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For housing that is to be built purely by the private market, meaning without direct subsidy of any kind, the main step a community can take is to provide the opportunity for the market to work. At the physical level this means providing infrastructure, namely roads, public water, and sewers. Land cannot be developed for housing without road access, and it cannot be developed at more than very low density without public water and sewers. Beyond these absolutely essential items, other public investment will affect the rate of new housing construction. For example, recreational facilities or an elementary school may make a developing area more desirable.

Land-use controls will limit the quantity of the housing stock by setting an upper limit on the number of units per acre. That affects price.

Controls also affect price by the types of units they permit. Garden apartments cost less per unit than do row houses. Row houses, in turn, cost less per unit than do free-standing, single-family houses on small lots. These cost less than houses on large lots. Land-use controls that require particular amenities (for example, recreational facilities) for new developments will raise prices. Subdivision requirements affect the site-preparation costs, which in turn will be reflected in the price of the finished units.

What can the community do to provide low- and moderate-income housing? As stated, it can provide the infrastructure to support and the land-use controls to permit the building of less expensive housing types. It can encourage builders to seek out and use federal and state subsidies for low- and moderate-income housing. It can make it community policy not to use its land-use control and other legal powers to obstruct the building of subsidized housing. Similarly, it can take an accommodating rather than a resisting stance toward group homes. This last item is not an idle point. In many communities, citizens' resistance to group homes can be ferocious. In addition, the municipality can use CD funds, or even funds raised through its own tax efforts, to subsidize low- and moderate-income housing. For example, CD funds have been used to make low-interest rehabilitation loans to low- and moderate-income homeowners and to the owners of low- rent apartment houses. This may be done through a revolving loan fund or through the banks, with the municipality picking up a portion of the interest cost and perhaps also guaranteeing the loan. The municipality's zoning laws can provide density bonuses to developers who will include a certain number of units reserved for low- and moderate-income buyers or renters (see Chapter 9).

If particular forces threaten to reduce the supply of affordable housing, municipal governments may sometimes be able to take preventive steps. For example, one trend in many suburban areas where land prices are high and the supply of vacant building lots limited has been that of tear downs. Typically these occur in older neighborhoods. A would-be homeowner purchases a house that may be of good quality and in scale with other houses in the neighborhood simply to obtain the lot. That house is then torn down and replaced with a much larger house, sometimes referred to derisively as a MacMansion or monster home. Residents often object because such large homes are out of scale with the surrounding development. But another effect is to reduce the supply of so-called starter homes and thus make it more difficult for less affluent people to make the transition into homeownership. Many municipalities have resisted this process with a variety of regulatory tools. In some cases, zoning laws and building codes have been adjusted to limit height, bulk (the cubic footage of the structure), and the maximum floor area ratio, among other building characteristics.13 Other municipalities have required design review if the new house is to be substantially larger than the one it will replace. However, like so many other matters in planning, such restrictions can be argued both ways. The goals of such restrictions seem quite reasonable, but they do constitute an infringement on the rights of the would-be buyer and may also impose a loss on the homeowner who wants to sell his or her home. The possibilities for litigation seem to be considerable.

A number of municipalities ranging from New York City to Santa Monica have attempted to render housing more affordable through rent controls. Economists, by and large, are against the practice. They argue that rent controls encourage disinvestment in those units subject to controls and that fear that controls will be extended to new units reduces the rate of new construction. Thus they conclude that controls reduce housing quality and exacerbate housing shortages. However, regardless of the wisdom of controls, no list of policies that address the question of affordability would be complete without mentioning them.

A single community generally cannot do a great deal with regard to low- and moderate-income housing. Federal monies for housing have always been in short supply. That has become even more the case since the federal budget tightening that followed the onset of the Great Recession.

Even if the community makes every effort to see that its land-use controls do not preclude lower-cost housing types, the fact is that any new unsubsidized housing is expensive. The ability of the community to subsidize housing through either CD funds or its own revenues is limited by other demands on the budget and the willingness of the majority of citizens to be taxed for that purpose. Still, as indicated above, there is a certain amount that can be done if the community wants to do it, but as noted, not every community wants to do it.

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