Expanding Housing Supply is a Civil Rights Issue

On August 16, 2018, The Department of Housing and Urban Development requested public comment on its proposal to streamline regulations related to the implementation of the Fair Housing Act of 1968, an iconic piece of civil rights legislation. Below is an edited version of the comments I submitted, in which I argue that FHA regulations deserve to be updated to tackle today’s challenges.

Housing policy should favor solutions that are fair, efficient, and increase housing supply. We support more housing of all kinds in every neighborhood for people of all levels of income.

Introduction

Denying access to housing based on race is unacceptable and inconsistent with American and basic moral principles of fairness and equal opportunity. The Fair Housing Act enshrined these principles in 1968, and the implementation of the FHA over the years has made strides toward eliminating discrimination in housing access.

But this progress has hit a hard barrier: the economic interests of incumbent homeowners have taken precedence over the need for more housing, especially in thriving, prosperous, and growing cities.

The intention of the FHA— fairness — has been undermined by housing scarcity created by local governments seeking to protect the rising value of investments in single-family housing by restricting housing supply with rules, regulations, and taxes. Less housing means existing property owners see their investment rise.

However beneficial this is to people who are already housed, when housing is in short supply, prices and rents go up, consuming a greater share of household income. This, of course, disproportionately impacts households with less money. People of color in the United States are more likely to be impoverished than white people; a Kaiser Family Foundation analysis of poverty data found that 22 percent of black families and 20 percent of Hispanic families are in poverty, compared to 9 percent of white families.

Therefore, restrictive land use and housing policies have, in fact and practice, a disparate impact on minorities. Each and every limit or slowdown of housing supply enacted by local government that is not for purposes of health and safety of residents or the community will mean higher prices, and those higher prices hurt families of color harder than white families.

Furthermore, ameliorating these restrictive policies through subsidies is unacceptable; buying down the high price of housing created by policies deliberately aimed at limiting housing supply means families with less money must wait in longer and longer lines for vouchers or units. Today’s system of offsetting high prices with subsidies is a modern day iteration of separate-but-equal: two systems of housing, one for people who already own their homes, and one for everyone else.

The problem is, however, that the two systems aren’t equal at all. One serves incumbent homeowners and the other inefficiently distributes public funding for housing to people who have less money.

So as the Department of Housing and Urban Development (HUD) considers changes to affirmatively furthering fair housing (AFFH) rules, it must take into account the current state of local regulation: local governments are imposing restrictions on housing, calling the resulting shortage a crisis, then squeezing money for subsidies to off set the consequences of those restrictions. Not only is this illogical, it is unfair and discriminatory.

Approach

Going forward, HUD should emphasize outcomes for local governments rather than plans. We suggest considering an approach that deploys HUD’s existing Fair Market Rent calculation to determine eligibility for Community Development Block Grants (CDBGs). As others have proposed, we suggest eliminating CDBG eligibility for cities with rents that have risen faster than inflation over the last 5 years that have also issued building permits for less than 5 percent net growth in housing units.

Local communities also should consider — and be allowed to use — CDBG funds to reduce cost burden, with direct subsidies to families under 30 percent of Area Median Income (AMI). These families and individuals are already housed, and direct cash assistance would help those families faster.

Jurisdictions seeking CDBG funding should have a list and proposed legislation or rule changes that would safely reduce burdens on housing supply by lowering costs and time to market as part of their application.

Conclusion

Funding from the CDBG program should be exclusively given to local jurisdictions that measure housing issues using established Fair Market Rent and market data to analyze price trends, the impact that regulation has on prices, establish serious efforts to roll back and eliminate regulation that limits supply, and proposes models for subsidy dollars that are not reliant on capital expenditures but investment in reducing poverty and creating improved access to economic opportunity for families.