Tacoma and Pierce County need more affordable housing. Here are four things worth trying

Compassion doesn’t pencil, and it won’t build enough affordable housing in Pierce County. Tacoma alone is short almost 15,000 units, according to the 2018 Affordable Housing Action Strategy; at $200,000 a unit that’s $3 billion worth. The rest of the County probably has an equal need.

A new inter-governmental effort called South Sound Housing Affordability Partners hopes to make progress. Here are four ideas that may help: monetize social benefits; remove constraints on local government; rethink zoning; and invite builders to profit.

Monetizing social benefits

Investors want a return. If we expect governments and private donors to make substantial investments in affordable housing, we need a clear, credible return on investment. Head Start has talked ROI for years: every dollar spent on Head Start returns seven to nine dollars in specific social benefits. Affordable housing should have a similar calculation, and use ROI to build a groundswell of support.

Unshackling local governments

For decades local governments have been constrained from giving or favorably leasing public land. The legal landscape is now more forgiving; governments should take advantage of the changes.

For example, a new Washington law in 2018 allows local governments to give land to nonprofit and for-profit developers for affordable housing. This step hasn’t led to much new housing locally, however. We see two reasons why.

First, nonprofit developers are preferred recipients of such land because they serve the lowest-income people. But nonprofits need more time to arrange financing, so they essentially land-bank surplus property. For-profit developers could build faster, but they’re at the back of the line. Allocating more land to for-profit builders could result in more affordable units faster.

Second, if acquiring or improving surplus land relies on federal dollars (often the case) developers are wary of triggering Davis-Bacon requirements. Davis-Bacon is a federal law requiring contractors to pay “prevailing wage” when federal funds are used; these wages and the record-keeping involved can increase cost significantly. Nonprofits (who generally need public funds anyway) aren’t scared off by Davis-Bacon; but for-profit developers stay away.

The underlying assumption may be wrong. A 2016 federal Appeals Court ruling said Davis-Bacon isn’t transferred when a local government leases land to a for-profit company. This ruling may open more surplus public land for all kinds of builders.

Rethinking zoning

Four-plexes won’t solve our affordable housing problem. The need is too great, and developers can’t make money on small projects. This means we need more places for large projects. There are places where zoning allows such projects, but if we persist in clustering them in a few locations, we run the risk of segregating low-income people from the rest of the community.

The solution, obviously, is some form of inclusive zoning that allows larger projects in mainstream neighborhoods. As Home in Tacoma has shown, this won’t be a simple step to take. But it may be an essential one.

Open for business

When local government asks builders why they don’t create more affordable housing, the answer is simple: they make more money doing other things. That’s rational. But what if we’re asking the wrong builders?

Housing Finance publishes an annual list of the top 50 affordable housing builders in the country. These builders are mostly for-profit, and many are publicly traded. They make money with a repetitive, streamlined construction process and by managing the properties after construction. They rent to low-income people at or above the 65th percentile AMI.

By housing the upper third of low-income people, we could relieve pressure on the whole system and reduce competition for existing units. That’s a good thing.

These builders don’t seem to like it here, however. The top ten had combined production of over 20,000 units last year, but they built no new projects in Washington. Perhaps South Sound Partners can discover why these big builders don’t build here, and then lower the barriers. It could lead to thousands of new units quickly, and without substantial public investment.

Is this enough?

I’ve outlined four steps: demonstrating ROI; flexibility in land disposition; inclusive zoning; and recruiting for-profit builders. Will these do the trick? Don’t know. The need is big and getting bigger; public and private resources are spread thin. But it’s almost certain more of the same won’t solve the problem. Whether it’s these ideas or any number of others, we need new approaches. Let’s hope South Sound Partners takes them. Soon.

Ken Miller formerly chaired the board of the Tacoma Housing Authority; he owns DADU Homes.