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January 30, 2018

Reckford JonathanA Thought Leader Series Piece

by Jonathan Reckford

Note: Habitat for Humanity CEO Jonathan Reckford gave a Wrigley Lecture titled "Housing for Inclusive and Equitable Cities" in January 2018.

With 60 percent of people worldwide projected to be concentrated in urban areas by 2030, developing sustainable communities that are inclusive and equitable for all will require creating affordable housing located near job opportunities. Some of the most promising ideas emerging in both developed and developing economies involve combining mixed-income housing with transit-oriented developments.

Those who are cost-burdened by the price of housing — and particularly essential service workers like fire fighters, teachers, entry-level government workers and hospital service workers — find it impossible to live near the places they work and the communities they serve. Gentrification and gated communities in urban centers are driving up costs and pushing people out into the periphery of the city, where they are then faced with the additional cost and time burdens of traveling to and from work. And the workforce internationally is often driven away from urban centers into outlying, informal settlements. When the sense of community is weakened and segregation among economic groups grows, myriad social problems often result.

Many cities in the U.S. have demolished unsustainable public housing complexes, which have fallen into pockets of concentrated poverty; in other countries, families living in informal settlements in the central areas of the city have been relocated. New housing plans instead focus on mixed-income communities — a strategy proven to lift families out of poverty when located near jobs. These designs enable residents to create new social ties that often result in improved household and community assets for all.

Successful examples can be found in cities around the world. For example, in Vienna, private developers collaborate with the city to build affordable housing, renting half of all new apartments to lower-income residents. Rents are regulated by the city for a set period of time so that no residents pay more than 20 to 25 percent of their income for housing.

For members of the workforce who are forcibly or economically driven outside of city centers, the creation of well-planned high density transit-oriented developments is critical. These centers, which place housing, retail and office properties around transit stops, are particularly important for lower-income families. These projects present challenges, however.

  • Land prices are high, and transit-oriented development sites frequently require rezoning and land assembly, which can lead to lengthy — and expensive — acquisition and permitting processes.
  • Developers can’t afford to buy land and hold it for several years without making improvements in anticipation of the arrival of transit.
  • Mixed-income developments require more complex financing structures and robust public infrastructure. The trend is strongest in high-growth metro areas.
  • The success for lower-income families requires long-term investment. In Atlanta, for example, the city demolished public housing high rises in an effort to decrease crime and replaced aging, unhealthy housing with low- and medium-rise mixed-income communities. The residents who stayed in the neighborhoods received a real boost as they became a part of a much more diverse economic population with better schools and flourishing social networks. However, those who moved further into the city’s periphery and who became reliant on an inadequate transit system face diminished opportunities. The incentives that were offered to the developers around transit stops are about to run out, and studies show that for successful developments, prices will revert to market rate when income restrictions expire. Then families will once again be forced to relocate further from jobs in the city with even fewer transit options to find an affordable place to live.

So what are the solutions?

  • Make a broad commitment to allocate land for affordable housing. Specifically, it is going to be increasingly important to preserve affordable housing near dense transit-oriented development.

  • Create an affordable housing acquisition fund to provide the capital necessary both to obtain and hold land or buildings near transit routes for affordable housing purposes.
  • Offer long-term tax credit incentives for developing mixed-income housing at transit-oriented developments. Short-term incentives will not support sustainable solutions.

A significant hurdle will be raising awareness that creating affordable housing opportunities can be a long-term economic driver. In Asia, housing leaders report that every job created in the housing sector generates two more jobs elsewhere in the economy. A New York State housing group reports that between 2011 and 2015, affordable housing projects created 329,400 total jobs and 46,800 permanent jobs.

Ensuring the sustainability of cities will require the integration of financing and revenue generation, policy, land use and transit. We are not talking only about large metropolitan agglomerations. Cities that are a million or less make up more than 50 percent of the global urban population and are the fastest growing cities around the world.

Now is the time to make systemic changes in secondary cities that often are less politically complicated and more open to public/private ventures and entrepreneurs with creative ideas who can improve the lives of millions of their residents. If we take action today, 20 to 30 years from now, we will see urban areas that are thriving as inclusive and equitable cities.

Jonathan Reckford is currently the CEO of Habitat for Humanity International. He has spent much of his career in the for-profit sector before accepting his dream job at Habitat for Humanity. Deeply committed to helping the world’s poor, Reckford was named the most influential nonprofit leader in America in 2017 by The NonProfit Times.