This commentary is by Jim Lovinsky, a resident of Hardwick, who has worked for 12 years at the Lamoille Housing Partnership, which has developed and operates nearly 300 units of affordable housing in Lamoille County and Hardwick.
I recently read a commentary in VTDigger by Tom Evslin, “Building affordable housing is not a good way to get more affordable housing.”
I share some of Mr. Evslin’s perspective and points that he presents. However, while his approach may seem reasonable at first glance, there are some differences between market rate and affordable housing development that are worth pointing out. I’d like to thank Tom for the opportunity to do so.
One of Tom’s perspectives that I agree with regards zoning and development: Vermont and our towns can’t be both pro-housing and anti-development. Zoning that promotes housing alternatives like accessory apartments and affordable housing in villages will help provide more housing opportunities so that people can live where they work, go to school, meet their needs and access amenities.
Towns could work to provide more available parking for downtown residents and promote commercial and residential mixed-use development. Towns could also make downtowns more pedestrian-friendly and work to provide accessible, affordable and convenient transportation options for our aging neighbors, neighbors who are disabled, and working neighbors.
Market rate and affordable housing developed in Vermont have different business models and funding mechanisms to achieve goals that set them apart.
Privately developed “market rate” housing is an income-producing business whereby the owner and investors make a profit from the rents during their time of ownership, and in the future by selling the property for a profit. The property owners invest their own money and take out loans to subsidize the rest. They have to pay back those loans’ principal and interest that is reflected in higher rents along with the owner’s profit. This is a legitimate business model that provides quality homes for many Vermonters, and is rooted in prioritizing profitability for the owner.
Conversely, housing that is income-eligible and affordable for lower- and moderate-income households in Vermont and developed by nonprofit organizations requires a different business model and funding streams.
Rental income produced by affordable housing covers the costs of the property’s operation; the owners do not make a profit on top of that. The properties cannot be sold due to deed restrictions added by community development project funders, thus making them perpetually affordable. The lion’s share of project funding comes from the federal Low Income Housing Tax Credit program. That program encourages local financial institutions and investment groups to invest in affordable housing projects in their communities in exchange for tax credits.
Picture this: For homeowners with a mortgage, your local bank allocates a portion of its profits generated from your mortgage back into your town. If you live in Morrisville, Arthur’s on Main is an example of Low Income Housing Tax Credit investments at work, providing both housing and economic development and revitalizing existing historic buildings.
This is a different and also legitimate business model that provides quality homes for many Vermonters without a profit motivation and debt service, and is rooted in prioritizing affordable, reasonable monthly rental costs for the residents in high-quality, easy-to-maintain and affordable-to-operate community development projects.
The idea that more market-rate housing will somehow “trickle down” to those who cannot afford market rates is simply not valid. Market-rate housing no doubt meets the needs of households who can afford to pay market-rate rents. And, we certainly need more of it.
But no matter how long we wait, market-rate housing costs will always be out of reach to lower-income and, increasingly, moderate-income households. Many Vermont households simply cannot, now or ever, afford market rents.
For decades, rents and incomes have been out of sync, with annual housing cost increases far outpacing that of household incomes. Equating a used car with a worn-out, substandard apartment is an inaccurate analogy to describe this situation: Cars have built-in obsolescence; housing should not.
“Subsidized ghetto.” Vermont’s network of nonprofit, affordable housing developers intentionally design, locate and incorporate various types of apartments into their community development projects to promote a dignified quality of life among their residents and the greater community, economic vibrancy, and high-quality housing resources that the community can rely on into the future and be proud of.
Prioritizing affordable housing development in downtown and village settings enables utilization of municipal water and sewer, adds to downtown and village vibrancy, and creates housing opportunities in areas that increase accessibility to a good job and education, participation in one’s community, and meets one’s needs.
A range of multi-age and multi-income apartments are offered, a strategy that diffuses consolidation of households in poverty. This comprehensive approach also follows traditional growth patterns and Smart Growth ideals, and does not contribute to sprawl or countryside and farmland development, sometimes reviving existing or historic buildings.
The economic impacts of these large community investments add to and increase local grand lists and property values for neighbors. As affordable housing property owners, we recognize our responsibility and role in the community and take seriously building solid relationships with our municipalities, neighbors, and community members.
Majora Carter, an urban revitalization strategy consultant and MacArthur Fellow: “When families spend less on housing, they have more to spend on goods and services. These transactions fuel community-wide economic growth by bolstering local businesses and the local workforce. They also contribute to the local tax base that gets invested back into the community through government programs and infrastructure improvements — resources that benefit everyone.… Vibrant communities have lots of different types of people in them, but if we don’t secure affordability for some, that vibrancy can fade very quickly.”
If Vermont is to find ways to affordably house our community members, then communities need to engage in discussions about the housing crisis and solutions to pursue for everyone who needs safe, decent and affordable housing!
