Breaking Barriers, Boosting Supply

Research & Policy | October 12th 2020 |

Equal opportunity is one of the most fundamental tenets of the American dream. Yet in reality, access to opportunity in American society has been shaped by land-use regulations and zoning laws that have segregated communities and increased racial and economic disparities in resources. While land use and zoning have long been the purview of local governments, there is an emerging consensus that state and federal action are necessary to overcome the legacy of racial exclusion, and the “opportunity hoarding” that emerges from local decision making.

This is what Ingrid Gould Ellen, Faculty Director of the NYU Furman Center, and Solomon Greene, a Senior Fellow at the Urban Institute, propose in a new report from the Urban Institute’s Opportunity for All project, Breaking Barriers, Boosting Supply. To address the racial and economic segregation that has defined so many American cities, the authors recommend that the federal government require states to demonstrate measurable progress toward meeting regional housing needs, and distribute affordable housing across a diverse range of communities in order to receive competitive federal funding for housing, transportation, and infrastructure.

Local governments restrict housing supply for both fiscal and exclusionary reasons. Fiscally, higher income households provide localities with more tax revenue from property taxes. Wealthier families in larger single-family homes may also use fewer social services, reducing local expenditures. But zoning restrictions that constrain housing supply are about more than just the bottom line: they are also an enduring legacy of intentional policies designed to segregate cities and enforce racial exclusion.

Though zoning rules that restrict development are no longer explicitly racist, they can still have potent effects on the demographic composition of our communities. Constraining supply and limiting housing choice is connected to a host of other issues – everything from growing political polarization to the uneven distribution of cases, hospitalizations, and deaths in the wake of COVID-19. Further, limiting development results in less affordable housing, more sprawl, and slower economic growth, as it prevents households from locating in desirable areas with more productive businesses and job opportunities.

The paper recommends that the federal government require states to “identify clear and actionable goals for boosting affordable housing supply and lifting exclusionary barriers when they apply for competitive grants for housing, transportation, and infrastructure.” It also recommends that states “set equitable and achievable performance goals.” Unless siting requirements are used, cities risk continuing policies of disparity across neighborhoods. Finally, it is necessary to require states to “demonstrate progress toward meeting these goals by adopting statewide policies that are likely to achieve them.”

The benefits of adopting state-level (rather than local-level) requirements are clear. States rely on federal support more so than localities do, and thus are more likely to take action. Furthermore, monitoring the efforts of 50 states is more feasible than tracking the efforts of thousands of localities.

There are several benefits to tying transportation and infrastructure funding to policy reform. States receive far more significant funding in these areas than they do for housing, and thus will be more heavily incentivized to make housing changes in order to access these funds. The funds that are being leveraged are competitive grants, not formula funding. This means that these alterations in how states receive federal funding are not a show of brute force that can generate backlash – states that do not comply will still receive formula funds.

Addressing the legacy of racial exclusion will require not only more production, but better distribution of housing opportunity, and this will require adequate sticks and carrots for more affluent communities. While these communities might not usually take advantage of housing grants, they will likely feel incentivized in order to receive their federal transportation and infrastructure funding.

Undoing decades of exclusionary policy will not be easy and cannot be done overnight, but the report closes on a note of optimism, and outlines clear next steps. The federal government can begin by taking an inventory of state and local funding programs to assess how competitive grants are currently being used, and which programs could be subjected to new funding rules. The federal government must also draft the criteria that will determine whether policies and reforms reasonably relate to advancing a given state’s goals. And federal resources and oversight will be a crucial component of a successful effort.

The road to increasing the supply of housing and decreasing inequalities in our cities may seem long and daunting, but the disparities that have been highlighted by the COVID-19 pandemic may be the final push that forces change to happen. The pandemic has sparked a national conversation about expanding housing opportunity and its role in racial equity that is both welcome and long overdue.

Read Breaking Barriers, Boosting Supply here.

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