirements and streamline development processes for projects with an affordability component,” the report says.

Kate Elizabeth Queram is a Staff Correspondent for Route Fifty and is based in Washington, D.C.

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