Often the best-laid plans of mice, men, and magistrates go astray. When it comes to affordable housing, it definitely went wrong in 2024 when obstacles made it too expensive to see projects through, according to a New York Times report.
The program in question was one of a number that the Biden administration initially pushed last year. The Department of Transportation released guidance on using the Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation & Improvement Financing (RRIF) programs to finance housing development near transportation. That would include conversion projects.
Resia, a South Florida multifamily housing developer, heard about the program and was interested in how it could help underwrite a 948-unit building near a rail station. All good, except for some of the specifics. A required investment-grade credit rating would have cost almost $800,000 and Resia would have had to pay $250,000 to the government upfront for financial and legal advisors.
That program has yet to close on any loan for housing projects because “getting from interested to closed is extremely difficult,” Tracy Hadden Loh, a fellow at Brookings Metro, research unit of the Brookings Institution, told the Times.
The Biden administration has been keen on increasing the amount of affordable housing, for good reason. The Joint Center for Housing Studies at Harvard University noted early in 2024 noted multiple estimates of the national housing shortfall. In 2020, Freddie Mac said that number was at 3.8 million. The National Association of Homebuilders (NAHB) put it at 1.5 million in 2021. But then, the National Association of Realtors said the number was 5.5 million in 2021. Each organization had a different way of measuring the gap. The National Low Income Housing Coalition (NLIHC) puts the lack at 7.3 million units when considering affordable housing for those with extremely low incomes.
Complex programs can fall short because of problems in structure or even misunderstandings in what actions could help most. The Biden White House took aim at local housing regulations in April 2024.
“While some land-use regulations can be a reasonable part of community planning — for example, keeping factories away from schools or ensuring that parks are situated near residential areas — many other building regulations — for example, limiting housing density and building heights, or imposing minimum lot sizes or parking requirements — can create artificial barriers that hinder growth and drive up the cost of housing,” the White House wrote in a report.
It was a variation on upzoning, also known as zoning reform. Let multi-unit buildings live alongside single-family units. There has been evidence from some cities that adding housing, as one might expect, can help tame rent growth. However, sorting out the mechanisms behind these statistics can be difficult. What seemed to be new regulations that promoted housing growth instead were regulatory reforms that reduced required amounts of parking. That kicked off new development and rather than small multiplex development that pushed the most housing, it was midrise apartment buildings near mass transit.