Deeply Affordable Housing Has More Support Than Ever, But One Crucial Piece Is Still Missing
Affordable housing surged to the forefront of social justice campaigns and policy debates nationwide after the pandemic laid out how important housing is to public health.
The federal government has spent trillions of dollars since to stabilize vast swaths of the economy and society, including housing. In doing so, it revealed just how effective housing can be as an intervention for several vicious cycles experienced by the most vulnerable members of society.
Yet accompanying services that would address even more needs have not enjoyed the same financial embrace or focus — and that could mean nodes of concentrated poverty and its associated problems will remain little diminished.
Organizations fighting poverty, drug addiction, mass incarceration and other problems have rallied around the model of Housing First — the idea that a stable housing situation is the most effective first step in addressing or easing those problems.
A growing list of government agencies, from the local level up to the federal, have made historic investments in taking that first step. But the all-important next step is languishing.
Best practices for housing individuals fighting mental illness, drug addiction or post-traumatic stress disorder — especially common in veterans and the formerly incarcerated — include offering a range of supportive services. And so far, funding for those services has not enjoyed the same boost.
Federal stimulus bills passed since the pandemic have allocated a total of $39B to housing, The New York Times reported in March. In states where supportive services at affordable housing are subsidized, they generally rely on Medicaid to provide care to people without income, Corporation for Supportive Housing President and CEO Deb DeSantis said. Medicaid received a total of $56B from pandemic stimulus bills, the Times reports, with the lion's share going to more traditional healthcare spending.
“It is a lot less common to have resident services paid for,” said Veronica Gonzalez, director of development in the Midwest for the nonprofit NHP Foundation. “We pay for [supportive services], basically, out of our own pocket, but fundraising is another critical component.”
When Housing First is not bolstered by a supportive services component, it becomes housing only, which can concentrate poverty in ways that present health and safety issues. If government support for services doesn’t keep pace with the housing component, those issues could grow more ugly, as they have in single-room occupancy properties in San Francisco and Vancouver.
“We can’t have developers avoiding supportive housing out of concern for not being able to fund services, and we can’t have developers building ‘supportive housing’ without the resources or the staffing to address the acuity level of the support residents need,” DeSantis said.
As cities grapple with preserving and increasing income diversity in their neighborhoods, mixed-income housing has grown in prominence. A tiny percentage of mixed-income projects include some form of supportive housing in their affordable components, even for deeply affordable units, partly because housing subsidies don’t cover the budget for programming and services, DeSantis and Gonzalez said.
“If we’re looking at a new development in a new area, the conversation is always, ‘Where’s the funding for resident services?’” Gonzalez said. “‘How are we going to pay for it? Can we build enough units to build a portfolio so we can hire services staff to support a building, or two, or three?’”
Housing In The Spotlight
Every part of the public health and criminal justice systems that marginalized people cycle through — hospitals, shelters, prisons, etc. — has long produced negative outcomes for affected populations, even as they grew more expensive and resource-intensive for the public sector.
But when the pandemic turned those settings into immediately dangerous situations for the spread of the coronavirus, the idea of Housing First suddenly became a reality for cities and states.
“Locally and at the state level, there’s more prioritization of supportive housing, because they understand a couple things,” DeSantis said. “The first was the cost savings element of supportive housing, because otherwise folks on the street would be using emergency services. [Second,] we have an overreliance on institutional care in this country, which costs a lot of money for often not great results.”
While the world was on lockdown, filling empty hotel rooms with those who would otherwise be in congregate settings was a simple, temporary solution. As the hotel industry started up again, the federal government’s series of stimulus packages put unprecedented funding behind local and state efforts to stabilize housing situations, DeSantis and Gonzalez said.
"In three or four different ways, we were pumping money into the economy to help people out," Gonzalez said. "And I think that amplified the issue, and we really started to talk about not just how a schoolteacher helps get their rent paid, but also asking, 'Why aren’t there more units? Why don’t we have the capacity to absorb people dropping out of the conventional housing market?'”
Now, as stimulus dollars run out for effective programs and sit frustratingly idle in less effective jurisdictions, the growing tent of housing advocates worry the systems built over the past two years will be left to wither as one-time emergency responses, rather than the long-term solutions that are so needed.
“It was that one-time shot in the arm, where you see a spike in housing development, and the challenge becomes, how do you sustain that long-term?” DeSantis said. “And scaling is the perennial issue. I don’t know any communities that really have got their arms around how to scale consistently and sustainably.”
Federal attempts to plow billions of dollars into public and affordable housing through the Build Back Better plan did not survive to the final version of the bipartisan infrastructure bill. While some cities have devoted large sums to the issue, others have tried to leverage resources like vacant land and new tax breaks to encourage private developers to join the fight.
Plenty have also used zoning changes and fees to force developers to foot the bill for new affordable units themselves.
“The political pressure has been to produce very low-income apartments,” L+M Development Partners President of Development Spencer Orkus told Bisnow. “And I think, with the impact of Covid, people see that as where the need lies.”
Over the same time frame, housing inflation has outpaced wage growth so steeply that naturally occurring affordable housing is vanishing from cities across the country. Much of the federal government’s focus has been on preserving and creating housing that can keep workers in location-dependent jobs within reasonable commuting distance.
“For the first time, the average worker felt the pain of what so many affordable housing residents had been feeling for years,” Gonzalez said. “Even though people didn’t know exactly what they meant when they said, ‘affordable housing,’ they knew that someone out there couldn’t afford to pay rent. And people rallied around that.”
Beyond LIHTC And AMI
For decades, Low-Income Housing Tax Credits have been the most abundant source of financing for affordable housing. LIHTC-funded developments determine affordability based on a metropolitan area’s median household income, restricting affordable units to tenants making below a certain percentage of AMI.
Until a new update to LIHTC rules takes effect, that has made each unit available to its own narrow slice of the income spectrum. The pending update allows landlords to take a blended average of rents across a property in meeting rent thresholds.
“The question is where to prioritize,” Orkus said. “And the higher up you go in income, the cheaper the units are to operate, and the farther subsidies stretch. So it’s a conundrum between wanting to produce units for lowest-income households, which may need it the most, and producing units for moderate-income households, which you can produce more of.”
As wage growth for lower-income jobs lags behind higher-paying sectors and keeps losing ground to inflation, AMI figures seem more and more detached from the reality of the housing crisis.
In the New York metropolitan area, a family of four with annual income of $106,720 qualifies for units restricted to 80% of AMI. In fast-growing Nashville, that figure is $77,360, 29% more than it was in 2018.
“The waiters and musicians in Nashville used to perform and work and live in the area, but they can’t do that anymore,” Gonzalez said. “And now they’re looking around, like, ‘What happened? We can’t even support artists anymore? How did we get here?’”
More cities are aware of AMI’s insufficiency and are pushing for deeper levels of affordability in income-restricted housing, though that makes each unit more expensive to subsidize, Orkus said.
“A decade or so ago, and before that, people were choosing three affordable units over two deeply affordable units, and that’s where the policy has changed a little bit to where there’s a view to help the neediest first,” he said. “And I think people are opting for the deeply affordable units now.”
But if poorly paid workers are dropping into income brackets targeted by affordable housing, that pushes out those with conditions that prevent them from working. When a person’s housing situation worsens, it does not do so in a vacuum.
“It’s two things: The mental health needs are more serious, though I will say that I feel like we had been hearing that trend even before the pandemic, but the pandemic exacerbated it,” DeSantis said. “It was just more people, and the needs were just front and center in a way they hadn’t been in the past. And people are presenting with deeper substance issues than they had in the past.”
Longstanding methods of funding affordable housing come with restrictions on how that money is used, which precludes providers from spending it on supportive services, Gonzalez and DeSantis said. If more funding brings more providers into the deeply affordable housing sector, they will be ill-equipped to produce positive outcomes for residents in need of support.
“Are there supportive housing operators that don’t do a great job? Sure, and those have bad outcomes,” DeSantis said. “But I can tell you that the probable reason they have bad outcomes is that they don’t have the staffing capacity or resources to provide adequate services. People are presenting to supportive housing with much higher acuity needs, and that’s not getting acknowledged by government partners.”
In addition to financial backing, the likelihood of affordable housing to contain supportive services depends on landlord participation. But there are organizations at the national level, such as CSH, and in most cities, with the expertise to take that responsibility in a partnership.
"We don’t necessarily want housers to become service providers or vice versa," DeSantis said. "More and more we’re seeing a decoupling of the houser and the service provider. But I do think it’s imperative that the housing operator really is intentional about establishing those partnerships with those service providers. Or the projects will have challenges.”
For those partnerships to function, services need to be staffed. On the shoestring budgets that nonprofit service providers work with, little room is left for competitive wages, DeSantis said.
That brings the struggle full circle in a cruel irony: Affordable housing is needed for the workers that make supportive housing effective. Much like healthcare advocates have added their voice to housing efforts, housing advocates are taking a wider view.
“We’ve never been an organization that focused advocacy efforts on living wage issues, and we know that’s something we do need to do now," DeSantis said. "We can’t assume that’s someone else’s area of interest; we have to lend our voice to that because the field is hurting.”
