Breaking Down Barriers to Affordable Housing and Neighborhood Opportunity

1. Breaking Down Barriers to Affordable Housing and Neighborhood Opportunity: Market Dynamics Presented by Patrick Brennan and Gary Brennan

2. Integrative Solutions to Our Housing Shortage • Strengthen neighborhoods • Promote opportunity • Make it a little easier for everyone involved *Spoiler alert: We’re going to discuss the urgent need for healthy, walkable, affordable communities. This means higher density and better design.

3. Historical Perspective • 1934 Federal Housing Administration • Redlining, household debt, and the American Dream! • A bunch of other stuff over a bunch of other decades…. • Civil rights, “slum clearance”, CRA, CDBG, LIHTC, URA, etc. • Awesome history from National Low Income Housing Coalition (only 4 pages!) • Also, the American Bar Association (18 pages, abstract) • And Harvard Joint Center for Housing Studies (71 pages… ) • Here we are today! Affordable Housing vs “Market Rate” • Why the dichotomy?

4. Desired Outcomes • Public Health • Equitable Development • Amenities for All • Neighborhood Stability and “Value” • Shared Community Values These outcomes are not being achieved. NIMBYs to blame? How about….. No more NIMBY vs YIMBY?

5. Seeking common ground…. QIMBY Quality In My Backyard! *Shamelessly stolen from The Simpsons and Brent Toderian https://www.vox.com/2017/6/20/15815490/toderian-nimbys

6. Where to Start…. The Big Problem • We have a shortage of affordable housing • Affects people at most income levels • Relatable/Understandable • New housing development tends to fit a low-density suburban form* • Follows post-WWII pattern, but the history dates back even further, to 1930s FHA standards and earlier “white flight” • Costly and less efficient • Less healthy/livable by modern standards • Why keep going down this path? • Familiar, easily entitled/permitted, “bigger = better”, etc. • But what about the “back to the city” movement? Crabgrass Frontier: The Suburbanization of the United States, by Kenneth Jackson, 1985 (function, class, separation, density)

7. Cross-Cutting Issues • Geographic Factors • Where we build • How we build • Affects costs and neighborhood character • Socio-Economic Factors • Disparities in wealth, income, opportunity • Public Health Factors • Also socio-economic in nature

8. Public Health Perspective

9. What’s Going On? Public Health Where we sleep has an impact on all of us

10. MAKE SOME MONEY - PAY YOUR RENT • OPPORTUNITY CRISIS : 62% of jobs don’t support middle-class life after accounting for cost of living (USA Today 10/30/18) • Job categories: • HARDSHIP = $26,070 or less (30%) • LIVING WAGE = $26,071-$44,066 (32%) • MIDDLE CLASS = $44,067 - $79, 085 (23%) • PROFESSIONAL = $79,085 or more (15%) https://www.thirdway.org/report/the-opportunity-index-ranking-opportunity-in-metropolitan-america

11. MAKE SOME MONEY - PAY YOUR RENT Nationally, the study found: • 30 percent of jobs are “hardship jobs” • 32 percent are “living wage jobs” • 23 percent are “middle-class jobs” • 15 percent are “professional jobs”

12. CALIFORNIA HERE WE COME! Some of the housing challenges facing California include: • Why California? • Proximity • California home to 12 percent of the nation’s population • Disproportionate 22 percent of the nation’s homeless population. • Production: • Less than 80,000 new homes annually, over the last 10 years • Projected need = 180,000 additional homes annually • Continued sprawl will decrease affordability and quality of life while increasing transportation costs. California’s Housing Future: Challenges And Opportunities, February 2018

13. CALIFORNIA, Cont. • Highest housing growth expected in communities with environmental and socioeconomic disparities. • Home ownership rates lowest since the 1940s. • Of California’s almost 6 million renter households • More than 3 million households, pay more than 30 percent (rent burdened) of their income • Nearly 30 percent - more than 1.7 million households - pay more than 50 percent of their income toward rent. • California’s Vulnerable Populations • Discrimination and inadequate accommodations for people with disabilities are worsening housing cost and affordability challenges.

14. Who Are Vulnerable Populations? • Persons with disabilities • Migrant farmworkers (documented and undocumented) • Tribal populations • Homeless Youth (Foster youth-aged out) - one-third of the nation’s total • Homeless veterans - one-fourth of the nation’s total • Seniors - 65 years and older (average median income $21,300)

15. NOT HEALTHY? THE ROAD FORWARD IS ROUGH • Americans spend more money out of pocket every year on healthcare • Bigger burden on poorer families (High deductibles, Higher premiums, Tiered pharmacy, Co-payments….) • Strategies (cost sharing) in place to help the consumer of service(s) understand real costs and then make a better choice in their purchase • Not a proven/effective concept AXIOS - Vitals - 10/24/2018 (Chase Institute Report)

16. Outside U.S. - AUSTRALIA • Homelessness associated with enormous health inequalities • Shorter life expectancy, higher morbidity and greater usage of acute hospital services. • Viewed through the lens of social determinants • Homelessness is a key driver of poor health • Homelessness results from accumulated adverse social and economic conditions. • Movement is away from “Housing Ready” to “Housing First” International Journal of Environmental Research and Public Health - 12/14/2017 - 14(12):1535 - Tracking Health Disparities for People Who Are Homeless / Start with Social Determinants - Case Studies - Australia

17. AUSTRALIA, Cont. • Cost-cutting vs Expense… • CONSIDER, mitigating expenses for: • Justice • Corrections • Child Protection and Family Services • Social Security • Ambulance and Hospital Emergency Departments • Other • This becomes a social justice imperative to address structural systemic disadvantages • It also becomes a common-sense issue

18. BACK TO ARIZONA AND MARICOPA COUNTY • Phoenix renters need to earn almost $20/hr. to afford two-bedroom apartment • Ten years ago, AZ had $40M+ in housing trust funds • Today, under $4M • Today’s need = 200,000 affordable housing units • 20% of need being met • Point-In-Time homeless count has risen 25-27% every year for the past three years • Missing “couch-surfers”, multiple family households • 15,000 “On-the-brink” KJZZ July 5, 2018, interview w/ Lisa Glow, CEO of CASS

19. MARICOPA COUNTY, Cont. • Higher rents recently landed the valley on a top 10 list… • ...of U.S. cities where renters have the toughest time stretching their wages to pay rent. • Another study reported that Phoenix ranks second among U.S. metro areas in the share of renters ousted from their apartments. • The list goes on… • At $14.59 per hour take-home pay, the average renter must use more than a 1 ½ weeks of their monthly pay to afford a typical one bedroom apartment (SmartAsset - 2018) • To cover an average $960 rent in metro Phoenix, a typical Valley resident must work almost 66 hours. • Valley apartment rents climbed about 20 percent since 2014 • Phoenix-area wages up by less than half as much AZCentral.com - The Republic - Phoenix ranks 9th most unaffordable city for renters, according to study - 2/20/2018

20. CITIES: SQUEEZING WATER BALLOONS • Who’s in charge? State? County? MAG? Cities? Others? • Example: Tempe • Spends more on human services per capita than any other city in the East Valley - $85.75/per capita • Budgets $1.6M/yr to assist families and individuals to end their homelessness (approximately 1,117 individuals per year) • Budgets $11.6M/yr to serve families and individuals with subsidized housing (approx. 3,000 individuals per year) • $1.3M to support local human services organizations, including nonprofits dedicated to addressing homelessness • Identified “Workforce Housing” as a priority - Households with income between 80%-120% AMI

21. ASU Stardust Center for Affordable Homes and Family Affordable and Workforce Housing Strategies • Known issue: Escalating housing prices are leaving behind families looking for affordable and workforce housing • Working with Silvia Urrutia, U Developing, LLC • Developing value-added knowledge and evidence-informed practice to effect changes in policy and practice to support the housing needs of the future workforce in sustainable communities

22. FINANCIAL STRESS & HEALTH • Social determinants >>> health >>> social determinants • THE LOOP CONTINUES …. • In 2013, lack of affordable housing was leading cause of homelessness in America’s 25 largest cities • Homeless/housing-insecure adults less likely to have goal-oriented thinking; likely to experience psychological distress • Homeless/housing-insecure children experience sleep problems, difficulty advancing in school, and exhibit antisocial behavior • Without affordable & accessible health care, illness/injury interfere with employment • This, in turn, increases likelihood of poverty and homelessness • Stable housing reduces Emergency visits/hospitalization The Permanente Journal: Access to Affordable Housing Promotes Health and Well-Being and Reduces Hospital Visits - November 15, 2017

23. FINANCIAL STRESS & HEALTH, Cont. • Personal financial impact of being seriously ill has not been well-recognized • 37% of seriously ill use up all or most of savings, despite having insurance • 31% have been contacted by a collection agency • 23% unable to pay for basic necessities like food, heat, or housing • 51% report challenges doing their job as well as before • 29% lost their job • 48% reported that their illness resulted in emotional or psychological problems The Commonwealth Fund, The New York Times, Harvard-T.H.Chan School of Public Health: Seriously Ill In America Today - October 2018

24. AVAILABLE RESOURCES? • Wealth Matters - Building wealth and income among people who have long lacked opportunity is essential and possible for improving health equity • Parents’ wealth shapes their children’s educational, economic and social opportunities, which in turn shape their children’s health throughout life • The distribution of wealth in the U.S.A. has become increasingly unequal with 21.2% of U.S. households with zero or negative wealth in 2016 • Segregated communities of color are more likely to be cut off from investments that promote good schools, affordable housing and other opportunities for health Robert Wood johnson Foundation - Wealth Matters for Health Economics, September 5, 2018… and New County Health Rankings Show Differences in Health and Opportunity by Place and Race - March 14, 2018 (www.countyhealthrankings.org)

25. HEALTH RESOURCES, Cont. • EMPLOYEE SPONSORED INSURANCE (ESI) • Total cost of a family Employee Sponsored Insurance plan rose from $5,791 to $18,142 between 1999 and 2016 • As a share of average annual earnings for bottom 90% of workforce, premium costs rose from 25.6% to 51.7% over the same period

26. HEALTH RESOURCES, Cont. • Arizona has Medicaid (AHCCCS). How’s it working? • As of 10/27/2018, AHCCCS enrolled 1,871,405 individuals (27% of population) • AZ population = 7.016 Million people • Phoenix population = 1.626 Million people • Maricopa County population = 4.3 Million people (61%) • AHCCCS/Medicaid eligibility = 136% of Federal Poverty Level (FPL) • $16,753 for an individual adult • $34,638 for a family of four • Average income of $35,022/year • 17.73% of population lives in poverty

27. HEALTH RESOURCES, Cont. WHAT DOES AHCCCS - State Medicaid Advisory Committee (SMAC) TELL US? • 5% of Service Members use 50+% of all funds • AHCCCS has special focus on Population Health identifying individuals/groups with same diagnosis and Social Determinants of Health (SDOH) • AHCCCS is changing service delivery by focusing on Value-Based contracts, away from Volume-Based contracts Arizona Health Care Cost Containment System (AHCCCS) - State Medicaid Advisory Committee (SMAC) Meeting, October 17, 2018

28. HEALTH RESOURCES, Cont. • AHCCCS Housing initiatives (Housing First) • Statewide AHCCCS funds 6,0000 units of public housing - less than one fourth the number of units in Philadelphia, PA (size of Phoenix) • AZ has 20,471 housing choice vouchers (is it located near PCP office or BH Center?) - ½ the number of available units in Los Angeles, CA • 2018 Point-In-Time Homeless Count in Maricopa County identified 6,298 people • 903 self identified as being seriously mentally ill (SMI) • 1,264 individuals counted throughout the rest of the state • Total population undercounted

29. HEALTH RESOURCES, Cont. • Mercy Care, Maricopa Regional Behavioral Health Authority (RBHA) funds special programs to address Social Determinants Of Health (SDOH) • Service members in housing programs each use $20,000/yr • 24% reduction by providing supported housing projects • Community Bridges Incorporated (CBI) provides a comprehensive array of services 24/7/365 • Mental health and substance abuse counseling • Independent living skills • Medication management • Housing and employment support services

30. Socio-ECONOMIC Perspective

31. Other Levers of Opportunity When we discuss “Opportunity Neighborhoods”, it should be noted that this is a hot topic in economics • Edge Cities, Edgeless Cities, and Enterprise Zones • Look outside of housing: Enterprise Zones • Major focus of economic development research/strategy • “Do Enterprise Zones Create Jobs? Evidence from California’s Enterprise Zone Program” David Neumark, Jed Kolko, NBER 2008 • “There is considerable debate over the effectiveness….” • “Many studies fail to find employment effects…” • Measurement problems, “...an enterprise zone program may cover areas that are also affected by other geographically-targeted policies….” https://www.citylab.com/design/2018/04/return-to-edge-city/552362/

32. Enterprise Zones, Cont. Peters, Alan H., and Peter S. Fisher. 2002. "The Effectiveness of State Enterprise Zones." Employment Research 9(4): 1–3. • “In the average zone… tax incentive package… lowered the effective tax rate… about a third. In 13 zones, the incentive package cut the tax rate by more than half.” • “Why do enterprise zones perform so poorly? … Enterprise zones are typically in areas with poor infrastructure, poor connections to the transportation system, high crime, and so on.” • “...Jobs in zones are often taken by nondisadvantaged individuals living far from the targeted areas….”

33. Levers of Opportunity, Cont. New Market Tax Credits • Launched in 2000 and threatened in 2017 • NMTC Coalition launched campaign to study and demonstrate program effectiveness • “Between 2003 and 2015, $42 billion in direct NMTC investments… leveraged nearly $80 billion in total capital investment… in communities with high rates of poverty and unemployment.” • “Between 2003 and 2015, the NMTC generated more than 1,000,000 jobs, at a cost to the federal government of less than $20,000 per job.” • Bipartisan proposal on table, to make NMTC permanent

34. Levers of Opportunity, Cont. • Back to Housing: CDBG • Also threatened in 2017 • Urban Institute reported last year that CDBG effectiveness has not been effectively studied; called for more evidence-based performance measures and guidance. • NLIHC reports: • “No reliable data exist on how well jurisdictions meet the requirement that 70% of funds benefit low income persons.”

35. Levers of Opportunity, Cont. • Forbes reported in 2016: “An area where HUD needs to improve is program assessment, and this will require better data…. HUD requires each city, county and state that receives block grants to document their accomplishments and expenditures. But these reports count things like the number of people served or houses repaired, which may or may not improve the community as a whole, and they are in a format that makes it difficult to compare outcomes across communities.”

36. The Latest: Opportunity Zones • Focused on private market; capital gains tax avoidance • IRS published new guidelines 10/19/18 • WSJ Headline on 10/23/18: “Developers Look to Hit Tax-Break ‘Jackpot’ in Opportunity Zones” • Commercial Property Executive 11/1/18: “Navigating the New Opportunity Zones” • Phoenix-based Virtua Partners were early adopters/proponents of the Opportunity Zone program - already announced their first 90-unit multifamily project in Tempe • Will this have a major impact? May be too soon to tell

37. O. Zones in My Neighborhood: South Phoenix • Map from Enterprise Community Partners Opportunity 360 map tool • Note that all of the highlighted areas are also QCTs, eligible for LIHTC funds • Note additional overlap of light rail alignment and COP’s Mobility Study Area

38. Opportunity Zones, “Here to Help….” Any Concerns? Center for American Progress: “The Treasury Department’s Regulations for Opportunity Zones Ignore the Communities They Should Serve” • “… The only certainty is that it will provide excessive tax breaks to investors.” • “Treasury could have mitigated this by including guardrails… to ensure that struggling communities will actually benefit, rather than simply be displaced.”

39. Zoning in My Neighborhood: South Phoenix • Reflects several layers of historical (failed?) redevelopment initiatives • City’s top-down “If you zone it, they will come” approach • NextCity: “So You Want to Change Zoning to Allow for More Housing” • “...up-zoning to absorb growth has unintended consequences” -Nora Liu, of Government Alliance on Race and Equity

40. Gentrification and Displacement “Endogenous Gentrification and Housing Price Dynamics” Guerrieri, Veronica & Hartley, Daniel & Hurst, Erik, 2013 • “A key ingredient in our model.... Individuals like to live next to richer neighbors.” • Endogenous gentrification: “In response to a city wide demand shock, higher income residents will choose to expand their housing by migrating into the poorer neighborhoods that directly abut the initial richer neighborhoods. The… richer residents... bid up prices… causing the original poorer residents to migrate out.”

41. Gentrification, Cont. "Superstar Cities," Joseph Gyourko & Christopher Mayer & Todd Sinai, 2013 • “Differences in house price and income growth rates between 1950 and 2000 across metropolitan areas have led to an ever-widening gap in housing values and incomes…” • Inelastic supply of land in attractive locations • Sorting of high-income families >>> Superstar Cities • New residents wealthier, cycle perpetuates • Sub-MSA findings: “Superstar Suburbs”

42. Gentrification, Cont. “Do Rising Tides Lift All Prices? Income Inequality and Housing Affordability” Matlack, Janna L. & Vigdor, Jacob L., 2008 • “In tight housing markets, the poor do worse when the rich get richer.” • “Tight housing markets tend to be those where incomes are rising rapidly at the high end of the distribution, while incomes at the low end trend upward only slowly if at all.” • Demand-side determinants of housing affordability should considered along with the supply side.

43. Gentrification, Cont. “Market Rate” Housing, aka “Luxury” Housing • Strong Towns, July 2018: “Why Are Developers Only Building Luxury Housing?” • Construction Costs • Apartments (Fannie Mae): $192-233 per sq ft • SFR (Nat. Assoc. Home Builders): $103 per sq ft • “Filtering” - Joe Cortright, City Observatory • Also consider scarcity and local elasticity of demand • “New Cars are Unaffordable to Low Income Households, too” • “Why Aren’t We Building Middle Income Housing?” - Rick Jackobus, for Shelterforce • Zoning to blame? “Toyota and Lexus”

44. Gentrification, Cont. Panel Paper: Does Luxury Housing Construction Increase Nearby Rents? - Asquith, Mast, and Reed • Presented by Evan Mast, Nov. 10, 2018, at Association for Public Policy Analysis and Management Conference • Explores endogenous shocks and induced demand • “On the whole, our results suggest that… new construction lowers rents in gentrifying neighborhoods.” • Future work will study buildings in different neighborhood types separately, explore different definitions of gentrification

45. SOCIO-Economic Perspectives

46. Finding Common Ground Remember QIMBY • Seek consensus on desired outcomes, based on shared community values • Bring in broader perspectives, additional expertise • Develop the expertise • Engage early and often around building value and implementing better standards for development One important tool…. Health Impact Analyses

47. WHAT DO WE NEED TO DO GOING FORWARD? DO WE - Focus on Housing - on Healthcare - Focus on Wages - Focus on …..? • World Health Organization and Centers for Disease Control and Prevention tell us to build a Healthy Community • Clinical care accounts for only 20% of health, while behaviors, physical environment and social and economic factors determine the rest • It’s not just the poor who are having trouble finding affordable housing. The middle class is hit too LEAVITT PARTNERS; Social determinants matter, But Who Is Responsible? 2017 Physician Surveys on Social Determinants of Health, May, 2018… and The National Alliance to Impact the Social Determinant: Releases White Paper (www.nasdoh.org)

48. Health Impacts, Cont. Additional support for health impact analyses: • Urban Institute, 10/2018 reports that 1 in 4 rural renters spends more than 50% of their income on housing • Who must address and pay to address Social Determinants Of Healthcare (SDOH)? • Funding these initiatives is identified as the biggest barrier by 55% of payers/providers • Fifty percent cite social determinants of health as having a significant impact on chronic disease management • Financial buy-in from state governments is cited as a key barrier Modern Healthcare, Custom Media, Evolve Health, 9/24/18, “Strategies for Payer-Provider Collaboration Around Social Determinants of Health

49. ELEMENTS OF A HEALTHY COMMUNITY • Access to healthcare and coverage • Affordable quality housing • Community Safety • Economic opportunity • Educational opportunity • Environmental quality • Quality affordable food • Social and cultural cohesion • Healthy community design • Social justice • Parks and recreational opportunities • Transportation options Vitalyst Health Foundation: Elements of a Healthy Community

50. HEALTH IMPACTS, Cont. SHOULD WE CONSIDER USING MORE HEALTH IMPACT ASSESSMENTS (HIAs)? • HIAs broadly take into account environmental, social, and economic factors related to health and evaluate the potential impacts of a proposed project plan, program or policy on the health and well-being of the community… Robert Wood Johnson Foundation and the Pew Charitable Trusts; HEALTH IMPACT PROJECT: Health Impact Assessment and Housing, March, 2016