Affordability Faces Yet Another New Foe

By Daniel C. Vock

Economic distress caused by the coronavirus pandemic will only amplify the need for affordable housing.

"[The pandemic] reinforces the importance of housing affordability," says Scott Hoekman, president and CEO of Enterprise Housing Credit Investments, LLC. "When homes are affordable, people are better able to pay the rent."

But affordable housing funding sources and operators, already stretched thin by the country's housing crisis, now face a fresh set of challenges. Renters have lost jobs. States and contractors are determining whether to shut down construction sites to prevent further spread of the disease. And cities are scrambling to adjust approval processes under social-distancing orders.

While construction was deemed essential in many states, housing projects across the country have been put on hold to prevent the spread of COVID-19. Photo by Photovs/iStock/Getty Images Plus.

Cautiously moving forward

Despite the upheaval, the industry was largely able to keep things running during the initial outbreak.

"Banks and cities are still advancing money that they said they [would]," says Joe Portelli, the vice president of development for RPM Development Group, an affordable housing provider based in New Jersey. "Banking institutions are asking questions about supply chains, manpower, what contractors are doing, and worker protections. But it's not stopping them from funding. They just want to know what's happening at each individual job."

Those conditions varied considerably in the spring. In Pennsylvania, Governor Tom Wolf ordered the closure of all but "life-sustaining" businesses, including almost all construction projects. Across the Delaware River, New Jersey Gov. Phil Murphy expressly allowed construction of affordable housing to continue during his state's shutdown. And despite Illinois deeming construction an essential service, some Chicago projects were put on hold.

Angela Brooks, AICP, development manager at the Chicago Housing Authority and the chair of APA's Housing Division, says much of their work has shut down, including projects in senior housing facilities, to prevent spreading the disease among workers and vulnerable residents.

But the agency has also tried to produce as many new units as possible to meet financing and regulatory deadlines, she adds. Foundation pouring for a new building went ahead as planned, for example, because it required few workers and no residents were on site.

Housing operators are bracing for further fallout in the coming months. Fewer rents have gone unpaid than experts feared, says Hoekman, but that could change. Eviction bans could have limited reach due to policy restrictions, and residents covered by them would still owe back rent.

Funding sources could also be in jeopardy. While federal Low-Income Housing Tax Credits are the main financing mechanism for affordable housing, state and local dollars are vital pieces of the pie. Those slices could be in danger, says Hoekman, because local tax revenues have dropped significantly during shutdowns, while health services need more funding.

A better public hearing

Public input processes needed for approval of new projects will also need an overhaul. In-person hearings fly in the face of social distancing, but regulations from the U.S. Department of Housing and Urban Development don't allow for alternatives like online meetings.

Hearings are often criticized as ineffective, and they tend to disproportionately attract NIMBY sympathizers, wealthier residents, and those with the ability to attend lengthy meetings on school nights — rarely the people served by affordable housing. While broadband access is its own issue, virtual hearings could see more diverse engagement. "It's really easy to participate in a land-use meeting from my couch," Brooks says.

The pandemic should spur planners to address disparities and the need for safe, affordable housing, adds Hoekman. "This whole thing is accentuating existing inequities and the lack of a robust social safety net."

Daniel C. Vock is a public policy reporter based in Washington, D.C.