Last week, the U.S. Department of Housing and Urban Development (HUD) announced the Affirmatively Furthering Fair Housing rule which is intended to promote significantly greater income diversity in housing outcomes across the U.S., as well as help ensure that affordable housing is maintained, especially in transitioning neighborhoods and areas. HUD secretary Julian Castro said, “Unfortunately, too many Americans find their dreams limited by where they come from, and a zip code should never determine a child’s future. This important step will give local leaders the tools they need to provide all Americans with access to safe, affordable housing in communities that are rich with opportunity.” Some key things to know about the rule are listed below:
The rule mandates an extensive and comprehensive data reporting and collection effort. Communities that receive HUD funding are required to identify, track and report detailed statistics on the socioeconomic and racial composition of households in their jurisdictions, which will be entered into a federally-maintained national database. The rule does provide communities with additional funding to undertake this effort, but other HUD funding can be denied if municipalities fail to comply with this reporting requirement.
HUD will use this data to examine every community’s composition of existing households. The federal government will review this data, examining for signs of “disparities by race, color, religion, sex, familial status, national origin or disability in access to [housing outcomes]”. HUD will report the results of its analysis to each community and work with them to achieve improved housing outcomes. Federal officials will list areas in which greater diversity should be achieved, and identify how improved affordability can help to achieve these outcomes. Specific goals, benchmarks and schedules will be shared with local officials, and implementation of policies to help promote these outcomes will be monitored by federal officials.
Modification to local zoning laws will be the primary instrument by which the outcomes of greater diversity will be achieved. HUD officials will work with local officials to identify how a municipality’s current zoning code can be modified to promote greater affordability and diversity in local housing outcomes. Changes to land use and allowable density will likely be the two biggest means to promote these outcomes. However, the rule also allows for suggested modifications to other local housing-related policies (e.g. building codes, infrastructure, transportation) are also within the bounds of consideration for modification.
Funding from HUD is both the carrot and the stick for local implementation of the rule. HUD will provide communities with additional funds to track and report existing housing outcomes, but can also deny federal funds to communities that are non-compliant with either the reporting requirement or implementation of proposed policy changes. Community Development Block Grants will be the main source of funding, but other HUD grant programs also apply.
The rule still faces some obstacles before it is fully implemented. There are still funding challenges for the program in the House of Representatives, where the rule faces significant political opposition. Also, there is an interim adoption period of the rule that expires on November 8, 2016 during which HUD can and will hear comments on the rule from local officials as well as stakeholders in the housing sector of the economy (e.g. homebuilders, realtors, etc.). Also, implementation will take time and cooperation even if funding goes through since it will be based on personal information within neighborhoods.
The rule appears motivated by the fact that the issue of income inequality has been an increasingly more prevalent topic over the last several decades. Volatile swings in asset classes from stocks to real estate have only contributed to these concerns. The recent housing bubble and subsequent recovery have changed the housing landscape in many metropolitan areas across the country. Cities like Los Angeles, San Francisco, and New York City have gotten extremely unaffordable and have resulted in the gentrification of neighborhoods and subsequent displacement of existing households. It will be important to see how this new rule, if fully enacted, will affect development and local planning in the years and decades to come, by essentially “federalizing” what has historically been locally-determined policies.