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Housing Development Incentives are local policies designed to stimulate the development of housing.\u00a0 A local government can deploy a variety of mechanisms providing direct and indirect forms of support to incentivize the development of housing.\u00a0 The goal of these incentives is to increase revenue streams or decrease costs for a specific development, which increases the project\u2019s likelihood of being developed.<\/span><\/p>\nHousing Development Incentives are local policies designed to stimulate the development of housing.\u00a0 A local government can deploy a variety of mechanisms providing direct and indirect forms of support to incentivize the development of housing.\u00a0 The goal of these incentives is to increase revenue streams or decrease costs for a specific development, which increases the project\u2019s likelihood of being developed.<\/span><\/p>\nStart by prioritizing the following for your community:<\/strong><\/p>\n<\/div>\n\n- \n
Lower Rent:\u00a0 <\/strong>Does your community wish to provide incentives in exchange for lower rents?<\/span><\/div>\n<\/li>\n- \n
Increased Supply:<\/strong>\u00a0 Does your community wish to increase the supply of rental housing to reduce the demand pressure on existing units?<\/span><\/div>\n<\/li>\n- \n
Production:\u00a0<\/strong> Does your community wish to expand production, diversify production, or accelerate production?<\/span><\/div>\n<\/li>\n<\/ul>\n<\/div>\n<\/div><\/div><\/div><\/div><\/div>Types of Incentives<\/strong><\/h2>\n<\/div>\n\n
\n\n\nRegulatory Incentives<\/span><\/strong><\/th>\nExplained<\/strong><\/th>\n<\/tr>\n<\/thead>\n\n\n\n\n- Density bonuses<\/span><\/strong><\/li>\n
- Flexible design standards<\/span><\/strong><\/li>\n
- Reduced parking requirements<\/span><\/strong><\/li>\n
- Accelerated approvals<\/span><\/strong><\/li>\n
- By-right development<\/strong><\/span><\/li>\n<\/ul>\n<\/td>\n
\n\n- Relatively inexpensive and straightforward to implement \u00a0<\/span><\/li>\n
- Can be less effective than direct funding in increasing new housing by large amounts.<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n
\n \n\n\nFunding Incentives<\/span><\/strong><\/th>\nExplained<\/strong><\/th>\n<\/tr>\n<\/thead>\n\n\n\n\n- Reduced fees<\/span><\/strong><\/li>\n
- Public land<\/span><\/strong><\/li>\n
- Tax Incentives<\/span><\/strong><\/li>\n
- Public financing<\/span><\/strong><\/li>\n<\/ul>\n<\/td>\n
\n\n- Provide money directly or indirectly from public reserves<\/span><\/li>\n
- Can be significant or even necessary for a project to be feasible for development<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div><\/div><\/div><\/div>
\n Tool for Developing Higher-Density, Multi-Family Housing by Right Development <\/strong>(Pages 63 \u2013 73 of the Toolkit)<\/span><\/div>\n\n \n By-Right Development:\u00a0<\/strong> A housing development policy that prioritizes the development of higher density multifamily housing through uniform, codified, and consistent zoning and development regulation. Establishing by-right development allows the supply of housing to grow with demand and helps to stabilize and lower rents.<\/span><\/p>\nPublic Land Policy (Pages 86-95)<\/strong><\/p>\nSelling public land at a below-market price to subsidize the development of housing can improve affordability in a community.<\/p>\n To design an effective public land policy, a city should take a three-tiered approach.<\/p>\n Tier 1:\u00a0 Include a Broad Portfolio of Publicly Controlled Land<\/strong><\/p>\n<\/div>\n\n- Apply a public land policy to land held by all governmental departments and quasigovernmental agencies (e.g., transit or redevelopment agencies, housing authorities, municipal utilities, school districts, etc.)<\/span><\/li>\n
- Prioritize high-value sites, rather than exempting sites in desirable areas.<\/span><\/li>\n
- Encourage co-location of housing and government facilities, including redesigning public facilities.<\/span><\/li>\n
- Conduct a thorough inventory of land to understand availability and barriers.<\/span><\/li>\n<\/ul>\n
Tier 2:\u00a0 Maximize Land Value in Order to Create More Affordably Priced Units<\/strong><\/span><\/p>\n\n- The more land value contributed to a project, the greater the affordability.<\/span>
\n\u00a0<\/span><\/li>\n- By allowing mixed-income, high-density developments on high-value sites, public land policies can create more affordability.<\/span>
\n\u00a0<\/span><\/li>\n- Public land can be used to model and catalyze the type of mixed income development a local government wishes to see more of in the market.<\/span>
\n\u00a0<\/span><\/li>\n- Affordability can also be supported through \u2018fast tracked\u2019 regulatory processes, reducing uncertainty and development costs that threaten affordability<\/span><\/li>\n<\/ul>\n
\nTier 3:\u00a0 Follow a Defined Selection Process\u00a0<\/strong>
\n<\/span><\/div>\n\n- The best selection processes will be clear and simple enough to attract a broad range of developers and competitive proposals, ensuring that a local government can get the best possible public value from a discounted land sale.<\/span><\/li>\n
- Public benefits and affordability goals must be detailed and specific, helping developers strengthen their proposals.<\/span><\/li>\n
- Early and effective community engagement is critical to a successful public land policy. Engagement can help to create a broadly supported selection criteria and prevent eventual community opposition to development.<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div><\/div><\/div><\/div><\/div>
\n Tax Abatement Tool <\/strong>(Page 96-104)<\/div>\n\n To design effective PROPERTY TAX incentives, a city should take a four-tiered approach.<\/span><\/p>\nTier 1:\u00a0 Create a Defined and Feasible Approach to Increase Affordability.\u00a0<\/strong><\/p>\n\n- Tax incentive policies should not only be limited to units that receive other federal and state subsidy sources<\/span><\/li>\n<\/ul>\n
\n- Tax incentives should be geographically targeted based on market conditions.<\/span><\/li>\n<\/ul>\n
\n- The flexibility of tax incentives should be used to create an approach customized to a market. In markets where the supply of housing is limited by a lack of developable land, a direct approach is best.<\/span><\/li>\n<\/ul>\n
Tier 2:\u00a0 Balance Affordability Requirements with Incentives\u00a0<\/strong>
\n<\/span><\/p>\n\n- Successful tax incentives can have economic, fiscal, and policy benefits that outweigh the implementation costs and foregone tax revenue.<\/span><\/li>\n<\/ul>\n
\n- Property tax incentives with a direct approach should set the incentive to match the level of affordability the policy is aiming to achieve.<\/span><\/li>\n<\/ul>\n
Tier 3:\u00a0 Carefully evaluate the period of the incentive to ensure that it aligns with the larger policy goals of the incentive.<\/strong><\/span><\/p>\n\n- To target deeper levels of affordability through a property tax abatement, incentives should allow tax reductions for market-rate units to cross-subsidize units at deeper levels of affordability.<\/span><\/li>\n<\/ul>\n
Tier 4: Enable Simple Administration and Developer Participation.\u00a0<\/strong>
\n<\/span><\/p>\n\n- Tax incentives should rely on a rule-based approval process. These programs should be designed to work in tandem with an existing development process that is predictable and limits discretionary review.<\/span><\/li>\n<\/ul>\n
\n- Administrative simplicity influences the ability of tax incentives to be effective.<\/span><\/li>\n<\/ul>\n
\n- Policies should keep income documentation and reporting requirements simple and should not replicate burdensome federal requirements<\/span><\/li>\n<\/ul>\n
\n- Resident selection processes should not impede the process of filling rental housing.<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div><\/div><\/div><\/div><\/div>
\n What NOT to DO \u2013 RENT CONTROL:<\/strong><\/div>\n\n Rent control is a counterproductive housing policy that does not address any of the key factors driving housing affordability.
\n<\/span><\/p>\n\n- Rent control leads to a decrease in supply of overall units and an increase in rents for unregulated units.\u00a0<\/span><\/li>\n
- Rent control is a blunt tool that does not efficiently target benefits.\u00a0<\/span><\/li>\n
- Rent control is complicated and expensive to administer.<\/span><\/li>\n<\/ul>\n
\u00a0<\/span>Economists have long considered rent control a failed housing policy \u2013 the benefits for a few select tenants do not outweigh the substantial economic and social costs. Cities around the country have shown that these policies have led to higher rents and fewer units overall.<\/span><\/p>\nLocal governments have many tools at their disposal that can decrease the affordability gap and increase overall supply.<\/p>\n \n- Rent vouchers can help increase what households can pay for units.<\/span><\/li>\n
- Tools like property tax incentives, public land subsidies, and other developer incentives can decrease the cost to develop and operate housing, while expanding by-right development can help increase overall supply.<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div><\/div><\/div><\/div><\/div>
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