Affordability. equation. Virtually every area in the country is grappling. The

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1 Clover Ridge in Chaska, Minnesota The Affordability Equation By Jason Miller Smart policies, creativity and New Urban designs deliver cost-sensitive housing options Virtually every area in the country is grappling with the challenge of building and maintaining affordable housing opportunities. It s not an easy task, especially since the very definition of affordable changes from city to city and town to town. Escalating production and land costs, market trends, transportation challenges and established development patterns all merge together to further complicate attempts to provide housing that everybody can afford. But with housing prices rising beyond what many working people can afford, the need for affordable housing has never been more immediate. From New Urban design providing affordable options to innovative public-private partnerships, many communities and regions are tackling the ever-difficult affordability equation. Something for every budget While most New Urbanist neighborhoods provide a superior mix of housing types, their best intentions of offering a wide variety of housing price points often falls victim to market demands. As a result, their lower-end dwellings suffer an upward creep, sometimes even before the units are completed. In Chaska, Minn., Clover Ridge is taking steps to prevent that from happening. The approach here is two-pronged. In Clover Field the neighborhood s first phase most of the housing is modular construction. Each home s structural components are assembled in a Wisconsin factory, then trucked to the building site for completion. This computer-driven approach creates a more solid house with truer lines, and helps to manage building costs. The savings are then passed to the homeowners. And since the two-story homes are composed of a bottom floor with ceiling joists, plus a top floor with floor joists (with additional soundproofing material between the two layers), the two living spaces are unbelievably quiet a big selling point for these options. To help curtail the swift increase in property values found in virtually every well-executed Traditional Neighborhood Development (TND), Chaska officials created the Chaska Community Land Trust (CLT), a community-based, nonprofit organization that is dedicated to creating and permanently preserving affordable housing opportunities (defined in Chaska as housing appropriate for households earning 80 percent of the median income in the region), while allowing individual homeowners to build equity in their property. 42 ON COMMON GROUND SUMMER 2006 SUMMER 2006 ON COMMON GROUND 43

2 Here s how it works: The CLT owns the land underneath the houses in Clover Field. Each homeowner owns his or her house, and has a lease to put the building on that lot for 99 years, with an option for adding another renewable period of 99 years. When the homeowner sells the house, he receives the equity off the house alone not the land, which keeps the property affordable for decades because the most important and most volatile piece of the puzzle land value is removed from the equation. The housing unit increases in value, but not exponentially, the way land can increase. Because of the way it preserves affordability in perpetuity, our CLT approach is truly fiscally conservative and socially liberal, says Kevin Ringwald, AICP, director of planning and development for the city of Chaska. It s very socially progressive, and it has broad support of both the business community and the residents. As for rentals, an affordable apartment building is in the design stage, with construction slated to begin in summer The Sinclair, an award-winning 115- to 120-unit project, will offer approximately half of its units to families earning 50 percent of the area median income for a family of four, says Alan Arthur, president of Minneapolis-based Central Community Housing Trust, a nonprofit provider of quality affordable housing and the project s builder. Our goal is to add life cycle housing to Clover Field; that is, housing for single individuals, couples and families with children and anyone who finds themselves moving through those cycles while living here. We will maintain the quality of the housing; it will fit into the community very well. Ringwald points to the recently completed Clover Condominiums as another score for affordability. With prices ranging from $129,900 to $169,900 (remarkable for the Twin Cities metro area), the condos are a great example of how we intensified land use and produced units in there. Right now the units are affordable for anyone making 60 to 70 percent of the median income. That gives people a real choice. Clover Field has become known nationally for its affordable housing strategies, so much so that Ringwald found himself relieved when a builder approached him to build higher-end housing. We ve been seeing some more expensive homes go in, now, which is good, because we wanted a place where everyone can live. Initially it was affordable and mid-range housing, so this gives us a better mix of price points. Portland, Oregon New Urbanist neighborhoods provide a superior mix of housing types. 44 ON COMMON GROUND SUMMER 2006

3 Selling the Clover Condominiums is a pleasure, says Gayle Dungey, a REALTOR with DuToit Family REALTORS. We market to the walking and biking trails, the Southwest Metro Transit (bus) line on site, the Clover Ridge Elementary School. The Sinclair apartment building will be next door and will have 12,000 sq. ft. of retail on the ground floor. Then there s the Chaska Community Center with its theater, workout facilities, café and art exhibits. While the neighborhood is very family-oriented, we aim at single young professionals and snowbirds for the Clover Condos. Where else can the average working young adult in their 20s and 30s possibly find this kind of sought-after lifestyle for that price? It needs to be a collaboration between the building industry, the public policy makers and the housing advocates. SUMMER 2006 ON COMMON GROUND 45

4 The Other Side of the Equation Rebuilding Gulf areas with affordability in mind The next small thing: Katrina Cottages New York designer Marianne Cusato and other New Urbanist architects are taking important steps toward true affordability. Their series of Katrina Cottages are small, well-designed, real homes designed to provide emergency housing for Gulf Coast communities ravaged by Hurricane Katrina. And they put the FEMA emergency trailers to shame in looks and cost. Cusato conceived the first design in October 2005 at the Mississippi Renewal Forum. The Forum, a component of Mississippi Governor Haley Barbour s Governor s Commission, studied 11 Mississippi Gulf Coast communities that were badly damaged or devastated by Hurricane Katrina, and produced recommendations for appropriate rebuilding of the towns neighborhoods. A model of Cusato s Katrina Cottage was constructed in Mississippi and trucked to Orlando in January 2006, where it was displayed at The International Builders Show and greeted with much enthusiasm. Another Katrina Cottage by South Carolina designer Eric Moser has since been built in Pass Christian, Mississippi. Even though it s the same size as a trailer or mobile home, it s a small house, says Cusato. The spaces are designed in the way we d design a house a logical sequence of spaces, appropriately defined rooms, properly sized windows. It s a real house just smaller. We design them to be more dignified, so people will take pride in them. How can something that looks this good be built and installed on site for the same or lower cost as a FEMA trailer, for which the U.S. government spends between $70,000 and $140,000? Size, for starters. The emergency-housing version of the original Katrina Cottage is 308 square feet the same size as a FEMA trailer. Construction techniques under consideration range from modular to mail-order kits to structural insulated panels (SIPs) all of which deliver houses with construction costs lower than that of conventional stickbuilt, on-site houses. The emergency-housing version of the Katrina Cottage can be built for $35,000; even after installation, that cost should stay under $60,000. But it doesn t end there. A design team that included such luminaries as Andrés Duany, Steve Oubre, Susan Henderson, Eric Moser, Steve Mouzon and Matt Lambert recently introduced the ingenious Katrina Cottage II (there are 10 Katrina Cottage designs thus far; two are built), a Grow House, which, like other Katrina Cottages, may remain on-site as a permanent dwelling that can be expanded into a full-sized house over the years. The Katrina Cottages idea is meeting with worldwide enthusiasm. Built with SIPs, Katrina Cottage II provides 470 sq. ft. on its main floor, plus a 300 sq.-ft. loft. It can sleep four comfortably. The Katrina Cottages idea is meeting with worldwide enthusiasm, says Cusato, who has fielded interest from Kansas City, Kans., (officials there want to use them as homeless shelters) to as far away as Ghana. There s a market for affordable housing, because it really is true that less is more. Some people don t want a huge house; they want only what they need. If Cusato and her colleagues have their way, those needs will be met soon. Teams are working to create a portfolio of Katrina Cottages that cater to virtually every life stage. Designs currently in development include: Emergency cottages: 300 to 400 sq. ft. Affordable cottages: up to 500 sq. ft. Cottages for the elderly: 500 to 600 sq. ft. (includes a side door that can lead to a caretaker-suite module) Affordable family cottage: 800 to 1,100 sq. ft. Stagnant, single-price-point housing that doesn t flex to meet residents needs is the norm these days, says Cusato, but that isn t what homeowners need. We rarely stay at the same station in life, financially, but that s what s being built out there right now. The idea of starting with a smaller house and adding on to it makes sense. We need to take back the word affordable, and remove the taboo associated with it. We shouldn t think less of anyone because of where they live, and they shouldn t think less of themselves. I think it s fully within our ability to change that. 46 ON COMMON GROUND SUMMER 2006

5 The partnership factor No single real estate or government entity is going to solve the affordable housing dilemma by itself, says David Rusk, an urban policy consultant based in Washington, D.C. My position is that this needs to be a collaboration between the building industry, the public policy makers, and the housing advocates, understanding everyone s points of view and interests, and reaching an understanding of how to tackle it. The issue of affordable housing can t be left to the nonprofit sector alone, or to government funds, which, particularly at the federal level, are drying up fast. One strategy that Rusk supports is the creation of inclusionary zoning codes (IZCs) within each municipality. An IZC is a local government requirement that a modest proportion of new development be set aside for lower income, working households, under conditions that are realistic for that housing market and that are fair to builders in terms of sustaining their profitability. That fairness often comes in the form of density bonuses; essentially, permission for the builder to build more units per acre in order to accommodate the affordable units without cutting into his profits. The numbers change among municipalities, but the desirable, denser outcome is one where affordable housing can be created with the New Urban and Smart Growth goal in mind. Most inclusionary zoning laws are in higherdensity areas, such as California, Vermont and Denver. One of the most mature and effective programs is in Montgomery County, Md., where a moderately priced dwelling units (MPDU) program was adopted in Since its inception, the MPDU program has created more than 12,000 MPDUs in the county. Aimed at first-time home buyers, Montgomery County s MPDU strategy is an inclusionary zoning approach and one that is badly needed, says Elizabeth Davison, director of Montgomery County Department of Housing and Community Affairs (DHCA), which administers the MPDU program and others. As with many large, high-growth metro areas, prices have been bid up and it s hard for middleclass people to find suitable housing. In the past we were dealing with young people just starting out, or elderly or disabled people, or what were called the working poor ; now we re well into the middle class who can t afford housing here. It s beginning to affect companies and industries who are trying to attract a work force. Montgomery County s MPDU program affects almost all development in the county, stipulating that 12.5 percent of every new development with Montgomery County, Maryland more than 40 units must be moderately priced ; i.e., affordable for moderate-income families, which is currently defined as those making $58,000 annually (the annual median income in the area is $90,000). Of those moderately priced units, the Montgomery County Housing Opportunities Commission (the county s housing authority) buys up to one-third; local nonprofits can buy the remainder. The bulk of the development is market-rate housing. The DHCA accepts applications from interested and qualified buyers, and sometimes holds a lottery to decide who gets first choice of a given property. As for resale, the DHCA maintains a control period of 30 years for for-sale properties, and 99 years for rental property owners. Within these control periods, homeowners are allowed to sell their units, but the DHCA sets the price based on a consumer price index escalation from the original purchase price, while allowing for improvements made to the units. After the control period is over, owners can sell their units on the open market, but the DHCA gets a share of the excess profit, which is what the controlled price would be, plus the owner s property improvements. The DHCA s efforts are bolstered by the Affordable Housing Conference of Montgomery County (AHC), a 15-year-old nonprofit advocacy group, which brings together representatives from the community on an annual basis to study affordable housing issues, funds and awards prizes for unique designs that speak to the affordability factor and hosts roundtable discussions to further the dialogue among housing experts. The organization s mission is to keep the issue of affordable housing on the front burner and to identify solutions to the growing problem, says Barbara Goldberg Goldman, a co-chair of the organization. Housing is an inalienable right. It goes hand in hand with health care and education. It affects every facet of our economy and our lives. And it is incumbent upon the private and public sectors to join together to make sure that everybody s needs are addressed. Jason Miller is a freelance writer, editor and publishing consultant based in Concrete, Washington. SUMMER 2006 ON COMMON GROUND 47