The Search for Affordable Housing: It Affects Everyone, Including YOU
From Canton to Old Saybrook, towns can’t find enough volunteer firefighters because many potential volunteers can’t afford to live in those communities.
In Falls Village, the new kindergarten class has only five children enrolled because young parents can’t afford to live in Litchfield County.
In Groton, skyrocketing housing costs have caused the Pfizer Corporation enormous difficulties, inducing executives from its Michigan facility to move to southeastern Connecticut to fill jobs at its research and development facility. If housing weren’t so expensive, Pfizer would be adding hundreds of new jobs to the Connecticut economy.
Connecticut’s housing prices have risen nearly 70% since 2000; roughly triple the rate of wage increases, mostly because of a shortage of supply. While the state has added more than 30,000 high-end four-, five- and six-bedroom homes in that time; it has lost more than 20,000 one- and two-bedroom apartments.
Overall, Connecticut has not produced the homes that workers, young professionals, and families have needed, standing forty-eighth among the states in housing units constructed per capita.
The result? Problem after problem after problem.
High housing costs, once a problem only in Fairfield County, is now a problem statewide. A 2006 survey by the Partnership for Strong Communities found that the median household income in 154 of Connecticut’s 169 municipalities could not qualify for a loan to buy the median sales price home in that town.
Affordability, once a problem only for low-income residents, is now a problem for moderate- and middle-income residents, too. As a result, Connecticut has the dangerous distinction of losing more twenty-five to thirty-four-year-old population than any state in the nation since 1990.
Because Connecticut stands as the eighth oldest state in the nation, with one of the oldest workforces, the state’s economic future is bleak unless it can stop the loss of young workers and use them to replace a rapidly retiring workforce.
“No company will come, stay, or expand here if it can’t find workers,” says Webster Bank President and Chief Executive James Smith.
Even as the nation experiences its worst housing slump in history, the affordability problem is getting worse in Connecticut. While prices have declined in virtually all other states, because overbuilding and mushrooming subprime mortgage defaults have swelled supply while deflating demand, prices continue to rise here: more than 4% in May and nearly 5% in June, according to the Warren Group.
The impact of high housing prices and the exodus twenty-five to thirty-four-year-olds has been pronounced:
- Municipalities have trouble finding workers and volunteers for town boards and commissions. Last year, even though it had only rain, the town of Fairfield had to cancel school when snow blanketed the northern half of the state. The reason: most of its teachers must live several towns away because they can’t afford to live in Fairfield.
- A large majority of businesses now list affordable housing for their workers as one of their top three problems, according to a Connecticut Business and Industry Association poll, because high housing costs make it hard for businesses to attract and keep workers.
- Parents born during the Baby Boom complain that their adult children, now graduating from college and graduate school, can’t afford to buy or rent homes in or even near the communities they grew up in.
Housing prices have risen because Connecticut’s supply of housing has not kept pace with demand. (Remember, Connecticut is forty-eighth among the states in its rate of housing production.) Connecticut’s slow housing production stems mainly from towns zoning to discourage significant housing production. Municipalities are often concerned that new housing will bring in new children to their public schools as well as strain other municipal services. Towns and their residents also fear changes in the appearance and character of their communities and sometimes don’t realize how attractive and well designed affordable and mixed-income housing can be.
Solutions are being attempted, but without large subsidy contributions from federal and state governments, they will have to involve strategies that sufficiently lower land costs for developers so they can afford to make a portion of their units affordable to households making 80% of the area median income or less.
In the legislative session that ended in June, the Connecticut General Assembly passed a new statute, the Connecticut Housing Program for Economic Growth. The statewide HOMEConnecticut affordable housing campaign, led by a 43-member steering committee of experts in business, banking, philanthropy, academia, land use, municipal government, and housing, proposed the plan. The new program provides incentives to municipalities that change their zoning to allow more housing units per acre to be built. It is unclear whether additional incentives will be needed, but towns are asking for them.
This new zoning approach attempts to tackle housing affordability in the following ways:
1. By creating incentives for towns that allow more housing, more new and rehabilitated housing will come on line and overcome Connecticut’s supply shortage that is driving up prices.
2. Allowing more housing units per acre means less land per unit. Less land means lower land cost in the bottom line.
3. The zoning encourages smaller-lot starter homes, condos, and apartments. Not everyone needs or wants a McMansion.
4. Twenty percent of the housing units are required to be kept affordable for households earning 80% of area median income. With the use of state and federal housing subsidies, developers may price the affordable units for people with even lower incomes.
This new program will take a couple years to get rolling, but in the meantime, the rise in prices has sparked significant activity in many towns. Ridgefield will open twenty new two- and three-bedroom affordable units and refurbish dozens of others. Westport is proceeding with a feasibility study on a 123-unit project on town-owned land. Darien has recently purchased the town library site for conversion to affordable housing, and many other towns from Greenwich to North Stonington are mulling affordable developments as housing costs continue to rise in Connecticut. Among them are Old Saybrook, Willington, New London, Norwich, Ledyard, New Canaan, Somers, Willimantic, Portland, Westbrook, Ellington, Torrington, South Windsor, East Windsor, Somers, Simsbury, Wallingford, and Fairfield.
Ensuring that municipalities’ interest is ultimately translated into starter homes and affordable rentals, condominiums, and townhouses will determine whether Connecticut will have homes for a new generation of workers. If not, jobs will not grow in a state that only this year clawed back to its 1989 high-water mark for employment.
Consistent with the state's position as first among states in the loss of twenty-five to thirty-four-year-old population since 2000, the University of Connecticut's Connecticut Economy projected this summer that job growth in 2008 and 2009 would slow, in part because of a no-growth population projection in Connecticut. Despite recent news that Connecticut had returned to the 1.7 million-job level first reached in 1989, the state suffers from a job gap of about 400,000 jobs, the additional number it would have, if job growth in the state since 1989 had matched the nation's 23% growth rate since then.
Although Connecticut’s high housing costs are daunting for many of Connecticut’s citizens, there is also much cause for optimism. The housing field has seen unprecedented collaboration and creative thinking. New legislation is chipping away at the housing problem, and nearly everyone now agrees that high housing costs are hurting Connecticut’s economy and communities and must be addressed soon.
Contact your local officials – Municipal governments have a great deal of influence over what gets built or not built. Talk to your mayor or first selectman, city council, and planning and zoning commission, and tell them you want to see more affordable housing in town. Speak at public hearings when housing is discussed. Tell town officials about the new Connecticut Housing Program for Economic Growth [see other article] and encourage them to learn more about it. See
www.homeconnecticut.org.
Contact your state legislators and governor – Governor Jodi Rell and the legislature can do wonders to help Connecticut’s housing problems. Thank them for the progress they’ve made so far and ask that they do more. Connecticut can strengthen the Housing Program for Economic Growth by enhancing the financial incentives offered to municipalities, to create a stronger encouragement for towns to use the program. The legislature and governor can also increase funding for affordable housing production and for rental subsidies for households with lower income.
Contact your US senators and US representative – Senator Christopher Dodd has an especially important role to play on housing, because he is the chair of the Senate Committee on Banking, Housing, and Urban Affairs, which makes important decisions on federal housing programs and oversees and regulates the mortgage and banking system. All other Connecticut’s members of Congress have important roles to play too.
When you contact government officials, don’t be shy. Your tax dollars pay their salary. They work for you, and they should be willing to hear what you have to say.
Connect with advocacy organizations working on housing – Advocacy organizations can’t accomplish everything alone. For political leaders to act, they must know that citizens want more affordable housing. Regularly visit the Web sites of organizations working on this front, get on their e-mail lists, and stay informed. Advocacy organizations can help you know the best ways to help the cause and the best times to make yourself heard. For starters, try
www.homeconnecticut.org or
www.ctpartnershiphousing.com.
Talk to friends, coworkers, and employers – Multiply your impact by encouraging others to speak up about the need for affordable housing.
Stay in Connecticut: Help is on the Way – High housing costs can make it tempting to leave the state to buy a more affordable home elsewhere. Please don’t! Connecticut needs its workers, especially younger ones who can replace retiring baby boomers. It looks like Connecticut’s high housing costs may be overcome soon. In just a couple years you may see many more housing units become available, some reserved for people of low or moderate income and ideal for the first-time homebuyer.
The Connecticut Housing Program for Economic Growth
The new state program offers financial incentives for cities and towns that allow higher density, mixed-income housing.
1. Payments to towns when they enact an Incentive Housing Zone. Inside the zone, developers are allowed to build more housing units per acre. Eighty percent of the housing can be market-rate, but at least 20% of the units must be affordable to households earning 80% of area median income or less. It can be ownership or rental housing.
2. Payments to towns when they issue permits for the housing to be built.
3. Four million dollars available in the first year to cover the payments to towns, as well as for technical assistance for municipalities and developers.
The HOMEConnecticut Campaign, which developed this plan (based on legislation enacted in Massachusetts), urged the legislature to include two important pieces of funding that didn’t make it into the bill.
1. Reimbursement of town’s unmet school costs resulting from housing. Towns often fear new housing development, thinking the housing will attract new children to educate and inflate the school budget. Although new housing typically attracts fewer children than towns fear, the state reimbursing towns for unmet school costs would put towns at ease and help them embrace new housing.
2. Project-based rental assistance money that would help willing developers target some of their units for lower-income households. The bill does ensure some of the units are affordable to households earning 80% of area median income, but the state subsidy would allow developers to make units for people with even lower income.
What’s next?
The legislation enacting the CT Housing Program for Economic Growth established a Blue Ribbon Panel to study obstacles to affordable housing development and to evaluate what the state can do to help. It will be meeting this fall and will present recommendations to the state legislature before its next session in February 2008.
The HOMEConnecticut Campaign will help municipalities learn about the new program and will urge the legislature and governor to strengthen the program by offering additional incentives to municipalities using it.
Did You Know?
Helping potential homebuyers afford a home doesn’t involve only creating affordable homes for purchase; it also requires creating affordable rental housing. Many thousands of Connecticut residents who would like to purchase a home are still renting. Because of Connecticut’s astronomical rents, many renters cannot save enough money to afford a down payment on a home. A holistic housing strategy in Connecticut will supply enough affordable apartments so that families can save money and get their finances in order to prepare for homeownership.
David Fink is Policy and Communications Director for the Partnership for Strong Communities and staff director of the HOMEConnecticut campaign.