Developing Inclusive Communities: Challenges and Opportunities for Mixed-Income Housing

Over the past decade, housing costs have risen faster than incomes. The need for affordable rental housing has well outpaced the number of available units as well as funding allocations at the federal level. Local regulation and land use policies that increase the cost of subsidized, mixed-income housing construction and preservation have contributed to the affordability problem. To meet the affordable housing needs in U.S. communities, innovation, creativity, and “out of the box” thinking may be required, particularly as it relates to reducing the rapidly increasing costs of development. Another consideration is pursuing mixed-income development, as it is more financially sustainable than low-income housing. Mixed-income neighborhoods are also desirable as they can lead to substantially better outcomes for families because the higher disposable incomes of a broader economic mix of families attract additional private investment, amenities, and opportunities. This discussion paper explores new ideas about how affordable housing in an economically integrated, mixed-income community setting could be developed and operated in an environment of declining government subsidies. Based on interviews with housing stakeholders in Atlanta, Georgia, Jacksonville, Florida, and Nashville, Tennessee, we have compiled ideas that could be scalable and replicable and could result in substantial cost savings without compromising mission, integrity, performance, or accountability. Specific suggestions include standardizing qualifying income targets and other standards imposed by funders and reducing building and permitting barriers to development, such as limited zoning for multifamily housing and regulations limiting wood frame construction. More generally, participants thought existing stakeholders could better address the underlying political environment by creating a unified constituency to advocate for more mixed-income communities. These ideas and lessons learned from the mixed-use, mixed-income revitalization experience may inform and assist cities in rebuilding or enhancing their urban core. JEL classification: H53, H75, I38, K25, R21, R31, R38