What Can Be Done About the Affordable Housing Crisis?
EPISODE 5: Erskine Bowles, former White House chief of staff, and Laurie Goodman, an Institute fellow at the Urban Institute, join Governors Bredesen and Haslam to discuss potential responses to the affordable housing crisis.
You would be hard-pressed to find someone who says they are against affordable housing. Instead, the debate lies with what we can and should do about it. To discuss potential responses to the affordable housing crisis, Governors Bredesen and Haslam speak with Erskine Bowles, former White House chief of staff and co-chair of the National Commission on Fiscal Responsibility and Reform, and Laurie Goodman, a founder of the Housing Finance Policy Center at the Urban Institute and an Institute fellow.
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“We have an acute housing supply shortage in this country”
How did we get here? Goodman started off by pointing to the housing supply shortage as a significant contributor to the crisis.
“I think the real problem is that we have an acute housing supply shortage in this country. We’re just not building enough,” Goodman told the governors. “From 1959 to 2001, we constructed an average of about 7.8 units per thousand population. It crashed; we’re now up to 5.1 units per thousand population. And we’re especially short affordable units. We just haven’t built much since the great financial crisis.”
“A real game changer”
While there’s “no one silver bullet” to addressing the problem, Goodman identified several places she’d recommend policymakers looking to take on affordable housing start.
“I would actually start with zoning issues,” she told the governors. “I would basically have more zoning – sort of higher density zoning – as a matter of right. And this could be a real game changer…. Houston was vilified for years because it basically had zoning codes that were very different than most other cities. It now has more affordable housing than most other large cities – it’s considered sort of the poster child.”
Goodman pointed to Minneapolis, Austin, and the states of California and Oregon as other examples of places where there has started to be some relaxation of zoning codes; they all now permit accessory dwelling units – things like backyard cottages, basement apartments, garage conversions (second housing units on the same grounds as a single-family home) – as a matter of right.
“I think financing could also make a big difference,” Goodman added. “When you think about financing, it’s important to realize that our system of preservation financing or renovation financing is very, very cumbersome. And sort of improvements there and streamlining there could make a big difference.”
“We’re making some real progress”
Bowles walked the governors through his work to develop naturally occurring affordable housing – known as NOAHs – in his hometown of Charlotte along with his longtime business partner, Nelson Schwab.
After realizing affordable housing was the precursor to two other issues they were interested in addressing in Charlotte – homelessness and a lack of economic mobility – the two helped launch the Housing Impact Fund and raised an initial $60 million.
“Nelson and I heard about this NOAH concept of buying, you know, older apartments built in the seventies, eighties, and nineties, and renovating them and then turning around and renting them to people at affordable rates,” Bowles explained. “We’ve come up with a lot of innovative financing tools in our career. And we came up with a brand-new financial stack that would allow us to buy these older apartments, spend an extraordinary amount of money renovating, so they’re just as nice as any place you’d like to live or I’d like to live or anybody else would. And having done that because of our financial stack, we’re able to rent these apartments to lower-income individuals.”
“In the first year of our existence, we’ve created over 500 affordable housing units that are high-quality housing units,” he said. “Then next month we’ll take on another 200, so that’ll be 700. And by the end of the year, we’ll have created over a thousand affordable housing units that are quality, that are near jobs, near transportation, near quality schools, and also near retail. So, we think we’re making some real progress.”
“I guarantee you it’ll work in Memphis, Nashville, and Knoxville”
Bowles broke down the Housing Impact Fund’s financial stack for the governors and noted that the approach is one he believes can be replicated in other cities.
“I guarantee you can do it in Nashville. You can do it in Knoxville. You can do it in Memphis. All you have to do is find people that have a passion that Nelson and I have, and some credibility, and those people exist in every single community,” Bowles told the governors. “We in turn will give them our entire intellectual property. We’ll just give it to them, because Nelson and I want to do this in Charlotte, but at 77 we don’t want to get involved in another national effort. But we’ll give all that intellectual property. And I guarantee you can duplicate it, and I guarantee you it’ll work in Memphis, Nashville, and Knoxville.”
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